EMPLOYMENT AGREEMENT
AGREEMENT, made and entered into as of August 11, 2005 (the "Effective
Date") by and between THE WARNACO GROUP, INC., a Delaware corporation (together
with its successors and assigns, the "Company"), and XXXXX X. XXXXXXXX (the
"Executive").
WITNESSETH:
WHEREAS, the Company desires to continue to employ the Executive and to
enter into an agreement embodying the terms of such continued employment and the
Executive desires to enter into this Agreement and to accept such continued
employment, subject to the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:
1. Certain Definitions.
(a) "Affiliate" of a specified person or entity shall mean a person or
entity that directly or indirectly controls, is controlled by, or is under
common control with, the person or entity specified.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Cause" shall mean:
(i) willful misconduct by the Executive which causes material
harm to the Company's interests;
(ii) willful and material breach of duty by the Executive in the
course of his employment, which, if curable, is not cured within
10 days after Executive's receipt of written notice from the
Company;
(iii) willful failure by the Executive, after having been given
written notice from the Company, to perform his duties other than
a failure resulting from Executive's incapacity due to physical
or mental illness;
(iv) indictment of the Executive for a felony, a crime involving
moral turpitude or any other crime involving the business of the
Company which, in the case of such crime involving the business
of the Company, is injurious to the business of the Company; or
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(v) failure of the Executive to give 180 days prior written
notice of a voluntary resignation (other than for Good Reason or
Disability).
For purposes of this Cause definition, no act or failure to act, on the
part of the Executive, shall be considered willful unless it is done, or omitted
to be done, by him in bad faith and without reasonable belief that his action
was in the best interests of the Company. The determination to terminate the
Executive's employment for Cause shall be made by the Board and prior to such
determination the Executive shall have the right to appear before the Board or a
committee designated by the Board.
(d) "Change in Control" shall mean any of the following:
(i) any "person" (as such term is used in Sections 3(a)(9) and
13(d) of the Securities Exchange Act of 1934) or group of persons
acting jointly or in concert, but excluding a person who owns
more than 5% of the outstanding shares of the Company as of the
date of this Agreement, becomes a "beneficial owner" (as such
term is used in Rule 13d-3 promulgated under that Act), of 50% or
more of the Voting Stock of the Company;
(ii) all or substantially all of the assets of the Company are
disposed of pursuant to a merger, consolidation or other
transaction (unless the shareholders of the Company immediately
prior to such merger, consolidation or other transaction
beneficially own, directly or indirectly, in substantially the
same proportion as they owned the Voting Stock of the Company,
all of the Voting Stock or other ownership interests of the
entity or entities, if any, that succeed to the business of the
Company); or
(iii) approval by the shareholders of the Company of a complete
liquidation or dissolution of all or substantially all of the
assets of the Company.
For purposes of this Change in Control definition, "Voting Stock" shall
mean the capital stock of any class or classes having general voting power, in
the absence of specified contingencies, to elect the directors of the Company.
(e) "Date of Termination" shall mean:
(i) if the Executive's employment is terminated by the Company
for Cause, the date specified in the notice by the Company to the
Executive that his employment is so terminated; provided such
notice is delivered after the Board determination as set forth in
Section 1(c) hereof;
(ii) if the Executive's employment is terminated by the Company
without Cause, 180 days after the Company provides written notice
to the
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Executive that his employment is so terminated or, if the
Executive shortens the required notice period in accordance with
Section 6(i), the date of termination specified in such notice;
(iii) if the Executive voluntarily resigns his employment, 180
days after the Executive provides written notice to the Company
that the Executive is terminating his employment or, if the
Company shortens the required notice period in accordance with
Section 6(i), the date of termination specified in such notice;
(iv) if the Executive's employment is terminated by reason of
death, the date of death;
(v) if the Executive's employment is terminated for Disability,
30 days after written notice is given as specified in Section
1(f) below; or
(vi) if the Executive resigns his employment for Good Reason, 30
days after receipt by the Company of timely written notice from
the Executive in accordance with Section 1(g) below unless the
Company cures the event or events giving rise to Good Reason
within 30 days after receipt of such written notice.
(f) "Disability" shall mean the Executive's inability, due to physical
or mental incapacity, to substantially perform his essential duties and
responsibilities for a period of 180 consecutive days as determined by a medical
doctor selected by the Company and reasonably acceptable to the Executive. In no
event shall any termination of the Executive's employment for Disability occur
until the Party terminating his employment gives written notice to the other
Party in accordance with Section 14 below.
(g) "Good Reason" shall mean the occurrence of any of the following
without the Executive's prior written consent:
(i) a material diminution by the Company in the Executive's
authority, duties or responsibilities as President, Swimwear
Group or the assignment to the Executive by the Company of any
duties materially inconsistent with such position;
(ii) a reduction in (A) Base Salary or (B) Target Bonus
opportunity as a percentage of Base Salary;
(iii) in connection with or following a Change in Control, a
change in reporting structure so that the Executive reports to
someone other than the Chief Executive Officer of the Company;
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(iv) the removal by the Company of the Executive as President,
Swimwear Group or the failure by the Board to elect or reelect
the Executive as an executive officer of the Company;
(v) requiring the Executive to be principally based at any office
or location more than 50 miles from his current office; or
(vi) the failure of a successor to all or substantially all of
the assets of the Company to assume the Company's obligations
under this Agreement either as a matter of law or in writing
within 15 days after a merger, consolidation, sale or similar
transaction.
Anything herein to the contrary notwithstanding, the Executive shall not be
entitled to resign for Good Reason (i) if the occurrence of the event otherwise
constituting Good Reason is the result of Disability, a termination by the
Company for which notification has been given or a voluntary resignation by the
Executive other than for Good Reason and (ii) unless the Executive gives the
Company written notice of the event constituting "Good Reason" within 90 days of
the occurrence of such event and the Company fails to cure such event within 30
days after receipt of such notice.
(h) "Notice Period" means the period from the date of a notice of
termination as set forth in Section 1(e)(ii) (for a termination without Cause by
the Company) or Section 1(e)(iii) (for a voluntary resignation by the Executive)
through the Date of Termination.
2. Term of Employment.
The term of the Executive's employment hereunder shall begin on the
Effective Date and end at the close of business on the third anniversary of such
date; provided, however, that the Term shall thereafter be automatically
extended for additional one-year periods (subject to a maximum of four such
automatic one-year extensions), unless either the Company or the Executive gives
the other written notice at least 180 days prior to the then-scheduled
expiration of the Term that such Party is electing not to so extend the Term
(the initial term plus any extension thereof in accordance herewith being
referred to herein as the "Term"). Notwithstanding the foregoing, the Term shall
end on the date on which the Executive's employment is terminated by either
Party in accordance with the provisions herein.
