EXHIBIT 10.23
AMENDMENT TO
EMPLOYMENT AGREEMENT
AMENDMENT, effective as of the 30th day of November, 2000, to the
Employment Agreement dated as of July 25, 1997 among Xxxxx Karan International
Inc. (the "Company"), a Delaware corporation, The Xxxxx Karan Company ("DKCo."),
a New York partnership and Xxxx X. Idol ("Executive").
W I T N E S S E T H:
WHEREAS, the Company, DKCo. and the Executive have previously entered into
the Employment Agreement;
WHEREAS, the Company has consulted with and retained a compensation
consultant to review the payments and benefits payable to the Executive under
the Employment Agreement upon the occurrence of a change in control or ownership
of the Company;
WHEREAS, the compensation consultant concurred with the Company that
certain changes to the Employment Agreement are appropriate and reasonable in
light of competitive compensation practices; and
WHEREAS, the Company, DKCo. and the Executive desire to amend the
Employment Agreement.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows:
1. Section 3(g) of the Employment Agreement is hereby amended, effective
as of April 1, 2000, by adding the following language at the end thereof:
"Notwithstanding the foregoing, the Company (i) shall be relieved of
the obligation under subsection (i)(C) to recommend to the Committee
that the Executive be granted on or about April 1, 2000 and 2001
Options to purchase 100,000 shares of common stock of the Company
and (ii) undertakes to recommend to the Committee at the applicable
time that the Executive be awarded on or about April 1, 2000 and
April 1, 2001 shares of restricted common stock under the Plan
intended to have the same economic value on a Black-Scholes basis as
the Options that would have been granted pursuant to subsection
(i)(C), as determined by the Committee in its sole discretion, but
in no event more than 62,000 shares of restricted common stock
annually. Shares of restricted stock granted pursuant to this
Section 3(g) shall vest at the end of five
(5) years from the date of grant provided the Executive is
continuously employed by the DK Companies or earlier, in 20%
increments, if the common stock attains price levels specified by
the Committee in its sole discretion at the time of the grant. The
measurement of "attaining" shall be determined on the same basis as
the restricted stock grants being made on or after April 1, 2000."
2. A new Section 3(i) is hereby added to the Employment Agreement to read
as follows:
"(i) TRANSACTION BONUS. The Executive shall be entitled to receive a
transaction bonus equal to $750,000 at the time specified herein,
provided that, the Executive shall continue to be employed by the
Company or any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to its business and/or assets,
for a period not to exceed six months following a Change in Control
(as defined in Section 11(b)). The bonus payable pursuant to this
Section 3(i) shall be paid in a lump sum in cash within 10 days
following the earliest of: (i) the expiration of the six month
period following the Change in Control (as defined in Section
11(b)), provided that Executive is continuously employed by the
Company or any successor for such six month period unless the
Executive dies or incurs a Disability during such six month period;
(ii) the date Executive's employment with the Company or any
successor is terminated without Cause on or after the occurrence of
a Change in Control (as defined in Section 11(b)); or (iii) the date
Executive's employment with the Company or any successor is
terminated by the Executive for Good Reason. Only one bonus may be
paid pursuant to this Section 3(i)."
3. A new Section 3(j) is hereby added to the Employment Agreement to read
as follows:
"(j) SPECIAL PERFORMANCE BONUS. Subject to the terms of a written
agreement of even date mutually agreed to between the Company and
the Executive, the Executive shall be entitled to receive a special
performance bonus equal to $1,250,000, provided that he satisfies
the terms and conditions of such agreement. The bonus payable
pursuant to this Section 3(j) shall be paid in a lump sum in cash
within 10 days following the consummation of the transaction
contemplated under the written agreement referenced herein. Only one
bonus may be paid pursuant to this Section 3(j)."
4. Section 6 of the Employment Agreement is hereby amended by deleting
Subsections 6(a) and 6(b) in their entirety and by redesignating Subsections
6(c) and 6(d) as Subsections 6(a) and 6(b), respectively.
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5. The definition of "Restricted Period," as defined in Section 6(c) of
the Employment Agreement (and which has been redesignated as Section 6(a)) is
hereby amended in its entirety to read as follows:
", during the Employment Period and until the first anniversary of
either the date of the termination of Executive's employment by the
Company or any other DK Company under this Agreement or the date the
Executive terminates his employment under this Agreement for Good
Reason (the "Restricted Period"),"
6. Section 6(c) of the Employment Agreement (which has been redesignated
as Section 6(a)) is hereby amended by adding the following language at the end
thereof:
"Notwithstanding the foregoing, in partial consideration for the
payments and benefits contemplated under Sections 3(i), 3(j) and
11(b) of this Agreement, as amended, upon the occurrence of a Change
in Control, the Restricted Period shall be extended until the second
anniversary of either the date of termination of Executive's
employment by the Company or any other DK Company under this
Agreement or the date the Executive terminates his employment under
this Agreement for Good Reason."
