Contract
Exhibit
10.39
Amendment
dated as of August 1, 2005 (this “Amendment”) to the Employment Agreement made
as of the 1st day of March 2004, by and between I.C. Xxxxxx & Company LP, a
Delaware limited partnership (“the Company”), and Xxxxx de la Rama, (the
“Executive”). Unless otherwise indicated, all capitalized terms used in this
Amendment shall have the meanings attributed thereto by the
Agreement.
WHEREAS,
the Executive is employed pursuant to the Agreement as the Company’s Vice
President of Merchandise Planning and Retail Development; and
WHEREAS,
the Company desires to modify the terms of the Executive’s employment and his
responsibilities under the Agreement in the manner hereinbelow provided;
and
WHEREAS,
the Executive is willing to accept such modifications,
NOW,
THEREFORE, in consideration of the foregoing and the mutual terms and provisions
hereinafter set forth, the parties agree as follows:
1. Amendment
of Section 1.
The
provisions of Section 1 of the Agreement are hereby deemed to have been amended,
with effect from and after December 6, 2004, the date on which the Board of
Directors of Xxxxxx (the “Board”) authorized such change (the “Board
Authorization Date”), to read, as follows:
“1. Employment. The
Company hereby employs the executive as Executive Vice President and Chief
Operating Officer. The Executive will report to the Chief Executive Officer
of
the Company’s parent, I.C. Xxxxxx & Company, Inc. (“Xxxxxx”).”
2. Amendment
of Section 3.
The
provisions of Section 3 of the Agreement are hereby deemed to have been amended
with effect from and after the Board Authorization Date, to read, as
follows:
“3. Base
Salary. The
Executive’s base salary during the Term shall be paid at a rate of $250,000 per
annum. The payment of the Executive’s base salary and all other payments made
and to be made to the Executive under this Agreement shall be made net of all
current and lawful withholdings and deductions, including those for federal,
state and local taxes.”
3. Amendment
of Section 4.
Section
4 of the Agreement is hereby deemed to have been amended, with effect from
and
after December 1, 2004, to read, as follows:
“4. Incentive
Compensation. In
addition to his base salary, the Executive shall be entitled to receive
incentive compensation calculated and paid, as follows:
(a) Initial
Term and all Renewal Terms.
The
Executive shall be eligible to receive the following bonuses with respect to
calendar years 2004 (to the extent provided in Section 4 of this Amendment),
2005, 2006 and each Renewal Term:
(i) In
the
event that the earnings before interest and taxes achieved by Xxxxxx during
any
of such years shall be:
1) not
less
than 95% of, and not more than 110% of, the “EBIT Target” specified by the
Company for such year, the Company shall pay the Executive a bonus of
$52,500;
2) not
less
than 111% of, and not more than 130% of, the “EBIT Target” specified by the
Company for such year, the Company shall pay the Executive a bonus of $70,000;
or
3) more
than
130% of the “EBIT Target” specified by the Company for such year, the Company
shall pay the Executive a bonus of $87,5000;
(ii) in
the
event that the increase in cash and cash equivalents reflected on the
consolidated statement of cash flows contained in Xxxxxx’ annual audited
financial statements for any of such years shall be:
1) not
less
than 95% of, and not more than 110% of, the “Cash Flow Target” specified by the
Company for such year, the Company shall pay the Executive a bonus of
$42,000;
2) not
less
than 111% of, and not more than 130% of, the “Cash Flow Target” specified by the
Company for such year, the Company shall pay the Executive a bonus of $56,000;
or
3) more
than
130% of the “Cash Flow Target” specified by the Company for such year, the
Company shall pay the Executive a bonus of $70,000; and
(iii) in
the
event that the number of turns of the Company’s inventory during any of such
years shall be:
1) not
less
than 95% of, and not more than 110% of, the “Inventory Turns Target” specified
by the Company for such year, the Company shall pay the Executive a bonus of
$10,500;
2) not
less
than 111% of, and not more than 130% of, the “Inventory Turns Target” specified
by the Company for such year, the Company shall pay the Executive a bonus of
$14,000; or
3) more
than
130% of the “Inventory Turns Target” specified by the Company for such year, the
Company shall pay the Executive a bonus of $17,500.
(b) Definitions.
For
purposes of this Agreement, the term:
(i) “EBIT
Target” shall mean the amount that the Company shall designate as the earnings
before interest and taxes that Xxxxxx must achieve in order for the Executive
to
earn the bonus described in Section 4 (a) (i) of this Agreement;
(i) “Cash
Flow Target” shall mean the amount that the Company shall designate as the cash
provided by operating activities that Xxxxxx must achieve in order for the
Executive to earn the bonus described in Section 4 (a) (ii) of this Agreement;
and
(ii) “Inventory
Turns Target” shall mean the number of turns of the Company’s inventory that the
Company must achieve, as designated by the Company, in order for the Executive
to earn the bonus described in Section 4 (a) (iii) of this
Agreement.
