POLO RALPH LAUREN CORPORATION EMPLOYMENT AGREEMENT
Exhibit 10.3
XXXX XXXXX XXXXXX CORPORATION
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made effective as of the 30th day of April,
2007 (the “Effective Date”), by and between Xxxx Xxxxx Lauren Corporation, a Delaware corporation
(the “Corporation”), and Xxxxxxxx Xxxx (the “Executive”).
WHEREAS, the Executive has been employed with the Corporation pursuant to an Employment
Agreement dated April 3, 2005 (the “2005 Employment Agreement”); and
WHEREAS, the Corporation and Executive wish to amend and restate such 2005 Employment
Agreement effective as of the date hereof;
NOW THEREFORE, in consideration of the mutual covenants and premises contained herein, the
parties hereby agree as follows:
ARTICLE I
EMPLOYMENT
1.1 Employment Term. The Corporation hereby agrees to employ the Executive, and the
Executive hereby agrees to serve the Corporation, on the terms and conditions set forth herein.
The employment of the Executive by the Corporation shall be effective as of the date hereof and
continue until the close of business on the third anniversary of the Effective Date of this
Agreement (the “Term”), unless terminated earlier in accordance with Article II hereof.
1.2 Position and Duties. During the Term the Executive shall faithfully, and in
conformity with the directions of the Board of Directors of the Corporation and any Committee
thereof (the “Board”) or the management of the Corporation (“Management”), perform the duties of
his employment, and shall devote to the performance of such duties his full time and attention.
During the Term the Executive shall serve in such position as the Board or Management may from time
to time direct. During the Term, the Executive may engage in outside activities provided those
activities do not conflict with the duties and responsibilities enumerated hereunder, and provided
further that the Executive receives written approval in advance from Management for any outside
business activity that may require significant expenditure of the Executive’s time in which the
Executive plans to become involved, whether or not such activity is pursued for profit. The
Executive shall be excused from performing any services hereunder during periods of temporary
incapacity and during vacations in accordance with the Corporation’s disability and vacation
policies.
1.3 Place of Performance. The Executive shall be employed at the principal offices of
the Corporation located in New York, New York, except for required travel on the Corporation’s
business.
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1.4 Compensation and Related Matters.
(a) Base Compensation. In consideration of his services during the Term, the
Corporation shall pay the Executive cash compensation at an annual rate of not less than six
hundred twenty-five thousand dollars ($625,000) (“Base Compensation”), less applicable
withholdings. Executive’s Base Compensation shall be subject to such increases as may be approved
by the Board or Management. The Base Compensation shall be payable as current salary, in
installments not less frequently than monthly, and at the same rate for any fraction of a month
unexpired at the end of the Term.
(b) Bonus. During the Term, the Executive shall have the opportunity to earn an
annual bonus in accordance with any annual bonus program the Corporation maintains that would be
applicable to the Executive.
(c) Stock Awards. During the Term, the Executive shall be eligible to participate in
the Xxxx Xxxxx Xxxxxx Xxxx-Term Stock Incentive Plan (the “Incentive Plan”). All grants of stock
options and restricted performance share units (“RPSUs”), if any, are governed by the terms of the
Incentive Plan and subject to approval by the Compensation Committee of the Board of Directors.
(d) Car Allowance. During the Term, the Corporation shall pay Executive a car
allowance in the amount of one thousand five hundred dollars ($1,500) per month, less applicable
withholdings.
(e) Expenses. During the Term, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in performing services
hereunder, including all reasonable expenses of travel and living while away from home,
provided that such expenses are incurred and accounted for in accordance with the policies
and procedures established by the Corporation.
(f) Vacations. During the Term, the Executive shall be entitled to the number of
vacation days in each fiscal year, and to compensation in respect of earned but unused vacation
days, determined in accordance with the Corporation’s vacation program. The Executive shall also
be entitled to all paid holidays given by the Corporation to its employees.
(g) Other Benefits. The Executive shall be entitled to participate in all of the
Corporation’s employee benefit plans and programs in effect during the Term as would by their terms
be applicable to the Executive, including, without limitation, any deferred compensation plan,
incentive plan, stock option plan, life insurance plan, medical insurance plan, dental care plan,
accidental death and disability plan, financial counseling program and sick/personal leave program.
