EXHIBIT 10.28
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
SECOND AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (“Agreement”), dated as of December 23, 2008,
between CALVIN KLEIN, INC., a New York corporation
(“CKI”, together with its affiliates, including,
without limitation, its parent corporation, Phillips-Van Heusen
Corporation (the “Company”; the Company shall refer to
CKI or Phillips-Van Heusen Corporation (“PVH”) or PVH
and its affiliates and subsidiaries, including CKI, collectively,
as the context may require), and PAUL THOMAS MURRY (the
“Executive”).
W I T N E S S E T H:
WHEREAS, the Company has previously
entered into an Amended and Restated Employment Agreement with the
Executive, dated as of June 14, 2007 (the “Existing
Agreement”), and the parties desire to amend and restate the
Existing Agreement to comply with Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), and to
make certain other changes to the Existing Agreement so as to
ensure that the Executive is retained on a full-time basis in
accordance with the terms set forth herein; and
WHEREAS, the Executive desires to be
employed by the Company on the terms and conditions set forth
herein, and agrees that this Agreement shall amend and supercede
the terms and conditions of the Existing Agreement.
NOW, THEREFORE, in consideration of the
foregoing and the mutual covenants herein contained, the parties
hereto hereby agree as follows:
1.
Employment .
(a)
Effective Date . This Agreement shall be effective as of March
9, 2006, the date on which the Executive’s promotion was made
(the “Effective Date”).
(b)
Employment Period
. The Company agrees to continue to
employ the Executive, and the Executive agrees to continue to be
employed by the Company, in accordance with the terms and
conditions hereof. The Executive shall be an employee at will
and this Agreement shall not constitute a guarantee of employment.
Each of the parties acknowledges and agrees that either party
may terminate the Executive’s employment at any time, for any
reason, with or without Cause (as defined in Section 3(a)).
The period commencing on the Effective Date and ending on the
effective date of the termination of the Executive’s
employment is hereinafter referred to as the “Employment
Period.”
(c)
Position and Duties
. (i) During the
Employment Period, (A) the Executive shall serve as President and
Chief Executive Officer of CKI, with such duties and
responsibilities as shall from time to time be assigned to him and
as are consistent and commensurate with his title and position, and
(B) the Executive’s services shall be performed at the
Company’s headquarters in New York, New York as of the
Effective Date or such other location as may be mutually agreed
between the Company and the Executive, except for travel, and
visits to Company offices and facilities worldwide, reasonably
required to attend to the
Company’s business. The
Executive shall also serve on the Company’s Operating
Committee; provided , however , that the Company may
disband the Operating Committee at any time prior to a Change in
Control (as hereinafter defined).
(ii)
During the Employment Period, and
excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote substantially
all of his business attention and time (with business time
determined in accordance with the Company’s usual and
customary standards for its senior executives) to the business and
affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use
the Executive’s reasonable best efforts to perform faithfully
and conscientiously such responsibilities. During the
Employment Period, the Executive shall be entitled to serve as a
member of the board of directors of a reasonable number of other
companies, to serve on civic and charitable boards and to manage
his personal and family investments, in each case, to the extent
such activities do not materially interfere, in the reasonable
judgment of PVH’s Board of Directors (which, for purposes of
this Agreement, includes any committee thereof, unless the context
requires otherwise (the “Board”)), with the performance
of his duties for the Company and are otherwise consistent with the
Company’s governance policies.
2.
Compensation .
(a)
Base Salary . During the Employment Period, the Company
shall pay the Executive a salary at the annual rate of $850,000
(“Base Salary”), payable in accordance with the normal
payroll procedures of the Company in effect from time to time.
The Executive’s Base Salary shall be reviewed for
increase at least annually by the Board pursuant to its normal
performance review policies for senior executives. Base
Salary shall not be reduced after any increase, and the term Base
Salary as utilized in this Agreement shall refer to the
Executive’s annual base salary as then in effect.
