Exhibit 10.1
April 21, 2004
Xx. Xxxxx Xxxxxxxx
00000 Xxxxxx Xxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
Dear Xxxxx,
This letter agreement is our offer to employ you as Group President,
Sportswear of The Warnaco Group, Inc. (together with its subsidiaries, divisions
and affiliates, the "Company"). Except as otherwise provided in this agreement,
the terms of your employment with the Company shall be governed by the Warnaco
Job Application and current Employee Handbook.
1. The Company agrees to employ you and you agree to serve as Group
President, Sportswear of the Company, and you shall have such
authorities, duties and responsibilities commensurate with that
position, including but not limited to operational responsibility for
the Company's Xxxxxx Xxxxx Men's and Women's Underwear, Chaps and
Xxxxxx Xxxxx Jeans units. In carrying out your duties, you shall
report to the Chief Executive Officer of the Company. You agree to
devote your full time and best efforts to the satisfactory performance
of such services and duties as the position requires, and you shall be
entitled to (i) serve on the boards of directors of trade
associations, charitable organizations and for-profit businesses,
subject to the reasonable approval of the Chief Executive Officer and
the Company's Board of Directors, (ii) engage in charitable activities
and community affairs and (iii) manage your personal investments and
affairs, provided that such activities do not interfere with the
proper performance of your duties and responsibilities for the
Company.
2. The term (the "Term") of your employment shall begin as of May 7, 2004
or such earlier date as we may actually agree to in writing (the
"Commencement Date") and end at the close of business on the third
anniversary of the Commencement Date; provided, however, that the Term
shall thereafter be automatically extended for additional one-year
periods unless either you or the Company gives the other written
notice at least 120 days prior to the then-scheduled expiration of the
Term that such party is electing not to so extend the Term.
Notwithstanding the foregoing, the Term shall end on the date on which
your employment is terminated by either party in accordance with the
provisions herein.
3. Your compensation shall be as follows:
a. During the Term, you shall be paid an annual base salary of
$700,000 ("Base Salary"), payable in semi-monthly payments of
$29,166.66. Your Base Salary may be reviewed annually by the
Compensation Committee of the Board of Directors in consultation
with the Chief Executive Officer and may be
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April 21, 2004
Page 2
increased based on such performance review within the Company's
discretion. You shall not be entitled to any additional
compensation for service as an officer or member of any board of
directors of any affiliate of the Company.
b. During the Term, commencing with the Company's fiscal year 2004,
you shall be eligible to receive an annual cash incentive award
under The Warnaco Group, Inc. Incentive Compensation Plan ("Bonus
Plan") with a target of 70% of Base Salary ("Target Bonus"). The
terms and conditions applicable to such annual cash incentive
award, including but not limited to the determination of
performance targets (following consultation with you), the
ultimate amount of such award, and the timing of payment of any
such award, shall be determined in accordance with the terms of
the Bonus Plan
i. For fiscal year 2004, you shall receive a minimum guaranteed
annual incentive award of $250,000. Any annual incentive
award, including any annual incentive award for fiscal year
2004, shall be payable when bonuses for the applicable
performance period are paid to other senior executives of
the Company.
c. Pursuant to the Warnaco 2003 Stock Incentive Plan (the
"Plan"), on the Commencement Date you will be granted
35,000 shares of restricted stock ("restricted stock") and
an option to purchase 210,000 shares of the Company's
outstanding common stock (the "option"), subject to the
terms and conditions of such awards as set out in the
Plan. You may also be eligible to receive future grants of
restricted stock and/or options or other forms of equity
compensation at the sole discretion of the Compensation
Committee of the Board of Directors.
i. Except as otherwise provided herein, the restricted stock as
described herein and the option as described herein shall
vest 33% on May 1, 2005 and shall vest 33% on each of May 1,
2006 and May 1, 2007, provided that you are employed by the
Company on such vesting date and have not given notice to
the Company that you are voluntarily resigning, without Good
Reason (as defined in Exhibit A), prior to such vesting
date. The form of the Restricted Stock Award Agreement for
the restricted stock is attached hereto as Exhibit B. The
form of the Non-Qualified Stock Option Agreement for the
option is attached hereto as Exhibit C.
ii. You shall be subject to the equity ownership, retention and
other requirements applicable to senior executives of the
Company. Except
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as otherwise expressly provided herein, all equity grants
shall be governed by the applicable plan and award
agreement, as in effect on the date hereof and as may be
hereafter changed in accordance with such plan and
agreement.