The Corporation shall not make any changes in such plans or programs that would adversely affect
the Executive’s benefits thereunder, unless such change occurs pursuant to a plan or program
applicable to other similarly situated employees of the Corporation and does not result in a
proportionately greater reduction in the rights or benefits of the Executive as compared with other
similarly situated employees of the Corporation. Except as otherwise specifically provided herein,
nothing paid to the Executive under any plan or program
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presently in effect or made available in the future shall be in lieu of the Base Compensation
or any bonus payable under Sections 1.4(a) and 1.4(b) hereof.
ARTICLE II
TERMINATION OF EMPLOYMENT
2.1 Termination of Employment. The Executive’s employment may terminate prior to the
expiration of the Term under the following circumstances:
(a) Without Cause. The Executive’s employment shall terminate upon the Corporation’s
notifying the Executive that his services will no longer be required.
(b) Death. The Executive’s employment shall terminate upon the Executive’s death.
(c) Disability. If, as a result of the Executive’s incapacity due to physical or
mental illness, the Executive shall have been absent and unable to perform the duties hereunder on
a full-time basis for an entire period of six consecutive months, the Executive’s employment may be
terminated by the Corporation following such six-month period.
(d) Cause. The Corporation may terminate the Executive’s employment for Cause. For
purposes hereof, “Cause” shall mean:
(i) failure by the Executive to perform the duties of the Executive hereunder (other than due
to disability as defined in 2.1(c)), provided that the conduct described in this Section 2.1(d)(i)
shall not constitute Cause unless and until such failure by Executive to perform his duties
hereunder has not been cured to the satisfaction of the Corporation, in its sole discretion, within
fifteen (15) days after notice of such failure has been given by the Corporation to Executive; or
(ii) an act of fraud, embezzlement, theft, breach of fiduciary duty, dishonesty, or any other
misconduct or any violation of law (other than a traffic violation) committed by the Executive; or
(iii) any action by the Executive causing damage to or misappropriation of Corporation
assets; or
(iv) the Executive’s wrongful disclosure of confidential information of the Corporation or any
of its affiliates; or
(v) the Executive’s engagement in any competitive activity which would constitute a breach of
this Agreement and/or of the Executive’s duty of loyalty; or
(vi) the Executive’s breach of any employment policy of the Corporation, including, but not
limited to, conduct relating to falsification of business records, violation of the Corporation’s
code of business conduct & ethics, harassment, creation of a hostile work environment, excessive
absenteeism, insubordination, violation of the Corporation’s policy on drug & alcohol use, or
violent acts or threats of violence; or
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(vii) performance by the Executive of his employment duties in a manner deemed by the
Corporation, in its sole discretion, to be grossly negligent; or
(viii) the commission of any act by the Executive, whether or not performed in the workplace,
which subjects or, if publicly known, would be likely to subject the Corporation to public ridicule
or embarrassment, or would likely be detrimental or damaging to the Corporation’s reputation,
goodwill, or relationships with its customers, suppliers, vendors, licensees or employees.
(e) Voluntary Termination. The Executive may voluntarily terminate the Executive’s
employment with the Corporation at any time, with or without Good Reason. For purposes of this
Agreement, “Good Reason” shall mean (A) a material diminution in or adverse alteration to
Executive’s title, base salary, position or duties, including no longer reporting to Xxxxx Lauren,
Chief Executive Officer, or Xxxxx Xxxxx, Chief Operating Officer, (B) the relocation of the
Executive’s principal office outside the area which comprises a fifty (50) mile radius from New
York City, or (C) a failure of the Corporation to comply with any material provision of this
Agreement provided that the events described in clauses (A), (B), and (C) above shall not
constitute Good Reason unless and until such diminution, change, reduction or failure (as
applicable) has not been cured within thirty (30) days after written notice of such noncompliance
has been given by the Executive to the Corporation.
