AGREEMENT made as of the _____ day of _____, 2011, by and between G-III APPAREL GROUP, LTD. (the “Company”) and _____ (the “Executive”).
Exhibit 10.1
G-III APPAREL GROUP, LTD.
EXECUTIVE TRANSITION AGREEMENT
WITH [NAME OF EXECUTIVE]
EXECUTIVE TRANSITION AGREEMENT
WITH [NAME OF EXECUTIVE]
AGREEMENT made as of the
_____ day of
_____, 2011, by and between G-III APPAREL GROUP,
LTD. (the “Company”) and
_____
(the “Executive”).
WITNESSETH:
WHEREAS, the Executive is employed as a senior executive officer of the Company; and
WHEREAS, the parties desire that certain severance protections be afforded to the Executive in
the event of involuntary termination of the Executive’s employment in conjunction with a “change in
control” of the Company, as described herein;
NOW, THEREFORE, the parties agree as follows:
1. Severance Protection.
1.1 Severance Events. Subject to the provisions of this Agreement, the Executive will
receive the severance payments and benefits described in Section 1.2 if a Change in Control (as
defined below) occurs and, at any time during the (a) three-month period prior to the date of the
Change in Control or (b) two-year period beginning on the date of the Change in Control, (i) the
Company terminates the Executive’s employment without Cause (as defined below), or (ii) the
Executive terminates the Executive’s employment for Good Reason (as defined below). For the
purposes hereof, the term “Company” shall be deemed to include the Company, any subsidiary of the
Company and, following a Change in Control, any direct or indirect successor to the Company.
1.2 Severance Payments and Benefits. If a severance event described in Section 1.1
occurs, then, subject to timely compliance with the release condition specified in Section 2 below,
the Executive will be entitled to receive the following severance payments and benefits:
(a) an amount equal to 1.5 times the sum of (a) the Executive’s highest annual rate of salary
in effect during the one-year period preceding the date the Executive’s employment terminates, plus
(b) the average annual cash bonus earned by the Executive during the two fiscal years preceding the
fiscal year in which the Executive’s employment terminates, which amount will be payable in equal
periodic installments during the 18-month period following the termination of the Executive’s
employment in accordance with normal payroll practices (for purposes of Section 409A of the Code,
this series of installment payments is treated as a right to a series of separate payments),
subject to delayed commencement and related make-up payment provisions set forth in Sections 2 and
11 of this Agreement; and
(b) if, immediately before the termination of the Executive’s employment, the Executive and/or
the Executive’s spouse and/or any of the Executive’s dependents participates (other than via COBRA)
in a Company group health plan, then, for the 18 months following the date of such termination (or,
if sooner, until corresponding coverage is obtained under a
successor employer’s plan), the Executive and/or such spouse and/or dependents may elect to
continue participating in the Company’s plan at the same benefit and contribution levels and on the
same basis as if the Executive’s employment had continued (which continuing participation will be
deemed to be in addition to and not in lieu of COBRA); provided, however, that, if provision of
such coverage is not permitted by the plan or by applicable law or would otherwise cause the
Company to incur a penalty or additional tax, then, in lieu of such coverage, the Company will
provide COBRA continuation coverage to the Executive, and the Executive’s spouse and/or dependents,
at the Company’s sole expense, if and to the extent any of such persons elects and is entitled to
receive COBRA continuation coverage, and, pursuant to applicable tax laws, the amount of the
Company’s subsidy will be reported as W-2 wage income to the Executive.
1.3 Definitions. For the purposes hereof, the following terms shall have the following
meanings:
(a) “Cause” means (1) the Executive’s repeated failure or refusal to perform the duties of the
Executive’s employment, consistent with past practice and his position and title where such conduct
shall not have ceased or been remedied within ten days following written warning from the Company
specifying such conduct; (2) the Executive’s conviction of, or entering a plea of guilty or no
contest to, a felony; (3) the Executive’s performance of any act or the Executive’s failure to act,
for which, if the Executive were prosecuted and convicted, a crime or offense involving money or
property of the Company would have occurred; (4) the Executive’s performance of any act or the
Executive’s failure to act which constitutes fraud or a breach of a fiduciary trust, including,
without limitation, misappropriation of funds or a material misrepresentation of the Company’s
operating results or financial condition; (5) any attempt by the Executive to secure any personal
profit (other than pursuant to the terms of the Executive’s employment or through the Executive’s
ownership of equity in the Company) in connection with the business of the Company (for example,
without limitation, using Company assets to pursue other interests, diverting to the Executive or
to a third party any business opportunity belonging to the Company, xxxxxxx xxxxxxx or taking
bribes or kickbacks); (6) the Executive’s engagement in conduct or activities materially damaging
to the property, business or reputation of the Company other than as a result of good faith
performance of his duties; (7) the Executive’s illegal use of controlled substances; (8) any act or
omission by the Executive involving malfeasance or gross negligence in the performance of the
duties of the Executive’s employment to the material detriment of the Company; or (9) the entry of
any order of a court that remains in effect and is not discharged for a period of at least sixty
days, which enjoins or otherwise limits or restricts the performance by the Executive of the duties
of the Executive’s employment, relating to any contract, agreement or commitment made by or
applicable to the Executive in favor of any former employer or any other person.