4. While you are employed by the Company, and subject, of course, to the
Company's right to amend, modify or terminate any benefit plan or
program, you shall be entitled to participate in all Company employee
benefit plans applicable to senior executives, including the following
benefits/perquisites:
a. Reimbursement of reasonable business expenses incurred in
carrying out your duties and responsibilities under this
agreement, subject to documentation in accordance with Company
policy. In addition, the Company will reimburse you for your
legal and other professional fees reasonably incurred in
connection with the negotiation and drafting of this agreement,
up to a maximum of $15,000.
b. Perquisites provided to other senior executives, including a
monthly car allowance of up to $1,500.
c. Vacation - four weeks paid vacation per calendar year.
During the Term, you shall also be entitled to Company-paid term life
insurance with a benefit equal to $2 million, provided the Company can
obtain such insurance at commercially reasonable premium levels. In
addition, during the Term, the Company shall provide for your use a
2-bedroom apartment (together with a furnishing allowance for such
apartment not to exceed $10,000) and shall reimburse you your costs
for one weekly round-trip travel between New York and Baltimore.
5. In the event your employment is terminated without Cause (as defined
in Exhibit A) by the Company (other than upon death or due to
Disability (as defined in Exhibit A)) or you resign for Good Reason
(as defined in Exhibit A), in each case during the Term, you shall be
entitled to:
a. Base Salary through the Date of Termination (as defined in
Exhibit A).
b. Payment of Base Salary as salary continuation for the remainder
of the Term, but in no event less than 12 months.
c. A pro-rata bonus for the fiscal year in which the Date of
Termination occurs, based on the Company's performance for such
year (determined by
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multiplying the amount you would have received had your
employment continued through the end of such fiscal year by a
fraction, the numerator of which is the number of days during
such fiscal year that you are employed by the Company and the
denominator of which is 365), payable when bonuses for such
fiscal year are paid to other Company executives; provided, that
if the Date of Termination occurs in fiscal 2004, such pro-rata
bonus shall be no less than $250,000.
d. Immediate vesting of that portion of the restricted stock
described in paragraph 3(c) above that would have vested if you
had been employed on the vesting date immediately following the
Date of Termination.
e. That portion of the option described in paragraph 3(c) above that
has vested as of the Date of Termination remaining exercisable
for two years following the Date of Termination.
f. Provided you make a timely election under COBRA, continued
participation on the same terms as immediately prior to the Date
of Termination (including costs of premiums) for you and your
eligible dependents in the Company's medical and dental plans in
which you and your 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 less than 18 months, or
(b) the date, or dates, you receive equivalent coverage under the
plans and programs of a subsequent employer.
g. Any amounts earned, accrued or owing to you but not yet paid.
h. As a condition to receiving severance compensation pursuant to
this paragraph 5, you hereby agree to execute, and not revoke, a
general release of claims in a form acceptable to the Company
(which release shall not require you to release claims to be
indemnified in accordance with applicable law or your rights to
post-termination benefits due or payable in accordance with the
terms of any Company employee welfare benefit plan). You shall be
afforded seven days after execution of such release to revoke it,
in which event you shall not be entitled to the benefits provided
herein other than as required by law.
6. In the event your employment is terminated upon death or due to
Disability during the Term, you (or your estate or legal
representative, as the case may be) shall be entitled to:
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April 21, 2004
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a. Base Salary through the Date of Termination.
b. A pro-rata bonus for the fiscal year in which the Date of
Termination occurs, based on the Company's performance for such
year (determined by multiplying the amount you would have
received had your employment continued through the end of such
fiscal year by a fraction, the numerator of which is the number
of days during such fiscal year that you are employed by the
Company and the denominator of which is 365), payable when
bonuses for such fiscal year are paid to other Company
executives; provided, that if the Date of Termination occurs in
fiscal 2004, such pro-rata bonus shall be no less than $250,000.
c. Immediate vesting of 50% of the restricted stock described in
paragraph 3(c) above that remains unvested as of the Date of
Termination and 100% of that portion of the option described in
paragraph 3(c) above that remains unvested as of the Date of
Termination, with any vested portion of such option remaining
exercisable for 12 months following the Date of Termination.
d. Any amounts earned, accrued or owing to you but not yet paid.