(b)
Incentive and Bonus
Compensation . The
Executive shall be eligible to participate in the Company’s
existing and future bonus and stock option plans and other
incentive compensation programs for similarly situated executives
(collectively, “Plans”), to the extent that the
Executive is qualified to participate in any such Plan under the
generally applicable provisions thereof in effect from time to
time. Such eligibility is not a guarantee of participation in
or of the receipt of any award, payment or other compensation under
any Plan. To the extent the Executive does participate in a
Plan and the Plan does not expressly provide otherwise, the Chief
Executive Officer of PVH and/or the Board, as appropriate, may
determine all terms of participation (including, without
limitation, the type and size of any award, payment or other
compensation and the timing and conditions of receipt thereof by
the Executive) in the Chief Executive Officer’s or the
Board’s sole and absolute discretion. Nothing herein
shall be deemed to prohibit the Company or the Board from amending
or terminating any and all Plans in its sole and absolute
discretion. Except as otherwise provided herein, the terms of
each Plan shall govern the Executive’s rights and obligations
thereunder during the Executive’s employment and upon the
termination thereof. Without limiting the generality of the
foregoing, the definition of “Cause” hereunder shall
not supersede the definition of “cause” in any Plan
(unless the Plan expressly defers to the definition of
“cause” under an executive’s employment
agreement) and any rights of the Executive hereunder upon and
subsequent to the termination of
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the Executive’s employment shall be
in addition to, and not in lieu of, any right of the Executive
under any Plan then in effect upon or subsequent to a termination
of employment.
(c)
Benefits . The Executive shall be eligible to
participate in all employee benefit and insurance plans sponsored
or maintained by the Company for similarly situated executives
(including any savings, retirement, life, health and disability
plans), to the extent that the Executive is qualified to
participate in any such plan under the generally applicable
provisions thereof in effect from time to time. Nothing
herein shall be deemed to prohibit the Company or the Board from
amending or terminating any such plan in its sole and absolute
discretion. Except as otherwise provided herein, the terms of
each such plan shall govern the Executive’s rights and
obligations thereunder during the Executive’s employment and
upon the termination thereof.
(d)
Expenses . The Company shall pay or reimburse the
Executive for reasonable expenses incurred or paid by the Executive
in the performance of the Executive’s duties hereunder in
accordance with the generally applicable policies and procedures of
the Company, as in effect from time to time and subject to the
terms and conditions thereof. Such procedures include the
reimbursement of approved expenses within 30 days after approval.
Section 409A (as defined in Section 7(l)) prohibits
reimbursement payments from being made any later than the end of
the calendar year following the calendar year in which the
applicable expense is incurred or paid. Also under Section
409A (i) the amount of expenses eligible for reimbursement during
any calendar year may not affect the amount of expenses eligible
for reimbursement in any other calendar year, and (ii) the right to
reimbursement under this Section 2(d) cannot be subject to
liquidation or exchange for another benefit.
3.
Termination of Employment
. The Executive’s employment
hereunder shall terminate, or shall be subject to termination at
any time, as described in this Section 3. A termination of
employment shall mean that the Executive has ceased to provide any
services as an employee of the Company.
(a)
Termination for Cause by the
Company . The Company
may terminate the Executive’s employment with the Company at
any time for Cause. Upon such termination, the Company shall
have no further obligation to the Executive hereunder except for
the payment or provision, as applicable, of (i) the portion of the
Base Salary for periods prior to the effective date of termination
accrued but unpaid (if any), (ii) all unreimbursed expenses (if
any), subject to Section 2(d), and (iii) other payments,
entitlements or benefits, if any, in accordance with terms of the
applicable plans, programs, arrangements or other agreements of the
Company or any affiliate thereof (other than any severance plan or
policy) as to which the Executive held rights to such payments,
entitlements or benefits, whether as a participant, beneficiary or
otherwise on the date of termination (“Other
Benefits”). For the avoidance of doubt, the Executive
shall have no right to receive any amounts under the
Company’s severance policy upon his termination for
Cause.
(i)
For purposes of this Agreement,
“Cause” shall be defined as: (1) gross negligence
or willful misconduct, as the case may be, in the performance of
the material responsibilities of the Executive’s office or
position, which results in material economic harm to the Company or
its affiliates or in material reputational harm causing
demonstrable injury to the Company or its affiliates; (2) the
willful and continued failure of the Executive to
perform
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substantially the Executive’s
duties with the Company or any affiliate (other than any such
failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to the Executive by the Board or the Company that
specifically identifies the manner in which the Board or the
Company believes that the Executive has not substantially performed
the Executive’s duties, and the Executive has not cured such
failure to the reasonable satisfaction of the Board or the Company
within 20 days following the Executive’s receipt of such
written demand; (3) the Executive is convicted of, or pleads guilty
or nolo contendere to, a felony within the meaning of U.S. Federal,
state or local law (other than a traffic violation); (4) the
Executive having willfully divulged, furnished or made accessible
to anyone other than the Company, its directors, officers,
employees, auditors and legal advisors, otherwise than in the
ordinary course of business, any Confidential Information (as
hereinafter defined); or (5) any act or failure to act by the
Executive, which, under the provisions of applicable law,
disqualifies the Executive from acting in any or all capacities in
which he is then acting for the Company.