2.2 Date of Termination. The date of termination shall be:
(a) if the Executive’s employment is terminated by the Executive’s death, the date of the
Executive’s death;
(b) if the Executive’s employment is terminated by reason of Executive’s disability pursuant
to Section 2.1(c) or by the Corporation pursuant to Sections 2.1(a) or 2.1(d), the date specified
by the Corporation; and
(c) if the Executive’s employment is terminated by the Executive, the date on which the
Executive notifies the Corporation of his termination.
2.3 Effect of Termination of Employment.
(a) If the Executive’s employment is terminated by the Corporation pursuant to Section 2.1(a),
or if the Executive resigns for Good Reason pursuant to Section 2.1(e), the Executive shall only be
entitled to the following:
(i) Severance. Subject to Section 4.1(a) hereof, the Corporation shall: (a) continue
to pay the Executive, in accordance with the Corporation’s normal payroll practice, his Base
Compensation, as in effect immediately prior to such termination of employment, for the longer of
the balance of the Term or the one-year period commencing on the date of such termination
(whichever period is applicable shall be referred to herein as the “Severance Period”); and (b) pay
to the Executive, on the last business day of the Severance Period, an amount equal to the bonus
paid to the Executive for the fiscal year prior to the fiscal year in which his employment is
terminated. If the Corporation has not paid any such bonus to the Executive, then the Corporation
shall not be obligated to make any bonus payment
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to the Executive. Under no circumstances shall the Executive be entitled to any pro-rated
bonus payment for the fiscal year in which his employment is terminated. Notwithstanding the
foregoing, in order to receive any severance benefits under this Section 2.3(a)(i), the Executive
must sign and not timely revoke a release and waiver of claims against the Corporation, its
successors, affiliates, and assigns, in a form acceptable to the Corporation.
(ii) Stock Awards. The Executive’s rights with respect to any stock options and RPSUs
provided to the Executive by the Corporation shall be governed by the provisions of the
Corporation’s Incentive Plan and the respective award agreements, if any, under which such awards
were granted, except as provided in Section 4.1(a).
(iii) Welfare Plan Coverages. The Executive shall continue to participate during the
Severance Period in any group medical or dental insurance plan he participated in prior to the date
of his termination, under substantially similar terms and conditions as an active employee;
provided that participation in such group medical or dental insurance plan shall only
continue for as long as permitted under COBRA and further, shall correspondingly cease at such time
as the Executive (a) becomes eligible for a future employer’s medical and/or dental insurance
coverage (or would become eligible if the Executive did not waive coverage) or (b) violates any of
the provisions of Article III as determined by the Corporation in its sole discretion.
Notwithstanding the foregoing, the Executive may not continue to participate in such plans on a
pre-tax or tax-favored basis.
(iv) Retirement Plans. Without limiting the generality of the foregoing, it is
specifically provided that the Executive shall not accrue additional benefits under any pension
plan of the Corporation (whether or not qualified under Section 401(a) of the Internal Revenue Code
of 1986, as amended) during the Severance Period.
(v) Section 409A. This Agreement is not intended to constitute a “nonqualified
deferred compensation plan” within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended, and the rules and regulations issued thereunder (the “Code”). The above payment
structure is based on the Corporation’s current understanding of its applicable requirements under
Section 409A of the Code. Notwithstanding the foregoing, if any payments of money or other
benefits due to Executive hereunder could reasonably be expected to cause the application of an
accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall
be restructured in the sole discretion of the Corporation in a manner which does not cause such an
accelerated or additional tax.
(b) If the Executive’s employment is terminated by reason of the Executive’s death or
Disability, pursuant to Sections 2.1(b) and 2.1(c), the Executive (or the Executive’s designee or
estate) shall only be entitled to whatever welfare plans benefits are available to the Executive
pursuant to the welfare plans the Executive participated in prior to such termination, and whatever
stock awards may have been provided to the Executive by the Corporation the terms of which shall be
governed by the provisions of the Corporation’s Incentive Plan and the respective award agreements,
if any, under which such stock awards were provided.
