EXHIBIT 10.30
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
SECOND AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (“Agreement”), dated as of December 23, 2008,
between PHILLIPS-VAN HEUSEN CORPORATION, a Delaware corporation
(“PVH” and, together with its affiliates and
subsidiaries, the “Company”), and MICHAEL SHAFFER (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 . 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 continue to 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
. During the Employment Period, the
Executive shall serve as Executive Vice President and Chief
Financial Officer or in such other position or positions as the
Company’s Chief Executive Officer or Board of Directors
(which, for purposes of this Agreement, includes any committee
thereof, unless the context requires otherwise (the
“Board”)) may designate from time to time. 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). The Executive shall (i)
perform such duties and services as shall from time to time be
assigned to him, (ii) devote all of his business
time to the services required of him
hereunder, excluding any periods of vacation and sick leave to
which the Executive is entitled, and (iii) use his best efforts,
judgment, skill and energy to perform such duties and services.
As used in this Section 1, “business time” shall
be determined in accordance with the usual and customary standards
of the Company.
2.
Compensation .
(a)
Base Salary . The Company shall pay the Executive a salary
at the annual rate of $425,000, increasing to $475,000 effective
June 1, 2007 (“Base Salary”), payable in accordance
with the normal payroll procedures of the Company in effect from
time to time. The Company or the Board may from time to time,
in its sole and absolute discretion, increase the Base Salary by
any amount it determines to be appropriate. Base Salary shall
not be reduced after any increase. 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 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 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. 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 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
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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
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, employee, 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.
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(ii) For purposes of the 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 the Company 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 his 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 and (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
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
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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. 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 120 consecutive days or for shorter periods aggregating
120 days in any 12-month period (a “Disability”).
If the Executive’s employment is terminated by the
Company due to the Executive’s 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
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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 outstanding voting securities of the
Company 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, 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
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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 the Company (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 the Company (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 the Company or all or
substantially all of the Company’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
(4)
The approval by the stockholders of the
Company of a complete liquidation or dissolution of the
Company.
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 without
his consent 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,
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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
relative to all other similarly situated senior executives 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);
or
(4)
the Company requiring that the
Executive’s services be rendered primarily at a location or
locations more than 75 miles from the location of the
Executive’s principal office at which he performs his duties
hereunder, except for travel, and visits to Company offices and
facilities worldwide, reasonably required to attend to the
Company’s business.
(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
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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 defined under Treasury Regulation
§1.409A-2(b)(2). If the Executive is a “specified
employee” (as determined under the 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 described
in clause (C) would be considered “deferred
compensation” under Section 409A, such severance amount 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 (unless any such
payment(s) shall satisfy