(ii)
For purposes of this provision, no act or
failure to act, on the part of the Executive, shall be considered
“willful” unless it is done, or omitted to be done, by
the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of
the Company. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board or upon
the instructions of the Board or the Chief Executive Officer of PVH
or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the
Company.
(b)
Termination without Cause by the
Company or for Good Reason by the Executive Prior to a Change in
Control . The Company
may also terminate the Executive’s employment with the
Company at any time without Cause, and the Executive may terminate
his employment with the Company at any time for Good Reason (as
defined in Section 3(f)(i)(B)).
(i)
If the Company terminates the
Executive’s services without Cause or the Executive
terminates his employment with the Company for Good Reason, other
than during the two-year period following a Change in Control (as
defined in Section 3(f)(i)(A)), the Executive shall be entitled to
receive from the Company (W) the portion of the Base Salary for
periods prior to the effective date of termination accrued but
unpaid (if any); (X) all unreimbursed expenses (if any), subject to
Section 2(d); (Y) an aggregate amount (the “Severance
Amount”) equal to one and a half (1.5) times the sum of (1)
the Base Salary plus (2) an amount equal to the bonus that would be
payable if “target” level performance were achieved
(referred to as “plan” level in the Company’s
2005 Performance Incentive Bonus Plan) in respect of the fiscal
year during which the termination occurs (or the prior fiscal year
if bonus levels have not yet been established for the year of
termination); and (Z) the payment or provision of any Other
Benefits. The Severance Amount shall be paid in 36
substantially equal payments and on the same schedule that Base
Salary was paid immediately prior to the Executive’s date of
termination, commencing on the first such scheduled payroll date
that occurs on or following the date that is 30 days after the
Executive’s termination of employment, subject to the
Executive’s compliance with the requirement to deliver the
release contemplated pursuant to Section 4(a). Each such
installment payment shall be treated as a separate payment as
defined under Treasury Regulation §1.409A-2(b)(2).
If the Executive
is a “specified employee” (as determined under
the
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Company’s policy for identifying
specified employees) on the date of his “separation from
service” (within the meaning of Section 409A) and if any
portion of the Severance Amount would be considered “deferred
compensation” under Section 409A, all payments of the
Severance Amount (other than payments that satisfy the short-term
deferral rule, as defined in Treasury Regulation
§1.409A-1(b)(4), or that are treated as separation pay under
Treasury Regulation §1.409A-1(b)(9)(iii) or
§1.409A-1(b)(9)(v)) shall not be paid or commence to be paid
on any date prior to the first business day after the date that is
six months following the Executive’s separation from service.
The first payment that can be made shall include the
cumulative amount of any amounts that could not be paid during such
six-month period. In addition, interest will accrue at the
10-year T-bill rate (as in effect as of the first business day of
the calendar year in which the separation from service occurs) on
all payments not paid to the Executive prior to the first business
day after the sixth month anniversary of his separation from
service that otherwise would have been paid during such six-month
period had this delay provision not applied to the Executive and
shall be paid with the first payment after such six-month period.
Notwithstanding the foregoing, payments delayed pursuant to
this six-month delay requirement shall commence earlier in the
event of the Executive’s death prior to the end of the
six-month period. For purposes hereof, the Executive shall
have a “separation from service” upon his death or
other termination of employment for any reason.
(ii)
In addition, if the Company terminates
the Executive’s employment with the Company without Cause or
the Executive terminates his employment with the Company for Good
Reason, then the Company shall also provide to the Executive,
during the 18-month period following the Executive’s date of
termination, medical, dental, life and disability insurance
coverage for the Executive and the members of his family which is
not less favorable to the Executive than the group medical, dental,
life and disability insurance coverage carried by the Company for
the Executive and the members of his family immediately prior to
such termination of employment; provided , however ,
that the obligations set forth in this sentence shall terminate to
the extent the Executive obtains comparable medical, dental, life
or disability insurance coverage from any other employer during
such period, but the Executive shall not have any obligation to
seek or accept employment during such period, whether or not any
such employment would provide comparable medical and dental
insurance coverage; and provided further ,
however , that the Executive shall be obligated to pay an
amount equal to the active employee contribution, if any, for each
such coverage.
