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EXHIBIT 10.38
Ms. Lynne F. Cote
2 Kincaid Lane
Chatham, NJ 07928
Dear Lynne:
Reference is made to
your Employment Agreement dated as of January 1, 2002 by and
between you (formerly known as Lynne F. Fish) and McNaughton
Apparel Group Inc. (formerly known as Norton McNaughton of Squire,
Inc.), as amended and assigned to Jones Apparel Group USA, Inc.
(the "Employment Agreement"). All capitalized terms not otherwise
defined herein shall have the meanings ascribed thereto in the
Employment Agreement.
For good and valuable
consideration, the receipt and sufficiency are hereby acknowledged,
you (the "Executive") and Jones Apparel Group USA, Inc. (the
"Company") agree as follows:
1. Amendment.
The terms and conditions of the Employment Agreement are hereby
amended as follows:
(a) The first sentence of Section 9(a) of the Employment Agreement
is hereby amended to read as follows:
"The Executive shall not, at any time during the Executive's
employment by the Company and thereafter until March 31, 2008 (the
"Non-Compete Period") (provided that the Company is making the
payments to the Executive, if any, which may be required hereby
during the Non-Compete Period) and under the following
circumstances, engage or become interested (as an owner,
stockholder, partner, director, officer, employee, consultant or
otherwise) (collectively, "Engages") in any business which then
competes, directly or indirectly, with the business then conducted
or licensed by the Company or any of its affiliates, including,
without limitation, the manufacturing, marketing and sale of
products by independent licensees under trademarks owned by the
Company or any of its affiliates" (collectively, a "Competitive
Business").
(b) Section 9(b) of the Employment Agreement is hereby amended to
read as follows:
"The Executive shall not, at any time during Executive's
employment by the Company and thereafter until December 31,
2011 (provided that the Company is making the payments to the
Executive, if any, which may be required hereby during the period
ending December 31, 2009), recruit, solicit for employment, hire or
engage, or assist any person or entity in recruiting, soliciting
for employment, hiring or engaging, any employee or consultant of
the Company or any of its affiliates, or any person who was such an
employee or consultant of the Company or any of its affiliates
within one year before the termination of the Executive's
employment; or
(c) A new Section 9(c) is hereby added to the Employment Agreement
to read as follows:
"The Executive shall not at anytime during the Executive's
employment by the Company and thereafter until December 31, 2009
(provided that the Company is making the payments to the Executive,
if any, which may be required hereby during such period), solicit,
induce, or attempt to solicit or induce, any person or entity then
known by the Executive to be a customer or distributor of the
Company to terminate or diminish his, her or its relationship with
the Company; provided that in the event that (i) the Executive
Engages in a Competitive Business after March 31, 2008, solely that
fact and solely the fact that such Competitive Business sources,
manufactures, distributes, merchandises, markets, sells or licenses
products which compete with any of those sourced, manufactured,
distributed, merchandised, marketed, sold or licensed by the
Company or any of its distributors or licensees shall not be a
breach or violation of this Section 9(c) if such results in such
termination or diminution or (ii) the decision by a customer or
distributor to terminate or diminish his, her or its relationship
with the Company is made by a person with authority which is
superior to the Executive's (and such person has not been induced
by the Executive to make such decision unless the Executive has a
reasonable, good faith commercial reason to engage in such
inducement) and such decision is made solely for a reasonable, good
faith commercial reason, then such termination or diminution shall
not be a breach or violation of this Section 9(c)."
(d) Sections 14 and 15 of the Employment Agreement are hereby
deleted in their entirety, Section 16 of the Employment Agreement
is hereby renumbered Section 15, and a new Section 14 is hereby
added to the Employment Agreement to read as follows:
"14. Costs . The Company shall reimburse the Executive
for all reasonable costs and expenses, including without limitation
reasonable attorneys' fees, of the Executive incurred in any
dispute or proceeding arising under this Agreement commenced by the
Company, so long as the Executive prevails in all material
respects
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with respect to the Executive's defenses in any such dispute or
proceeding."
2. Payment .
No later than fourteen (14) days following the execution hereof by
the Executive, the Company shall deliver to the Executive a check,
payable to the Executive, in the gross, lump sum amount of
$100,000, less deduction for taxes required by law to be withheld
or deducted as provided under Section 4(c) of this Agreement.
3. Mutual Release
and Waiver . In consideration of the mutual promises contained
in this Agreement, the Company and the Executive agree as set forth
below.
(a) Release by the Company . Subject to the limitation set
forth below in Section 3(e), the Company, on behalf of itself and
its affiliates, irrevocably releases the Executive, her attorneys,
agents, representatives, advisors, executors, administrators and
heirs and the successors, predecessors and assigns of each of the
foregoing (and those acting on their behalf in any capacity
whatsoever) from all claims, counterclaims, actions, complaints,
causes of actions, judgments, debts, rights to indemnification,
demands or suits, at law or in equity, known or unknown, arising
from, relating to or otherwise concerning the Executive's
employment with the Company or the termination thereof, which the
Company or any of its past and present parents, subsidiaries or
affiliates and the successors, predeces
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