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EXHIBIT 10.23
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT made effective as of the 4th day of April, 1999, between
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Corporation, a Delaware corporation (the "Company"), and ▇▇▇▇▇
Lauren (the "Executive").
The Executive is the founder of the predecessor entities of the
Company and has acted as Chief Executive Officer of such entities for more than
thirty-one years.
The Executive has heretofore been employed by the Company pursuant
to an employment agreement made effective as of June 9, 1997 (the "Prior
Agreement");
The Company recognizes that the Executive's talents and abilities
are unique and have been integral to the success of the Company. The Company
wishes to retain the services of the Executive and recognizes that the
Executive's contribution to the growth and success of the Company will be
substantial. The Company desires to provide for the continued employment of the
Executive and to make employment arrangements that which will reinforce and
encourage the attention and dedication to the Company of the Executive as a
member of the Company's senior management, in the best interest of the Company.
The Executive is willing to commit himself to serve the Company, on the terms
and conditions herein provided.
The Company and the Executive wish to amend and restate the Prior
Agreement as evidenced by this Agreement effective as of the date hereof in
order to provide for the modification of certain provisions of the Prior
Agreement;
In order to effect the foregoing, the Company and the Executive wish
to enter into an Agreement on the terms and conditions set forth below.
Accordingly, in consideration of the premises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Employment. Effective as of April 4, 1999, the Executive's employment
with the Company shall be governed by this Agreement, which restates and
supercedes the Prior Agreement.
2. Term. The term of the Executive's employment hereunder shall commence
as of the date hereof and shall continue until the close of business on June 17,
2002, subject to earlier termination in accordance with the terms of this
Agreement (the "Term"). The Term shall be automatically extended for successive
one year periods thereafter unless either party notifies the other in writing of
its intention not to so extend the Term at least ninety (90) days prior to the
commencement of the next scheduled one year extension.
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3. Position and Duties.
(a) Title and Duties. The Executive shall serve as Chief Executive Officer
of the Company and Chairman of the Board of Directors of the Company (the
"Board"), and shall have such duties, authority and responsibilities as are
normally associated with and appropriate for such positions. The Executive shall
report directly to the Board. The Executive shall devote substantially all of
his working time and efforts to the business and affairs of the Company.
(b) Office and Facilities. The Executive shall be provided with
appropriate office and secretarial facilities in each of the Company's principal
executive offices in New York City and any other location that the Executive
reasonably deems necessary to have an office and support services in order for
the Executive to perform his duties to the Company. In addition, the Executive
shall continue to be entitled to have certain employees of the Company perform
services for the Executive which are non-Company related in a manner consistent
with past practice; provided that the Executive reimburses the Company for the
full amount of salary, benefits and other expenses relating to such employees.
4. Compensation.
(a) Base Salary. During the Term, the Company shall pay to the Executive
an annual base salary of $1,000,000. The Executive's base salary shall be paid
in substantially equal installments on a basis consistent with the Company's
payroll practices and shall be subject to such increases, if any, as may be
determined in the sole discretion of the Board. The Executive's base salary, as
in effect at any time, is hereinafter referred to as the "Base Salary."
(b) Annual Bonus. For each fiscal year of the Company that occurs during
the Term (including the fiscal year beginning on April 4, 1999 and ending April
1, 2000), the Executive shall be eligible to earn an annual cash bonus (the
"Bonus") based upon the achievement by the Company and its subsidiaries of
performance goals for each such fiscal year established by the Compensation
Committee of the Board of Directors (the "Compensation Committee"). The
Compensation Committee shall establish objective criteria to be used to
determine the extent to which such performance goals have been satisfied. The
range of the Bonus opportunity for each fiscal year will be $0 to $8,000,000
based upon the extent to which such performance goals are achieved. The Bonus,
if any, payable to the Executive in respect of each such fiscal year will be
paid at the same time that bonuses are paid to other executives of the Company,
but in any event within seventy-five days after the conclusion of each
applicable fiscal year. Notwithstanding any provision of this Agreement to the
contrary, the Executive's entitlement to payment of a Bonus during any period
when the compensation payable to the Executive pursuant to this Agreement is
subject to the deduction limitations of section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), shall be subject to shareholder approval
of a plan or arrangement evidencing such Bonus opportunity that complies with
the requirements of section 162(m) of the Code.