(c) The
EBIT
Target, Cash Flow Target and Inventory Turns Target shall (i) not be greater
than any of the EBIT Targets, Cash Flow Targets and Inventory Turns Targets
applicable to any other senior executive of the Company; (ii) be determined
by
the Compensation Committee of the Board after consultation with the Executive;
and (iii) be specified in writing by the Company not later than February 28,
2005 with respect to calendar year 2005, and not more than 60 days after the
first day of each other year during the Initial Term and each Renewal Term
with
respect to such year.
(d) Determination
of the achievement of:
(ii) the
EBIT
Target shall be made by adding the sum of the interest expense net of interest
income, and income tax expense (but not income tax benefit) reflected on the
consolidated statement of operations contained in Xxxxxx Financial Statements
for the year in question from the line item entitled Net income” on such
consolidated statement of operations;
(iii) the
Cash
Flow Target shall be made by reference to the line item entitled “cash provided
by operating activities” reflected on the consolidated statement of cash flows
contained in the Xxxxxx Financial Statements for the year in question;
and
(iv) the
Inventory Turns Target shall be made by reference to the quotient obtained
by
dividing:
1) the
cost
of goods sold reflected on the consolidated statement of operations contained
in
the Xxxxxx Financial Statements for the year in question by
2) the
quotient derived by dividing the sum of the beginning and ending inventories
for
the year in question, as determined by reference to the notes to the Xxxxxx
Financial Statements for such year, by the number 2.
(e) Each
of
the bonuses described in Sections 4(a) which shall be earned during any calendar
year or part thereof during the Term shall be paid not more than 10 days after
the date upon which Xxxxxx’ Annual Report on Form 10-K for the year in question
shall be filed with the SEC.”
4. Calculation
of 2004 Incentive Compensation.
(a) The
aggregate amount of any incentive compensation to be paid to the Executive
with
respect to 2004 shall be determined by calculating the amount of the incentive
compensation that would have been payable pursuant to Section 4 of the Agreement
as though (i) this Amendment had not been executed by the parties (the “Original
Amount”), and (ii) this Agreement, as amended by this Amendment, had been in
effect during all of 2004 (the “Amendment Amount”).
(b) The
aggregate amount of any incentive compensation to be paid to the Executive
with
respect to 2004 will be the sum derived by adding 11/12 of the Original Amount
to 1/12 of the Amendment Amount.
5. Amendment
of Section 10.
The
provisions of Section 10 of the Agreement are hereby deemed to have been amended
to read, as follows:
“10. Termination
of Employment by the Company Without Cause.
Notwithstanding the provisions of Section 2 of this Agreement, the Company
may
terminate the Executive’s employment as provided under this Agreement, at any
time, for reasons other than for Cause by notifying the Executive in writing
of
such termination. If the Executive’s employment is terminated pursuant to this
Section 10, the Company shall pay to the Executive, in accordance with the
normal payroll practices of the Company, if such termination occurs at any
time
during any Renewal Term, an amount equal to the Executive’s base salary for a
period of 12 months commencing on the Termination Date. Such payments shall
be
reduced by any compensation paid to the Executive during said 12 month period
with respect to other employment or consulting services he performs for other
persons or entities. In addition to the foregoing payments, the Executive’s
participation in all of the Company’s benefit plans, programs, arrangements and
practices, including all disability, medical, life insurance and similar
programs, but excluding the Option Plan and any pension, 401-K or similar
retirement income or profit sharing plans, shall continue for the 12 month
period during which he shall receive such payments.”
6. Amendment
of Section 11.
The
provisions of Section 11 of the Agreement are hereby deemed to have been amended
to read, as follows:
11. “Confidential
Information; Non-Competition; Non-Solicitation.
(a) The
Executive agrees that during the Term of this Agreement and during the one
year
period following the Termination Date, if this Agreement is terminated by the
Company for cause, or during any period when the Company shall make payments
to
the Executive pursuant to Section 10 of this Agreement, he will:
(i) not
disclose to any person or use the same in any way, other than in the discharge
of his duties under this Agreement in connection with the business of the
Company, any trade secrets or confidential or proprietary information of the
Company, including, without limitation, any information or knowledge relating
to
1) the business, operations or internal structure of the Company, 2) the clients
(or customers) or potential clients (or potential customers) of the Company,
3)
any method and/or procedure (such as records, programs, systems, correspondence,
or other documents), relating or pertaining to projects developed by the Company
or contemplated to be developed by the Company, or 4) the Company’s business,
which information or knowledge the Executive shall have obtained during the
term
of this Agreement, and which is otherwise of a secret or confidential nature;
(ii) not,
directly or indirectly, within the United States, whether as a partner,
proprietor, employee, consultant, agent or otherwise, participate or engage
in
any business that competes with, restricts or interferes with the business
of
the Company, including, without limitation, any business in the young men’s and
women’s contemporary sportswear and jeanswear industry;
(iii) not,
directly or indirectly (for his own account, or for the account of others),
urge
any current or potential client, customer, supplier or contractor of the Company
to discontinue business, in whole or in part, or not to do business, with the
Company or otherwise interfere with the Company’s relationship or potential
relationship with any parties;
(iv) refrain
from soliciting or recruiting any employee who was employed by the Company
as of
the Termination Date to leave his or her employment with the
Company.