7. In the event the Company terminates your employment for Cause or you
voluntarily resign, you shall be entitled to Base Salary through the
Date of Termination. In the event of your termination for Cause, the
unvested restricted stock described in paragraph 3(c) above and that
portion of the option described in paragraph 3(c) above that remains
unvested as of the Date of Termination shall be forfeited. In the
event of your voluntary resignation, the unvested restricted stock
described in paragraph 3(c) above and that portion of the option
described in paragraph 3(c) above that remains unvested as of the date
on which you provide written notice to the Company that you are
voluntarily resigning shall be forfeited. A voluntary resignation
shall be effective on 60 days prior written notice by you to the
Company, subject to early termination by the Company, and, provided
that such notice is given, shall not be deemed to be a breach of this
agreement.
8. In the event your employment is terminated without Cause by the
Company (other than upon death or due to Disability) or you resign for
Good Reason, in both cases within one year following a Change in
Control (as defined on Exhibit A) (provided the Term is still in
effect or has expired during the one-year period), you shall be
entitled to:
a. Base Salary through the Date of Termination.
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April 21, 2004
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b. Payment of Base Salary for the remainder of the Term, but in no
event less than 18 months, payable in a lump sum promptly
following the Date of Termination.
c. A pro-rata bonus for the fiscal year in which the Date of
Termination occurs, based on the Company's performance for such
year (determined by multiplying the amount you would have
received had your employment continued through the end of such
fiscal year by a fraction, the numerator of which is the number
of days during such fiscal year that you are employed by the
Company and the denominator of which is 365), payable when
bonuses for such fiscal year are paid to other Company
executives.
d. Immediate vesting of 100% of any of the restricted stock
described in paragraph 3(c) above that remains unvested as of the
Date of Termination and 100% of that portion of the option
described in paragraph 3(c) above that remains unvested as of the
Date of Termination, with any vested portion of such option
remaining exercisable for six months following the Date of
Termination.
e. Provided you make a timely election under COBRA, continued
participation on the same terms as immediately prior to the Date
of Termination (including costs of premiums) for you and your
eligible dependents in the Company's medical and dental plans in
which you and your 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 less than 18 months, or
(b) the date, or dates, you receive equivalent coverage under the
plans and programs of a subsequent employer.
f. Any amounts earned, accrued or owing to you but not yet paid.
g. As a condition to receiving severance compensation pursuant to
this paragraph 8, you hereby agree to execute, and not revoke, a
general release of claims in a form acceptable to the Company
(which release shall not require you to release claims to be
indemnified in accordance with applicable law or your rights to
post-termination benefits due or payable in accordance with the
terms of any Company employee welfare benefit plan). You shall be
afforded seven days after execution of such release to revoke it,
in which event you shall not be entitled to the benefits provided
herein other than as required by law.
Xx. Xxxxx Xxxxxxxx
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9. In the event the Company provides written notice to you in accordance
with paragraph 2 above that the Term shall not renew and upon such
expiration of the Term the Company terminates your employment under
circumstances that during the Term would constitute a termination of
employment without Cause, you shall be entitled to:
a. Base Salary through the Date of Termination.
b. Payment of Base Salary as salary continuation for 12 months
following the Date of Termination.
c. That portion of the option described in paragraph 3(c) above that
has vested as of the Date of Termination remaining exercisable
for nine months following the Date of Termination.
d. Provided you make a timely election under COBRA, continued
participation on the same terms as immediately prior to the Date
of Termination (including costs of premiums) for you and your
eligible dependents in the Company's medical and dental plans in
which you and your eligible dependents were participating
immediately prior to the Date of Termination for 18 months
following the Date of Termination.
e. Any amounts earned, accrued or owing to you but not yet paid.
f. As a condition to receiving severance compensation pursuant to
this paragraph 9, you hereby agree to execute, and not revoke, a
general release of claims in a form acceptable to the Company
(which release shall not require you to release claims to be
indemnified in accordance with applicable law or your rights to
post-termination benefits due or payable in accordance with the
terms of any Company employee welfare benefit plan). You shall be
afforded seven days after execution of such release to revoke it,
in which event you shall not be entitled to the benefits provided
herein other than as required by law. .
10. Any amounts due to you under paragraphs 5, 6, 8 or 9 are in the nature
of severance payments considered to be reasonable by the Company and
are not in the nature of a penalty. Any payments provided pursuant to
paragraph 5, paragraph 8 or paragraph 9 shall be in lieu of any salary
continuation arrangements under any other severance program or plan of
the Company.