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5. Stock Options.
(a) For at least each of the fiscal year ending April 1, 2000 and the
fiscal year ending March 31, 2001, as of a date no later than June 11 of each
fiscal year (or the first business day thereafter if June 11 falls on a
holiday), the Executive will be granted options (the "Annual Options") to
purchase 250,000 shares of the Class A Common Stock of the Company (the "Common
Shares") pursuant to the terms of the Company's 1997 Long-Term Stock Incentive
Plan (the "Option Plan"). The Annual Options will have a term of ten (10) years
(subject to earlier termination as described below and in Section 7) and will be
transferable by the Executive to family members (or trusts for their benefit)
pursuant to the terms of the Option Plan.
(b) The Annual Options will vest and become exercisable ratably over three
(3) years on each of the first three anniversaries of the date of grant, subject
to the Executive's continued employment through each vesting date and subject to
the provisions of Section 7, and will have an exercise price per Common Share
equal to the fair market value per Common Share as of the date of grant.
6. Employee Benefits.
(a) Benefit Plans. The Executive shall continue to participate in all
existing employee benefit plans, perquisite and fringe benefit arrangements of
the Company or its affiliates in which he is currently participating and shall
be entitled to participate in any future employee benefit plans, perquisite and
fringe benefit arrangements of the Company or its affiliates that are provided
to other officers of the Company on terms no less favorable than are provided to
any other senior executive of the Company.
(b) Life Insurance. The Company shall, until fully funded in accordance
with applicable insurance projections, continue to maintain, and make premium
contributions with respect to, those certain split dollar and other life
insurance arrangements between the Company and the Executive, his family members
and/or life insurance trusts for the benefit of any of them, that are currently
maintained or contributed to by the Company or its affiliates or predecessor
entities.
(c) Expenses. The Executive shall be entitled to receive prompt
reimbursement for all reasonable and customary expenses incurred by the
Executive in performing services hereunder, including all expenses of travel and
living expenses while away from home on business or at the request of and in the
service of the Company (including hotel, travel and meal expenses for the
Executive's spouse should the Executive's spouse elect to travel with
Executive), provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company.
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(d) Perquisites. The Company shall (i) provide the Executive with a car
and driver for his use during the term of his employment with the Company and
(ii) reimburse the Executive for club dues and initiation fees at a social club
or country club of the Executive's choosing.
(e) Corporate Aircraft. For security purposes, the Executive and his
family members shall be required to use the Company's or other acceptable
private aircraft for any travel; provided that in connection with any use which
is solely for personal non-business reasons, the Executive shall reimburse the
Company at swap rates charged to owners of airplanes, which rates are set by an
independent management company.
(f) Vacations. The Executive shall be entitled to vacations and holidays
on a basis consistent with that offered to other senior executive officers of
the Company.
(g) Indemnification. The Company shall indemnify the Executive to the
fullest extent permitted by applicable law against damages and expenses
(including fees and disbursements of counsel) in connection with his status or
performance of duties as an officer or director of the Company and its
affiliates (including any predecessor entities) and shall use reasonable
commercial efforts to maintain customary and appropriate directors and officers
liability insurance for the benefit of the Executive's protection. The Company's
obligations under this Section 6(g) shall survive any termination of the
Executive's employment hereunder.
7. Termination of Employment. The Company and the Executive may each
terminate the Executive's employment hereunder and the Term for any reason.