3. Position; Duties and Responsibilities.
During the Term, the Executive shall be employed by the Company as
President, Swimwear Group and shall perform such duties and responsibilities as
determined by the Chief Executive Officer. The Executive shall devote
substantially all of his business time and attention to the satisfactory
performance of his duties. Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from (i) subject to the reasonable approval
of the Board, serving on the boards of directors of trade associations and/or
charitable organizations or other business corporations (provided such service
is not prohibited under Section 8(a) below),
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(ii) engaging in charitable activities and community affairs and (iii) managing
his personal investments and affairs, provided that the activities described in
the preceding clauses (i) through (iii) do not materially interfere with the
proper performance of his duties and responsibilities hereunder.
4. Compensation.
(a) Base Salary. During the Term, the Executive shall be paid an
annualized Base Salary of $680,000 ("Base Salary"), payable in accordance with
the regular payroll practices of the Company, subject to annual review by the
Board (or its designee, including the Compensation Committee of the Board) in
its sole discretion. During the Term the Base Salary may not be decreased
without the Executive's prior written consent. The Executive shall not be
entitled to any compensation for service as an officer or member of any board of
directors of any Affiliate. After any increase in base salary approved by the
Board or its designee, the term "Base Salary" as used in this Agreement shall
thereafter refer to the increased amount.
(b) Annual Incentive Awards. During the Term, the Executive shall be
eligible to receive an annual incentive award (provided the Executive was
employed continuously during the applicable fiscal year) pursuant to the
Company's Incentive Compensation Plan, as amended (or such other annual
incentive plan as may be approved by the Company's shareholders), in effect for
the applicable fiscal year ("Bonus Plan"). The Executive's annual incentive
award for fiscal year 2005 and thereafter shall have a target of 70% of Base
Salary ("Target Bonus"), with a potential maximum award as set forth in the
Bonus Plan, in all events based on the Executive's achievement of annual
performance and other targets approved by the committee administering the Bonus
Plan. The amount and payment of any annual incentive award shall be determined
in accordance with the Bonus Plan and shall be payable when bonuses for the
applicable performance period are paid to other senior executives of the
Company. After any increase in the Executive's target annual bonus opportunity
as a percentage of Base Salary as approved by the Board (or its designee), the
term "Target Bonus" as used in this Agreement shall thereafter refer to the
increased target opportunity.
(c) Long-Term Incentive Awards. During the Term, the Executive shall
be eligible to participate in the Company's equity incentive plans, including,
without limitation, the 2003 and 2005 Stock Incentive Plans, as amended from
time to time, and such other long-term incentive plan(s) as may be approved by
the Company's shareholders from time to time ("Stock Incentive Plan"). Except as
otherwise provided herein, all equity grants shall be governed by the applicable
equity plan and/or award agreement. The Executive shall be subject to the equity
ownership, retention and other requirements applicable to senior executives of
the Company.
(d) Supplemental Award. During the Term beginning with fiscal year
2005, provided the Executive is employed by the Company, the Executive shall be
entitled to an annual award with an aggregate grant date value equal to 10% of
the sum of Base Salary plus Annual Bonus as defined in this Section 4(d) if the
Executive will be less than age 60 by the end of the applicable fiscal year and
13% of such amount if the Executive will be age 60 or older by the end of the
applicable fiscal year ("Supplemental Award"), with the first such award being
made no
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later than 60 days after the Effective Date. For this purpose, Base Salary shall
be the Base Salary paid to the Executive for the fiscal year prior to the award
year and Annual Bonus shall be the annual bonus awarded to the Executive by the
Board for such prior fiscal year. The Supplemental Award shall not be awarded to
the Executive until after the determination by the Board of the Executive's
annual bonus for the prior fiscal year (but in no event later than 60 days
thereafter for any award made after fiscal year 2005) and 50% of the value of
the Supplemental Award shall be awarded in the form of restricted shares
pursuant to the applicable Stock Incentive Plan ("Career Shares") and 50% shall
be awarded in the form of a credit to a bookkeeping account maintained by the
Company for the Executive's account (the "Notional Account"). Any Career Shares
awarded hereunder shall be governed by the applicable Stock Incentive Plan and,
if applicable, any award agreement. For purposes of this Section 4(d), each
Career Share shall be valued at the closing price of a share of the Company's
common stock ("Share") on the date that the Supplemental Award is made. For the
Notional Account, the Company shall select the investment alternatives available
to the Executive under the Company's 401(k) plan. The balance in the Notional
Account shall periodically be credited (or debited) with the deemed positive (or
negative) return based on returns of the permissible investment alternative or
alternatives under the Company's 401(k) plan as selected in advance by the
Executive (and in accordance with the applicable rules of such plan or
investment alternative) to apply to such Notional Account, with such deemed
returns calculated in the same manner and at the same times as the return on
such investment alternative(s). The Company's obligation to pay the amount
credited to the Notional Account, including any return thereon provided for in
this Section 4(d), shall be an unfunded obligation to be satisfied from the
general funds of the Company. Except as otherwise provided in Section 6 below or
the applicable Stock Incentive Plan and provided that the Executive is employed
by the Company on such vesting date, any Supplemental Award granted in the form
of Career Shares will vest as follows: 50% of the Career Shares will vest on the
earlier of the Executive's 62nd birthday or upon the Executive's obtaining 15
years of "Vesting Service" and 100% of the Career Shares will vest on the
earliest of (i) the Executive's 65th birthday, (ii) upon the Executive's
obtaining 20 years of "Vesting Service" or (iii) the 10th anniversary of the
date of grant. Except as otherwise provided in Section 6 below, and provided
that the Executive is employed by the Company on such vesting date, any
Supplemental Award granted as a credit to the Notional Account (as adjusted for
any returns thereon) ("Adjusted Notional Account")) shall vest as follows: 50%
on the earlier of the Executive's 62nd birthday or upon the Executive's
obtaining 5 years of "Vesting Service" and 100% on the earlier of the
Executive's 65th birthday and upon the Executive's obtaining 10 years of
"Vesting Service". For purposes of this Section 4(d), "Vesting Service" shall
mean the period of time that the Executive is employed by the Company as an
executive officer, provided that for these purposes only the Executive's service
from February 4, 2003 on will be counted. Subject to Section 16(b) hereof, upon
vesting the Career Shares will be delivered in the form of Shares to the
Executive. The vested balance in the Adjusted Notional Account shall not be
distributed to the Executive until he ceases to be an employee of the Company
and, at such time, shall only be distributed at the earliest time that satisfies
the requirements of this Section 4(d). Except as otherwise provided in Section 6
hereof, if the Executive's employment is terminated for any reason, any unvested
Supplemental Awards (whether in the form of Career Shares or the Adjusted
Notional Account) shall be forfeited and any vested balance in the Adjusted
Notional Account, subject to Section 16(b) hereof, shall be paid to the
Executive in a cash lump-sum
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payment immediately following the Executive's "separation from service," as
defined by Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as
amended (the "Code"), with the Company; provided, however, that, except in the
case of the Executive's death, if at the time of such separation from service
the Executive is a "specified employee," as defined in Section 409A(a)(2)(B)(i)
of the Code, such distribution shall not be made until at least six months after
the date of such separation from service; provided, further, that if the
Executive's employment is terminated due to Disability and such Disability
satisfies the requirements of Section 409A(a)(2)(C) of the Code, then such
distribution may be made upon termination without regard as to whether Executive
was a "specified employee" at such time. The provisions of this Section 4(d)
shall survive expiration or termination of the Term.