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(c) If the Executive’s employment is terminated by the Corporation for Cause or by the
Executive without Good Reason (as defined in Section 2.1(e)), the Executive shall receive only that
portion of the Executive’s then current Base Compensation payable through the Executive’s
termination date. The Executive’s rights with respect to any stock awards provided to the
Executive by the Corporation shall be governed by the provisions of the Corporation’s Incentive
Plan and the respective award agreements, if any, under which such stock awards were provided.
ARTICLE III
COVENANTS OF THE EXECUTIVE
3.1 Non-Compete.
(a) The Corporation and the Executive acknowledge that: (i) the Corporation has a special
interest in and derives significant benefit from the unique skills and experience of the Executive;
(ii) the Executive will use and have access to proprietary and valuable Confidential Information
(as defined in Section 3.2 hereof) during the course of the Executive’s employment; and (iii) the
agreements and covenants contained herein are essential to protect the business and goodwill of the
Corporation or any of its subsidiaries, affiliates or licensees. Accordingly, except as
hereinafter noted, the Executive covenants and agrees that during the Term, and for the remainder
of such Term following the termination of Executive’s employment, the Executive shall not provide
any labor, work, services or assistance (whether as an officer, director, employee, partner, agent,
owner, independent contractor, consultant, stockholder or otherwise) to a “Competing Business.”
For purposes hereof, “Competing Business” shall mean any business engaged in the designing,
marketing or distribution of premium lifestyle products, including but not limited to apparel,
home, accessories and fragrance products, which competes in any material respects with the
Corporation or any of its subsidiaries, affiliates or licensees, and shall include, without
limitation, those brands and companies that the Corporation and the Executive have jointly
designated in writing on the date hereof, which is incorporated herein by reference and which is
attached as Schedule A, as being in competition with the Corporation or any of its subsidiaries,
affiliates or licensees as of the date hereof. Thus, Executive specifically acknowledges that
Executive understands that, except as provided in Section 3.1(b) he may not become employed by any
Competing Business in any capacity during the Term.
(b) The non-compete provisions of this Section shall no longer be applicable to Executive if
he has been notified pursuant to Section 2.1(a) hereof that his services will no longer be required
during the Term or if the Executive has terminated his employment for Good Reason pursuant to
Section 2.1(e) or if the Corporation elects in its sole discretion not to extend the Term for any
reason other than for Cause.
(c) It is acknowledged by the Executive that the Corporation has determined to relieve the
Executive from any obligation of non-competition for periods after the Term, and/or if the
Corporation terminates the Executive’s employment under Section 2.1(a) or if the Executive has
terminated his employment for Good Reason pursuant to Section 2.1(e) or if the Corporation elects
in its sole discretion not to extend the Term for any reason other than for Cause. In
consideration of that, and in consideration of all of the compensation provisions in
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this Agreement (including the potential for the award of stock options and/or RPSUs that may
be made to the Executive), Executive agrees to the provisions of Section 3.1 and also agrees that
the non-competition obligations imposed herein are fair and reasonable under all the circumstances.
3.2 Confidential Information.
(a) The Corporation owns and has developed and compiled, and will own, develop and compile,
certain proprietary techniques and confidential information as described below which have great
value to its business (referred to in this Agreement, collectively, as “Confidential Information”).
Confidential Information includes not only information disclosed by the Corporation and/or its
affiliates, subsidiaries and licensees to Executive, but also information developed or learned by
Executive during the course of, or as a result of, employment hereunder, which information
Executive acknowledges is and shall be the sole and exclusive property of the Corporation.