(b) The
Executive expressly acknowledges and agrees that, upon leaving the employ of
the
Company for any reason whatsoever, the Executive shall not take with him,
without prior written consent of the Company, any documents, forms or other
reproductions of any data or any information relating to or pertaining to the
Company, any clients (or customers) or potential clients (or potential
customers) of the Company, or any other confidential information or trade
secrets and will promptly return any such materials already in his possession
to
the Company.
(c) The
Executive further expressly acknowledges and agrees that (i) the restrictions
set forth in this Section 11 are reasonable in terms of scope, duration,
geographic area and otherwise; (ii) the protections afforded to the Company
hereunder are necessary to protect its legitimate business interests; and (iii)
the agreement to observe such restrictions forms a material part of the
consideration of this Agreement and the Executive’s employment by the
Company.
(d) In
the
event that the Executive violates any of the provisions of Section 11(a) hereof,
the Company’s obligation to pay any sums to the Executive pursuant to Section 10
or 13 hereof, or otherwise, and the Executive’s entitlement to exercise any
options granted to him under the Option Plan, shall thereupon be
terminated.
(e) The
provisions of this Section 11 shall survive the termination of this
Agreement.
7. New
Section 13.
The
Agreement is hereby deemed to have been amended to add the following as Section
13 thereof:
“13. Change
of Control.
(a) Anything
elsewhere contained in this Agreement to the contrary notwithstanding, if
Executive’s employment is terminated:
(i) other
than for Cause by the Company within 90 days prior to a “Change of Control” (as
defined herein), or
(ii) other
than for Cause by the Company (or its successor corporation) at any time after
a
Change of Control, or
(iii) as
a
result of Executive’s resignation within 60 days following a Change of Control,
Executive
shall receive, in lieu of any payments that he might otherwise be entitled
to
receive pursuant to Section 10 of this Agreement, an amount equal to the
Executive’s base salary for a period of 12 months commencing on the Termination
Date, as the case may be. All of such payments shall be made in accordance
with
the normal payroll practices of the Company then in effect.
(b) For
purposes of this Agreement, a “Change of Control” shall occur if:
(i) any
“Person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended), other than François Girbaud, Marithé
Bachellerie and/or any Person directly or indirectly controlled by either or
both of them, is or becomes the “beneficial owner” (as defined in Rule 13d-3
under said Act), directly or indirectly, of securities of Xxxxxx representing
50% or more of the total voting power represented by Xxxxxx’ then outstanding
voting securities;
(ii) any
merger or consolidation of Xxxxxx with any other Person that has been approved
by the stockholders of Xxxxxx, other than a merger or consolidation which would
result in the voting securities of Xxxxxx outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving Person) more than fifty percent (50%)
of
the total voting power represented by the voting securities of Xxxxxx or such
surviving Person outstanding immediately after such merger or consolidation,
or
the stockholders of Xxxxxx approve a plan of complete liquidation of Xxxxxx;
or
(iii) any
sale,
merger, dissolution or other disposition of the Company; or
(iv) any
sale
or other disposition, in one transaction or a series of related transactions,
of
all or substantially all the Company’s assets; or
(v) a
change
in the composition of the Board occurring within a two-year period, as a result
of which fewer than a majority of the directors are Incumbent Directors.
“Incumbent Directors” will mean directors who 1) are directors of Xxxxxx as of
the Effective Date, or 2) are elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the Incumbent Directors
at
the time of such election or nomination, or 3) are elected by Xxxxxx’
stockholders after nomination by a) a majority of the Incumbent Directors at
the
time of such election, or b) a committee of the Board at least a majority of
which shall be Incumbent Directors.”
8. New
Section 14.
The
Agreement is hereby deemed to have been amended to add the following as Section
14 thereof:
“14. Additional
Option Plan Option.
On
February 10, 2005 (the “New Option Grant Date”), the Compensation Committee of
the Board approved the grant to the Executive of a non-qualified stock option
to
purchase 75,000 shares of Common Stock (the “New Option”) pursuant to the Option
Plan. The New Option shall be granted under, and shall be subject to all of
the
terms and conditions of, the Option Plan. The New Option shall be exercisable
(a) for a period of ten (10) years commencing on the New Option Grant Date
(the
“New Option Term”), but only if the Executive is an active employee of he
Company on each date when he exercises the New Option; and (b) at the price
per
share which must be applied to all non-qualified stock options granted under
the
Option Plan on the New Option Grant Date. The Executive’s right to purchase
Common Stock pursuant to the New Option shall vest ratably on the first, second
and third anniversaries of the New Option Grant Date, provided that he shall
be
an active employee of the Company on each of such dates.”
9. Continuation
of Effectiveness of the Agreement.
The
Agreement, as amended by this Amendment, shall continue in full force and
effect.
IN
WITNESS WHEREOF, the parties have executed this Amendment as of the date first
above written.
I.C.
Xxxxxx & Company, L.P.
By:
I.C.
Xxxxxx & Company, Inc.,
General
Partner
By: /s/
Xxxxx X Xxxxx
Xxxxx
X.
Xxxxx, Chief Executive officer