5. Employee Benefits.
(a) Employee Benefit Programs. During the Term, subject to the
Company's right to amend, modify or terminate any benefit plan or program, the
Executive shall be entitled to participate in all employee savings and welfare
benefit plans and programs made available to the Company's senior-level
executives on a basis no less favorable than provided to other
similarly-situated executives, as such plans or programs may be in effect from
time to time, including, without limitation, savings and other retirement plans
or programs, medical, dental, hospitalization, short-term and long-term
disability and life insurance plans, accidental death and dismemberment
protection and travel accident insurance. During the Term, the Executive shall
also be entitled to a paid annual physical medical exam as approved by the
Company and Company-paid term life insurance with a benefit equal to $1 million,
provided the Company can obtain such insurance at commercially reasonable
premium levels. The Executive shall be entitled to four weeks paid vacation per
calendar year.
(b) Business Expenses. During the Term, the Executive is authorized to
incur reasonable expenses in carrying out his duties and responsibilities under
this Agreement and the Company shall promptly reimburse him for all business and
entertainment expenses incurred in connection with carrying out the business of
the Company, subject to documentation in accordance with the Company's policy.
The Executive shall be entitled to first class air travel when traveling on
Company business.
(c) Perquisites. The Executive shall be entitled to perquisites
provided to other senior-level executives, including a monthly car allowance of
up to a maximum of $1,000.
6. Termination of Employment. The Term of this Agreement and the
Executive's employment hereunder shall terminate as of the Date of Termination
in the following circumstances:
(a) Termination Without Cause by the Company. In the event that during
the Term the Executive's employment is terminated without Cause by the Company
(other than due to Disability) and Section 6(e) below does not apply, the
Executive shall be entitled to:
(i) payment of Base Salary as salary continuation for the
remainder of the applicable Term (without regard to its earlier
termination hereunder),
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but in no event more than 18 months or less than 6 months
following the Date of Termination;
(ii) immediate vesting as of the Date of Termination of 50% of
any restricted stock (other than Career Shares) that remains
unvested as of the Date of Termination;
(iii) with respect to any stock options granted on or after the
Effective Date which are vested and outstanding as of the Date of
Termination, continued exercisability for 6 months following the
Date of Termination or the remainder of the option term, if
shorter; and
(iv) continued participation for the Executive and his eligible
dependents in the Company's welfare benefit plans in which he and
his eligible dependents were participating immediately prior to
the Date of Termination until the earlier of (a) the end of the
applicable Term (without regard to its earlier termination
hereunder), but in no event more than 18 months or less than 6
months following the Date of Termination, or (b) the date, or
dates, the Executive receives equivalent coverage under the plans
and programs of a subsequent employer.
(b) Resignation for Good Reason by the Executive. In the event that
during the Term, the Executive resigns for Good Reason and Section 6(f) below
does not apply, the Executive shall be entitled to:
(i) payment of Base Salary as salary continuation for the
remainder of the applicable Term (without regard to its earlier
termination hereunder), but in no event more than 24 months or
less than 12 months following the Date of Termination;
(ii) immediate vesting as of the Date of Termination of 50% of
any restricted stock (other than Career Shares) that remains
unvested as of the Date of Termination;
(iii) with respect to any stock options granted on or after the
Effective Date which are vested and outstanding as of the Date of
Termination, continued exercisability for 12 months following the
Date of Termination or the remainder of the option term, if
shorter; and
(iv) continued participation for the Executive and his eligible
dependents in the Company's welfare benefit plans in which he and
his eligible dependents were participating immediately prior to
the Date of Termination until the earlier of (a) the end of the
applicable Term (without regard to its earlier termination
hereunder), but in no event more than 24 months or less than 12
months following the Date of Termination, or (b)
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the date, or dates, the Executive receives equivalent coverage
under the plans and programs of a subsequent employer.
(c) Termination upon Death or due to Disability. In the event that
during the Term the Executive's employment is terminated upon death or due to
Disability, the Executive (or his estate or legal representative, as the case
may be) shall be entitled to:
(i) a pro-rata annual bonus determined by multiplying the amount
of the annual bonus the Executive would have received had his
employment continued through the end of the fiscal year in which
the Date of Termination occurs by a fraction, the numerator of
which is the number of days during such fiscal year that the
Executive was employed by the Company and the denominator of
which is 365, payable when bonuses for such fiscal year are paid
to other Company executives;
(ii) immediate vesting as of the Date of Termination of 50% of
any restricted stock (other than Career Shares) that remains
unvested as of the Date of Termination; and
(iii) immediate vesting as of the Date of Termination of 50% of
any previously granted Supplemental Award that remains unvested
as of the Date of Termination, payable in accordance with Section
4(d) above.
(d) Termination by the Company for Cause or a Voluntary Resignation by
the Executive. In the event that during the Term the Company terminates the
Executive's employment for Cause, or the Executive voluntarily resigns in
accordance with Section 1(e)(iii), the Executive shall be entitled to his Base
Salary and employee benefits through the Date of Termination. A voluntary
resignation by the Executive of his employment shall be effective upon 180 days
prior written notice by the Executive to the Company and failure by the
Executive to provide such notice shall be deemed to be a breach of this
Agreement.
