EMPLOYMENT AGREEMENT
Exhibit 10.67
This AGREEMENT (“Agreement”) is made and entered into as of December 3, 2008 (the “Effective
Date”) by and between WARNACO INC., a Delaware corporation (together with its successors and
assigns, the “Company”), and XXXXXX X. XXXXX (the “Executive”).
W I T N E S S E T H :
WHEREAS, the Company desires to employ the Executive and to enter into an agreement embodying
the terms of such employment and the Executive desires to enter into this Agreement and to accept
such employment, subject to the terms and provisions of this Agreement; and
WHEREAS, this Agreement supersedes in its entirety the Executive’s current
employment agreement, dated as of October 5, 2004.
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 Warnaco Group, Inc.
(c) “Cause” shall mean:
(i) willful misconduct by the Executive which causes material
harm to the interests of the Company or any of its Affiliates;
(ii) willful and material breach of duty by the Executive in the
course of her 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 her 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 crime involving the business of the Company or any
of its Affiliates which, in the case of such crime involving the
business of the Company or any of its Affiliates, is injurious to such
business; or
(v) failure of the Executive to give 45 days prior written notice
of a voluntary resignation (other than for Good Reason or Disability).
(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, as amended) or group of persons
acting jointly or in concert, but excluding a person who owns more than 5% of
the outstanding shares of The Warnaco Group, Inc. 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 Warnaco
Group, Inc.;
(ii) all or substantially all of the assets of The Warnaco Group,
Inc. are disposed of pursuant to a merger, consolidation or other transaction
(unless the shareholders of The Warnaco Group, Inc. 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 Warnaco Group, Inc., all of the Voting Stock or other ownership
interests of the entity or entities, if any, that succeed to the business of
The Warnaco Group, Inc.); or
(iii) approval by the shareholders of The Warnaco Group, Inc. of a
complete liquidation or dissolution of all or substantially all of the assets
of The Warnaco Group, Inc.
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 Warnaco Group, Inc.
(e) “Date of Termination” shall mean:
(i) if the Executive’s employment is terminated by the
Company, the date specified in the notice by the Company to the Executive
that her employment is so terminated;
(ii) if the Executive voluntarily resigns her employment, 45 days
after receipt by the Company of written notice from the Executive that the
Executive is terminating her employment or, if the Company shortens the
required notice period in accordance with Section 5(e), the date of
termination specified in such notice;
(iii) if the Executive’s employment is terminated by reason of death,
the date of death;
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(iv) if the Executive’s employment is terminated for Disability, 30
days after written notice is given as specified in Section 1(f) below; or
(v) if the Executive resigns her 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 her duties and responsibilities for a period of 120 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 her employment gives written notice to the other Party in accordance with Section
13 below.
(g) “Good Reason” shall mean the occurrence of any of the following without the Executive’s
prior consent:
(i) a reduction in (A) Base Salary or (B) Target Bonus
opportunity as a percentage of Base Salary;
(ii) requiring the Executive to be principally based at any office or
location more than 50 miles from her current place of employment; or
(iii) 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 in writing or as a matter of law.
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 60 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 voluntary resignation by the Executive) through the Date of Termination.
(i) “Separation From Service” shall mean a termination of the Executive’s employment in
a manner consistent with Final Treasury Regulations 1.409A-1(h).
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2.
Position; Term.
During the Term, the Executive shall be employed by the Company as President, Xxxxxx Xxxxx
Underwear, U.S. & Core Brands, or in such other position(s) of an executive nature as the
Company’s Chief Executive Officer may from time to time assign to the Executive. The Executive
shall perform such duties and responsibilities as determined by the Company’s Chief Executive
Officer and the Executive shall devote her full business time and attention to the satisfactory
performance of such duties. The term of the Executive’s employment hereunder began on September 9,
2008 (the “Commencement Date”) and shall end at the close of business on the second anniversary of
the Effective Date; provided, however, that the Term shall thereafter be automatically extended for
additional one-year periods, unless either the Company or the Executive gives the other written
notice at least 90 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. Compensation.
(a) Base Salary. During the Term, the Executive shall be paid an annualized Base
Salary of $550,000 (“Base Salary”), payable in accordance with the regular payroll practices of the
Company. 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 Company, the term “Base Salary” as used in this Agreement shall thereafter refer to the
increased amount.