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(b) “Change in Control” means (i) the consummation of (A) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation or pursuant to which
shares of the Company’s voting stock would be converted into cash, securities or other property,
other than a merger of the Company in which the holders of the Company’s voting stock immediately
prior to the merger have the same proportionate ownership of voting stock of the surviving
corporation immediately after the merger, or (B) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all, or
substantially all, the assets of the Company; or (ii) the stockholders of the Company shall
approve any plan or proposal for liquidation or dissolution of the Company; or (iii) any person (as
such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)), other than a person who on the date hereof is the beneficial owner (within
the meaning of Rule 13d-3 under the Exchange Act) of 10% or more of the Company’s outstanding
voting stock, shall become the beneficial owner of 35% or more of the Company’s then outstanding
voting stock; or (iv) during any period of two consecutive years, individuals who at the beginning
of such period constitute the entire Board of Directors of the Company (the “Board”) shall cease
for any reason to constitute a majority thereof unless the election, or the nomination for election
by the Company’s stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the period.
(c) “Good Reason” means any of the following events that occur, after expiration of any remedy
or cure period, (1) a material diminution of the Executive’s duties and responsibilities that
result in a material adverse effect on the Executive’s status and authority, (2) a change in the
principal location of the Executive’s employment to a location more than fifty (50) miles outside
of New York City, except for travel reasonably required as part of such employment, (3) failure to
timely pay the Executive any salary or bonus when due or (4) any reduction in (i) the Executive’s
annual rate of salary from the highest annual rate of salary in effect during the one-year period
prior to the date of the Change of Control or (ii) the amount of annual bonus paid to the Executive
after the date of the Change in Control in light of the results of operations of the Company for
that year compared to the bonus paid for the most recent fiscal year prior to the date of the
Change of Control in light of the results of operations of the Company for that year.
Notwithstanding the foregoing, in order to terminate for “Good Reason,” the Executive must specify
in writing to the Company (or the successor or acquiring company) the nature of the act or omission
that the Executive deems to constitute Good Reason and provide the Company (or the successor or
acquiring company) 30 days after receipt of such notice to review and, if required, correct the
situation (and thus prevent the Executive’s termination for Good Reason). Notice of termination for
Good Reason must be provided, if at all, within 90 days after the occurrence of the event or
condition giving rise to such termination.
2. Release of Claims; Timing of Payments. Notwithstanding anything herein to the contrary,
Executive’s right to receive and retain any severance payments or benefits under this Agreement
shall be conditioned upon receipt by the Company, within the applicable 60-day time period
described below, of a release substantially in the form annexed hereto as Exhibit A, which is no
longer subject to revocation; it being understood that such release will not affect Executive’s
right to indemnity or vested benefits. For the purpose of the preceding sentence, the applicable
period shall be 60 days after the date of Executive’s termination of employment, or, if the event
giving rise to severance payments and benefits is a Change in Control occurring after Executive’s
termination of employment, 60 days after the date of the Change in Control. If the Executive fails
to timely satisfy the foregoing release condition, then the Executive will not be entitled to
receive or retain any severance payments or benefits under this Agreement. Subject to the
provisions hereof, including, without limitation, satisfaction of the release condition imposed
pursuant to this section and any delayed payment requirement that may be imposed by Section 11
below, severance payments required to be made under this Agreement shall be made or begin at the
end of the applicable 60-day time period described above; and, on such payment
commencement date, the Executive will be entitled to receive a single sum make-up payment equal to
the sum of the severance payments the Executive would have received from the date of the event
giving rise to such severance payments and the delayed start date for such payments.
