Exhibit 10.1
AMENDMENT NO. 1
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TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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AMENDMENT No. 1 dated as of November 4, 2000 to Amended and
Restated Employment Agreement dated as of June 7, 1999 (the "Employment
Agreement") by and between NORTON ▇▇▇▇▇▇▇▇▇▇ OF ▇▇▇▇▇▇, INC., a New York
corporation (the "Company"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (the "Employee").
W I T N E S S E T H :
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WHEREAS, the Company and the Employee have heretofore entered
into an Employment Agreement dated as of April 30, 1997 (the "Old Employment
Agreement"), which Old Employment Agreement was amended and restated in its
entirety pursuant to the Employment Agreement; and
WHEREAS, the Company and the Employee desire to amend and
restate certain sections of the Employment Agreement as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the parties hereto hereby agree as
follows:
A. The first sentence of Section 2 of the Employment
Agreement is hereby amended and restated to read in its entirety as follows:
"The Employee shall serve in the positions of Chairman of the
Board, Chief Executive Officer, President and Chief Operating
Officer of the Company in the New York City metropolitan
area."
B. Section 3 of the Employment Agreement is hereby amended
and restated to read in its entirety as follows:
"3. Compensation.
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3.1 Salary. During the Term, in consideration of
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the performance by the Employee of the services set forth in
Section 2 and his observance of the other covenants set forth
herein, the Company shall pay the Employee, and the Employee
shall accept, a salary at a rate of $800,000 per annum for the
fiscal year of the Company ending in 2001, $900,000 per annum
for the fiscal year of the Company ending in 2002 and
$1,000,000 per annum for the fiscal year of the Company ending
in 2003, payable in accordance with the standard payroll
practices of the Company.
3.2 Bonus. During the Term, in addition to the
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salary provided for in Section 3.1, the Employee shall
participate in the 2001 ▇▇▇▇▇▇▇▇▇▇
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Apparel Group Inc. Incentive Bonus Plan for Senior Officers
(the "Bonus Plan"), subject to the approval of the Bonus Plan
by the stockholders of the Company at the annual meeting of
the stockholders in March 2001, and any successor p lan to the
Bonus Plan. The Employee's Target Bonus for the Applicable
Fiscal Year under, and as defined in, the Bonus Plan shall be
an amount equal to 80% of the Employee's salary for the
Applicable Fiscal Year as set forth in Section 3.1. The
Employee shall be eligible to participate in any other bonus
or compensation plan for executives of the Company in effect
during the Term.
3.3 Options.
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(a) Confirmation of Terms. The Company and the
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Employee acknowledge and agree that (i) pursuant to Section
3.4 of the Old Employment Agreement, on April 30, 1997, the
Parent granted to the Employee options (the "First Options")
to purchase an aggregate of 700,000 shares of Common Stock of
the Parent at an exercise price of $5.50 per share, all of
which First Options are currently exercisable and (ii) on
April 28, 1999, the Parent granted to the Employee options
(the "Second Options"; and together with the First Options,
the "Employment Agreement Options") to purchase an aggregate
of 100,000 shares of Common Stock of the Parent at an exercise
price of $5.50 per share, one-third (1/3) of which Second
Options became exercisable on April 28, 2000 and another
one-third (1/3) of which Second Options will become
exercisable on each of April 28, 2001 and April 28, 2002
respectively, and which Second Options were intended to be and
are subject to the same terms and conditions pursuant to
Section 3.4 of the Old Employment Agreement as the First
Options (except as to vesting). The Company and the Employee
also agree that (i) the Employment Agreement Options shall, in
addition to the terms and conditions thereof set forth in this
subsection (a), be subject to the terms and conditions set
forth in subsections (b), (c) and (d) below and (ii) in the
event of any conflict between this Section 3.3, on the one
hand, and the stock option certificates evidencing Employment
Agreement Options or Section 3.4 of the Old Employment
Agreement, on the other hand, the terms and conditions of this
Section 3.3 shall control.
