PHILLIPS-VAN HEUSEN CORPORATION
1290 Avenue of the Americas
New York, New York 10104
February 14, 1995
Mr. Lawrence S. Phillips
21301 Power Line Road
Suite 309
Boca Raton, Florida 33433
Dear Larry:
This letter, when accepted and agreed to by you, shall
confirm the agreement between you ("Phillips") and Phillips-Van
Heusen Corporation (the "Company") as follows:
1. The provisions of Section 7 of the Agreement, dated as
of April 28, 1993, among Bruce J. Klatsky, Phillips and the
Company shall be terminated as of the effective date of this
agreement and shall be of no further force and effect thereafter.
2. The Company hereby agrees to retain Phillips as a
consultant for the period commencing on the effective date of
this agreement and ending on June 14, 2004 or upon the earlier
death of Phillips (the "Term"). Phillips hereby accepts such
retention, agrees to perform such consulting services as may be
reasonably requested of him from time to time by the chief
executive officer of the Company and agrees to devote his skills,
attention and energies and such portion of his business time as
shall be reasonably required to such services; provided, however,
that such consultation services shall not require more than an
average of 10 hours per month or more than 20 hours in any one
month and shall not require Phillips to travel, other than to the
Company's principal executive offices and, in such case, not more
frequently than once per year; and provided, further, however,
that the Company's obligations hereunder shall not be affected as
a result of any disability of Phillips or his inability to render
consulting services as a result thereof. During the Term, the
Company shall pay to Phillips, and Phillips shall accept from the
Company, for Phillips' consulting services pursuant to this
Section 2, compensation at the rate of $250,000 per annum,
payable in equal monthly installments on the first business day
of each month, except that a pro rata portion for the month
ending February 28, 1995 shall be paid on the date hereof.
3. The Company shall pay for and provide Phillips during
the Term with the use of and maintenance for a company car in
accordance with past practice with respect to Phillips,
including, without limitation, reimbursement of all advance
and/or other payments incurred by Phillips upon lease renewals or
new leases. The Company shall pay to Phillips during the Term
$50,000 per annum to reimburse Phillips for all out-of-pocket
expenses incurred by him in connection with the performance of
his duties hereunder, which includes reimbursement of all fees
and transportation for Phillips and his spouse for attendance at
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business-related seminars and the costs of participating in all
business-related organizations including the Young Presidents
Organization, the World Presidents Organization, the Chief
Executive Officers Organization and the Aspen Institute. Such
amounts shall be paid to Phillips periodically during each year.
During the Term, Phillips and his family shall continue to have
the benefit of all merchandise discounts provided to employees of
the Company and the Company shall provide all documentation
therefor, including the Company's associate discount cards.
4. To the extent available, Phillips shall elect primary
coverage for his and his spouse's medical expenses under Medicare
and the Company shall, during the Term, provide and pay for
additional medical, surgical, dental, optical and other health
insurance which, together with such Medicare coverage, if any,
will provide Phillips and his spouse with the same coverage to
which they have been entitled under the Company's "Corporate
Medical Reimbursement Insurance Plan." In the event of Phillips'
death during the Term, such coverage will continue at the
Company's sole expense for the benefit of Phillips' spouse
through June 14, 2004. In addition, simultaneously with the
execution of this agreement, the Company is entering into a
split-dollar life insurance agreement on the life of Phillips in
the form of Schedule A hereto.
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5. During the Term, the Company shall continue as
heretofore to maintain and make available at its cost a furnished
and equipped office (and shall pay all costs associated with the
operation of such office) for Phillips and his assistant, and
shall continue to employ and pay Phillips' assistant (or any
replacement therefor selected by Phillips) at the same salary and
with the same benefits as heretofore. The Company shall also
continue to pay, or to reimburse Phillips for, the cost of all
telecommunications equipment in accordance with past practice.
6. During the Term, the Company shall continue to make
(itself or through the Phillips-Van Heusen Foundation) annual
contributions (with the first contributions to be made on or
before June 14, 1995 and additional annual contributions to be
made during each successive year of the Term) to the Phillips-
Green Foundation, American Jewish World Service, Beth Israel
Medical Center and the Parliamentary Human Rights Foundation, in
the amounts of $150,000, $10,000, $10,000 and $10,000,
respectively, so long as such organizations remain valid Section
501(c)(3) organizations under the Internal Revenue Code of 1986
or any successor statute; provided, however, if any such
organization ceases for any reason to be a valid Section
501(c)(3) organization, the Company, after consultation with
Phillips, will select a qualified replacement charitable
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organization to which the Company will continue to contribute;
and provided further that if the Company, after consultation with
Phillips, shall determine that continued contributions to any of
the foregoing charitable organizations is not warranted, then the
Company, after consultation with Phillips. shall select a
replacement charitable organization(s) to which the Company will
continue to contribute.
