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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT made as of
July 11, 2007 by and between JONES APPAREL GROUP, INC., a
Pennsylvania corporation (the "Company"), and JOHN T. McCLAIN (the
"Executive").
WITNESSETH:
WHEREAS, the Company
wishes to employ the Executive, and the Executive wishes to enter
employment with the Company, on the terms and conditions
hereinafter set forth.
NOW, THEREFORE , it
is agreed as follows:
1. Employment.
During the term of this Agreement, the Company shall employ the
Executive as Chief Financial Officer of the Company. The Executive
shall report directly to the Chief Executive Officer of the
Company. During the term of this Agreement, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote all of Executive's
business time and attention to the business affairs of the Company,
and to perform such responsibilities in a professional manner.
Notwithstanding the foregoing, during the term of this Agreement,
it shall not be a violation of this Agreement for the Executive to
(a) serve on a reasonable number of trade and professional
organizations; (b) engage in community and charitable affairs; (c)
serve as a non-employee member of a board of directors of a
business entity which is not competitive with the Company and as to
which the Board of Directors of the Company has given its consent;
and (d) manage personal investments, so long as such activities do
not interfere with the performance of the Executive's
responsibilities as a senior executive of the Company in accordance
with this Agreement.
2. Term. The
Company shall employ the Executive for the period commencing as of
July 16, 2007 and ending as of June 30, 2010, as renewed in
accordance with the following sentence (the "Term"). The Company
may extend the Term for an additional twelve months by giving
notice to the Executive no later than December 31, 2009 of such
extension. For avoidance of doubt, if this Agreement shall be so
extended, the "Term" shall mean the period commencing July 16, 2007
and ending on June 30, 2011.
3. Salary, Retirement
Plans, Fringe Benefits and Allowances.
(a) Throughout the Term, the Executive shall
receive a salary at the annual rate of not less than $500,000. The
Executive's salary shall be payable at such regular times and
intervals as the Company customarily pays its senior executives
from time to time, but no less frequently than once a month and
shall be subject to future increases at the discretion of the Board
of Directors of the Company.
(b) During the Term, the Executive shall be eligible to participate
in all savings and retirement plans, practices, policies and
programs to the extent applicable generally to other senior
executives of the Company.
(c) During the Term, the Executive and/or the Executive's family,
as the case may be, shall be eligible for participation in and
shall receive all benefits under welfare, fringe
and other benefit plans, practices, policies and programs
provided by the Company (including, without limitation, medical,
prescription drug, dental, disability, accidental death and travel
accident insurance plans and programs) to the extent applicable
generally to other senior executives of the Company.
(d) The Executive shall be entitled to an aggregate of four weeks
paid vacation during each calendar year of the Term. The Executive
shall also be entitled to the benefits of the Company's policies
relating to sick leave and holidays.
(e) The Executive shall have all expenses reasonably incurred by
Executive on behalf of the Company reimbursed by the Company in
accordance with the Company's standard policies and practices. The
Executive shall be entitled to first class seating for air travel
on Company business.
(f) The Company shall make available to the Executive all
perquisites that are made available to senior executives of the
Company.
4. Bonus.
Executive shall
participate in the Company's 2007 Executive Annual Cash Incentive
Plan (the "Bonus Plan"), pursuant to which the Executive may be
entitled to receive annual bonus payments for each full calendar
year of employment which ends prior to the expiration of the Term
(the "Expiration Date") and throughout which the Executive has been
employed by the Company, conditioned upon the attainment of annual
criteria and objectives established for participants in the Bonus
Plan.
5. Equity
Grants.
(a) Subject to the absolute authority of the Compensation Committee
of the Board of Directors of the Company from time to time to grant
(or not to grant) to eligible individuals shares of common stock of
the Company that are subject to vesting restrictions ("Restricted
Stock") and/or options to purchase common stock of the Company
("Options") (Restricted Stock and Options being referred to
collectively as, "Equity Grants"), it is the intention of the
Company and the expectation of the Executive that while the
Executive is employed hereunder, the Executive will be eligible to
receive Equity Grants annually, on such terms and conditions as may
be determined by the Compensation Committee.
(b) Notwithstanding the provisions of any agreement, document or
instrument to the contrary, such Equity Grants and all other
Options and shares of common stock of the Company then held by the
Executive which are not then vested (in the aggregate being
referred to herein as "Accelerated Equity Grants") shall become
fully vested and, in the case of Options, immediately exercisable
during the remaining original term of each such Accelerated Equity
Grant (or, if shorter, for three years following death), upon the
occurrence of any of the following events ("Acceleration Events"):
Executive's Retirement (as defined herein), death, Disability (as
defined herein), a Change in Control (as defined herein), and
termination of the
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Executive's employment by the Company without Cause (as defined
herein) or by the Executive for Good Reason (as defined
herein).
6. Termination of
Employment.
(a) By the Company for Cause, or by the Executive without
Good Reason. The Company may terminate the Executive's
employment for Cause before the Expiration Date. If the Executive's
employment is terminated for Cause, or if Executive resigns during
the Term without Good Reason, the Company shall pay to the
Executive any unpaid salary through the date of termination, as
well as reimburse the Executive for any unpaid reimbursable
expenses incurred on behalf of the Company, and thereafter the
Company shall have no additional obligations to the Executive under
this Agreement.