7. Section 11(b) of the Employment Agreement is hereby amended, effective
December 8, 2000, by substituting "paragraphs (a), (b) or (c) of Exhibit A to
the Company's Executive Severance Plan" for "Section II.E.(a) or II.E.(b) of the
Plan" therein but, solely with respect to Section 11(b)(i) and 11(b)(ii), such
substitution shall be subject to and conditioned upon the confirmation that the
accounting treatment applicable to such amendment to the stock awards described
in Section 11(b)(i) and 11(b)(ii), is consistent with the accounting treatment
for such stock awards prior to such amendment.
8. Section 11(b) of the Employment Agreement is hereby further amended by
substituting "thirty-six" for "eighteen" in subsection (iii) therein and by
adding the following language at the end thereof:
"; provided, however, that in the event that the Executive commences
other full time employment that offers substantially similar or
improved group health and life insurance and long-term disability
coverage, such continuation of coverage by the Company shall
immediately cease. The Company also shall provide outplacement
services, up to a maximum of $50,000, for the Executive for a period
of one year commencing on the Executive's date of termination, but
in no event extending beyond the date on which the Executive
commences other full time employment."
9. Section 11(c) of the Employment Agreement is hereby amended in its
entirety to read as follows:
"(c) (i) In the event any payment that is either received by the
Executive or paid by the Company on his behalf or any property or
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any other benefit provided to him under this Agreement or under any
other plan, arrangement or agreement with the Company or any other
person whose payments or benefits are treated as contingent on a
change of ownership or control of the Company (or in the ownership
of a substantial portion of the assets of the Company) or any person
affiliated with the Company or such person (but only if such payment
or other benefit is in connection with the Executive's employment by
the Company) (collectively the "Company Payments"), will be subject
to the tax (the "Excise Tax") imposed by Section 4999 of the Code
(and any similar tax that may hereafter be imposed by any taxing
authority), the Company shall pay to the Executive an additional
amount (the "Gross-up Payment") such that the net amount retained by
the Executive, after deduction of any Excise Tax on the Company
Payments and any federal, state, and local income or payroll tax
upon the Gross-up Payment provided for by this subsection (i), but
before deduction for any federal, state, and local income or payroll
tax on the Company Payments, shall be equal to the Company Payments.
(ii) For purposes of determining whether any of the Company Payments
and Gross-up Payments (collectively the "Total Payments") will be
subject to the Excise Tax and determining the amount of such Excise
Tax: (A) the Total Payments shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code, and all
"parachute payments" in excess of the "base amount" (as defined
under Code Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that, in
the opinion (based on a substantial authority standard) of the
Company's independent certified public accountants appointed prior
to any change in ownership (as defined under Code Section
280G(b)(2)) or tax counsel selected by such accountants or the
Company, provided that such counsel advised the Company with regard
to tax matters prior to any such change in ownership (the
"Accountants"), such Total Payments (in whole or in part), (1) do
not constitute "parachute payments," (2) represent reasonable
compensation for services actually rendered within the meaning of
Section 280G(b)(4) of the Code or (3) are otherwise not subject to
the Excise Tax; and (B) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Accountants
in accordance with the principles of Section 280G of the Code.
(iii) For purposes of determining the amount of the Gross-up
Payment, the Executive shall be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation in the
calendar year in which the Gross-up Payment is to be made and
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state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Executive's residence for
the calendar year in which the Company Payment is to be made, net of
the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes if paid in
such year. In the event that the Excise Tax is determined by the
Accountants to be less than the amount taken into account hereunder
at the time the Gross-up Payment is made, the Executive shall repay
to the Company, at the time that the amount of such reduction in
Excise Tax is finally determined, the portion of the prior Gross-up
Payment attributable to such reduction (plus the portion of the
Gross-up Payment attributable to the Excise Tax and federal, state
and local income tax imposed on the portion of the Gross-up Payment
being repaid by the Executive if such repayment results in a
reduction in Excise Tax or federal, state and local income tax
deduction), plus interest on the amount of such repayment at the
rate provided in Section 1274(b)(2)(B) of the Code. In the event
that the Excise Tax is later determined by the Accountants or the
Internal Revenue Service to exceed the amount taken into account
hereunder at the time the Gross-up Payment is made (including by
reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-up Payment), the Company shall
make an additional Gross-up Payment in respect of such excess (plus
any interest at the rate provided in Section 1274(b)(2)(B) of the
Code or penalties payable with respect to such excess) at the time
that the amount of such excess is finally determined."
10. LEGAL FEES. The Company shall promptly pay or reimburse the Executive
for his reasonable costs of entering into this Amendment, including
specifically, the fees and expenses of his counsel, up to a maximum of $25,000.
11. AGREEMENT OTHERWISE UNCHANGED. The Employment Agreement, as so
amended, shall remain in full force and effect.
12. COUNTERPARTS. This Amendment may be executed in counterparts, each of
which shall be deemed an original, but both of which together shall constitute
the same agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Amendment as of
the date first written above.
XXXXX KARAN INTERNATIONAL INC.
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------------
Name:
Title:
THE XXXXX KARAN COMPANY
By: XXXXX KARAN INTERNATIONAL INC.,
GENERAL PARTNER
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------------
Name:
Title:
EXECUTIVE
/s/ Xxxx X. Idol
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Xxxx X. Idol
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