(e) Termination without Cause by the Company Upon or Following a
Change in Control. In the event the Executive's employment is terminated without
Cause by the Company (other than due to Disability) upon or within one year
following a Change in Control (provided the Term is still in effect or has
expired during this one-year period), the Executive shall be entitled to:
(i) an amount equal to (A) the greater of (x) the sum of Base
Salary plus Target Bonus divided by 12, with such amount then
multiplied by the number of months (including any partial months)
remaining in the Term (without regard to the earlier termination
thereof) or (y) 2 times the sum of (a) Base Salary plus (b)
Target Bonus, minus (B) the Base Salary and the bonus earned by
the Executive during the Notice Period, with such amount payable
in a lump sum as soon as practicable following the Date of
Termination (but in no event later than 60 days following such
date);
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(ii) a pro-rata Target Bonus for the year in which the notice of
termination is given, determined by multiplying the Target Bonus
by a fraction, the numerator of which is the number of days that
have elapsed from the first day of the performance period for
such year through the date the Company gives the Executive a
notice of termination of his employment without Cause and the
denominator of which is 365, payable in a lump sum as soon as
practicable following the Date of Termination (but in no event
later than 60 days following such date);
(iii) immediate vesting as of the Date of Termination of all
outstanding equity awards (other than Career Shares), with any
stock options granted on or after the Effective Date remaining
exercisable for 18 months following the Date of Termination or
the remainder of the option term, if shorter;
(iv) immediate vesting as of the Date of Termination of any
previously granted Supplemental Award, payable in accordance with
Section 4(d) above; and
(v) continued participation for the Executive and his eligible
dependents in the Company's welfare benefit plans in which he and
his eligible dependents were participating immediately prior to
the Date of Termination until the earlier of (a) 18 months
following the Date of Termination, or (b) the date, or dates, the
Executive receives substantially equivalent coverage under the
plans and programs of a subsequent employer.
(f) Resignation for Good Reason by the Executive Upon or Following a
Change in Control. In the event that the Executive resigns for Good Reason
within one year following a Change in Control (provided the Term is still in
effect or has expired during this one-year period), the Executive shall be
entitled to:
(i) an amount equal to the greater of (x) the sum of Base Salary
plus Target Bonus divided by 12, with such amount then multiplied
by the number of months (including any partial months) remaining
in the Term (without regard to the earlier termination thereof)
or (y) 2 times the sum of (a) Base Salary plus (b) Target Bonus,
payable in a lump sum as soon as practicable following the Date
of Termination (but in no event later than 60 days following such
date);
(ii) a pro-rata Target Bonus for the year of termination,
determined by multiplying the Target Bonus by a fraction, the
numerator of which is the number of days the Executive was
employed by the Company during the year in which the Date of
Termination occurs and the denominator of
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which is 365, payable in a lump sum as soon as practicable
following the Date of Termination (but in no event later than 60
days following such date);
(iii) immediate vesting as of the Date of Termination of all
outstanding equity awards (other than Career Shares), with any
stock options granted on or after the Effective Date remaining
exercisable for 24 months following the Date of Termination or
the remainder of the option term, if shorter;
(iv) immediate vesting as of the Date of Termination of any
previously granted Supplemental Award, payable in accordance with
Section 4(d) above; and
(v) continued participation for the Executive and his eligible
dependents in the Company's welfare benefit plans in which he and
his eligible dependents were participating immediately prior to
the Date of Termination until the earlier of (a) 24 months
following the Date of Termination, or (b) the date, or dates, the
Executive receives substantially equivalent coverage under the
plans and programs of a subsequent employer.
(g) Termination of the Executive's Employment by the Company Upon the
Expiration of the Term. If the Company provides written notice to the Executive
in accordance with Section 2 above that the Term shall not renew and upon such
expiration of the Term the Company terminates the Executive's employment under
circumstances that during the Term would constitute a termination of employment
without Cause, the Executive shall be entitled to the same payments, benefits
and entitlements as a resignation for Good Reason by the Executive under Section
6(b) hereof.
(h) Other Entitlements Upon Termination of Employment. In the event of
any termination of the Executive's employment, the Executive (or his estate or
legal representative, as the case may be) shall be entitled to:
(i) Base Salary through the Date of Termination;
(ii) except for a termination for Cause, payment of any annual
bonus awarded to the Executive that remains unpaid for the fiscal
year preceding the fiscal year in which the Date of Termination
occurs, payable when bonuses for such performance period are paid
to other Company executives;
(iii) any Supplemental Award that is vested as of the Date of
Termination, payable in accordance with Section 4(d) above;
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(iv) any amounts owing to the Executive but not yet paid under
Section 5(b) and 5(c) above; and
(v) except as otherwise provided in Section 6(j) below,
additional entitlements or treatment, if any, in accordance with
applicable plans and programs of the Company (provided that in no
event shall the Executive be entitled to duplication of any
payments or benefits).
(i) Obligations During Notice Period. In the event the Executive's
employment is terminated without Cause by the Company or the Executive
voluntarily resigns his employment (other than for Good Reason), the Executive
shall continue to be an employee of the Company during the Notice Period. As
such, his fiduciary duties and other obligations as an employee of the Company
shall continue during the Notice Period and the Executive agrees to cooperate in
the transition of his responsibilities during such period. The Company shall
have the right to direct the Executive to no longer come to work, or not to
perform any work for the Company, during the Notice Period and, if the Company
so directs, in addition to his fiduciary duties and other obligations as an
employee and his commitments pursuant to Section 7 and 8 hereof, the Executive
agrees to refrain during the Notice Period from contacting any customers,
clients, advertisers, suppliers, agents, professional advisors or employees of
the Company or any of its Affiliates. In the case of a voluntary resignation by
the Executive, the Company may shorten the Notice Period by providing written
notice to the Executive, in which event the Executive's employment shall
terminate on the date stated in such notice; provided that the Company shall
continue to pay the Executive his Base Salary through the end of the original
Notice Period. In the case of a termination without Cause by the Company, the
Executive may shorten the Notice Period by providing written notice to the
Company, in which event the Executive's employment shall terminate on the date
stated in such notice.
(j) Exclusivity of Benefits; Releases of Claims. Any payments provided
pursuant to Section 6(a), Section 6(b), Section 6(e), Section 6(f) or Section
6(g) above shall be in lieu of any salary continuation arrangements under any
other severance program of the Company and in all events, the Executive shall
not be entitled to duplication of any benefit or entitlement. In order to be
entitled to any payments, rights and other entitlements pursuant to this
Agreement or otherwise, the Executive must comply with the covenants and/or
acknowledgements contained in Sections 7, 8, 9 and 10 of this Agreement. In
addition, in order to be entitled to any payments, rights or other entitlements
in connection with a termination covered by Section 6(a), Section 6(b), Section
6(e), Section 6(f) or Section 6(g) above (except for those payments or benefits
required to be paid or provided by applicable law), the Executive shall be
required to execute and deliver to the Company the Agreement and Release of
Claims attached hereto as Exhibit A (and not revoke such agreement within the
applicable revocation period).