(b) Annual Incentive Awards. During the Term (including for fiscal year 2008 and
thereafter), 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 Warnaco
Group, Inc.’s Incentive Compensation Plan, as amended (or such other annual incentive plan as may
be approved by its shareholders), in effect for the applicable fiscal year (“Bonus Plan”). During
the Term, the Executive’s annual incentive award for fiscal year 2008 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. Any bonus shall, in all events, be 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, but in all events no earlier than January 1st and no later
than March 15th of the fiscal year following the fiscal year for which the Annual Bonus
has been earned. After any increase in the Executive’s target annual bonus opportunity as a
percentage of Base Salary as approved by the Company, the term “Target Bonus” as used in this
Agreement shall thereafter refer to the increased target opportunity.
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(c) Long-Term Incentive Awards. Subject to Section 5 hereof, the Executive was granted
the following equity awards on September 9, 2008: 4,100 shares of restricted stock (“Restricted
Stock”) and an option to purchase 10,000 shares of the common stock of The Warnaco Group, Inc.
(“Option”) in accordance with the applicable equity plan. The Restricted Stock xxxx xxxxx vest on
the third anniversary of the Commencement Date and the Option shall vest (and become exercisable)
in three equal annual installments on the first, second and third
anniversaries of the Commencement Date, provided in both cases that the Executive is employed by
the Company through such applicable vesting date and has not given notice to the Company that the
Executive is voluntarily resigning without Good Reason prior to such applicable vesting date.
Thereafter, commencing in fiscal year 2009 and provided the Term is in effect and the Executive
continues to be employed by the Company, the Executive shall be eligible to participate in The
Warnaco Group, Inc.’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 its shareholders from time to time; provided, that, prior to such time, the
Compensation Committee of the Board may, in its sole discretion, grant to the Executive one or more
equity awards based on the performance of the Executive or the Executive’s business unit, on such
terms and conditions as it shall determine in its sole discretion. 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.
4. Employee Benefits.
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 generally made available to the Company’s employees 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 shall be entitled to four weeks paid vacation per calendar
year, pro-rated for any partial year of employment. Notwithstanding anything elsewhere to the
contrary, except to the extent any reimbursement, payment or entitlement pursuant to this Section 4
does not constitute a “deferral of compensation” within the meaning of Section 409A, (i) the
amount of expenses eligible for reimbursement or the provision of any in-kind benefit (as defined
in Section 409A) to the Executive during any calendar year will not affect the amount of expenses
eligible for reimbursement or provided as in-kind benefits to the Executive in any other calendar
year, (ii) the reimbursements for expenses for which the Executive is entitled shall be made on or
before the last day of the calendar year following the calendar year in which the applicable
expense is incurred and (iii) the right to payment or reimbursement or in-kind benefits may not be
liquidated or exchanged for any other benefit.
5. 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 or Resignation for Good Reason by the
Executive. In the event that during the Term the Executive’s employment is terminated without
Cause by the Company (other than due to Disability) or the Executive resigns for Good Reason and
Section 5(d) below does not apply, subject to Section 14(c) hereof, the Executive shall be entitled
to:
(i) payment of Base Salary through the Date of Termination, payable
on the first regularly scheduled payroll date following the Date of
Termination;
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(ii) payment of an amount equal to one times Base Salary,
payable in a cash lump sum to you as soon as practicable following the
Date of Termination (but in no event later than 60 days following such
date);
(iii) with respect to any stock options granted on or after the
Effective Date and 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;
(iv) continued participation for the Executive and her eligible
dependents in the Company’s medical and dental plans in which she and her
eligible dependents were participating immediately prior to the Date of
Termination until the earlier of (a) 12 months following the Date of
Termination, and (b) the date, or dates, the Executive receives coverage under
the plans or programs of a subsequent employer; and
(v) any amount due the Executive as of the Date of Termination that
remains unpaid by the Company (without duplication of any payment or
entitlement hereunder), payable on the first regularly scheduled payroll date
following the Date of Termination or, if later, in accordance with the
applicable plan or policy.