Confidential Information includes all proprietary information that has or could have commercial
value or other utility in the business in which the Corporation is engaged or contemplates
engaging, and all proprietary information the unauthorized disclosure of which could be detrimental
to the interests of the Corporation. Whether or not such information is specifically labeled as
Confidential Information by the Corporation is not determinative. By way of example and without
limitation, Confidential Information includes any and all information developed, obtained or owned
by the Corporation and/or its subsidiaries, affiliates or licensees concerning trade secrets,
techniques, know-how (including designs, plans, procedures, processes and research records),
software, computer programs, innovations, discoveries, improvements, research, development, test
results, reports, specifications, data, formats, marketing data and plans, business plans,
strategies, forecasts, unpublished financial information, orders, agreements and other forms of
documents, price and cost information, merchandising opportunities, expansion plans, designs, store
plans, budgets, projections, customer, supplier and subcontractor identities, characteristics and
agreements, and salary, staffing and employment information. Notwithstanding the foregoing,
Confidential Information shall not in any event include (A) Executive’s personal knowledge and
know-how relating to merchandising and business techniques which Executive has developed over his
career in the apparel business and of which Executive was aware prior to his employment, or (B)
information which (i) was generally known or generally available to the public prior to its
disclosure to Executive; (ii) becomes generally known or generally available to the public
subsequent to disclosure to Executive through no wrongful act of any person or (iii) which
Executive is required to disclose by applicable law or regulation (provided that Executive provides
the Corporation with prior notice of the contemplated disclosure and reasonably cooperates with the
Corporation at the Corporation’s expense in seeking a protective order or other appropriate
protection of such information).
(b) Executive acknowledges and agrees that in the performance of his duties hereunder the
Corporation will from time to time disclose to Executive and entrust Executive with Confidential
Information. Executive also acknowledges and agrees that the unauthorized disclosure of
Confidential Information, among other things, may be prejudicial to the Corporation’s interests,
and an improper disclosure of trade secrets. Executive agrees that he shall not, directly or
indirectly, use, make available, sell, disclose or otherwise communicate to any corporation,
partnership, individual or other third party, other than in the course of his
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assigned duties and for the benefit of the Corporation, any Confidential Information, either
during his Term of employment or thereafter.
(c) The Executive agrees that upon leaving the Corporation’s employ, the Executive shall not
take with the Executive any software, computer programs, disks, tapes, research, development,
strategies, designs, reports, study, memoranda, books, papers, plans, information, letters,
e-mails, or other documents or data reflecting any Confidential Information of the Corporation, its
subsidiaries, affiliates or licensees.
(d) During Executive’s Term of employment, Executive shall disclose to the Corporation all
designs, inventions and business strategies or plans developed for the Corporation, including
without limitation any process, operation, product or improvement. Executive agrees that all of
the foregoing are and shall be the sole and exclusive property of the Corporation and that
Executive shall at the Corporation’s request and cost do whatever is necessary to secure the rights
thereto, by patent, copyright or otherwise, to the Corporation
3.3 Non-Solicitation of Employees. The Executive covenants and agrees that during the
Term, and for the remainder of such Term following the termination of Executive’s employment for
any reason whatsoever hereunder, the Executive shall not directly or indirectly solicit or
influence any other employee of the Corporation, or any of its subsidiaries, affiliates or
licensees, to terminate such employee’s employment with the Corporation, or any of its
subsidiaries, affiliates or licensees, as the case may be, or to become employed by a Competing
Business. As used herein, “solicit” shall include, without limitation, requesting, encouraging,
enticing, assisting, or causing, directly or indirectly.
3.4 Nondisparagement. The Executive agrees that during the Term and thereafter whether
or not he is receiving any amounts pursuant to Sections 2.3 and 4.1, the Executive shall not make
any statements or comments that reasonably could be considered to shed an adverse light on the
business or reputation of the Corporation or any of its subsidiaries, affiliates or licensees, the
Board or any officer of the Corporation or any of its subsidiaries, affiliates or licensees;
provided, however, the foregoing limitation shall not apply to (i) compliance with legal process or
subpoena, or (ii) statements in response to inquiry from a court or regulatory body.
3.5 Remedies.
(a) The Executive acknowledges and agrees that in the event the Corporation reasonably
determines that the Executive has breached any provision of this Article III, that such conduct
will constitute a failure of the consideration for which stock awards had been granted, and
notwithstanding the terms of any stock award agreement, plan document, or other provision of this
Agreement to the contrary, the Corporation may notify the Executive that he may not exercise any
unexercised stock options and/or the Corporation may rescind any RPSUs he has received. Further,
the Executive shall immediately forfeit the right to vest in any unvested RPSUs and to exercise any
stock options of the Corporation that remain unexercised at the time of such notice and Executive
waives any right to assert that any such conduct by the Corporation violates any federal or state
statute, case law or policy.