7. On the date this agreement becomes effective, the
Company shall grant to Phillips a stock option to acquire 100,000
shares of the Company's common stock at an exercise price equal
to the closing price of such common stock on the New York Stock
Exchange on the trading day prior to the grant of such option,
which option shall be in the form of Schedule B hereto.
8. Phillips agrees, during and after the Term, to keep
secret and confidential all proprietary and confidential
information heretofore or hereafter acquired by him concerning
the business and affairs of the Company or any of its
subsidiaries and/or affiliates (as such term is defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended), and
further agrees that he will at no time during the Term or
thereafter disclose any such information to any person, firm or
corporation, other than to the Company or any of its subsidiaries
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and/or affiliates or their respective directors, officers,
employees and agents, or use the same in any manner other than in
connection with the business and affairs of the Company or any of
its subsidiaries and/or affiliates, except (i) as may be required
by law, (ii) in connection with Phillips' enforcement of his
rights under this agreement, (iii) as to such information as may
already have become publicly known other than through Phillips in
violation of this Section 8 and (iv) with the consent of the
Company.
9. Phillips agrees, to the extent permitted by law, that
he shall not, during the Term and for the five years after the
Term, for any reason whatsoever, directly or indirectly, own,
manage, operate, join or control, or participate in the
ownership, management, operation or control of, or be a director
or employee of, or a consultant to, any business, firm or
corporation which is conducting any business which competes with
the business of the Company as now conducted; provided, however,
that the provisions of this Section 9 shall not apply to
investments by Phillips in (i) securities traded on a national
securities exchange or on the national over-the-counter market
which shall constitute less than two percent of the outstanding
class of such securities and (ii) any investment partnership,
mutual fund or similar investment vehicle the investment
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decisions for which are made by a person or entity not affiliated
with Phillips. Notwithstanding anything to the contrary
contained herein, Phillips shall not be in breach of this Section
9 with respect to any breach of this Section 9 which is cured by
Phillips within 30 days of notification of such breach by the
Company. During the Term, the Company shall pay to Phillips, and
Phillips shall accept from the Company, in consideration of
Phillips' agreement contained in this Section 9, the amount of
$500,000 per annum, payable in equal quarterly installments on
the first business day of each quarter, except that a pro rata
portion for the quarter ending March 31, 1995 shall be paid on
the date hereof.
10. Phillips acknowledges and agrees that, because of the
unique and extraordinary nature of his services, any breach or
threatened breach of the provisions of Sections 8 and 9 hereof
will cause irreparable injury and incalculable harm to the
Company and that it shall, accordingly, be entitled to seek
injunctive or other equitable relief. The foregoing, however,
shall not be deemed to waive or to limit in any respect any other
right or remedy which the Company may have with respect to such
breach.
11. On the date this agreement becomes effective, the
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Company shall execute and deliver to Phillips an indemnification
agreement substantially in the form of Schedule C hereto.
12. The Company agrees to cause the memorabilia and
furnishings currently in the Heritage Room at the Company's
principal executive offices to be transported, at its cost, to a
location designated by Phillips within 20 days of the date
Phillips designates such location.
13. Phillips hereby resigns from the Board of Directors of
the Company, effective upon the acceptance of said resignation by
the Board of Directors.
14. This agreement shall become effective upon approval
thereof by the Board of Directors of the Company at its meeting
on February 14, 1995 or at any adjournment thereof. In the event
that the Board of Directors of the Company does not approve this
agreement at said meeting, none of the provisions of this
agreement shall come into force and effect and the provisions of
paragraph 7 of the Agreement referred to in Section 1 hereof
shall continue in full force and effect.
15. The Company hereby agrees to indemnify and hold
harmless Phillips from and against any and all losses, claims,
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liabilities, damages, costs and expenses, including, without
limitation, reasonable fees and disbursements of counsel,
suffered or incurred by Phillips arising out of, relating to, or
resulting from the execution, delivery and/or performance of this
agreement and/or the consummation of the transactions
contemplated hereby.