(b) 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, subject to Section
14(c) hereof, the Executive (or her estate or legal representative, as the case may be) shall be
entitled to:
(i) payment of Base Salary through the Date of Termination,
payable on the first regularly scheduled payroll date following the Date of
Termination;
(ii) a pro-rata annual bonus determined by multiplying the amount of
the annual bonus the Executive would have received had her 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 (but in no event earlier than January 1st or
later than March 15th of the fiscal year following the fiscal year
in which the Date of Termination occurs);
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(iii) immediate vesting as of the Date of Termination of 50% of any
restricted stock that remains unvested as of the Date of Termination; and
(iv) any amount due the Executive as of the Date of Termination that
remains unpaid by the Company (without duplication of any payment or
entitlement hereunder), payable on the first regularly scheduled payroll date
following the Date of Termination or, if later, in accordance with the
applicable plan or policy.
(c) 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)(ii), the Executive shall be
entitled to her Base Salary and employee benefits through the Date of Termination. A voluntary
resignation by the Executive of her employment shall be effective upon 45 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.
(d) Termination without Cause by the Company or Resignation for Good Reason by the
Executive Upon or Following a Change in Control. In the event that the Executive’s employment
is terminated without Cause by the Company (other than due to Disability) or the Executive resigns
for Good Reason, in both cases 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), subject to Section 14(c)
hereof, the Executive shall be entitled to:
(i) payment of Base Salary through the Date of Termination, payable
on the first regularly scheduled payroll date following the Date of
Termination;
(ii) an amount equal to 1.5 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 the Date of Termination);
(iii) 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 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 the Date of Termination);
(iv) immediate vesting as of the Date of Termination of all
outstanding equity awards, with any stock options granted on or after the
Effective Date remaining exercisable for 12 months following the Date of
Termination or the remainder of the option term, if shorter;
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(v) continued participation for the Executive and her eligible
dependents in the Company’s welfare benefit plans in which she and her
eligible dependents were participating immediately prior to the Date of
Termination until the earlier of (a) 18 months following the Date of
Termination, and (b) the date, or dates, the Executive receives
substantially equivalent coverage under the plans or programs of a
subsequent employer; and
(vi) any amount due the Executive as of the Date of Termination that
remains unpaid by the Company (without duplication of any payment or
entitlement hereunder), payable on the first regularly scheduled payroll date
following the Date of Termination or, if later, in accordance with the
applicable plan or policy.
(e) Obligations
During Notice Period. In the event that the Executive voluntarily
resigns her employment (other than for Good Reason), the Executive shall continue to be an employee
of the Company during the Notice Period. As such, her 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 her 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 her fiduciary
duties and other obligations as an employee and her commitments pursuant to Sections 6, 7, 8 and 9
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 her Base Salary through the end of the original Notice Period.
(f) Termination of the Executive’s Employment by the Company Upon or After 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, or at any time after, 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 Termination without Cause under Section 5(a) hereof;
provided that if such notice of non-renewal of the Term and such termination both occur on or
within one year following a Change in Control, then the Executive shall be entitled to the
payments, benefits and entitlements under Section 5(d) hereof.
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(g) Exclusivity of Benefits; Releases of Claims. Any payments provided pursuant to
Section 5(a), Section 5(d) or Section 5(f) above shall be in lieu of any salary continuation
arrangements under any other severance program of the Company or any Affiliate and, in all events,
the Executive shall not be entitled to duplication of any benefit or entitlement (whether pursuant
to this Agreement, any other plan, policy, arrangement of, or other agreement with, the Company or
any Affiliate or pursuant to law), 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 6, 7, 8 and 9 of this Agreement.
As a condition of receiving the severance and benefits pursuant to Section 5(a), Section 5(d) or
Section 5(f), as the case may be, the Executive shall be required to execute and deliver and not
revoke a general release of claims in a form acceptable to the Company, which release shall be
delivered by the Executive to the Company no later than 60 days following the Date of Termination.
The Executive shall be afforded seven days after execution of such release to revoke it, in which
event the Executive shall not be entitled to the payments, rights or other entitlements hereunder
other than as required by applicable law.
(h) Nature of Payments; No Mitigation. Any amounts due under this Section 5 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 her 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 5 (including, without limitation, Section 5(g)
hereof), there shall be no offset against amounts due to her on account of any remuneration or
benefits provided by any subsequent employment she may obtain.
(i) 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 Company, the Executive shall immediately
resign, if applicable, from all boards of directors of the Company and of any Affiliate of the
Company of which she 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 she shall be treated for all
purposes as having so resigned upon termination of her employment or commencement of the Notice
Period, as the case may be, regardless of when or whether she executes any such documentation.