11. Notwithstanding any other provision of this Agreement, upon the
termination of your employment for any reason, unless otherwise
requested by the Board, you shall
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April 21, 2004
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immediately resign from all boards of directors of any affiliate of
the Company, if any, of which you may be a member, and as a trustee
of, or fiduciary to, any employee benefit plans of the Company or any
affiliate of the Company. You agree to execute any and all
documentation of such resignations upon request by the Company, but
you shall be treated for all purposes as having so resigned upon
termination of your employment, regardless of when or whether you
execute any such documentation.
12. You acknowledge that in your capacity in management you have had or
will have a great deal of exposure and access of the Company's trade
secrets and confidential and proprietary information. Therefore,
during the Term and thereafter (provided you are employed by the
Company) and for 12 months following the termination of your
employment with the Company, to protect the Company's trade secrets
and other confidential and proprietary information, you agree that you
will not, other than in the ordinary course of performing your duties
hereunder or as 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 of its affiliates is
engaged in business. You shall not be deemed to be in violation of
this paragraph 12 by reason of the fact that you own or acquire,
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 primarily engaged in apparel design or
apparel wholesaling.
13. Upon any termination of employment (whether during or after the
expiration of the Term), you agree to refrain from directly or
indirectly soliciting any employee of the Company or an affiliate of
the Company to terminate his/her employment (excluding, only, your
personal assistant) on your own behalf or on behalf of any other
person or entity or from directly or indirectly hiring any key
employee (e.g., any management-level employee or any designer) of the
Company for a period of eighteen (18) months thereafter. In addition,
you agree that for a period of eighteen (18) months following the
termination of your employment with the Company (whether during or
after the expiration of the Term), you will not, without the prior
written consent of the Company, directly or indirectly, solicit or
encourage any customer of the Company or any affiliate of the Company
to reduce or cease its business with the Company or any such affiliate
of the Company or otherwise interfere with the relationship of the
Company or any affiliate of the Company with its customers. You and
the Company each agree to refrain from making any statements or
comments of a defamatory or disparaging nature to third parties
regarding each other (including, in the case of the Company, an
affiliate of the Company or the Company's officers, directors,
personnel or products). You and the Company each understand that
either party should be
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entitled to respond truthfully and accurately to statements about such
party made publicly by you or the Company, as the case may be,
provided that such response is consistent with your or the Company's
obligations not to make any statements or comments of a defamatory or
disparaging nature as set forth herein above.
14. During the Term and thereafter, other than in the ordinary course of
performing your duties for the Company or as required in connection
with providing any cooperation to the Company pursuant to paragraph 20
below, you agree that you will 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 you acquire during the course of your employment,
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 you
to divulge, disclose or make accessible such information. The
foregoing shall not apply to information that (i) was known to the
public prior to its disclosure by you or (ii) becomes known to the
public through no wrongful disclosure by or act of you or any of your
representatives. In the event you are requested by subpoena, court
order, investigative demand, search warrant or other legal process to
disclose any information regarding the Company, you agree, 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 your making such disclosure and
you shall not disclose such information regarding the Company unless
and until the Company has expressly authorized you to do so in writing
or the Company has had a reasonable opportunity to object to such a
request or to litigate the matter (of which the Company agrees to keep
you reasonably informed) and has failed to do so.
15. You hereby sell, assign and transfer to the Company all of your right,
title and interest in and to all inventions, discoveries, improvements
and copyrightable subject matter (the "Rights") which during the
period of your employment are made or conceived by you, 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 you perform, or
information you receive regarding the business of the Company, while
employed by the Company. You shall fully disclose to the Company as
promptly as available all information known or possessed by you
concerning any Rights, and upon request by the Company and without any
further remuneration in any form to you by the Company, execute all
applications for patents and for copyright registration, assignments
thereof and other
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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.
16. You agree that at the time of the termination of employment (whether
during or after the expiration of the Term), whether at your instance
or the Company, and regardless of the reasons therefore, you 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 your
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 the Company's affiliates, including any and
all documents relating to the conduct of the business of the Company
or any of the Company's affiliates and any and all documents
containing confidential or proprietary information of the customers of
the Company or any of the Company's affiliates, except for (x) any
documents for which the Company's General Counsel has given written
consent to removal at the time of termination, (y) any documents on
your personal computer if you destroy such documents and give a
notarized written affidavit of such destruction and (z) any
information necessary for you to retain for tax purposes (provided you
maintain the confidentiality of such information in accordance with
paragraph 14 above).