(b) Change in Control. In connection with any
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merger or consolidation involving the Parent which results in
the holders of the outstanding voting securities of the Parent
(determined immediately prior to such merger or consolidation)
owning less than a majority of the outstanding voting
securities of the surviving corporation (determined
immediately following such merger or consolidation), or any
sale or transfer by the Parent of all or substantially all its
assets or any tender offer or exchange offer for or the
acquisition, directly or indirectly, by any person or group of
all or a majority of the then outstanding voting
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securities of the Parent, in each case occurring during the
Term, all outstanding Second Options shall become vested and
exercisable in full, notwithstanding any other provision
hereof, on and after (i) fifteen (15) days prior to the
effective date of such merger, consolidation, sale, transfer
or acquisition or (ii) the date of commencement of such tender
offer or exchange offer, as the case may be.
(c) Term of Options. Except as provided below,
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the term of the Employment Agreement Options shall be ten
years from the applicable date of grant.
(i) (a) In the event of termination of the
employment of the Employee pursuant to Section 6.1 of this
Agreement, (b) in the event of the termination of the
employment of the Employee with the Company following the Term
as a result of the death of the Employee, or (c) in the event
of the death of the Employee during the Consulting Term (as
defined in Section 7.1 below), then in any case, the
Employee's estate shall be entitled to exercise, for a period
of two years from the date of the Employee's death, that
number of Employment Agreement Options which are vested and
exercisable on the date of the Employee's death.
(ii) (a) In the event of termination of the
employment of the Employee pursuant to Section 6.2 of this
Agreement, the Employee shall be entitled to exercise, for the
Disability Exercise Term (as hereinafter defined), that number
of Employment Agreement Options which are vested and
exercisable on the date of termination of the employment of
the Employee; for purposes hereof, "Disability Exercise Term"
shall mean the Disability Salary Continuation Period (as
defined in Section 6.2 of this Agreement) plus two years, (b)
in the event of termination of the employment of the Employee
with the Company is terminated by the Company or the Employee
following the Term as a result of a Disability (as defined in
Section 6.2 below as if such Section were in effect at the
time), the Employee shall be entitled to exercise, for a
period of two years from the date of such termination, that
number of Employment Agreement Options which are vested and
exercisable on the date of termination of the employment of
the Employee or (c) in the event of termination of the
consultancy of the Employee with the Company pursuant to
Section 7 as a result of a Disability, the Employee shall be
entitled to exercise, for a period of two years from the date
of such termination, that number of Employment Agreement
Options which are vested and exercisable on the date of
termination of the consultancy.
(iii) (a) In the event of termination of the
employment of the Employee by the Company for Due Cause
pursuant to Section 6.3 of this Agreement, (b) in the event of
termination of the employment of the Employee by the Company
following the Term for Due Cause (as defined in Section 6.3
below as if such Section were in effect at the time),
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or (c) in the event that the agreements and obligations of the
Company set forth in Section 7 are terminated by the Company
during the Consulting Term for Due Cause pursuant to Section
7.4 hereof, then in any case, no Employment Agreement Options
shall be exercisable.
(iv) (a) In the event of termination of the
employment of the Employee by the Company pursuant to Section
6.4 of this Agreement, the Employee shall be entitled to
exercise, for the Exercise Term (as hereinafter defined), that
number of Employment Agreement Options which are vested and
exercisable on the date of termination of the employment of
the Employee; for purposes hereof, "Exercise Term" shall mean
the Salary Continuation Period (as defined in Section 6.4 of
this Agreement) plus two years or (b) in the event of
termination of the employment of the Employee by the Company
following the Term for whatever reason it deems appropriate
(other than under the circumstances contemplated by clauses
(c)(ii)(b) or (c)(iii)(b) above) or without reason, the
Employee shall be entitled to exercise, for a period of two
years from the date of such termination, that number of
Employment Agreement Options which are vested and exercisable
on the date of termination of the employment of the Employee.