(k) Nature of Payments; No Mitigation. Any amounts due under this
Section 6 are in the nature of severance payments considered to be reasonable by
the Company and are not in the nature of a penalty. In the event of termination
of his employment for any reason in compliance with this Agreement, the
Executive shall be under no obligation to seek other employment and, except as
specifically provided for in this Section 6 with respect to continuation
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of welfare benefits, there shall be no offset against amounts or entitlements
due to him on account of any remuneration or benefits provided by any subsequent
employment he may obtain.
(l) Resignation. Notwithstanding any other provision of this
Agreement, upon the termination of the Executive's employment for any reason or,
if earlier, upon commencement of the Notice Period, unless otherwise requested
by the Board, he shall immediately resign from the Board, if applicable, and all
boards of directors of any Affiliate of the Company of which he may be a member,
and as a trustee of, or fiduciary to, any employee benefit plans of the Company
or any Affiliate. The Executive hereby agrees to execute any and all
documentation of such resignations upon request by the Company, but he shall be
treated for all purposes as having so resigned upon termination of his
employment or upon commencement of the Notice Period, as the case may be,
regardless of when or whether he executes any such documentation.
7. Protection of Confidential Information and Company Property.
(a) During the Term and thereafter, other than in the ordinary course
of performing his duties for the Company or as required in connection with
providing any cooperation to the Company pursuant to Section 10 below, the
Executive agrees that he shall not disclose to anyone or make use of any trade
secret or proprietary or confidential information of the Company or any
Affiliate of the Company, including such trade secret or proprietary or
confidential information of any customer or other entity to which the Company
owes an obligation not to disclose such information, which he acquires during
the course of his employment ("Confidential Information"), including, but not
limited to, records kept in the ordinary course of business, except when
required to do so by a court of law, by any governmental agency having
supervisory authority over the business of the Company or by any administrative
or legislative body (including a committee thereof) with apparent or actual
jurisdiction to order him to divulge, disclose or make accessible such
information. "Confidential Information" shall not include information that (i)
was known to the public prior to its disclosure by the Executive; or (ii)
becomes known to the public through no wrongful disclosure by or act of the
Executive or any representative of the Executive. In the event the Executive is
requested by subpoena, court order, investigative demand, search warrant or
other legal process to disclose any Confidential Information, the Executive
agrees, unless prohibited by law or Securities and Exchange Commission
regulation, to give the Company's General Counsel prompt written notice of any
request for disclosure in advance of the Executive's making such disclosure and
the Executive agrees not to disclose such information unless and until the
Company has expressly authorized the Executive to do so in writing or the
Company has had a reasonable opportunity to object to such request or to
litigate the matter (of which the Company agrees to keep the Executive
reasonably informed) and has failed to do so.
(b) The Executive hereby sells, assigns and transfers to the Company
all of his right, title and interest in and to all inventions, discoveries,
improvements and copyrightable subject matter (the "Rights") which during the
period of his employment are made or conceived by him, alone or with others, and
which are within or arise out of any general field of the Company's business or
arise out of any work he performs, or information he receives regarding
13
the business of the Company, while employed by the Company. The Executive shall
fully disclose to the Company as promptly as available all information known or
possessed by him concerning any Rights, and upon request by the Company and
without any further remuneration in any form to him by the Company, but at the
expense of the Company, execute all applications for patents and for copyright
registration, assignments thereof and other instruments and do all things which
the Company may deem necessary to vest and maintain in it the entire right,
title and interest in and to all such Rights. The Executive hereby acknowledges
receipt of a separate written notice provided by the Company pursuant to Section
2872 of the California Labor Code, attached hereto as Exhibit B.
(c) The Executive agrees upon termination of employment (whether
during or after the expiration of the Term and whether such termination is at
the instance of the Executive or the Company), and regardless of the reasons
therefor, or at any time as the Company may request, he will promptly deliver to
the Company's General Counsel, and not keep or deliver to anyone else, any and
all of the following which is in his possession or control: (i) Company property
(including, without limitation, credit cards, computers, communication devices,
home office equipment and other Company tangible property) and (ii) notes,
files, memoranda, papers and, in general, any and all physical matter and
computer files containing confidential or proprietary information of the Company
or any of its Affiliates, including any and all documents relating to the
conduct of the business of the Company or any of its Affiliates and any and all
documents containing confidential or proprietary information of the customers of
the Company or any of its Affiliates, except for (x) any documents for which the
Company's General Counsel has given written consent to removal at the time of
termination of the Executive's employment and (y) any information necessary for
the Executive to retain for his tax purposes (provided the Executive maintains
the confidentiality of such information in accordance with Section 7(a) above).
8. Additional Covenants.
(a) The Executive agrees that during his employment with the Company
or any Affiliate (whether during the Term or thereafter), including, without
limitation, during any Notice Period, he shall not, except as otherwise agreed
by the Company in writing, engage in a "Competitive Business," directly or
indirectly, as an individual, partner, shareholder, director, officer,
principal, agent, employee, trustee, consultant, or in any relationship or
capacity, in any geographic location in which the Company or any Affiliate is
engaged in business. The Executive shall not be deemed to be in violation of
this Section 8(a) by reason of the fact that he owns or acquires, solely as an
investment, up to two percent (2%) of the outstanding equity securities
(measured by value) of any entity. "Competitive Business" shall mean a business
engaged in (x) apparel design and/or apparel wholesaling or (y) retailing in
competition with any business that the Company or any Affiliate is conducting at
the time of the alleged violation.
(b) The Executive agrees that during his employment with the Company
or any Affiliate (whether during the Term or thereafter), including, without
limitation, during any Notice Period, he shall not, other than in the ordinary
course of the Company's business or with the Company's prior written consent,
directly or indirectly, solicit or encourage any customer of
14
the Company or any of its Affiliates to reduce or cease its business with the
Company or any such Affiliate or otherwise interfere with the relationship of
the Company or any Affiliate with its customers.
(c) The Executive agrees that during his employment with the Company
or any Affiliate and for 18 months following termination of such employment for
any reason (whether during the Term or thereafter), he shall not, other than in
the ordinary course of the Company's business or with the Company's prior
written consent, directly or indirectly, hire any employee of the Company or any
of its Affiliates, or solicit or encourage any such employee to leave the employ
of the Company or its Affiliates, as the case may be.
(d) Upon commencement of the Notice Period and following the
termination of the Executive's employment for any reason (whether during the
Term or thereafter), the Executive and the Company each agree to refrain from
making any statements or comments, whether oral or written, of a defamatory or
disparaging nature to third parties regarding each other (and, in the case of
the Executive's commitment hereunder, the "Company" shall include an Affiliate
of the Company and the Company's officers, directors, personnel and products).