17. Any failure by you to comply with the provisions of paragraphs 12, 13,
14, 15 or 16 shall relieve the Company of any of its obligations
pursuant to this agreement, including pursuant to paragraphs 5, 6, 8
and 9.
18. From and after the date hereof, should any disagreement, claim or
controversy arise between you and the Company with respect to this
agreement or your employment by the Company, the same may be enforced
at the option of either party by confidential, binding and final
arbitration in New York, New York before a single arbitrator in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association. With respect to any dispute regarding whether
Cause (as defined in Exhibit A) or Good Reason (as defined in Exhibit
A) exists as a basis for forfeiting your outstanding stock options or
restricted stock, the parties agree that any determination by the
committee administering the applicable plan that Cause or Good Reason
did or did not exist shall not be binding in the arbitrator(s). The
award of the arbitrator with respect to such disagreement, claim or
controversy shall be enforceable in any court of competent
jurisdiction and shall be binding upon the parties hereto. You consent
to the personal 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 proceedings for equitable relief. You further
agree not to interpose
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any objection or improper venue in any such proceeding or interpose
any defense that the Company has an adequate remedy at law or that the
injury suffered by the Company is not irreparable. You and the Company
agree that each party shall be responsible for its own costs and
expenses, including attorneys' fees, provided, however, that if you
substantially prevail with respect to all claims that are the subject
matter of the dispute, your costs, including reasonable attorneys'
fees, shall be borne by the Company.
19. You expressly agree and acknowledge that any breach or threatened
breach of any obligation set forth in paragraphs 12, 13, 14, 15 or 16
above will cause the Company irreparable harm for which there is no
adequate remedy at law, and as a result of this the Company shall be
entitled to seek the issuance by a court of competent jurisdiction of
an injunction, restraining order or other equitable relief in favor of
itself, without the necessity of posting a bond and without proving
actual damages, restraining you from committing or continuing to
commit any such violation.
20. Following the Date of Termination, upon reasonable request by the
Company, you 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 you were involved or had
knowledge during your employment with the Company, subject to your
reasonable personal and business schedules. The Company shall
reimburse you for all reasonable out-of-pocket costs, such as travel,
hotel, and meal expenses, and reasonable attorneys' fees, incurred by
you in providing any cooperation pursuant to this paragraph 20, as
well as a reasonable per diem amount for your time which shall be
based upon your Base Salary at the Date of Termination.
21. You represent and warrant that you have the free and unfettered right
to enter into this agreement and to perform your obligations under it
and that you know of no agreement between you and any other person,
firm or organization, or any law or regulation, that would be violated
by the performance of your obligations under this agreement. You agree
that you will not use or disclose any confidential or proprietary
information of any current or prior employer in the course of
performing your duties for the Company or any of its affiliates.
22. The invalidity or unenforceability of any particular provision or
provisions of this agreement (as determined by an arbitrator or a
court of competent jurisdiction) shall not affect the other provisions
hereof and this agreement shall be construed in all respects as if
such invalid or unenforceable provisions had been omitted.
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23. This agreement (including its Exhibits) and the documents referred to
herein constitute the full and complete understanding and agreement of
the parties, supersede all prior representations, understandings and
agreements as to your employment by the Company and cannot be amended,
changed, modified in any respect, without the written consent of the
parties, except that the Company reserves the right in its sole
discretion to make changes at any time to the other documents
referenced in this letter agreement. No waiver by either party of any
breach by the other party of any condition or provision contained in
this agreement shall be deemed to be a waiver of a similar or
dissimilar condition or provision.
24. This agreement shall be binding upon and shall inure to the benefit of
successors and assigns of the Company.
25. This agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to its provisions as
to choice of laws. The respective rights and obligations of the
parties hereunder, including without limitation paragraphs 12 through
16, shall survive any expiration of the Term, including expiration
thereof upon your termination of employment for whatever reason, to
the extent necessary to the intended preservation of such rights and
obligations.
26. Any notice given to either you or the Company under this agreement
shall be in writing and shall be deemed to have been given upon actual
receipt or refusal to accept receipt, with any such notice duly
addressed to you or the Company, as the case may be, at the address
indicated below or to such other address as such Party may
subsequently designate by written notice in accordance with this
paragraph 26: If to the Company: The Warnaco Group, Inc., 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: General Counsel; If to
you: at your home address as indicated on the Company's records.