(v) (a) In the event of termination of the
employment of the Employee with the Company by the Employee
during the Term for any reason other than pursuant to Sections
6.1, 6.2 or 6.6 of this Agreement, no Employment Agreement
Options shall be exercisable, (b) in the event of termination
of the employment of the Employee with the Company by the
Employee following the Term for any reason (other than under
the circumstances contemplated by clauses (c)(i)(b) or
(c)(ii)(b) above), or (c) in the event the Employee terminates
the consulting agreements under Section 7 hereof during the
Consulting Term, in any case, no Employment Agreement Options
shall be exercisable.
(vi) Except as otherwise provided in
clauses (i), (ii), (iii) and (v) above, in the event that
Section 7 hereof shall become applicable, the Employee shall
be entitled to exercise, for a period of two years from the
date of commencement of the Consulting Term, that number of
Employment Agreement Options which are vested and exercisable
on the date of commencement of the Consulting Term.
(d) Adjustments. In the event of any
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dividend or other distribution (whether in the form of cash,
Common Stock, other securities or other property),
recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off,
combination, or repurchase or exchange of Common Stock or
other securities of the Parent, the Board of Directors shall,
in such manner as it may deem equitable, adjust the number of
shares of Common Stock (or other
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securities or property) subject to the Employment Agreement
Options or the exercise price with respect to any Employment
Agreement Options.
3.4 Limitation on Sales of Common Stock. The
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Employee agrees, for the benefit of the Company and the
Parent, that during the period of his employment with the
Company and at all times thereafter for so long as he shall
beneficially own in the aggregate more than 100,000 shares of
Common Stock or Employment Agreement Options and whether or
not he is at the time deemed to be an "affiliate" (as such
term is used in Rule 144 under the Securities Act of 1933, as
amended) of the Company or the Parent, he shall not sell
shares of Common Stock in excess of the volume limitation
which from time to time would be applicable to him under Rule
144(e)(1) determined as if he were an affiliate."
C. Sections 6.1, 6.2 and 6.4 of the Employment Agreement
are hereby amended and restated to read in their entirety as follows:
"6.1 Death. In the event of the death of the
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Employee during the Term, the Company shall pay to the estate
or other legal representative of the Employee the salary
provided for in Section 3.1 accrued to the date of the
Employee's death and not theretofore paid to the Employee. In
addition, under such circumstances, the Company shall pay to
the estate or other legal representative of the Employee an
amount equal to (a) the bonus payable to the Employee pursuant
to Section 3.2 of this Agreement, multiplied by (b) a
fraction, the numerator of which is the number of days elapsed
during the Company's fiscal year to the date of the Employee's
death and the denominator of which is 365. Rights and benefits
of the estate or other legal representative of the Employee
under the benefit plans and programs of the Company shall be
determined in accordance with the provisions of such plans and
programs. Neither the estate or other legal representative of
the Employee nor the Company shall have any further rights or
obligations under this Agreement, except as provided in
Section 3.3 of this Agreement and in or pursuant to any other
benefit or option plan of the Company or the Parent in which
the Employee participates.
6.2 Disability. If during the Term the Employee
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shall become incapacitated by reason of physical or mental
disability and shall be unable to perform his normal duties
hereunder for a cumulative period of six (6) months in any
period of twelve (12) consecutive months (a "Disability"), the
employment of the Employee hereunder may be terminated by the
Company or the Employee upon notice to the other. In the event
of such termination, subject to Section 5.4 of this Agreement,
the Company shall continue to pay to the Employee the salary
provided for in Section 3.1 for the remainder of the Term (the
period of time during which the Company shall be required to
continue to pay such salary, the "Disability Salary
Continuation Period"). In addition, under such circumstances,
the Company shall pay to the Employee an amount equal
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to (a) the bonus payable to the Employee pursuant to Section
3.2 of this Agreement, multiplied by (b) a fraction, the
numerator of which is the number of days elapsed during the
Company's fiscal year to the date on which the Employee's
Disability occurs and the denominator of which is 365. Rights
and benefits of the Employee under the benefit plans and
programs of the Company s hall be determined in accordance
with the provisions of such plans and programs. Neither the
Employee nor the Company shall have any further rights or
obligations under this Agreement, except as provided in
Section 3.3, 8, 9, 10 and 11 hereof and in or pursuant to any
other benefit or option plan of the Company or the Parent in
which the Employee participates.
