EXHIBIT 10.33
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), made as of the 30" day of September, 1999,
by and between Levi Xxxxxxx & Co., a Delaware corporation ("Company"), and
Xxxxxx X. Xxxxxxxx ("Executive").
WITNESSETH THAT:
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to be employed by the Company, in accordance with the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
the Company and the Executive hereby agree as follows:
In consideration of the mutual covenants set forth herein, the Company and the
Executive hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and the
Executive agrees to serve the Company in accordance with the terms and
conditions of this Agreement.
2. PERIOD OF EMPLOYMENT. The term "Period of Employment" shall mean the
period which commences on the date hereof (the "Effective Date") and, unless
earlier terminated pursuant to Section 6, ends on September 30, 2002; provided,
however, that the Period of Employment shall automatically be extended on a day
by day basis effective on and after September 30, 2002 until such date as either
the Company or the Executive shall have terminated such automatic extension
provision by giving written notice to the other pursuant to Section 6(e).
3. DUTIES AND RESPONSIBILITIES DURING THE PERIOD OF EMPLOYMENT. During
the Period of Employment, the Executive shall be employed as the President and
Chief Executive Officer of the Company and shall report to the Company's Board
of Directors (the "Board"). It is also understood that the Executive will be
elected a member of the Board. During the Period of Employment, and excluding
any periods of vacation, sick leave or other Company-approved leave of absence
to which the Executive is entitled, the Executive shall devote his full time,
energy and skill to the business and affairs of the Company. Executive may (i)
serve on corporate, civic or charitable boards or committees (subject to
approval of the Board, which approval shall not be unreasonably withheld), (ii)
deliver lectures, fulfill speaking engagements or teach at educational
institutions, or (iii) manage personal investments, so long as such activities
under clauses (i), (ii) and (iii) do not interfere, in any respect, with the
Executive's responsibilities hereunder.
4. COMPENSATION AND OTHER PAYMENTS.
(A) SALARY. The Company shall pay the Executive a base salary of
at least $1,000,000 per year (the "Base Salary") during the Period of Employment
in accordance with the Company's executive salary policy.
(B) ANNUAL BONUS. Subject to the terms of the Annual Incentive
Plan (the "AIP"), the Executive will be eligible to receive a target annual
bonus of 90% of his Base Salary (the "Target Amount") with a maximum annual
bonus of 180% of his Base Salary.
(C) TRANSITION BONUS. The Company will pay Executive a cash
payment of three million dollars ($3,000,000) on or before January 2000. If the
Executive's employment shall be terminated by the Company for Cause (as defined
under Section 6(b)) or by the Executive other than for Good Reason (as defined
in Section 6(c)) within 12 months of the Effective Date, Executive shall repay
to the Company an amount equal to $3,000,000 multiplied by a fraction, the
numerator of which is 12 minus the number of full months of employment with the
Company and the denominator of which is 12.
(D) ANNUAL LONG-TERM INCENTIVE GRANT. Each February, the Company
will award a Leadership Shares grant under the Leadership Shares Plan of the
Company based on the performance of the Executive. In February 2000, the Company
will grant to the Executive 170,000 Leadership Shares (using a base year
Leadership Value Added ("LVA") equal to 1999 actual LVA).
(E) SPECIAL LONG-TERM INCENTIVE GRANT. In February 2000, the
Company will grant to the Executive 810,000 Leadership Shares (using a base year
LVA equal to the 1999 actual LVA), which shall be subject to all of the terms
and conditions of the Leadership Shares Plan, except as otherwise provided
herein.
(F) REIMBURSEMENT OF PROFESSIONAL FEES. Subject to reasonable and
appropriate substantiation presented by the Executive, the Company shall pay on
the Executive's behalf all statements for reasonable expenses incurred in
connection with the negotiation and execution of this Agreement.
(G) RELOCATION EXPENSES. The Company shall pay the Executive's
reasonable expenses related to the relocation of his primary residence to the
San Francisco metropolitan area in accordance with the Company's relocation
policy, but with the following additions and modifications:
(i) The Company shall reimburse the Executive for temporary
living accommodations for the Executive and his family in the San Francisco
metropolitan area for a period not to exceed one year from the Effective
Date;
(ii) At the election of the Executive, the Company shall
purchase the Executive's current primary residence under the Company's
relocation policy subject to a minimum buy-out of $3.6 million; and
(iii) The Company shall reimburse the Executive for all taxes
payable by the Executive because of relocation-related payments by the
Company, including tax reimbursement payments, but excluding taxes
attributable to capital gains from the sale of his primary residence.