(a) Termination by the Company without Cause, Non-Extension of Term or by
the Executive for Good Reason. If the Company shall terminate the Executive's
employment without "Cause" (as defined in Section 7(e)), if the Company elects
not to extend the Term, or if the Executive resigns for Good Reason (as defined
in Section 7(e)) then, the Executive shall be entitled to the following:
(i) A lump sum cash payment equal to the sum of:
(1) The Executive's Base Salary that would be payable
through the later of (A) June 11, 2002, or (B) three years
from the date of the Executive's termination of employment
(the "Severance Period");
(2) Any accrued but unpaid compensation as of the date
of termination of employment; and
(3) A Bonus for each full or partial fiscal year that
occurs during the Severance Period equal to the average annual
bonus paid to the
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Executive in each of the immediately preceding two fiscal
years prior to the Executive's termination of employment,
provided, however, that the amount of the Bonus for any
partial fiscal year beyond the third fiscal year following the
date of the Executive's termination of employment will be
prorated; and
(ii) During the Severance Period, the Company shall (A) continue to
provide the Executive with office facilities and secretarial assistance in
New York City and any other location that the Executive maintained an
office during the term of his employment that the Executive reasonably
deems necessary, (B) permit the Executive to continue to participate in
all welfare and medical plans on the same terms as active officers of the
Company, and (C) continue to provide the Executive with the use of a car
and driver; and
(iii) Any unvested options granted pursuant to Section 5 will of
this Agreement and Section 5 of the Prior Agreement continue to vest on
their scheduled vesting dates, subject to and conditioned upon the
Executive's compliance with Section 9 hereof. In addition, subject to, and
conditioned upon, the Executive's compliance with Section 9 hereof, any
vested options (and any options that continue to vest as described above)
will remain exercisable until the latest to occur of (A) June 11, 2002,
(B) one (1) year from the date of the Executive's termination of
employment and (C) thirty (30) days from the date the option becomes
vested and exercisable.
(iv) Except as expressly provided above and for the Company's
obligations under Sections 6(b) and (6)g hereof, the Company will have no
further obligations to the Executive hereunder following the Executive's
termination of employment under the circumstances described in this
Section 7(a).
(b) Termination due to Death or Disability. If the Executive's employment
is terminated due to his death or "Disability" (as defined in Section 7(e)), the
Executive (or his estate) shall be entitled to the following:
(i) A lump sum cash payment equal to the sum of:
(1) the Executive's Base Salary through the date on which his
termination due to death or Disability occurred;
(2) any accrued and unpaid compensation for any prior fiscal
year; and
(3) a pro-rata portion of the Bonus he would otherwise have
received for the fiscal year in which his termination due to death
or Disability occurred; and
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(ii) Any unvested options granted pursuant to Section 5 of this
Agreement and Section 5 of the Prior Agreement will vest immediately and
options held by the Executive, or his estate, will remain exercisable for
three (3) years from the date of the Executive's death or termination due
to Disability.
(iii) Except as expressly provided above and for the Company's
obligations under Sections 6(b) and 6(g) hereof, the Company will have no
further obligations to the Executive hereunder following the Executive's
termination of employment under the circumstances described in this
Section 7(b).
(c) Termination by the Company for Cause, by Executive Other than for Good
Reason or Due To The Executive's Election Not To Extend The Term. If the
Executive's employment is terminated by the Company for Cause, by the Executive
other than for Good Reason or due to the Executive's election not to extend the
Term, the Executive shall be entitled to:
(i) an immediate lump sum cash payment equal to the sum of:
(1) his Base Salary through the date of termination; and any
accrued but unpaid compensation for any prior fiscal year; and
(2) a pro-rata portion of his Bonus for the fiscal year in
which the termination occurred, to be paid when bonuses are paid to
other executives of the Company; and
(ii) Any options granted pursuant to Section 5 of this Agreement and
Section 5 of the Prior Agreement that have not previously been exercised
shall be forfeited.
(iii) Except as expressly provided above and for the Company's
obligations under Sections 6(b) and 6(g) hereof, the Company will have no
further obligations to the Executive hereunder following the Executive's
termination of employment under the circumstances described in this
Section 7(c).
(d) Notice of Termination. Any termination of the Executive's employment
by the Company or by the Executive (other than termination pursuant to the
Executive's death) shall be communicated by written Notice of Termination to the
other party hereto in accordance with Section 11 hereof. If the Company
terminates the Executive's employment for Cause or due to Disability or if the
Executive resigns for Good Reason, the "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
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(e) Definitions. For purpose of this Agreement:
(i) "Cause" shall mean (A) the willful and continued failure by the
Executive to substantially perform his duties hereunder after demand for
substantial performance is delivered by the Company that specifically
identifies the manner in which the Company believes the Executive has not
substantially performed his duties; or (B) the Executive's conviction of,
or plea of nolo contendre to, a crime (whether or not involving the
Company) constituting a felony; or (C) willful engaging by the Executive
in gross misconduct relating to the Executive's employment that is
materially injurious to the Company or subjects the Company, monetarily or
otherwise (including, but not limited to, conduct that constitutes
competitive activity, in violation of Section 9) or which subjects, or if
generally known, would subject the Company to public ridicule or
embarrassment. For purposes of this paragraph, no act, or failure to act,
on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by him not in good faith and without reasonable belief
that his action or omission was in the best interest of the Company.