16. Each of the parties hereto shall pay its or his own
legal fees in connection with the negotiation, execution and
delivery of this agreement; provided, however, that the Company
shall pay the legal fees and disbursements incurred by Phillips
in connection with the negotiation, execution and delivery of
this agreement; provided, further, however, that the Company
shall not be required to pay more than $40,000 of such legal fees
and disbursements.
17. This agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York
without reference to the conflicts of law provisions thereof.
18. This agreement contains the entire understanding
between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings
with respect to the subject matter hereof. No waiver shall be
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deemed to be made by either of the parties to any of its or his
rights hereunder unless that waiver shall be in a writing signed
by the waiving party and any such waiver shall only be effective
to the extent set forth therein.
19. All notices and communications hereunder shall be in
writing and shall be sent by registered or certified mail, return
receipt requested, addressed to the party for whom or for which
intended, in the case of the Company, to its then principal
executive office, or at such other address of which the Company
shall have given notice to Phillips in the manner herein pro-
vided, and in the case of Phillips, at his residence address as
set forth in the records of the Company (which is currently 2197
N. W. 60th Road, Boca Raton, FL 33496) or at such other address
of which he hall have given notice to the Company in the manner
herein provided, with a copy of all such notices and communica-
tions to be given concurrently to Rosenman & Colin, 575 Madison
Avenue, New York, New York 10022, Attention: Edward H. Cohen,
Esq. and to Shereff, Friedman, Hoffman & Goodman, 919 Third
Avenue, New York, NY 10022, Attention: Martin Nussbaum, Esq.
20. Each of the parties hereto shall execute and deliver to
the other such additional documents and shall take such further
actions as may be reasonably requested to carry out the
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transactions contemplated by this agreement.
21. In the event that any provision of this agreement shall
be declared invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability
of the other provisions of this agreement, it being hereby agreed
that such provisions are severable and that this agreement shall
be construed in all respects as if such invalid or unenforceable
provisions were omitted.
22. The terms and provisions of this agreement shall inure
to the benefit of and be binding upon the Company and its
successors and assigns and Phillips and his heirs, legal
representatives, successors and assigns.
Very truly yours,
PHILLIPS-VAN HEUSEN CORPORATION
By_________________________________
Bruce J. Klatsky,
Chief Executive Officer
ACCEPTED AND AGREED TO:
______________________________
Lawrence S. Phillips
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Schedule A
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
AGREEMENT made the ______ day of February, 1995 by and
between Phillips-Van Heusen Corporation (the "Corporation") and
Laura Phillips and David L. Phillips (the "Policyowners").
WHEREAS, the Corporation wishes to establish a life
insurance program for the benefit and protection of Laura
Phillips and David L. Phillips, the children of Lawrence S.
Phillips, who has been retained as a consultant to the
Corporation, under Policy No. ______________ issued by The
Guardian Insurance and Annuity Company, Inc., ("Guardian"); said
policy hereinafter referred to as the "Policy".
WHEREAS, the Corporation has agreed to pay all premiums
due on the Policy in accordance with the provisions of this
Agreement; and
WHEREAS, the Policyowners will be the sole owners of
the Policy, and the Policy will be collaterally assigned to the
Corporation for the purpose of providing security for the
repayment of premiums paid by the Corporation;
NOW, THEREFORE, in consideration of the mutual promises
contained herein, it is agreed between the parties hereto as
follows:
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ARTICLE I
The Policy shall be the exclusive property of the
Policyowners, and shall be owned by them as tenants in common.
The Policyowners may exercise all rights of ownership with
respect thereto subject only to the security interest and other
rights of the Corporation as expressed in this Agreement. The
Policyowners shall be jointly and severally liable to perform
their obligations under this Agreement.
ARTICLE II
A. The Corporation shall be responsible for the
payment of all premiums due to Guardian with respect to the
Policy on or before the date such premium payments are due (or
within the grace period allowed by the Policy) and, if so
requested, shall give proof of the timely payment of each premium
to the Policyowners.
B. The Policyowners shall not be required to pay any
part of the premiums; provided, however, that they shall remit to
the Corporation an amount equal to any dividends with respect to
the Policy paid in cash to the Policyowners, which amount shall
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be applied by the Corporation toward the payment of subsequent
premiums due with respect to the Policy.
ARTICLE III
The Policyowners shall collaterally assign the Policy
to the Corporation pursuant to the terms of this Agreement as
security for the repayment of amounts paid by the Corporation
toward the premiums on the Policy as provided for in Article II
of this Agreement. The collateral assignment shall be
substantially in the form of Exhibit "A" attached hereto and made
a part hereof.