5. OTHER EXECUTIVE BENEFITS.
(a) SUPPLEMENTAL PENSION BENEFIT. The Company shall provide the
Executive with the following supplemental pension benefit.
(i) Subject to paragraph (iii) below, the Executive will
be entitled to receive a supplemental pension benefit, in the form and
at the time described below, equal to the excess of the Pension Amount
(defined below) over the offsets described in (ii) below. For such
purposes, the Pension Amount and each such offset as of any date shall
be the actuarial equivalent of such Pension Amount or offset
determined as if it were payable in the form of a straight life
annuity commencing as of the Executive's normal retirement date under
the Company's Revised Home Office Pension Plan ("XXXX"), and using the
actuarial assumptions set forth in the XXXX, as in effect on the
Effective Date. For these purposes, the Pension Amount shall equal the
normal retirement benefit to which the Executive would be entitled
under the terms of XXXX as in effect on the Effective Date if (A) his
Benefit Service (as defined in the XXXX on the Effective Date) were
equal to his actual years of Benefit Service plus 18 years and (B) his
Final Average Compensation (as defined in the XXXX on the Effective
Date) were equal to the greater of his actual Final Average
Compensation or the sum of his initial Base Salary and Target Amount
described in Section 4(a) and (b), respectively without regard to any
dollar limitation on compensation contained in the XXXX.
(ii) The offsets shall be (A) the benefits provided to
Executive under any qualified or non-qualified defined benefit plans
of the Company (including, if applicable, any cash balance pension
plan), (B) the benefits owed to Executive under any qualified or non-
qualified defined benefit plans maintained by any prior employer of
the Executive, and (C) the projected unreduced Social Security benefit
of the Executive assuming constant earnings from the date of
termination to his normal retirement age.
(iii) Except as otherwise provided below, the supplemental
pension benefit will vest 1/36th for each month of the Executive's
Service (as defined in the XXXX on the Effective Date) with the
Company after the Effective Date. Notwithstanding the foregoing, the
Executive will forfeit all rights to the
supplemental pension benefit if, prior to September 30, 2002, the
Company terminates the Executive's employment for Cause or if the
Executive terminates employment with the Company other than for Good
Reason. In the event the Company terminates the Executive's employment
or the Executive shall resign for Good Reason within 12 months after a
Change in Control (defined below), the supplemental pension benefit
will fully vest and will be determined as set forth in paragraph
(a)(i) above (A) using the years of Benefit Service and age Executive
would have attained as of the last day of the Period of Employment
(determined without regard to termination of employment) and (B)
taking into account for purposes of determining Final Average
Compensation, the salary and bonus-based termination benefits payable
under this Agreement though the last day of the Period of Employment.
(iv) The Executive may elect to receive the supplemental
pension benefit at any time and in any form available under the XXXX
or any non-qualified defined benefit plan of the Company as in effect
on the Effective Date, or as may be available under any qualified or
non-qualified defined benefit plan of the Company hereafter. For
commencement of benefits prior to age 65, the supplemental pension
benefit will be subject to reduction pursuant to the early retirement
benefit provisions of the XXXX and non-qualified defined benefit plan
as in effect on the Effective Date and shall be Determined as if the
Executive is early retirement eligible (regardless of his attained age
or years of Benefit Service at the time of termination of employment).
(v) If the Executive dies after the Effective Date but
before the supplemental pension benefit becomes payable, his wife will
receive a supplemental survivor annuity for her life in an amount
equal to 50% of the supplemental benefit that would have been payable
to the Executive hereunder as if (i) he had terminated his employment
immediately before his death, (ii) he was eligible for early
retirement (regardless of his attained age or years of Benefit Service
at the time of death), (iii) he was fully vested in the supplemental
pension benefit as of such date, and (iv) he elected to receive the
benefit in the form of a Qualified Joint and Survivor Annuity (as
defined in the XXXX).