Notwithstanding the forgoing, the Executive shall not be deemed to have
been terminated for Cause without (x) reasonable written notice to the
Executive setting forth the reasons for the Company's intention to
terminate for Cause, (y) an opportunity for the Executive, together with
his counsel, to be heard before the Board, and (z) delivery to the
Executive of a Notice of Termination, as defined in Section 7(d) hereof,
from the Board finding that in the good faith opinion of the Board the
Executive was guilty of conduct set forth above in clauses (A) through (C)
hereof, and specifying the particulars thereof in detail.
(ii) "Good Reason" shall mean (A) a material diminution in the
Executive's duties or the assignment to the Executive of a title or duties
inconsistent with his position as Chairman of the Board and Chief
Executive Officer of the Company, (B) a reduction in the Executive's
salary or annual incentive bonus opportunity, (C) a failure of the Company
to comply with any material provision of this Agreement or (D) the
Executive's ceasing to be entitled to the payment of an annual incentive
bonus as a result of the failure of the Company's shareholders to approve
a plan or arrangement evidencing such annual incentive bonus in a manner
that complies with the requirements of section 162(m) of the Internal
Revenue Code of 1986; provided that the events described in clauses (A),
(B) and (C) above shall not constitute Good Reason unless and until such
diminution, reduction or failure (as applicable) has not been cured within
thirty (30) days after notice of such noncompliance has been given by the
Executive to the Company.
(iii) For purposes of this Agreement, "Disability" shall mean that
as a result of the Executive's incapacity due to physical or mental
illness, the Executive shall have been absent from his duties hereunder on
a full-time basis for the entire period of six consecutive months, and
within thirty (30) days after written Notice of Termination is given by
the Company (which may occur before or after the end of such six month
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period) the Executive shall not have returned to the performance of his
duties hereunder on a full-time basis.
8. No Mitigation. The Executive shall have no duty to mitigate the
payments provided for hereunder by seeking other employment or otherwise and
such payment shall not be subject to reduction for any compensation received by
the Executive from employment in any capacity following the termination of the
Executive's employment with the Company.
9. Non-Solicitation/Non-Competition.
(a) The Executive agrees that for the duration of his employment and for a
period of three (3) years from the date of termination thereof, he will not, on
his own behalf or on behalf of any other person or entity, hire, solicit, or
encourage to leave the employ of the Company or its subsidiaries or affiliates
any person who is an employee of any of such companies.
(b) The Executive agrees that for the duration of his employment and for a
period of three (3) years from the date of termination thereof, the Executive
will take no action which is intended, or would reasonably be expected, to harm
(e.g., making public derogatory statements or misusing confidential Company
information, it being acknowledged that the Executive's employment with a
competitor in and of itself shall not be deemed to be harmful to the Company for
purposes of this Section 9(b)) the Company or any of its subsidiaries or
affiliates of their reputation.
(c) The Executive agrees that during the duration of his employment and;
(i) in the event of the Executive's termination of employment
due to the Executive's resignation without Good Reason, until the
later of (x) June 11, 2002 and (y) two (2) years from the date of
such termination of employment; and
(ii) in the event of the Executive's termination of employment
by the Company without Cause or the Executive's resignation for Good
Reason pursuant to Section 7(a), for two (2) years from the date of
such termination of employment; and
(iii) in the event of the Executive's termination of
employment by the Company for Cause, at the election of the Company
in consideration for the payment to the Executive of an amount equal
to the Executive's salary and Bonus (equal to the average Bonus paid
to the Executive over the preceding two years) for each year within
such period, for a period of up to two (2) years from the date of
such termination of employment,
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then, during the period specified in clause (i), (ii) or (iii)
above, as applicable, the Executive shall not, directly or
indirectly, (A) engage in any "Competitive Business" (as defined
below) for his own account, (B) enter into the employ of, or render
any services to, any person engaged in a Competitive Business, or
(C) become interested in any entity engaged in a Competitive
Business, directly or indirectly as an individual, partner,
shareholder, officer, director, principal, agent, employee, trustee,
consultant, or in any other relationship or capacity; provided that
the Executive may own, solely as an investment, securities of any
entity which are traded on a national securities exchange if the
Executive is not a controlling person of, or a member of a group
that controls such entity and does not, directly or indirectly, own
2% or more of any class of securities of such entity.