(j) Section 409A. Notwithstanding anything to the contrary in this Agreement or
elsewhere, if the Executive is a “specified employee” as determined pursuant to Section 409A as of
the date of the Separation From Service and if any payment, benefit or entitlement provided for in
this Agreement or otherwise both (x) constitutes a “deferral of compensation” within the meaning of
Section 409A and (y) cannot be paid or provided in a manner otherwise provided herein or otherwise
without subjecting the Executive to additional tax, interest or penalties under Section 409A, then
any such payment, benefit or entitlement that is payable during the first six months following the
Executive’s Separation From Service shall be paid or provided to the Executive in a cash lump-sum
on the earlier of the Executive’s death or the first business day of the seventh calendar month
following the month in which the Executive’s Separation From Service occurs. In addition, any
payment, benefit or entitlement due upon a termination of the Executive’s employment that
represents a “deferral of compensation” within the meaning of Section 409A shall only be paid or
provided to Executive upon a Separation From Service, in which case any reference to “Date of
Termination” in connection with such payment, benefit or entitlement shall be deemed to be a
reference to “Separation From Service”, and the actual payment date within the time specified in
the applicable provision of Section 5 shall be within the Company’s sole discretion.
Notwithstanding anything to
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the contrary in this Section 5 or otherwise, any payment or benefit
under this Section 5 or otherwise which is exempt from Section 409A pursuant to Final Treasury
Regulation 1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to the Executive only to the
extent the expenses are not incurred or the benefits are not provided beyond the last day of the
second taxable year of the Executive following the taxable year of the Executive in which the
Separation From Service occurs; and provided further that the Company reimburses such expenses no
later than the last day of the third taxable year following the taxable year of the Executive in
which the Separation From Service occurs. Finally, to the extent that the provision of any benefit
pursuant to Section 5(a)(iv) or Section 5(d)(v) hereof is taxable to the Executive, any such
reimbursement shall be paid to the Executive on or before the last day of the Executive’s taxable
year following the taxable year in which the expense is incurred and such reimbursement shall not
be subject to liquidation or exchange for any other benefit.
6. Protection of Confidential Information and Company Property.
(a) During the Term and thereafter, other than in the ordinary course of performing the
Executive’s duties for the Company or as required in connection with providing any cooperation to
the Company pursuant to Section 9 below, the Executive agrees that the Executive 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 the Executive acquires during the course of the Executive’s 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 the Executive 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 the Executive’s
right, title and interest in and to all inventions, discoveries, improvements and copyrightable
subject matter (the “Rights”) which during the period of the Executive’s employment are made or
conceived by the Executive, 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 the Executive performs, or information the
Executive receives regarding 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 the Executive concerning any Rights, and upon request by the Company and without any
further remuneration in any form to
the Executive 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.
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(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, the
Executive 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 the Executive’s
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 the Executive’s tax purposes (provided the Executive
maintains the confidentiality of such information in accordance with Section 6(a) above).
7. Additional Covenants.
(a) The Executive acknowledges that in the Executive’s capacity in management the
Executive has had or will have a great deal of exposure and access to the trade secrets of the
Company or its Affiliates and other Confidential Information. Therefore, to protect such trade
secrets and other Confidential Information, the Executive agrees as follows:
(i) during the Executive’s employment with the Company or any
Affiliate, including during any Notice Period (whether such employment is
during the Term or thereafter) and, if the Executive receives severance
pursuant to Sections 5(a), 5(d) or 5(f) for 12 months following termination of
such employment (whether or not the Term is in effect), the Executive shall
not, other than in the ordinary course of performing the Executive’s 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. The Executive shall not be deemed
to be in violation of this Section 7(a) by reason of the fact that the
Executive 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 of its Affiliates is conducting at the time of
the alleged violation; and
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(ii) during the Executive’s employment with the Company or any
Affiliate and for 12 months following termination of such employment for any
reason (whether during the Term or thereafter), including, without limitation,
during any Notice Period, the Executive 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 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.
(b) The Executive agrees that during the Executive’s 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), including, without limitation, during any Notice Period, the Executive
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.
(c) 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.