(iii)
For the avoidance of doubt, the payment
of the Severance Amount shall be in lieu of any amounts payable
under the Company’s severance policy (as then in effect) and
the Executive hereby waives any and all rights
thereunder.
(c)
Termination by Voluntary Resignation
(without Good Reason) by the Executive . The Executive may terminate his employment
with the Company without Good Reason at any time by voluntary
resignation. Upon such termination, the Company shall have no
further obligation to the Executive hereunder except for the
payment of (i) the portion of the Base Salary for periods prior to
the effective date of termination accrued but unpaid (if any), (ii)
all unreimbursed expenses (if any), subject to Section 2(d), and
(iii) the payment or provision of any Other Benefits.
Notwithstanding the foregoing, the Executive shall provide no
less than 90 days’ prior written notice of the effective date
of his resignation (other than for Good Reason). The Company
shall continue to pay the Executive his Base Salary during such
90-day period.
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Notwithstanding the foregoing, the
Company, in its sole and absolute discretion, may waive the
requirement for prior notice of the Executive’s resignation
or decrease the notice period, in which event the Company shall
have no continuing obligation to pay the Executive’s Base
Salary or shall only have such obligation with respect to the
shortened period, as the case may be.
(d)
Disability . The Executive’s employment shall be
terminable by the Company, subject to applicable law and the
Company’s short-term and long-term disability policies then
in effect, if the Executive becomes physically or mentally
disabled, whether totally or partially, such that he is prevented
from performing his usual duties and services hereunder for a
period of 180 consecutive days as determined by a medical doctor
selected by the Company and reasonably acceptable to the Executive
or his legal representative (“Disability”).
If the Executive’s employment is terminated by the
Company due to his Disability, the Company shall have no further
obligation to the Executive hereunder, except for the payment to
the Executive or his legal guardian or representative, as
appropriate, of (i) the portion of the Base Salary for periods
prior to the effective date of termination accrued but unpaid (if
any), (ii) all unreimbursed expenses (if any), subject to
Section 2(d), and (iii) the payment or provision of any Other
Benefits.
(e)
Death . If the Executive shall die during the
Employment Period, this Agreement shall terminate on the date of
the Executive’s death and the Company shall have no further
obligation to the Executive hereunder except for the payment to the
Executive’s estate of (i) the portion of the Base Salary
for periods prior to the effective date of termination accrued but
unpaid (if any), (ii) all unreimbursed expenses (if any), subject
to Section 2(d) and (iii) the payment or provision of any Other
Benefits.
(f)
Termination by the Company without
Cause or by the Executive For Good Reason Subsequent to a Change in
Control .
(i)
For purposes of this Agreement, the
following terms shall have the meanings set forth below:
(A)
“ Change in Control ”
shall be deemed to occur upon the first to occur of the following
events:
(1)
Any “person” (as such term is
used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act
of 1934 (the “Exchange Act”)), other than a
“person” who as of the Effective Date was the owner of
at least 8% of the combined voting power of the then-outstanding
voting securities of PVH entitled to vote generally in the election
of directors (the “Outstanding Company Voting
Securities”), becomes (A) a “beneficial owner,”
as such term is used in Rule 13d-3 of the Exchange Act, of at least
one-quarter but less than one-half of the Outstanding Company
Voting Securities, unless such acquisition has been approved within
thirty (30) days thereafter by at least a majority of the Incumbent
Board (as defined in clause (2) below taking into account the
provisos), or (B) a “beneficial owner,” as such term is
used in Rule 13d-3 of the Exchange Act, of at least one-half of the
Outstanding Company Voting Securities; provided ,
however , that, for purposes of this Section 3(f)(i)(A)(1),
the following acquisitions shall not constitute a Change in
Control: (I) any acquisition directly from the
Company,
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other than an acquisition by virtue of
the exercise of a conversion privilege unless the security being so
converted was itself acquired directly from the Company, (II) any
acquisition by the Company, (III) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any of its affiliates, or (IV) any acquisition pursuant
to a transaction which complies with clauses (A), (B) and (C) of
Section 3(f)(i)(A)(3) below;
(2)
Individuals who, as of the date hereof,
constitute the Board (the “Incumbent Board”) cease for
any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Company’s stockholders, was approved by a
vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents
by or on behalf of a person other than the Board;
(3)
Consummation of a reorganization, merger,
consolidation or a sale or other disposition of all or
substantially all of the assets of PVH (each, a “Business
Combination”), in each case unless, following such Business
Combination, (A) all or substantially all of the individuals and
entities that were the beneficial owners of the outstanding shares
of common stock of PVH (the “Outstanding Company Common
Stock”) and the Outstanding Company Voting Securities,
immediately prior to such Business Combination, beneficially
own, directly or indirectly, more than 50% of the then-outstanding
shares of common stock and more than 50% of the combined voting
power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including,
without limitation, a corporation that, as a result of such
transaction, owns PVH or all or substantially all of PVH’s
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately
prior to such Business Combination of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the
case may be, (B) no person (other than the Company, any employee
benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns
directly or indirectly, 20% or more of, respectively, the
outstanding shares of common stock of the corporation resulting
from such Business Combination or the outstanding voting securities
of such corporation entitled to vote generally in the election of
directors, except to the extent that such ownership existed prior
to the Business Combination, and (C) at least a majority of the
members of the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement or of the action
of the Board providing for such Business Combination, whichever
occurs first; or
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(4)
The approval by the stockholders of PVH
of a complete liquidation or dissolution of PVH.