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(b) If the Corporation reasonably determines that the Executive has breached any provision
contained in this Article III, the Corporation shall have no further obligation to make any payment
or provide any benefit whatsoever to the Executive pursuant to this Agreement, and may also recover
from the Executive all such damages as it may be entitled to at law or in equity. In addition, the
Executive acknowledges that any such breach is likely to result in immediate and irreparable harm
to the Corporation for which money damages are likely to be inadequate. Accordingly, the Executive
consents to injunctive and other appropriate equitable relief upon the institution of proceedings
therefor by the Corporation in order to protect the Corporation’s rights hereunder. Such relief
may include, without limitation, an injunction to prevent: (i) the breach or continuation of
Executive’s breach; (ii) the Executive from disclosing any trade secrets or Confidential
Information (as defined in Section 3.2); (iii) any Competing Business from receiving from the
Executive or using any such trade secrets or Confidential Information; and/or (iv) any such
Competing Business from retaining or seeking to retain any employees of the Corporation.
3.6 The provisions of this Article III shall survive the termination of this Agreement and
Executive’s Term of employment.
ARTICLE IV
CHANGE IN CONTROL
4.1 Change in Control.
(a) Effect of a Change in Control. Notwithstanding anything contained herein to the
contrary, if the Executive’s employment is terminated within 12 months following a Change in
Control (as defined in Section 4.1(b) hereof) during the Term by the Corporation for any reason
other than Cause, then:
(i) Severance. The Corporation shall pay to the Executive, in lieu of any amounts
otherwise due him under Section 2.3(a) hereof, within 15 days of the Executive’s termination of
employment, a lump sum amount equal to two times the sum of: (A) the Executive’s Base Compensation,
as in effect immediately prior to such termination of employment; and (B) the bonus paid to the
Executive for the fiscal year prior to the fiscal year in which his employment is terminated.
(ii) Stock Awards. The Executive shall immediately become vested in any unvested
stock options granted to the Executive by the Corporation prior to the Change in Control and
Executive will have six (6) months from the date of termination under this circumstance to exercise
all vested options. Any RPSU awards which are unvested shall be deemed vested immediately prior to
such Change in Control.
(b) Definition. For purposes hereof, a “Change in Control” shall mean the occurrence
of any of the following: (i) the sale, lease, transfer, conveyance or other disposition, in one or
a series of related transactions, of all or substantially all of the assets of the Corporation to
any “person” or “group” (as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Securities
Exchange Act of 1934 (“Act”)) other than Permitted Holders; (ii) any person or group, other than
Permitted Holders, is or becomes the “beneficial owner” (as defined in Rules 13d-3
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and 13d-5 under the Act, except that a person shall be deemed to have “beneficial ownership”
of all shares that any such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more than 50 percent of
the total voting power of the voting stock of the Corporation, including by way of merger,
consolidation or otherwise; (iii) during any period of two consecutive years, Present and/or New
Directors cease for any reason to constitute a majority of the Board; or (iv) the Permitted
Holders’ beneficial ownership of the total voting power of the voting stock of the Corporation
falls below 30 percent and either Xxxxx Xxxxxx is not nominated for a position on the Board of
Directors, or he stands for election to the Board of Directors and is not elected. For purposes of
this Section 4.1(b), the following terms have the meanings indicated: “Permitted Holders” shall
mean, as of the date of determination: (A) any and all of Xxxxx Lauren, his spouse, his siblings
and their spouses, and descendants of them (whether natural or adopted) (collectively, the “Lauren
Group”); and (B) any trust established and maintained primarily for the benefit of any member of
the Lauren Group and any entity controlled by any member of the Lauren Group. “Present Directors”
shall mean individuals who at the beginning of any such two consecutive year period were members of
the Board. “New Directors” shall mean any directors whose election by the Board or whose
nomination for election by the shareholders of the Corporation was approved by a vote of a majority
of the directors of the Corporation who, at the time of such vote, were either Present Directors or
New Directors.