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3. Golden Parachute Tax Limitation. If the Executive is entitled to receive payments and
benefits under this Agreement and if, when combined with the payments and benefits the Executive is
entitled to receive under any other plan, program or arrangement of the Company, the Executive
would be subject to excise tax under Section 4999 of the Code or the Company would be denied a
deduction under Section 280G of the Code, then the severance amounts otherwise payable to the
Executive under this Agreement will be reduced by the minimum amount necessary to ensure that the
Executive will not be subject to such excise tax and the Company will not be denied any such
deduction.
4. Effect of Other Agreements. Notwithstanding the provisions hereof, if any termination or
severance payments or benefits are made or provided to the Executive by the Company pursuant to a
written employment or other agreement between the Executive and the Company, the payments and
benefits required to be provided under this Agreement shall be reduced by the amount of the
comparable payments and benefits payable under such other agreement(s) in order to avoid
duplication.
5. No Duty to Mitigate. Except as otherwise specifically provided herein, the Executive’s
entitlement to payments and benefits hereunder is not subject to mitigation or a duty to mitigate
by the Executive.
6. Successors and Assigns. The Company shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all
the business or assets of the Company and its subsidiaries taken as a whole, expressly and
unconditionally to assume and agree to perform or cause to be performed the Company’s obligations
under this Agreement. In any such event, the term “Company,” as used herein shall include any such
successor or assignee.
7. Legal Fees to Enforce Rights after a Change in Control. If, following a Change in
Control, the Company fails to comply with any of its obligations under this Agreement or the
Company takes any action to declare this Agreement void or unenforceable or institutes any
litigation or other legal action designed to deny, diminish or to recover from the Executive the
payments and benefits intended to be provided, then the Executive shall be entitled to select and
retain counsel at the expense of the Company to represent the Executive in connection with the good
faith initiation or defense of any litigation or other legal action, whether by or against the
Company or any director, officer, stockholder or other person affiliated with the Company or any
successor thereto in any jurisdiction.
8. Not a Contract of Employment. This Agreement shall not be deemed to constitute a
contract of employment between the Executive and the Company. Nothing contained herein shall be
deemed to give the Executive a right to be retained in the employ or other service of the Company
or to interfere with the right of the Company to terminate the Executive’s employment at any time.
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9. Governing Law; Venue. This Agreement shall be governed by the laws of the State of New
York, excluding its conflict of law rules. Any suit with respect to this Agreement will be brought
in the federal or state courts in the districts, which include New York, New York, and the
Executive hereby agrees to submit to the personal jurisdiction and venue thereof.
10. Counterparts. This Agreement may be executed in separate counterparts, each of which
will be an original and all of which taken together shall constitute one and the same agreement,
and any party hereto may execute this Agreement by signing any such counterpart.
11. Tax Withholding; Section 409A Compliance. The payment of any amount pursuant to this
Agreement shall be subject to all applicable tax withholding. For the purposes of this Agreement, a
“termination of employment” or words of like import shall mean a “separation from service” within
the meaning of Section 409A of the Internal Revenue Code of 1986 and the regulations issued
thereunder. Notwithstanding any provision to the contrary in this Agreement, any payment otherwise
required to be made to the Executive on account of the termination of the Executive’s employment,
to the extent such payment is properly treated as deferred compensation subject to the Section 409A
of the Internal Revenue Code of 1986 and the regulations and other applicable guidance issued by
the Internal Revenue Service thereunder, and only if the Executive is treated as a “specified
employee” within the meaning of Section 409A of the Code at the time of such termination of
employment, shall not be made until the first business day after the expiration of six months from
the date of the Executive’s termination of employment or, if earlier, the date of Executive’s
death. On the payment date, as so delayed, there shall be paid to the Executive (or the Executive’s
estate, as the case may be) in a single cash payment an amount equal to aggregate amount of the
payments delayed pursuant to the preceding sentence. It is intended that any amounts payable under
this Agreement and Company’s and Executive’s exercise of any authority or discretion hereunder
shall comply with, and avoid the imputation of any tax, penalty or interest under Section 409A of
the Code. This Agreement shall be construed and interpreted in a manner that is consistent with
that intent. Notwithstanding the foregoing, Executive shall be solely responsible, and the Company
shall have no liability, for any taxes, acceleration of taxes, interest or penalties arising under
Section 409A of the Code.