6.4 Other Termination by the Company. The Company
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may terminate the Employee's employment at any time during the
Term for whatever reason it deems appropriate or without
reason; provided, however, that in the event that such
termination is not pursuant to Section 6.1, 6.2, 6.3, or 6.6,
the Company shall continue to pay to the Employee the salary
provided for in Section 3.1 for the remainder of the Term (the
period of time during which the Company shall be required to
continue to pay such salary, the "Salary Continuation
Period"). In addition, under such circumstances, the Company
shall pay to the Employee the bonus otherwise payable to the
Employee pursuant to Section 3.2 of this Agreement for the
fiscal year of the Company in which such termination occurs.
Rights and benefits of the Employee under the benefit plans
and programs of the Company shall be determined in accordance
with the provisions of such plans and programs. Neither the
Employee nor the Company shall have any further rights or
obligations under this Agreement, except as provided in
Sections 3.3, 7, 8, 9, 10 and 11 hereof and in or pursuant to
any other benefit or option plan of the Company or the Parent
in which the Employee participates."
D. Section 6 of the Employment Agreement is
hereby amended by adding the following new Sections 6.5, 6.6 and 6.7 at the end
thereof:
"6.5 Constructive Termination Following a Change in
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Control. Anything herein to the contrary notwithstanding, if,
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during the period equal to the lesser of (i) the then
remaining Term hereunder following a Change in Control and
(ii) the one (1) year period following a Change in Control,
either the Parent or the Company:
(a) demotes the Employee to a lesser
position than provided in Section 2, in the case of the
Company, or to a lesser position than Chairman of the Board,
Chief Executive Officer, President and Chief Operating Officer
of the Parent, in the case of the Parent;
(b) causes a material change in the nature
or scope of the authorities, powers, functions, duties, or
responsibilities attached to the
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Employee's positions as described in Section 2, in the case of
the Company, or a material change in the nature or scope of
the authorities, powers, functions, duties or responsibilities
attached to the Employee's positions with the Parent, in each
case as in effect on November 4, 2000;
(c) decreases the Employee's salary or
bonus below the levels provided for in Section 3; or
(d) fails to obtain the agreement of a
successor company to assume the obligations of the Company
under this Agreement as required by Section 12;
then such action (or inaction) by the Company, unless
consented to in writing by the Employee, shall constitute a
termination of the Employee's employment by the Company
pursuant to Section 6.6 (a "Constructive Termination of
Employment"). Notwithstanding the preceding sentence, within
thirty (30) days after learning of an action (or inaction)
constituting the basis for a Constructive Termination of
Employment, the Employee may (unless he gives written consent
thereto) advise the Company in writing that such action (or
inaction) constitutes a Constructive Termination of
Employment, in which event the Company shall have thirty (30)
days from the date of such written advice in which to correct
such action (or inaction) and if the Company does so correct
such action (or inaction) the Employee shall not be entitled
to terminate his employment under this Section as a result of
such action (or inaction).
6.6 Termination of Employment Following a Change
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in Control. In the event that (a) the Company terminates the
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Employee's employment during the period equal to the lesser
of (i) the then remaining Term hereunder following a Change
in Control and (ii) the one (1) year period following a
Change in Control (other than pursuant to Section 6.3) or (b)
a Constructive Termination of Employment occurs, the Company
shall pay to the Employee within ten (10) business days of
such termination an amount equal to the greater of (A) the
aggregate salary provided for in Section 3.1 during the
remainder of the Term or (B) one half (1/2) of the sum of (1)
the aggregate salary paid to the Employee during the two year
period ending on the date of the Change in Control and (2)
the aggregate bonuses paid to the Employee for the two fiscal
years of the Company ended prior to the date of the Change in
Control. In either case, notwithstanding anything to the
contrary contained herein, the Employee shall not be required
to seek subsequent employment or to offset any amounts earned
from any subsequent employment (whether as an employee, a
consultant or otherwise) against such amounts payable by the
Company. Rights and benefits of the Employee under the
benefit plans and programs of the Company shall be determined
in accordance with the provisions of such plans and programs.
