Exhibit 99.3
July 13, 2001
Xxxx X. Idol
000 Xxxxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Dear Xxxx:
This letter will confirm certain modifications to the letter agreement
between you and Xxxxx Karan International Inc. (the "Company") dated May 16,
2001, regarding the anticipated resignation of your employment (the "Resignation
Letter"). Capitalized terms used but not defined in this letter shall have the
meaning given to them in the Resignation Letter.
The parties hereto hereby agree that the Resignation Letter is amended
to provide for your resignation of employment as Chief Executive Officer and
Director of the Xxxxx Karan Company and the Company and from all other positions
with the Company and its affiliates, effective as of July 13, 2001, except as
otherwise provided herein. The defined term "Termination Date" as used in the
Resignation Letter shall be deleted and the defined term "Resignation Date"
shall be substituted in its place and stead. The defined term "Resignation Date"
shall be deemed to refer to July 13, 2001.
The parties hereto further agree to delete the second paragraph of the
Resignation Letter in its entirety and replace it with the following:
"Your resignation as Chief Executive Officer and Director of
the Company effective as of July 13, 2001 and your subsequent
resignation as an employee as provided herein will be treated as having
been made for "Good Reason" pursuant to Section 11(b) of the Agreement
effective on the earlier to occur of (A) November 15, 2001 and (B) the
date on which the merger (the "Merger") provided for under the Merger
Agreement is consummated (the "Merger Closing Date"), and you will
receive the benefits provided under Sections 3(i) and 11(b) of the
Agreement in accordance with the terms thereof (except as otherwise
amended in this letter), in lieu of any other payments or benefits
under the Agreement, which benefits shall consist of the following and
shall be payable as follows. On the earlier to occur of (a) November
15, 2001 and (b) the Merger Closing Date, (i) the Company shall pay to
you $6,251,712 (consisting of (A) $5,100,000, which represents the sum
of three times your current base salary plus three times your total
bonus compensation for fiscal 2000, (B) a transaction bonus
of $750,000 and (C) $401,712, which represents the Performance Bonus
(as defined in the Agreement) that otherwise would have been paid to
you for 2001, pro-rated to reflect the number of days worked for the
Company on a full-time basis prior to the Resignation Date), less all
amounts required to be withheld by the Company for federal, state and
local taxes in connection with such $6,251,712 payment and in
connection with the 548,503 shares of restricted common stock as
hereafter provided, if applicable, and (ii) all 548,503 unvested shares
of restricted common stock held by you as of the Resignation Date shall
vest in full. In the event of any termination of your employment prior
to the payment of the foregoing amounts, you (or in the event of your
death, your estate) shall receive such payments at the date specified,
except that you shall not be entitled to the vesting of the shares of
restricted common stock provided in subsection (ii) above in the event
you voluntarily terminate your employment or you are terminated for
"cause" prior to the earlier of November 15, 2001 and the Merger
Closing Date. The definition of "Cause" in the Agreement shall apply
mutatis mutandis to this letter agreement. In addition, you shall be
entitled to receive (x) continued health, long-term disability and life
insurance at the level in effect on the Resignation Date for 36 months
from the Resignation Date (or the economic equivalent of such coverage
in cash), provided that if you commence other full-time employment that
offers substantially similar or improved health, long-term disability
and life insurance, this continued coverage will cease, (y)
outplacement services, up to $50,000, for a period of one year
commencing on the Resignation Date, but in no event beyond the date on
which you commence other full-time employment, and (z) any salary and
expenses that are accrued but unpaid as of the Resignation Date. The
Company's obligation to provide the foregoing benefits and make the
foregoing payments shall be unconditional and not dependent to any
extent on the successful consummation of the Merger before November 15,
2001."
In addition, the parties hereto agree that the third paragraph of the
Resignation Letter shall be amended by adding a new sentence after the first
sentence thereof, as follows:
"Notwithstanding the foregoing and the provisions of Section
6(a) of the Agreement, you may employ, at any time following the
Resignation Date, your current personal assistant."
As you are aware, by letter agreement of even date herewith between
LVMH, Gabrielle Studio, Inc., Karma Acquisition, Inc., Xxxxx Karan Studio, and
the Company, LVMH, Gabrielle Studio, Inc. and Karma Acquisition, Inc. have
agreed to defer a portion of the Sales Royalty (as defined therein) due with
respect to the third quarter of 2001 in the event the Merger has not been
consummated by November 15, 2001. The Company hereby agrees to use the full
amount of such deferred Sales Royalty to satisfy
its November 15, 2001 payment obligations set forth in the Resignation Letter,
as amended by this letter agreement.
Effective as of the Resignation Date, you will continue as an employee
of the Company until the earlier to occur of (i) November 15, 2001 and (ii) the
Merger Closing Date, under the following terms and conditions:
o DUTIES. Your duties shall be assisting, advising and providing
expertise to the Board of Directors in connection with the Company's
transition to a new Chief Executive Officer and the Merger. You
shall be required to work not more than fifteen (15) hours per month
during the term of your employment. You shall have the right to
perform such duties at a location other than the Company's offices,
and you shall have no obligation to maintain an office at the
Company. Nothing herein shall preclude you from obtaining other
full-time employment with an employer or employers other than the
Company.
o COMPENSATION AND EXPENSES. For work you perform pursuant to this
letter agreement after the Resignation Date, you shall be entitled
to a monthly salary at a rate of $5,000 to be paid in accordance
with the Company's customary and ordinary payroll practices, subject
to the withholding of all applicable federal, state and local taxes.
You acknowledge that you will not be entitled to any other
compensation or benefits except as provided in this letter agreement
and the Resignation Letter or in accordance with the terms of any
benefit plan or arrangement of the Company. The Company shall
reimburse you for reasonable and necessary out-of-pocket expenses
incurred in the performance of your duties, subject to the
presentation of appropriate receipts and vouchers in accordance with
the Company's policies for expense verification.
o TERMINATION. In no event shall you be entitled to any severance
payment of any kind in connection with the expiration or termination
of your employment except as set forth in the second paragraph of
the Resignation Letter.
All of the terms and conditions set forth in the Resignation Letter
shall remain in full force and effect, except to the extent otherwise expressly
set forth herein. This letter agreement may be executed in any number of
identical counterparts, any of which may contain the signatures of less than all
parties, and all of which together shall constitute a single agreement. The
Company shall pay the reasonable attorneys' fees incurred by you in connection
with the negotiation of this letter agreement.
The terms and conditions set forth in this letter agreement are subject
to consent by LVMH pursuant to the terms of the Merger Agreement and are not
binding or enforceable until such terms and conditions are consented to by LVMH
in writing.
XXXXX KARAN INTERNATIONAL INC.
By: /s/ M. Xxxxxxx Xxxxxxxxx
-----------------------------------------
Name: M. Xxxxxxx Xxxxxxxxx
Title: Director
Consented to as of the date first above
written by:
/s/ Xxxx X. Idol
---------------------------------
Xxxx X. Idol
LVMH Moet Xxxxxxxx Xxxxx
Vuitton Inc.
By: /s/ Xxxxx X. Xxxxxx
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Title: Senior Vice President
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cc: Xxxxxx X. Xxxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Xxxxx X. Barack, Esq.