ARTICLE IV
A. The Corporation, as collateral assignee, shall have
the limited right to obtain, from time to time, one or more
withdrawals of partial cash value benefit (as defined in the
Policy) and/or one or more policy loans based on the Policy's
loan value (as defined in the Policy), in an aggregate amount not
to exceed, as of the time of any such withdrawal or loan, the
lesser of (i) the aggregate amount theretofore paid by the
Corporation toward the premiums on the Policy, pursuant to
Article II of this Agreement, or (ii) the amount of the aggregate
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proceeds of the Policy which would be payable to the Corporation
pursuant to Article VI A., Part B (after payment in full of the
Part A amount as provided in Article VI A.), if the death of the
insured were to occur on the date of any such withdrawal or loan
(the "maximum withdrawal/loan amount").
B. If the Corporation withdraws and/or borrows an
amount in excess of its maximum withdrawal/loan amount, it must
promptly return or repay the amount of such excess to either
Guardian or to the Policyowners. The Corporation shall pay all
loan interest in connection with loans made to it with respect to
the Policy, in addition to the premiums payable by the
Corporation pursuant to Article II. In no event shall a payment
of interest by the Corporation constitute a premium payment under
this Agreement. Any unpaid interest charges shall be added to
the outstanding indebtedness of the Policy.
C. The Corporation shall be prohibited from taking any
action that might adversely affect the interest of the
Policyowners in the Policy and the Policyowners shall be
prohibited from taking any action that might adversely affect the
interest of the Corporation in the Policy.
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D. The Corporation shall have the right to select any
dividend options available with respect to the Policy.
E. In the event the Policyowners desire to surrender
the Policy, they shall give written notice of their intention to
do so to the Corporation. The Corporation, within 30 days of the
effective date of such notice, may elect by written notice to the
Policyholders that the Policyowners not surrender the Policy
whereupon the Policyowners shall transfer their entire right,
title and interest in the Policy to the Corporation without
additional consideration of any kind. In the event the
Corporation does not elect within said 30 day period to have the
Policy transferred to it, then the Policyowners shall be free to
surrender the Policy subject to the rights of the Corporation
under subparagraph F. hereof.
F. In addition to the limited rights in the Policy
assigned to the Corporation by the Policyowners pursuant to this
Article IV, the Corporation shall have a security interest in any
proceeds payable to the Policyowners in the event the
Policyowners, prior to the death of the Insured, after complying
with the provisions of Article IV E of this Agreement, surrender
the Policy pursuant to Article V A. of this Agreement. In such
event the Policyowners shall pay to the Corporation, from such
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proceeds, an amount equal to the lesser of (i) the amount of such
proceeds, or (ii) the aggregate amount theretofore paid (pursuant
to ARTICLE II) by the Corporation toward the premiums on the
Policy, less the aggregate amount of any withdrawals or
borrowings theretofore made by the Corporation with respect to
the Policy under Article IV A. hereof and accrued, unpaid
interest on such loans. In the event the amount described in
clause (ii) of the preceding sentence shall exceed the amount
described in clause (i), the Policyowners shall not be liable to
the Corporation with respect to such excess or any part thereof.
The amount payable by the Policyowners to the Corporation
pursuant to this Article IV F. shall be deemed to be received by
the Policyowners from Guardian on behalf of the Corporation, and
shall be promptly paid over to the Corporation. It is hereby
agreed that, alternatively, at the option of the Policyowners,
Guardian shall be directed by the Policyowners in writing to draw
a check in the appropriate amount payable directly to the
Corporation.
ARTICLE V
The Policyowners retain all rights in the Policy not
specifically assigned to the Corporation hereunder, including but
not limited to the following rights:
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A. The right to surrender the Policy and receive the
surrender value thereof (subject to the provisions of ARTICLES IV
E. and F. hereof).
B. The right to change the beneficiary of the Policy,
subject to the provisions of Article VI B hereof.
C. The right to select optional methods of settlement
with regard to the Part A death benefit provided for in Article
VI A hereof.