Neither the Employee nor the Company shall have any further
rights or obligations under this
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Agreement, except as provided in Sections 3.3, 8, 9 and 11
hereof and in or pursuant to any other benefit or option plan
of the Company or the Parent in which the Employee
participates. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if:
(a) a "person" (meaning an individual, a
partnership, or other group or association as defined in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, other than the Employee or a group including the
Employee), acquires fifty percent (50%) or more of the
combined voting power of the outstanding securities of the
Parent having a right to vote in elections of directors; or
(b) Continuing Directors shall for any
reason cease to constitute a majority of the Board of
Directors of the Parent; or
(c) the business of the Parent is
disposed of in a disposition of all or substantially all of
its assets (including stock of subsidiary(s)).
For purposes of this Agreement, the term
"Continuing Director" shall mean a member of the Board of
Directors of the Parent who either was a member of such Board
of Directors on the date hereof or who subsequently became a
member of such Board of Directors and whose election, or
nomination for election, was approved by a vote of at least
two-thirds of the Continuing Directors then in office.
6.7 Excise Tax Gross Up. Notwithstanding any
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provision in this Agreement to the contrary, if any payment to
or for the benefit of the Employee under this Agreement,
either alone or together with other payments to or for the
benefit of the Employee, is subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code", such payments referred to hereinafter as
"Change of Control Payments" and such tax referred to
hereinafter as the "Excise Tax"), the Company shall pay to the
Employee such additional amount (the "Gross-up Payment") as
may be necessary to place the Employee in the same after-tax
position as if no portion of the Change of Control Payments
and any amounts paid to the Employee pursuant to this Section
6.7 had been subject to the Excise Tax. For purposes of
determining the amount of the Gross-up Payment, the Employee
shall be deemed (i) to pay federal income tax at the highest
marginal rate of federal income taxation for the calendar year
in which the Gross-up Payment is to be made and (ii) to pay
any applicable state and local income taxes at the highest
marginal rate of taxation for the calendar year in which the
Gross-up 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. The amount
of the Gross-up Payment shall be determined by the
Compensation Committee of the Board of Directors acting
reasonably,
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promptly and in good faith and shall be paid in cash within
ten (10) business days after the determination of such amount,
but in any event not later than the business day prior to the
date on which the Employee would otherwise pay his federal
income taxes for the applicable year in which the Excise Tax
is imposed."
E. Section 7.1 of the Employment Agreement is hereby
amended by deleting the last sentence thereof and inserting the following
sentence in its place:
"Subject to Section 7.2 hereof, during the Consulting Term, in
consideration of the performance by the Employee of services
set forth in this Section 7.1, the Company shall pay the
Employee, and the Employee shall accept, a consulting fee (the
"Fee") (payable on the 15th day of each month for the month in
which the payment occurs) in an amount per month equal to the
quotient obtained by dividing (x) the sum of (i) the
Employee's annual salary under Section 3.1 for the fiscal year
immediately preceding the commencement of the Consulting Term
(the "Reference Year") and (ii) the bonus paid to the Employee
for the Reference Year under Section 3.2 by (y) twelve (12)."
F. The references in Sections 7.2 and 7.4 hereof to
"Section 3.4 of the 1997 Agreement" are hereby deleted and replaced with
references to "Sections 3.3 and 3.4 hereof."
G. The Employment Agreement, as hereby amended, continues
in full force and effect and is hereby ratified and confirmed in all respects.
H. This Amendment No. 1 may be executed in counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Amendment No. 1 as of the date first above written.
NORTON ▇▇▇▇▇▇▇▇▇▇ OF ▇▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
EMPLOYEE:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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