(c) Excise Tax Gross-Up. If the Executive becomes entitled to one or more payments
(with a “payment” including the vesting of restricted stock, a stock option, or other non-cash
benefit or property), whether pursuant to the terms of this Agreement or any other plan or
agreement with the Corporation or any affiliated company (collectively, “Change of Control
Payments”), which are or become subject to the tax (“Excise Tax”) imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”), the Corporation shall pay to the Executive
at the time specified below such amount (the “Gross-up Payment”) as may be necessary to place the
Executive in the same after-tax position as if no portion of the Change of Control Payments and any
amounts paid to the Executive pursuant to this paragraph 4.1(c) had been subject to the Excise Tax.
The Gross-up Payment shall include, without limitation, reimbursement for any penalties and
interest that may accrue in respect of such Excise Tax. For purposes of determining the amount of
the Gross-up Payment, the Executive shall be deemed: (A) to pay federal income taxes at the highest
marginal rate of federal income taxation for the year in which the Gross-up Payment is to be made;
and (B) to pay any applicable state and local income taxes at the highest marginal rate of taxation
for the calendar year in which the Gross-up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and local taxes if paid
in such year. If the Excise Tax is subsequently determined to be less than the amount taken into
account hereunder at the time the Gross-up Payment is made, the Executive shall repay to the
Corporation at the time that the amount of such reduction in Excise Tax is finally determined (but,
if previously paid to the taxing authorities, not prior to the time the amount of such reduction is
refunded to the Executive or otherwise realized as a benefit by the Executive) the portion of the
Gross-up Payment that would not have been paid if such Excise Tax had been used in initially
calculating the Gross-up Payment, plus interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder at the time the Gross-up Payment is made, the
Corporation shall make an additional Gross-up Payment in respect of such excess (plus any interest
and penalties
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payable with respect to such excess) at the time that the amount of such excess is finally
determined.
The Gross-up Payment provided for above shall be paid on the 30th day (or such
earlier date as the Excise Tax becomes due and payable to the taxing authorities) after it has been
determined that the Change of Control Payments (or any portion thereof) are subject to the Excise
Tax; provided, however, that if the amount of such Gross-up Payment or portion
thereof cannot be finally determined on or before such day, the Corporation shall pay to the
Executive on such day an estimate, as determined by counsel or auditors selected by the Corporation
and reasonably acceptable to the Executive, of the minimum amount of such payments. The
Corporation shall pay to the Executive the remainder of such payments (together with interest at
the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined. In the event that the amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the Corporation to the
Executive, payable on the fifth day after demand by the Corporation (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Code). The Corporation shall have the right to
control all proceedings with the Internal Revenue Service that may arise in connection with the
determination and assessment of any Excise Tax and, at its sole option, the Corporation may pursue
or forego any and all administrative appeals, proceedings, hearings, and conferences with any
taxing authority in respect of such Excise Tax (including any interest or penalties thereon);
provided, however, that the Corporation’s control over any such proceedings shall
be limited to issues with respect to which a Gross-up Payment would be payable hereunder, and the
Executive shall be entitled to settle or contest any other issue raised by the Internal Revenue
Service or any other taxing authority. The Executive shall cooperate with the Corporation in any
proceedings relating to the determination and assessment of any Excise Tax and shall not take any
position or action that would materially increase the amount of any Gross-up Payment hereunder.
ARTICLE V
MISCELLANEOUS
5.1 Notice. For the purposes of this Agreement, notices, demands and all other
communications provided for in the Agreement shall be in writing and shall be deemed to have been
duly given when delivered by hand or by facsimile or mailed by United States registered mail,
return receipt requested, postage prepaid, addressed as follows:
| If to the Executive: | Xxxxxxxx Xxxx | |||
| REDACTED | ||||
| REDACTED | ||||
| If to the Corporation: | Xxxx Xxxxx Lauren Corporation | |||
| 000 Xxxxxxx Xxxxxx | ||||
| Xxx Xxxx, Xxx Xxxx 00000 | ||||
| Attn: Xxxxx Xxxxx | ||||
| President & Chief Operating Officer | ||||
| Fax: (000) 000-0000 |
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or to such other address as any party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.