(b) Death or Disability; Retirement. (i) If the
Executive's employment terminates before the Expiration Date
because of Executive's death or Disability, the Company shall pay
Executive or Executive's duly appointed personal representative, as
the case may be, (i) any unpaid salary through the date of death or
the Disability Termination Date (as defined herein), as well as
reimbursement of any unpaid reimbursable expenses incurred on
behalf of the Company, (ii) an amount equal to Executive's monthly
salary during each of the six (6) months following Executive's
death or the Disability Termination Date, irrespective of the
expiration of the Term, and (iii) the Target Bonus (as defined
herein) for the calendar year in which Executive dies or becomes
Disabled, prorated for the portion of such year preceding
Executive's death or the Disability Termination Date, which shall
be paid not later than 120 days after the end of such year. Except
as set forth in this Section 6(b), the Company shall have no
additional obligations to the Executive under this Agreement in the
event of Executive's termination of employment under this Section
6(b).
(ii) In addition to the foregoing and notwithstanding any other
agreement between the Executive and the Company, all Accelerated
Equity Grants which were held by the Executive at the time of the
Executive's Retirement, death or the Disability Termination Date,
shall become fully vested and, in the case of options, shall remain
exercisable by the Executive or by the Executive's estate or his
representative, as the case may be, during the remaining original
term of the Accelerated Equity Grant in the case of the Executive's
Retirement or Disability or, if shorter, for three years following
the date of the Executive's death.
(c) By the Company without Cause, or by the Executive for
Good Reason. (i) The Company may terminate the Executive's
employment before the Expiration Date without Cause, and the
Executive may terminate Executive's employment before the
Expiration Date for Good Reason, upon 30 days' written notice to
the other party. If the Executive's employment is so terminated by
the Company without Cause, or by the Executive for Good Reason, as
the case may be, the Company shall pay and provide to the Executive
(i) any unpaid salary through the date of termination, as well as
reimbursement of any unpaid reimbursable expenses incurred on
behalf of the Company, (ii) the Target Bonus for the calendar year
in which termination occurs, prorated for the portion of such year
preceding termination, which shall be paid not later than 120 days
after the end of such year, (iii) during each month of the
Severance Period (as defined below), an amount equal to the sum of
(x) Executive's monthly
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salary at the rate in effect immediately preceding termination
and (y) one-twelfth of the Executive's Target Bonus for the
calendar year in which termination occurs, (iv) throughout the
Severance Period, continuation of Executive's participation
(including the Company's contributions thereto) in all benefit
plans and practices in which Executive was participating
immediately preceding termination and (v) reimbursement to the
Executive for up to $10,000 of executive outplacement services. In
no event, including at the expiration of the agreement, shall the
Executive receive less than six months of such salary or benefits
under this agreement.
(ii) In addition to the foregoing and notwithstanding any other
agreement between the Executive and the Company, all Accelerated
Equity Grants which were held by the Executive at the time of the
termination of the Executive's employment by the Company without
Cause or by the Executive for Good Reason (whether or not following
a Change of Control), shall become fully exercisable and shall
remain exercisable for the same period following termination as
would apply if the Executive's employment had not terminated.
(d) Change in Control. (i) If, following a "Change in
Control" (as defined herein) and prior to the end of the Term, the
Company terminates the Executive's employment without Cause, or the
Executive terminates employment hereunder for Good Reason, the
Company shall pay to the Executive, within 20 days following
termination, (i) any unpaid salary through the date of termination,
as well as reimbursement of any unpaid reimbursable expenses
incurred on behalf of the Company, (ii) the Target Bonus for the
calendar year in which termination occurs, prorated for the portion
of such year preceding termination, (iii) a lump sum payment equal
to (x) 200% of Executive's yearly salary at the rate in effect
immediately preceding termination, multiplied by (y) the Severance
Multiple (as defined herein), (iv) reimbursement to the Executive
for up to $10,000 of executive outplacement services and (v) a lump
sum equal to the Company's cost for health insurance, life
insurance and retirement benefits for the Severance Period.
(ii) In addition to the foregoing and notwithstanding any other
agreement between the Executive and the Company, all Accelerated
Equity Grants which were held by the Executive at the time of the
termination of the Executive's employment by the Company without
Cause or by the Executive for Good Reason following a Change of
Control (and prior to the end of the Term), shall become vested and
fully exercisable and shall remain exercisable for the same period
following termination as would apply if the Executive's employment
had not terminated.
(e) As used herein:
(i) the term "Cause" shall mean (v) the Executive's commission of
an act of fraud or dishonesty or a crime involving money or other
property of the Company; (w) the Executive's conviction of a felony
or a plea of guilty or nolo contendere to an indictment for
a felony that damages the Company; (x) if, in carrying out
Executive's duties hereunder, the Executive engages in conduct
which constitutes willful misconduct or gross negligence; (y) the
Executive's failure to carry out a lawful order of the Board of
Directors of the Company or its Chief Executive Officer; or (z) a
material breach by the Executive of this Agreement. Any act or
failure to act on the part of the Executive which is based upon
authority given pursuant to a
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resolution duly adopted by the Board of Directors of the Company
or authorized in writing by the Chief Executive Officer of the
Company, or based upon the advice of counsel for the Company, shall
not constitute Cause as used herein. For purposes of this provision
only, a breach shall be "material" if it is demonstrably injurious
to the Company, its affiliates or any of its respective business
units, financially or otherwise.
Cause shall not exist unless and until the Company (i) has
delivered to the Executive a written Notice of Termination that
specifically identifies the events, actions, or non-actions, as
applicable, that the Company believes constitute Cause hereunder,
and, in the case of termination for Cause under clauses (x), (y) or
(z) above,
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