(B) REGULAR REIMBURSED BUSINESS EXPENSES. The Company shall
promptly reimburse the Executive for all expenses and disbursements reasonably
incurred by the Executive in the performance of his duties hereunder during the
Period of Employment and to the extent consistent with the applicable Company
policies. In addition, the Company shall reimburse the Executive for reasonable
expenses incurred to obtain any amounts owed to the Executive under Section
5(a)(ii)(B) above.
(C) BENEFIT PLANS. The Executive and his eligible family members
shall be entitled to participate immediately, on terms no less favorable to the
Executive and his eligible family members than the terms generally offered to
senior executives of the Company, in any employee benefit plan or arrangement or
other fringe benefits of the Company, automobile
allowance, club memberships and dues, and similar programs (collectively
referred to as the "Benefits"). In the event that any health programs or
insurance policies applicable to the Benefits provided hereunder contain a
preexisting conditions clause, or in the event that the Executive does not
qualify for disability insurance under the appropriate plan, the Company shall
either obtain a waiver from such provision with respect to the Executive and/or
his eligible family members or self-insure the Executive and/or his eligible
family members with respect to such conditions.
6. TERMINATION.
(A) DEATH OR DISABILITY. This Agreement and the Period of
Employment shall terminate automatically upon the Executive's death. The Company
may also terminate this Agreement in the event of a Disability. In such event,
the Executive's employment with the Company shall terminate effective 30 days
after receipt by the Executive of notice given any time after a period of 120
consecutive days of Disability or a period of 180 days of Disability within any
12 consecutive months, and, in either case, while such Disability is continuing
("Disability Effective Date"). "Disability" means the Executive's inability to
substantially perform his duties hereunder, with or without reasonable
accommodation, as evidenced by a certificate signed by a physician mutually
acceptable to the Company and the Executive.
(B) BY THE COMPANY FOR CAUSE. The Company may terminate the
Executive's employment for Cause. For purposes of this Agreement, " Cause" shall
mean that (i) the Executive has plead "guilty" or "no contest" to or has been
convicted of an act which is defined as a felony under federal or state law,
(ii) engaged in conduct that constitutes willful neglect or willful misconduct
with respect to employment duties under this Agreement, resulting, in either
case, in material economic harm to the Company or substantial damage to the
Company's reputation, or (iii) willful disobedience by the Executive of lawful
directions received from or policies established by the Chairman of the Board of
Directors of the Company or the Board of Directors, which continues for more
than 30 days after the Company notifies the Executive of its intention to
terminate his employment on account of such disobedience. Notwithstanding the
foregoing, the Board may not terminate the Executive's employment for Cause
unless the Executive is given at least 30 days written notice of the Board
meeting called to make such determination, and the Executive is given the
opportunity to address such meeting, with the assistance of counsel if so
desired.
(C) BY EXECUTIVE FOR GOOD REASON. During the Period of Employment,
the Executive may terminate his employment within 90 days of any event that
constitutes Good Reason, provided that he has given not less than 30 days
advance notice to the Company. For purposes of this Agreement, "Good Reason"
shall mean:
(i) the assignment to the Executive of any duties materially
inconsistent with the Executive's position as President and Chief Executive
Officer of the Company and that result in a significant diminution of
responsibility;
(ii) any material failure by the Company to comply with the
provisions of this Agreement;
(iii) any removal of the Executive from his position as the
President and Chief Executive Officer of the Company, unless in any such
instance the Company shall have reason to terminate the Executive's
employment hereunder for Cause; and
(iv) the Company's requiring the Executive to be based in any
office or location other than in the San Francisco metropolitan area, and
other than on travel reasonably required to carry out the Executive's
obligations under this Agreement.
(D) OTHER THAN FOR CAUSE OR GOOD REASON. The Company or the Executive
may terminate this Agreement for any reason other than for Cause or Good Reason,
respectively, upon not less than 30 days written notice to the Company or
Executive, as the case may be.
(E) NOTICE OF TERMINATION. Any termination by the Company for Cause
or other than for Cause, or by the Executive for Good Reason or for other than
Good Reason, shall be communicated by notice of termination to the other party
not less than 30 days prior to the termination effective date. For purposes of
this Agreement, "Date of Termination" means the date specified in the Notice of
Termination; provided, however, that if the Executive's employment is terminated
by reason of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the case may be.
7. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(A) GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If the
Company shall terminate the Executive's employment (other than for Cause,
Disability or death) or if, during the Period of Employment, the Executive shall
terminate his employment within 90 days of an event that constitutes Good
Reason, the Company shall pay to the Executive the aggregate of the following
amounts with respect to items (i) and (ii) and will cause the Executive to
receive the benefits described in (iii) and (iv):
(i) three times the sum of (1) the Executive's Base Salary as
of the Date of Termination plus (2) the Executive's most recent target
bonus, or if greater, most recent annual bonus payment, payable in a lump
sum within 30 days following the Date of Termination;
(ii) any obligations accrued or earned by (and, except as
provided under (iii) below, to the extent vested) the Executive under the
terms of any plan, contract or arrangement of the Company on the Date of
Termination (hereinafter referred to as "Accrued Obligations");
(iii) Leadership Shares in the Special Long-Term Incentive Grant
under Section 4(e) in an amount equal to the greater of (i) the number of
such Leadership Shares vested under the terms of the Leadership Shares Plan
of the Company on the Date of
Termination, or (ii) the number of such shares determined by multiplying
13,500 by the number of months of Service (as defined in the XXXX on the
Effective Date) of the Executive on the Date of Termination, which
Leadership Shares shall remain outstanding through the end of their
original term; and
(iv) if the Executive has not yet attained age 55 as of the Date
of Termination, the Company shall continue medical benefits to the
Executive and/or the Executive's family at least equal to those which would
have been provided to them in accordance with Section 5(c) of this
Agreement if the Executive's employment had not been terminated, and
thereafter the Executive shall be treated as a retired senior executive of
the Company for purposes of medical benefits provided by the Company to
such retirees.
(B) CHANGE IN CONTROL. If the Company shall terminate the Executive's
employment for any reason other than for Cause or the Executive shall resign for
Good Reason within 12 months after a Change in Control, the Company shall
provide the Executive with the aggregate of the following amounts and benefits:
(i) each of the benefits provided under Section 7(a) above;
(ii) full and immediate vesting in the supplemental pension
benefit under Section 5(a);
(iii) full and immediate vesting in each Annual Long-Term
Incentive Grant under Section 4(d) and in each Special Long-Term
Incentive Grant under Section 4(e) to the' extent yet vested-as of the
Date of Termination, which Grants shall remain outstanding~though the
end of their respective original terms; and
(iv) if the Executive has not yet attained age 55 as of the Date
of Termination, the Company shall continue medical benefits to the
Executive and/or the Executive's family at least equal to those which
would have been provided to them in accordance with Section 5(c) of
this Agreement if the Executive's employment had not been terminated,
and thereafter the Executive shall be treated as a retired senior
executive of the Company for purposes of medical benefits provided by
the Company to such retirees.
For purposes of this Agreement, a "Change in Control" shall be deemed to have
occurred when any person (as that term is used in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended, but excluding the Company, or any
of its "controlled group members" (as defined under Section 1563 of the Internal
Revenue Code of 1986, as amended), or any employee benefit plan of the Company
or any controlled group member, or any person organized, appointed or
established by the Company or any controlled group member for or pursuant to the
terms of any such plan, or any person who is affiliated through ownership or
familial relations with any holder of the Company's outstanding securities as of
the Effective Date), has acquired, directly or indirectly, beneficial ownership
of securities representing 51 percent or more of the
total votes THAT COULD BE CAST BY THE holders of all of the Company's
outstanding securities entitled to vote in elections of Directors.
(C) CAUSE; OTHER THAN GOOD REASON. If the Executive's employment
shall be terminated by the Company for Cause or by the Executive other than for
Good Reason, this Agreement shall terminate without further obligations to the
Executive, other than Accrued Obligations (which do not include any target bonus
that is not payable as of the Date of Termination and/or any Leadership Shares
that have not vested as of the Date of Termination).
(D) DISABILITY. If the Executive's employment is terminated by reason
of the Executive's Disability, this Agreement shall terminate without further
obligations to the Executive, other than Accrued Obligations.