27. The Company may withhold from any amounts payable under this agreement
such Federal, state, local or other taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
Your signature below will signify that you have read, and understand and
agree to, the terms and conditions contained in each item of the new-hire
paperwork.
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This agreement shall not be binding on the Company until you sign, date
and deliver an original of this agreement to Xxx X. Xxxxxxxx at the Company's
address set forth in paragraph 26 above and its effectiveness is contingent on
the circumstances set forth in the introductory paragraph of this agreement. If
the foregoing is agreeable to you, please sign both copies of this agreement and
return them to me. A fully executed original will be returned to you.
Very truly yours,
THE WARNACO GROUP, INC.
/s/ Xxx X. Xxxxxxxx
-------------------
Xxx X. Xxxxxxxx
Vice President, General Counsel & Secretary
Agreed to and accepted this
21st day of April, 2004
/s/ Xxxxx Xxxxxxxx
------------------
Xxxxx Xxxxxxxx
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EXHIBIT A
DEFINITIONS
"CAUSE" shall mean:
(i) willful misconduct by you which is injurious to the Company's
interests;
(ii) willful breach of duty by you in the course of your employment, which,
if curable, is not cured within 10 days after your receipt of written
notice from the Company;
(iii) willful failure by you after having been given written notice from the
Company to perform your duties other than a failure resulting from your
incapacity due to physical or mental illness; or
(iv) indictment of you for the commission of a felony, or your engagement in
other willful misconduct which is injurious to the business or
reputation of the Company.
For purposes of this definition of "Cause," no act or omission by you shall be
deemed to be "willful" if you had a reasonable good faith belief that such act
or failure to act was in the best interests of the Company. The determination to
terminate your employment for Cause shall be made by the Board of Directors of
the Company and prior to such determination you shall have the right to appear
(represented by counsel) before a committee designated by the Board.
"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), but excluding a person who owns more
than 5% of the outstanding shares of the Company as of the Commencement
Date, 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, provided that any sale or transfer of Voting Stock by
shareholders as of the Commencement Date shall not constitute a Change
in Control; or
(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).
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April 21, 2004
Page 15
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.
"DATE OF TERMINATION" shall mean:
(i) if your employment is terminated by the Company, the date specified in
the notice by the Company to you that your employment is so terminated;
(ii) if you voluntarily resign your employment, 60 days after receipt by the
Company of written notice that you are terminating your employment
(provided, that the Company may accelerate the Date of Termination to
an earlier date by providing you with written notice of such action,
or, alternatively, the Company may place you on paid leave (covering
only Base Salary) during such period);
(iii) if your employment is terminated by reason of death, the date of death;
or
(iv) if you resign your employment for Good Reason, 30 days after receipt by
the Company of timely written notice from you in accordance with
paragraph 26 of the letter agreement dated April __, 2004 between you
and the Company (the "letter agreement"), unless the Company cures the
event or events giving rise to Good Reason within 30 days after receipt
of such written notice.
"DISABILITY" shall mean your inability, due to physical or mental incapacity, to
substantially perform your duties and responsibilities for a period of
120 consecutive days as determined by a medical doctor selected by the
Company and reasonably acceptable to you.
"GOOD REASON" shall mean the occurrence of any of the following without your
consent:
(i) a material diminution in your authority, duties or responsibilities as
Group President - Sportswear of the Company;
(ii) a reduction in your Base Salary or Target Bonus;
(iii) a change in reporting structure so that you report to someone other
than the Chief Executive Officer of the Company;
(iv) the removal by the Company of you as Group President - Sportswear of
the Company;
Xx. Xxxxx Xxxxxxxx
April 21, 2004
Page 16
(v) the failure of a successor to all or substantially all of the assets of
the Company to assume the Company's obligations under the letter
agreement either in writing or as a matter of law; or
(vi) requiring you to be principally based at any office or location other
than Manhattan, New York or any location within a 45 mile radius of
Manhattan, New York.
Anything herein to the contrary notwithstanding, you shall not be
entitled to resign for Good Reason unless you give the Company written notice of
the event constituting "Good Reason" within 60 days of the occurrence of such
event and the Company fails to cure such event within 30 days after receipt of
such notice.