The Executive and the Company each understand that either party should be
entitled to respond truthfully and accurately to statements about such party
made publicly by the Executive or the Company, as the case may be, provided that
such response is consistent with the responding party's obligations not to make
any statements or comments of a defamatory or disparaging nature as set forth
herein.
9. Injunctive and Other Relief.
(a) The Executive acknowledges that the restrictions and commitments
set forth in Sections 7, 8 and 10 of this Agreement are necessary to prevent the
improper use and disclosure of Confidential Information and to otherwise protect
the legitimate business interests of the Company and any of its Affiliates. The
Executive further acknowledges that the restrictions set forth in Sections 7, 8
and 10 of this Agreement are reasonable in all respects, including, without
limitation, duration, territory and scope of activity. The Executive expressly
agrees and acknowledges that any breach or threatened breach by the Executive or
any third party of any obligation by the Executive under this Agreement,
including, without limitation, any breach or threatened breach of Section 7, 8
or 10 of this Agreement will cause the Company immediate, immeasurable and
irreparable harm for which there is no adequate remedy at law, and as a result
of this, in addition to its other remedies, the Company shall be entitled to the
issuance by a court of competent jurisdiction of an injunction, restraining
order, specific performance or other equitable relief in favor of itself,
without the necessity of posting a bond, restraining the Executive or any third
party from committing or continuing to commit any such violation. If the Company
defers or withholds any payment, benefit or entitlement due to the Executive
pursuant to this Agreement or otherwise based on the Executive's violation of
this Agreement and it is subsequently finally determined that the Executive did
not commit such breach, the Company shall promptly pay all such unpaid amounts,
and shall extend such rights or other entitlements, to the Executive as of the
date that it is so determined that the Executive did not commit such
15
breach.
(b) If any restriction set forth in Section 7, 8 or 10 of this
Agreement is found by any court of competent jurisdiction to be unenforceable
because it extends for too long a period of time or over too great a range of
activities or in too broad a geographic area, it will be interpreted to extend
over the maximum period of time, range of activities or geographic area as to
which it may be enforceable. If any provision of Section 7, 8 or 10 of this
Agreement is declared to be invalid or unenforceable, in whole or in part, for
any reason, such invalidity will not affect the remaining provisions of such
Section which will remain in full force and effect.
10. Cooperation.
Following the Executive's termination of employment for any reason (whether
during or after the expiration of the Term), upon reasonable request by the
Company, the Executive shall cooperate with the Company or any of its Affiliates
with respect to any legal or investigatory proceeding, including any government
or regulatory investigation, or any litigation or other dispute relating to any
matter in which he was involved or had knowledge during his employment with the
Company, subject to his reasonable personal and business schedules. The Company
shall reimburse the Executive for all reasonable out-of-pocket costs, such as
travel, hotel and meal expenses and reasonable attorneys' fees, incurred by the
Executive in providing any cooperation pursuant to this Section 10, as well as a
reasonable per diem amount for the Executive's time (other than for time spent
preparing for or providing testimony) which shall be based upon the Executive's
Base Salary at the Date of Termination.
11. Tax Matters.
(a) If any amount, entitlement, or benefit paid or payable to the
Executive or provided for his benefit under this Agreement and under any other
agreement, plan or program of the Company (such payments, entitlements and
benefits referred to as a "Payment") is subject to the excise tax imposed under
Section 4999 of the Code, or any similar federal or state law (an "Excise Tax"),
then notwithstanding anything contained in this Agreement to the contrary, to
the extent that any or all Payments would be subject to the imposition of an
Excise Tax, the Payments shall be reduced (but not below zero) if and to the
extent that such reduction would result in the Executive retaining a larger
amount, on an after-tax basis (taking into account federal, state and local
income taxes and the imposition of the Excise Tax), than if the Executive
received all of the Payments (such reduced amount is hereinafter referred to as
the "Limited Payment Amount"). Unless the Executive shall have given prior
written notice specifying a different order to the Company to effectuate the
limitations described in the preceding sentence, the Company shall reduce or
eliminate the Payments, by first reducing or eliminating those payments or
benefits which are not payable in cash and then by reducing or eliminating cash
payments, in each case in reverse order beginning with payments or benefits
which are to be paid the farthest in time from the Determination (as defined
below). Any notice given by the Executive pursuant to the preceding sentence
shall take precedence over the provisions of any other plan, arrangement or
agreement, including, but not limited to, the other provisions of this
Agreement, governing the Executive's rights and entitlements to any
compensation, entitlement
16
or benefit.
(b) All calculations under this Section 11 shall be made by a
nationally recognized accounting firm designated by the Company and reasonably
acceptable to the Executive (other than the accounting firm that is regularly
engaged by any party who has effectuated a Change in Control) (the "Accounting
Firm"). The Company shall pay all fees and expenses of such Accounting Firm. The
Accounting Firm shall provide its calculations, together with detailed
supporting documentation, both to the Company and the Executive within 45 days
after the Change in Control or the Date of Termination, whichever is later (or
such earlier time as is requested by the Company) and, with respect to the
Limited Payment Amount, shall deliver its opinion to the Executive that he is
not required to report any Excise Tax on his federal income tax return with
respect to the Limited Payment Amount (collectively, the "Determination").
Within 5 days of the Executive's receipt of the Determination, the Executive
shall have the right to dispute the Determination (the "Dispute"). The existence
of the Dispute shall not in any way affect the right of the Executive to receive
the Payments in accordance with the Determination. If there is no Dispute, the
Determination by the Accounting Firm shall be final binding and conclusive upon
the Company and the Executive (except as provided in subsection (c) below).
(c) If, after the Payments have been made to the Executive, it is
established that the Payments made to, or provided for the benefit of, the
Executive exceed the limitations provided in subsection (a) above (an "Excess
Payment") or are less than such limitations (an "Underpayment"), as the case may
be, then the provisions of this subsection (c) shall apply. If it is established
pursuant to a final determination of a court or an Internal Revenue Service (the
"IRS") proceeding which has been finally and conclusively resolved, that an
Excess Payment has been made, the Executive shall repay the Excess Payment to
the Company on demand. In the event that it is determined by (i) the Accounting
Firm, the Company (which shall include the position taken by the Company, or
together with its consolidated group, on its federal income tax return) or the
IRS, (ii) pursuant to a determination by a court, or (iii) upon the resolution
to the satisfaction of the Executive of the Dispute, that an Underpayment has
occurred, the Company shall pay an amount equal to the Underpayment to the
Executive within 10 days of such determination or resolution together with
interest on such amount at the applicable federal short-term rate, as defined
under Section 1274(d) of the Code and as in effect on the first date that such
amount should have been paid to the Executive under this Agreement, from such
date until the date that such Underpayment is made to the Executive.