(E) DEATH. If the Executive's employment is terminated by reason of
the Executive's death, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement other
than Accrued Obligations and supplemental pension amounts, as provided under
Section 5(a).
8. INDEMNIFICATION. The Company shall maintain, for the benefit of tile
Executive, director and officer liability insurance in form at least as
comprehensive as, and in an amount that is at least equal to, that maintained by
the Company on August 1, 1999.
9. CONFIDENTIAL INFORMATION, NON-COMPETITION, NON-SOLICITATION. The
following provisions shall apply to the extent permissible under applicable law:
(A) The Executive shall hold in a fiduciary capacity for the benefit
of the Company all secret -or confidential information, knowledge or data
relating to the Company, including any of its subsidiaries and affiliates.
The Company shall be entitled to injunctive relief to prevent any breach or
threatened breach of this Section.
(B) For at least one year after the Period of Employment, the
Executive shall not, without the prior written consent of the Company,
utilize any confidential information of the Company to own, manage,
operate, join, control, be employed by (in an executive or managerial
capacity), consult with or participate in any business that competes,
directly or indirectly, with the Company, which may result in harm
(economic or to reputation) to the Company; provided, however, that the
ownership by the Executive after his Date of Termination of not more than
two percent of the voting stock of any publicly held corporation shall not
be a violation of this Section 9(b).
(C) For at least one year after the Period of Employment, the
Executive shall not (i) interfere with or harm, or attempt to interfere
with or harm, the relationship of the Company with any person who at any
time was an employee, customer or supplier of the Company or otherwise had
a business relationship with the Company; (ii) solicit for employment or
hire any person who is or was during the prior year an employee of the
Company, or (iii) solicit similar business from any customer of the
Company.
10. TAXES.
(A) In the event that the aggregate of payments or benefits provided
to the Executive under Section 7(b) above constitute a Parachute Payment, as
defined in Section 280G(b)(2) of the Internal Revenue Code, the Company shall
pay to the Executive an additional amount which is equal to the applicable
excise tax on the Executive, plus any taxes on reimbursement payments made to
the Executive under this Section 10.
(B) Notwithstanding paragraph (a) above, if the After-Tax Amount (as
defined below) of the payment of benefits under Section 7(b) and the gross-up
payment do not exceed 110 percent of the After-Tax Floor Amount (as defined
below), then no gross-up payment shall be made to the Executive and the amount
of benefits under Section 7(b) shall be reduced (but not below the Floor Amount)
to the largest amount which would both (i) not cause any excise tax to the
executive, and (ii) not cause any nondeductibility by the Company. "After-Tax
Amount" is the amount that remains after payment of all federal, state and local
or other taxes. "Floor Amount" means the greatest pre-tax amount of benefits
that could be paid to the Executive without causing the Executive to be subject
to any excise taxes. "After-Tax Floor Amount" means the after-tax amount of the
Floor Amount.
11. SUCCESSORS. This Agreement is personal to the Executive and shall
not be assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's heirs and legal representatives. This Agreement
shall inure to the benefit of and be binding upon the Company and its successors
and assigns.
12. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of California, without reference to principles of
conflicts of laws.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party, by overnight
courier, or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Xxxxxx X. Xxxxxxxx
000 X. 00.x Xx.
Xxx. 00 X
Xxx Xxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Vedder, Price, Xxxxxxx & Kammholz
000 X. XxXxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, XX 00000
If to the Company:
Xxxxxx X. Xxxxxx
Senior Vice President and General Counsel
Levi Xxxxxxx & Co.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
or to such other address as any of the parties shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(C) None of the provisions of this Agreement shall be deemed to be a
penalty.
(D) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(E) Either party's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision hereof.
(F) This Agreement (which includes the agreements referenced herein)
supersedes any prior employment agreement or understandings, written or verbal
between the Company and the Executive and contains the entire understanding of
the Company and the Executive with respect to the subject matter hereof.
(G) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS HEREOF, the parties have executed this Agreement all as of the
day and year first above written.
XXXXXX X. XXXXXXXX XXXX XXXXXXX & CO.
_________________________ By:____________________________
Xxxxxx X. Xxxx
Chairman and Chief Executive Officer
Date:____________________ Date:__________________________