12. Entire Agreement; Amendment. This Agreement contains the entire understanding between
the parties hereto with respect to the subject matter hereof and supersedes any prior and/or
contemporaneous understandings, agreements or representations, written or oral, relating to the
subject matter hereof. This Agreement may be amended only by a written instrument signed by both
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
| G-III APPAREL GROUP, LTD. |
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| By: | ||||
| Executive | ||||
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EXHIBIT A
This Release Agreement (“Agreement”) is made as of the
_____
day of
_____
2011, by and between
[Executive] (“Executive”) and G-III Apparel Group, Ltd. (the “Company”).
1. This will confirm that a severance event as described in Section 1.1 of the Executive
Transition Agreement between Executive and the Company, dated February
_____, 2011 (the “Executive
Transition Agreement”), has occurred. In accordance with paragraph 2 of the Executive Transition
Agreement, the Executive’s right to receive and retain any severance payments or benefits under the
Executive Transition Agreement is conditioned upon the timely receipt by the Company of a general
release by the Executive in favor of Company, its affiliates and their officers, directors and
employees, which is no longer subject to revocation. Accordingly, in consideration of the severance
payments and benefits under the Executive Transition Agreement and other good and valuable
consideration, Executive for himself and for the executors and administrators of his estate, his
heirs, successors and assigns, hereby covenants not to commence an action or proceeding against,
and releases and forever discharges, the Company and its, parent, subsidiaries, affiliates and
their officers, directors, employees, and agents, and the respective executors, administrators,
heirs, successors and assigns of the foregoing, from any and all claims and actions relating to
Executive’s employment or the termination of Executive’s employment with the Company, including but
not limited to actions arising under the New York State Executive Law, Title VII of the 1964 Civil
Rights Act, the Age Discrimination in Employment Act (“ADEA”), the Older Workers Benefit Protection
Act, the Americans With Disabilities Act, and the Administrative Code of The City of New York, and
all other causes of action, suits, sums of money, debts, dues, accounts, reckonings, bonds, bills,
covenants, contracts, controversies, agreements, promises, demands or damages of any nature
whatsoever or by reason of any matter, cause or thing regardless of whether known or unknown at
present, including tort or negligence claims, against the Company, its subsidiaries, affiliates,
officers, directors, employees, and agents, which Executive ever had, now has or hereafter can,
shall or may have for, upon, or by reason of, any matter, cause or thing whatsoever from the
beginning of the world to the date hereof. The parties also agree that this Agreement does not
either affect the rights and responsibilities of the Equal Employment Opportunity Commission to
enforce the Age Discrimination in Employment Act, or justify interfering with the protected right
of an employee to file a charge or participate in an investigation or proceeding conducted by the
Equal Employment Opportunity Commission under the Age Discrimination in Employment Act. In the
event the Equal Employment Opportunity Commission commences a proceeding against the Company in
which Executive is a named party, Executive agrees to waive and forego any monetary claims which
may be alleged by the Equal Employment Opportunity Commission to be owed to Executive. This release
does not affect the Executive’s right, if any, to receive any vested payments or benefits accrued
and payable under and in accordance with the Executive Transition Plan or any employee benefit plan
in which Executive is a participant, nor shall this release affect any right the Executive may have
to indemnification by the Company. For the purposes hereof, the term “Company” shall include any
direct or indirect successor to the Company. Executive does not waive or release any claims which
arise after the date Executive executes this Agreement.
EXHIBIT A
2. Executive has been advised to consult with an attorney prior to executing this Agreement.
By executing this Agreement, Executive acknowledges that (a) he has been provided with an
opportunity to consult with an attorney or other advisor of his choice regarding the terms of this
Agreement, (b) this is a final offer and Executive has been given [21 or 45, as applicable] days in
which to consider whether he wishes to enter into this Agreement, (c) Executive has elected to
enter into this Agreement knowingly and voluntarily and (d) if he does so within fewer than
[21]/[45] days from receipt of the final document he has knowingly and voluntarily waived the
remaining time. This Agreement shall be fully effective and binding upon all parties hereto
immediately upon execution of this Agreement except as to rights or claims arising under the ADEA,
in which case Executive has 7 days following execution of this Agreement to change his mind (the
“Revocation Period”).
|
Executive G-III APPAREL GROUP, LTD. |
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| By: | ||||
| Title: | ||||