(B)
“ Good Reason ” shall
mean the occurrence of any of the following events or circumstances
without the Executive’s prior written consent:
(1)
the assignment to the Executive of any
duties inconsistent in any material respect with the
Executive’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as
contemplated by Section 1(c) (or following a Change in Control, as
in effect immediately prior to such Change in Control), or any
other action by the Company that results in a material diminution
in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and that is remedied by the Company promptly
after receipt of notice thereof given by the Executive and the
assignment of additional or alternate duties or responsibilities to
the Executive in connection with his professional development or
the reallocation of some of the Executive’s duties or
responsibilities to other executives of the Company in connection
with the evolution of the Executive’s position; provided,
however , that the Executive’s removal from the
Company’s Operating Committee (including the
Executive’s removal from, or failure to be appointed to, any
analogous committee of any successor to the Company following a
Change in Control) shall be conclusively presumed to a material
diminution of the Executive’s authority, duties and
responsibilities;
(2)
a reduction of the Executive’s Base
Salary;
(3)
the taking of any action by the Company
that substantially diminishes (A) the aggregate value of the
Executive’s total compensation opportunity, and/or (B) the
aggregate value of the employee benefits provided to the Executive
pursuant to the Company’s employee benefit and insurance
plans as in effect on the Effective Date (or, following a Change in
Control, as in effect immediately prior to such Change in
Control);
(4)
the Company requiring that the
Executive’s services be rendered primarily at a location or
locations more than 35 miles from the location set forth in Section
1(c), except for travel, and visits to Company offices and
facilities worldwide, reasonably required to attend to the
Company’s business; or
(5)
the failure of the Company to require any
successor to the Company (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 assume expressly 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.
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(ii)
If within two years after the occurrence
of a Change in Control, the Executive terminates his employment
with the Company for Good Reason or the Company terminates the
Executive’s employment for any reason other than death,
Disability or Cause, the Company (or the then former Company
subsidiary employing the Executive), or the consolidated, surviving
or transferee person in the event of a Change in Control pursuant
to a consolidation, merger or sale of assets, the Executive shall
be entitled to receive from the Company (A) the portion of the Base
Salary for periods prior to the effective date of termination
accrued but unpaid (if any); (B) all unreimbursed expenses (if
any), subject to Section 2(d); (C) an aggregate amount equal
to two times the sum of (I) the Base Salary plus (II) an amount
equal to the bonus that would be payable if the
“target” level performance were achieved (referred to
as “plan” level in the Company’s 2005 Performance
Incentive Bonus Plan) in respect of the fiscal year during which
the termination occurs (or the prior fiscal year if bonus levels
have not yet been established for the year of termination); and (D)
the payment or provision of any Other Benefits. The severance
amount described in clause (C) of the immediately preceding
sentence shall be paid (x) in a lump sum, if the Change in Control
event constitutes a “change in the ownership” or a
“change in the effective control” of the Company or a
“change in the ownership of a substantial portion of a
corporation’s assets” (each within the meaning of
Section 409A), or (y) in 48 substantially equal payments, if the
Change in Control event does not so comply with Section 409A.
The lump sum amount shall be paid, or the installment
payments shall commence, as applicable, on the first scheduled
payroll date (in accordance with the Company’s payroll
schedule in effect for the Executive immediately prior to such
termination) that occurs on or following the date that is 30 days
after the Executive’s termination of employment; provided,
however, that the payment of such severance amount is subject
to the Executive’s compliance with the requirement to deliver
the release contemplated pursuant to Section 4(a). Any such
installment payment shall be treated as a separate payment as
define