(iv) For purposes of this Agreement the term "Competitive
Business" shall include the design, manufacture, sale, marketing or
distribution of branded or designer apparel and other products in
the categories of products sold by, or under license from, the
Company or its affiliates within the United States.
(d) The Executive will not at any time (whether during or after his
employment with the Company) disclose or use for his own benefit or purposes or
the benefit or purposes of any other person, entity or enterprise, other than
the Company or any of its affiliates, any trade secrets, information, data, or
other confidential information relating to customers, development programs,
costs, marketing, trading, investment, sales activities, promotion, credit and
financial data, manufacturing processes, financing methods, plans or the
business and affairs of the Company generally, or any affiliate of the Company;
provided that the foregoing shall not apply to information which is not unique
to the Company or which is generally known to the industry or the public other
than as a result of the Executive's breach of this covenant. The Executive
agrees that upon termination of his employment with the Company for any reason,
he will return to the Company immediately all memoranda, books, papers, plans,
information, letters and other data, and all copies thereof or therefrom, in any
way relating to the business of the Company and its affiliates.
(e) If the Executive breaches, or threatens to commit a breach of, any of
the provisions of this Section 9 (the "Restrictive Covenants"), the Company
shall have the following rights and remedies, each of which rights and remedies
shall be independent of the other and severally enforceable, and all of which
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity:
(i) The right and remedy to have the Restrictive Covenants
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages will not
provide an adequate remedy to the Company;
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(ii) The right and remedy to require the Executive to account for
and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits (collectively, "Benefits") derived or
received by the Executive as the result of any transactions constituting a
breach of any of the Restrictive Covenants, and the Executive shall
account for and pay over such Benefits to the Company; and
(iii) The right to discontinue the payment of any amounts owing to
the Executive under the Agreement.
(f) If any court determines that any of the Restrictive Covenants, or any
part thereof, is invalid or unenforceable, the remainder of the Restrictive
Covenants shall not thereby be affected and shall be given full effect, without
regard to the invalid portion. In addition, if any court construes any of the
Restrictive Covenants, or any part thereof, to be unenforceable because of the
duration of such provision or the area covered thereby, such court shall have
the power to reduce the duration or area of such provision and, in its reduced
form, such provision shall then be enforceable and shall be enforced.
10. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as herein defined and any successor
to its business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 10 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts are payable
to him hereunder all such amounts unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate.
11. Notice. For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered with receipt
acknowledged or five business days after having been mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed as follows:
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If to the Executive:
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
c/o ▇▇▇▇ ▇▇▇▇▇ Lauren Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
If to the Company:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
12. Miscellaneous. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York without regard to its conflicts of law principles.
13. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
15. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in the City of
New York in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction; provided, however, that the Company shall be entitled to
seek a restraining order or injunction in any court of competent jurisdiction to
prevent
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any continuation of any violation of the provisions of Section 9 of this
Agreement and the Executive hereby consents that such restraining order or
injunction may be granted without the necessity of the Company's posting any
bond, and provided further that the Executive shall be entitled to seek specific
performance of his right to be paid until the date of termination during the
pendency of any dispute or controversy arising under or in connection with this
Agreement.
16. Withholding. The Company may withhold from any amounts payable under
this Agreement such federal, state and local taxes as may be required to be
withheld pursuant to applicable law or regulation.
17. Prior Agreements; Entire Agreement. This Agreement sets forth the
entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto; and any
prior agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and canceled.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and the Executive has hereunto set his hand, effective as of the 4th
day of April, 1999.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Executive: ▇▇▇▇▇ Lauren