8. Injunctive and Other Relief.
(a) The Executive acknowledges that the restrictions and commitments set forth in
Sections 6, 7 and 9 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 6, 7 and 9 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 6, 7 or 9 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.
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(b) If any restriction set forth in Section 6, 7 or 9 of this Agreement is found by any
arbitrator or 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 6, 7 or 9 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.
9. 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 the Executive was involved or had knowledge during the Executive’s
employment with the Company, subject to the Executive’s 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 9; provided such expenses shall be paid to the Executive as
soon as practicable but in no event later than the end of the calendar year following the calendar
year in which the expenses are incurred, subject in all cases to the Executive providing
appropriate documentation to the Company. The Company shall also pay the Executive 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, with
such per diem paid to the Executive in the calendar month following the month in which she provides
such assistance. Any reimbursement or payment under this Section 9 shall not affect the amount of
the reimbursement or payment to the Executive in any other taxable year. The right to payment or
reimbursement pursuant to this Section 9 shall not be liquidated or exchanged for any other
benefit.
10. Tax Matters.
(a) If any amount, entitlement, or benefit paid or payable to the Executive or provided
for her benefit under this Agreement and under any other agreement, plan or program of the Company
or any Affiliate (such payments, entitlements and benefits referred to as a “Payment”) is subject
to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended from
time to time (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”). The Company shall reduce or eliminate the Payments by first reducing or
eliminating the payments or benefits payable in cash and then by reducing or eliminating the
non-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).
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(b) All calculations under this Section 10 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 she is not
required to report any Excise Tax on her 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 within 20 days following the determination
of such Excess Payment. 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.
11. Representations.
The Executive represents and warrants that she has the free and unfettered right to enter
into this Agreement and to perform her obligations under it and that she knows of no agreement
between her and any other person, firm or organization, or any law or regulation, that would be
violated by the performance of her obligations under this Agreement. The Executive agrees that
she will not use or disclose any confidential or proprietary information of any prior employer in
the course of performing her duties for the Company or any of its Affiliates.
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12. Resolution of Disputes.
Except as otherwise provided in Section 8 above, any controversy, dispute or claim arising
under or relating to this Agreement, the Executive’s employment with the Company or any Affiliate
or the termination thereof shall, at the election of the Executive or the Company (unless otherwise
provided in an applicable Company plan, program or agreement), be resolved by confidential, binding
and final arbitration, to be held in the borough of Manhattan in New York City in accordance with
the rules and procedures of the Commercial Arbitration Rules of the American Arbitration
Association. Judgment upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof and shall be binding upon the Parties. The Executive consents 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 proceedings hereunder, including,
without limitation, any proceeding for equitable relief. The Executive 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, and neither Party shall be liable for
punitive or exemplary damages.
13. Notices.
Any notice given to a Party shall be in writing and shall be deemed to have been given (i)
when delivered personally, (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,
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 13:
If to the Company:
|
Warnaco 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. |
14. Miscellaneous Provisions.
(a) 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; provided, however, that
Federal law shall apply to the interpretation or enforcement of the arbitration provisions of
Section 12 hereof. 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.
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(b) 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 (including the employment agreement between the Parties
dates as of October 5, 2004 but not including any equity awards or related equity agreements that
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. 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. The
respective rights and obligations of the Parties hereunder, including, without limitation, Section
6 (protection of confidential information and company property), Section 7 (additional covenants),
Section 8 (injunctive and other relief), Section 9 (cooperation) and Section 12 (resolution of
disputes) 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.
(c) The Company may withhold from any amounts, payments or benefits under this Agreement such
Federal, state, local or other taxes as shall be required to be withheld pursuant to any applicable
law or regulation.
(d) 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. No rights or obligations
of the Executive under this Agreement may be assigned or transferred by the Executive other than
her rights to compensation and benefits, which may be transferred only by will, operation of law or
in accordance with any applicable Company plan, program or agreement.
(e) In the event that any provision or portion of this Agreement shall be determined to be
invalid or unenforceable by an arbitrator or 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.
(f) 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.
(g) This Agreement may be executed in two or more counterparts.
[Signatures on next page.]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written
above.
| WARNACO INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||||
| Title: Chief Executive Officer | ||||||
| THE EXECUTIVE | ||||||
| /s/ Xxxxxx X. Xxxxx | ||||||
| Xxxxxx X. Xxxxx | ||||||
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