12. Representations.
(a) The Executive represents and warrants that he has the free and
unfettered right to enter into this Agreement and to perform his obligations
under it and that he knows of no agreement between him and any other person,
firm or organization, or any law or regulation, that would be violated by the
performance of his obligations under this Agreement. The Executive agrees that
he will not use or disclose any confidential or proprietary information of any
prior employer in the course of performing his duties for the Company or any of
its Affiliates.
17
(b) The Company represents that (i) the execution of this Agreement
and the granting of the benefits and awards hereunder have been authorized by
the Company, including, where necessary, by the Board, (ii) the execution,
delivery and performance of this Agreement does not violate any law, regulation,
order, decree, agreement, plan or corporate governance document of the Company
and (iii) upon the execution and delivery of this Agreement by the Parties, it
shall be the valid and binding obligation of the Company enforceable against it
in accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally.
13. Indemnification and Liability Insurance.
The Company hereby agrees during, and after termination of, his employment
to indemnify the Executive and hold him harmless, both during the Term and
thereafter, to the fullest extent permitted by law and under the certificate of
incorporation and by-laws of the Company against and in respect of any and all
actions, suits, proceedings, claims, demands, judgments, costs, expenses
(including reasonable attorneys' fees), losses, amounts paid in settlement to
the extent approved by the Company, and damages resulting from the Executive's
good faith performance of his duties as an officer or director of the Company or
any Affiliate of the Company. The Company shall reimburse the Executive for
expenses incurred by him in connection with any proceeding hereunder upon
written request from the Executive for such reimbursement and the submission by
the Executive of the appropriate documentation associated with these expenses.
Such request shall include an undertaking by the Executive to repay the amount
of such advance or reimbursement if it shall ultimately be determined that he is
not entitled to be indemnified hereunder against such costs and expenses. The
Company shall use commercially reasonable efforts to obtain and maintain
directors' and officers' liability insurance covering the Executive to the same
extent as the Company covers its other officers and directors.
14. Notices.
Any notice given to a Party shall be in writing and shall be deemed to have
been given (i) when delivered personally (provided that a written
acknowledgement of receipt is obtained), (ii) three days after being sent by
certified or registered mail, postage prepaid, return receipt requested or (iii)
two days after being sent by overnight courier (provided that a written
acknowledgement of receipt is obtained by the overnight courier), with any such
notice duly addressed to the Party concerned at the address indicated below or
to such other address as such Party may subsequently designate by written notice
in accordance with this Section 14:
If to the Company: The Warnaco Group, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
If to the Executive: The most recent address in the Company's records.
15. Governing Law; Exclusive Jurisdiction.
18
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of New York without reference to principles of
conflicts of law. The Parties each consent to the personal and exclusive
jurisdiction of the courts of the State of New York (including the United States
District Court for the Southern District of New York) in any proceeding arising
out of, or relating to, this Agreement. Each Party further agrees not to
interpose any objection for improper venue in any such proceeding. Each Party
shall be responsible for its own costs and expenses, including attorneys' fees,
in connection with any dispute arising out of, or relating to, this Agreement.
16. Miscellaneous Provisions.
(a) This Agreement contains the entire understanding and agreement
between the Parties concerning the subject matter hereof and, as of the
Effective Date, shall supersede all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or oral, between the
Parties with respect thereto (but not including any indemnification agreements
and/or equity agreements which remain outstanding as of the Effective Date). No
provision of this Agreement may be amended unless such amendment is agreed to in
writing and signed by the Executive and an authorized officer of the Company.
Notwithstanding the foregoing, in 2005, the Company shall have the right to
modify any provision of this Agreement (or, if requested by the Executive, shall
make such modification), including, without limitation, Section 4(d) and/or
Section 6 hereof, if, and only to the extent that, such modification shall be
required, in the reasonable opinion of the Company's and/or the Executive's
counsel, to comply with Section 409A of the Code or any regulations or similar
guidance issued by the Treasury or the Internal Revenue Service with respect to
Code Section 409A. No waiver by either Party of any breach by the other Party of
any condition or provision contained in this Agreement to be performed by such
other Party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver must be in
writing and signed by the Party against whom it is being enforced (either the
Executive or an authorized officer of the Company, as the case may be). The
respective rights and obligations of the Parties hereunder, including, without
limitation, Section 4(d) (Supplemental Award), Section 7 (protection of
confidential information and company property), Section 8 (additional
covenants), Section 9 (injunctive and other relief), Section 10 (cooperation)
and Section 13 (indemnification and liability insurance), shall survive any
expiration of the Term, including expiration thereof upon the Executive's
termination of employment for whatever reason, to the extent necessary to the
intended preservation of such rights and obligations.
(b) The Company may withhold from any amounts or payments under this
Agreement such Federal, state, local or other taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(c) This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors, heirs (in the case of the
Executive) and assigns. For purposes of this Section 16(c), a successor to the
Company shall be limited to an entity which
19
shall have acquired all or substantially all of the business and/or assets of
the Company and shall have assumed (whether by agreement or operation of law)
the Company's rights and obligations under this Agreement. No rights or
obligations of the Executive under this Agreement may be assigned or transferred
by the Executive other than his rights to compensation and benefits, which may
be transferred only by will, operation of law or in accordance with this clause
(c). The Executive shall be entitled, to the extent permitted under applicable
plans, agreements or law, to select and change a beneficiary or beneficiaries to
receive any compensation or benefit payable hereunder following the Executive's
death by giving the Company written notice thereof. In the event of the
Executive's death or a judicial determination of his incompetence, reference in
this Agreement to the Executive shall be deemed, where appropriate, to refer to
his beneficiary, estate or other legal representative.
(d) In the event that any provision or portion of this Agreement shall
be determined to be invalid or unenforceable by a court of competent
jurisdiction for any reason, in whole or in part, the remaining provisions of
this Agreement shall be unaffected thereby and shall remain in full force and
effect to the fullest extent permitted by law.
(e) The headings and subheadings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
(f) This Agreement may be executed in two or more counterparts.
[Signatures on next page.]
20
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
THE WARNACO GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
THE EXECUTIVE
/s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxx
21
EXHIBIT A
AGREEMENT AND RELEASE OF CLAIMS
THIS AGREEMENT AND RELEASE is executed by XXXXX X. XXXXXXXX (the
"Executive") as of the date hereof.
WHEREAS, the Executive and The Warnaco Group, Inc. (the "Company")
entered into an employment agreement dated August 11, 2005 (the "Employment
Agreement");
WHEREAS, the Executive has certain entitlements pursuant to the
Employment Agreement subject to the Executive's executing this Agreement and
Release and complying with its terms.