5.2 Modification or Waiver; Entire Agreement. No provision of this Agreement may be
modified or waived except in a document signed by the Executive and the Corporation. This
Agreement, along with any documents incorporated herein by reference, constitutes the entire
agreement between the parties regarding their employment relationship and supersedes all prior
agreements, promises, covenants, representations or warranties, including the Executive’s 2005
Employment Agreement with the Corporation. To the extent that this Agreement is in any way
inconsistent with any prior or contemporaneous stock award agreements between the parties, this
Agreement shall control. No agreements or representations, oral or otherwise, with respect to the
subject matter hereof have been made by either party that are not set forth expressly in this
Agreement. Any extensions or renewals of this Agreement must be in writing and must be agreed to
by both the Corporation and the Executive.
5.3 Governing Law. The validity, interpretation, construction, performance, and
enforcement of this Agreement shall be governed by the laws of the State of New York without
reference to New York’s choice of law rules. In the event of any dispute, the Executive agrees to
submit to the jurisdiction of any court sitting in New York State.
5.4 No Mitigation or Offset. In the event the Executive’s employment with the
Corporation terminates for any reason, the Executive shall not be obligated to seek other
employment following such termination and there shall be no offset of the payments or benefits set
forth herein.
5.5 Withholding. All payments required to be made by the Corporation hereunder to the
Executive or the Executive’s estate or beneficiaries shall be subject to the withholding of such
amounts as the Corporation may reasonably determine it should withhold pursuant to any applicable
law.
5.6 Attorney’s Fees. Each party shall bear its own attorney’s fees and costs incurred
in any action or dispute arising out of this Agreement and/or the employment relationship.
5.7 No Conflict. Executive represents and warrants that he is not party to any
agreement, contract, understanding, covenant, judgment or decree or under any obligation,
contractual or otherwise, in any way restricting or adversely affecting his ability to act for the
Corporation in all of the respects contemplated hereby.
5.8 Enforceability. Each of the covenants and agreements set forth in this Agreement
are separate and independent covenants, each of which has been separately bargained for and the
parties hereto intend that the provisions of each such covenant shall be enforced to the fullest
extent permissible. Should the whole or any part or provision of any such separate covenant be
held or declared invalid, such invalidity shall not in any way affect the validity of any other
such covenant or of any part or provision of the same covenant not also held or declared invalid.
If any covenant shall be found to be invalid but would be valid if some part thereof were deleted
or the period or area of application reduced, then such covenant shall apply
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with such minimum modification as may be necessary to make it valid and effective. The
failure of either party at any time to require performance by the other party of any provision
hereunder will in no way affect the right of that party thereafter to enforce the same, nor will it
affect any other party’s right to enforce the same, or to enforce any of the other provisions in
this Agreement; nor will the waiver by either party of the breach of any provision hereof be taken
or held to be a waiver of any prior or subsequent breach of such provision or as a waiver of the
provision itself.
5.9 Miscellaneous. No right or interest to, or in, any payments shall be assignable by
the Executive; provided, however, that this provision shall not preclude the
Executive from designating in writing one or more beneficiaries to receive any amount that may be
payable after the Executive’s death and shall not preclude the legal representative of the
Executive’s estate from assigning any right hereunder to the person or persons entitled thereto.
If the Executive should die while any amounts would still be payable to the Executive hereunder,
all such amounts shall be paid in accordance with the terms of this Agreement to the Executive’s
written designee or, if there be no such designee, to the Executive’s estate. This Agreement shall
be binding upon and shall inure to the benefit of, and shall be enforceable by, the Executive, the
Executive’s heirs and legal representatives and the Corporation and its successors. The section
headings shall not be taken into account for purposes of the construction of any provision of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date and year
first above written.
XXXX XXXXX LAUREN CORPORATION
/s/ Xxxxx Xxxxx
|
/s/ Xxxxxxxx Xxxx | |||||
By: Xxxxx Xxxxx
|
XXXXXXXX XXXX | |||||
Title: President & Chief Operating Officer
|
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SCHEDULE A
[Redacted]
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