NOW, THEREFORE, in consideration of the payments set forth in Section
6 of the Employment Agreement and other good and valuable consideration, the
Executive agrees as follows:
The Executive, on behalf of himself and his dependents, heirs,
administrators, agents, executors, successors and assigns (the "Executive
Releasors"), hereby releases and forever discharges the Company and its
affiliated companies and their past and present parents, subsidiaries,
successors and assigns and all of the aforesaid companies' past and present
officers, directors, employees, trustees, shareholders, representatives and
agents (the "Company Releasees"), from any and all claims, demands, obligations,
liabilities and causes of action of any kind or description whatsoever, in law,
equity or otherwise, whether known or unknown, that any Executive Releasor had,
may have had or now has against the Company or any other Company Releasee as of
the date of execution of this Agreement and Release arising out of or relating
to the Executive's employment relationship, or the termination of that
relationship, with the Company (or any affiliate), including, but not limited
to, any claim, demand, obligation, liability or cause of action arising under
any Federal, state, or local employment law or ordinance (including, but not
limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of
1991, the Equal Pay Act, the Americans With Disabilities Act of 1991, the
Workers Adjustment and Retraining Notification Act, the Employee Retirement
Income Security Act (other than any claim for vested benefits), the Family and
Medical Leave Act, the Age Discrimination in Employment Act, as amended by the
Older Workers' Benefit Protection Act ("ADEA"), the California Fair Employment
and Housing Act, California Business and Professions Code, the California
Constitution, the California Labor Code (including, without limitation, Section
132a), the California Civil Code and the California Family Rights Act), tort,
contract, or alleged violation of any other legal obligation (collectively
"Released Executive Claims"). In addition, in consideration of the promises and
covenants of the Company, the Executive, on behalf of himself and the other
Executive Releasors, further agrees to waive any and all rights under the laws
of any jurisdiction in the United States, or any other country, that limit a
general release to any of the foregoing actions, causes of action, claims or
charges that are known or suspected to exist in the Executive's favor as of the
date of this Agreement and Release. IN THIS CONNECTION, EXECUTIVE UNDERSTANDS
AND AGREES AS PART OF THE
22
INDUCEMENT FOR THE CONSIDERATION GIVEN FOR THIS RELEASE THAT THE EXECUTIVE
SPECIFICALLY WAIVES AND RELINQUISHES ALL RIGHTS AND BENEFITS AFFORDED BY THE
PROVISIONS OF SECTION 1542 OF THE CALIFORNIA CIVIL CODE, WHICH READS AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
EXECUTIVE ACKNOWLEDGES THAT HE UNDERSTANDS THE SIGNIFICANCE OF THIS RELEASE OF
UNKNOWN CLAIMS HEREUNDER AND THIS WAIVER OF STATUTORY PROTECTION AGAINST THE
RELEASE OF SUCH UNKNOWN CLAIMS. Anything to the contrary notwithstanding in this
Agreement and Release or the Employment Agreement, nothing herein shall release
any Company Releasee from any claims or damages based on (i) any right or claim
that arises after the date of this Agreement and Release pertaining to a matter
that arises after such date, (ii) any right the Executive may have to enforce
Sections 6, 11 and 13 of the Employment Agreement, (iii) any right or claim the
Executive may have to benefits or equity awards that have accrued or vested as
of the Date of Termination or any right pursuant to any qualified retirement
plan or (iv) any right the Executive may have to be indemnified by the Company
to the extent such indemnification by the Company or any Affiliate is permitted
by applicable law or the Company's by-laws.
The Executive agrees that he shall continue to be bound by, and will
comply with, the provisions of Sections 7, 8 and 10 of the Employment Agreement
and the provisions of such sections, along with Section 9 of the Employment
Agreement, shall be incorporated fully into this Agreement and Release.
The Executive acknowledges that he has been provided a period of at
least 21 calendar days (45 calendar days in the case of any termination covered
by Section 7(f)(1)(F)(ii) of ADEA) in which to consider and execute this
Agreement and Release. The Executive further acknowledges and understands that
he has seven calendar days from the date on which he executes this Agreement and
Release to revoke his acceptance by delivering to the Company written
notification of his intention to revoke this Agreement and Release. This
Agreement and Release becomes effective when signed unless revoked in writing
and in accordance with this seven-day provision and Section 14 of the Employment
Agreement. To the extent that the Executive has not otherwise done so, the
Executive is advised to consult with an attorney prior to executing this
Agreement and Release.
This Agreement and Release shall be governed by and construed and
interpreted in accordance with the laws of New York without reference to
principles of conflicts of law. The Executive consents and submits to the
exclusive jurisdiction of the Federal and state courts of New York with respect
to any legal proceeding brought, whether by the Executive or the Company,
concerning the subject matter contained in this Agreement and Release.
Capitalized
23
terms, unless defined herein, shall have the meaning ascribed to such terms in
the Employment Agreement.
IN WITNESS WHEREOF, the Executive has executed this Agreement and
Release as of the date hereof.
------------------------------------
Xxxxx X. Xxxxxxxx
Date:
------------------------------
24
Exhibit B
In accordance with Section 2872 of the California Labor Code, you are
hereby notified that the Invention Assignment provisions of the Employment
Agreement you have signed in connection with your employment with THE WARNACO
GROUP, INC. do not apply to an invention that qualifies fully under the
provisions of Section 2870 of the California Labor Code, which provides in
pertinent part:
ANY PROVISION IN AN EMPLOYMENT AGREEMENT WHICH PROVIDES THAT AN
EMPLOYEE SHALL ASSIGN, OR OFFER TO ASSIGN, ANY OF HIS OR HER RIGHTS IN
AN INVENTION TO HIS OR HER EMPLOYER SHALL NOT APPLY TO AN INVENTION
THAT THE EMPLOYEE DEVELOPED ENTIRELY ON HIS OR HER OWN TIME WITHOUT
USING THE EMPLOYER'S EQUIPMENT, SUPPLIES, FACILITIES, OR TRADE SECRET
INFORMATION EXCEPT FOR THOSE INVENTIONS THAT EITHER:
(1) RELATE AT THE TIME OF CONCEPTION OR REDUCTION TO PRACTICE OF
THE INVENTION TO THE EMPLOYER'S BUSINESS, OR ACTUAL OR
DEMONSTRABLY ANTICIPATED RESEARCH OR DEVELOPMENT OF THE
EMPLOYER; OR
(2) RESULT FROM ANY WORK PERFORMED BY THE EMPLOYEE FOR THE
EMPLOYER.
RECEIPT ACKNOWLEDGED:
Dated: August 11, 2005 /s/ Xxxxx X. Xxxxxxxx
----------------------------- ------------------------------------
Xxxxx X. Xxxxxxxx
25