ARTICLE VI
A. In the event of the death of the Insured while the
Policy and this Agreement are in force, the aggregate proceeds of
the Policies shall be divided in two parts and paid as follows:
Part A: The following amounts shall be paid to the
Policyowners, in equal shares, per stirpes, (or in the event
neither of the Policyowners or their issue shall then survive,
the Phillips-Green Foundation), as beneficiaries:
If death occurs on or before June 14, 1996, the amount
of $3,375,000;
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If death occurs on or before June 14, 1997, the amount
of $3,000,000;
If death occurs on or before June 14, 1998, the amount
of $2,625,000;
If death occurs on or before June 14, 1999, the amount
of $2,250,000;
If death occurs on or before June 14, 2000, the amount
of $1,875,000;
If death occurs on or before June 14, 2001, the amount
of $1,500,000;
If death occurs on or before June 14, 2002, the amount
of $1,125,000;
If death occurs on or before June 14, 2003, the amount
of $750,000;
If death occurs on or before June 14, 2004, the amount
of $375,000.
Part B: The Corporation as beneficiary shall receive
the remainder of the proceeds of the Policy (or all thereof, if
the death of the insured shall occur after June 14, 2004).
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B. The designations of beneficiary under the Policy
contain, and at all times during the term of this Agreement shall
contain, a schedule of benefits identical to that set forth above
in Article VI A. of this Agreement and the Policyholders shall
provide the Corporation from time to time at the request of the
Corporation suitable proof thereof.
ARTICLE VII
A. This Agreement shall terminate upon the sooner to
occur of:
(1) Surrender of the Policy by the Policyowners
pursuant to Article V of this Agreement;
(2) Transfer of the Policy to the Corporation
pursuant to ARTICLE IV E. hereof;
(3) Upon thirty (30) days written notice of
termination sent by registered or certified mail by the
Policyholders to the Corporation; or
(4) June 15, 2004.
B. Upon termination pursuant to Article VII A.(3) or
(4) above, the Policyowners shall, within thirty (30) days of the
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effective date of such termination, in their sole and absolute
discretion, either (i) transfer ownership of the Policy to the
Corporation; or (ii) pay to the Corporation an amount equal to
the aggregate amount theretofore advanced by the Corporation in
payment of premiums on the Policy, less the aggregate amount of
any withdrawals or borrowings theretofore made by the Corporation
under Article IV A. hereof and accrued, unpaid interest on such
loans.
ARTICLE VIII
Any payments made or action taken by Guardian in
accordance with the provisions of the Policy and the collateral
assignment of the Policy shall fully discharge it from all
claims, suits, and demands of all persons whatsoever. With the
sole exception of this Article VIII, Guardian shall not be deemed
to be a party to this Agreement for any purpose nor in any way be
responsible for its validity.
ARTICLE IX
This Agreement shall be binding upon the parties
hereto, their heirs, legal representatives, successors, and
assigns.
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ARTICLE X
Any notice to be given hereunder shall be by certified
mail, return receipt requested, to the parties at the addresses
set forth below, such notice to be deemed effective on the date
of mailing thereof.
Notice to the Policyholders:
Laura Phillips
David L. Phillips
c/o Weitzner, Levine, Hamburg & Chill
437 Madison Avenue, 35th Floor
New York, New York 10022
Notice to the Corporation:
Phillips-Van Heusen Corp.
1290 Avenue of the Americas
New York, New York 10104
Attention: I. Winter
ARTICLE XI
This Agreement embodies all agreements made by the
parties with respect to the Policy, and no change, alteration, or
modification may be made except in writing signed by all parties
hereto.
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ARTICLE XII
This Agreement shall be governed by the laws of the
State of New York.
IN WITNESS WHEREOF, the parties hereto have set their
hands on the day and year first set forth above.
PHILLIPS-VAN HEUSEN CORPORATION
By:
Attest:
Secretary
(Witness) Laura Phillips
(Witness) David Phillips
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COLLATERAL ASSIGNMENT
Pursuant to the provisions of a Split Dollar Life
Insurance Agreement entered into by Laura Phillips and David L.
Phillips, (the "Policyowners"), and Phillips-Van Heusen
Corporation, (the "Corporation"), dated the day of February,
1995 (the "Agreement"), for value received, we hereby assign unto
the Corporation Policy No. (the "Policy") issued by The Guardian
Insurance and Annuity Company, Inc. ("Guardian") on the life of
Lawrence S. Phillips, as collateral security to the extent
specified below.
1. Prior to the death of Lawrence S. Phillips: The
Policy's cash values shall be collateral security to the extent of
(i) the aggregate amount paid by the Corporation toward premiums on
the policy, (ii) less the aggregate amount of any withdrawals or
borrowing against the Policy made by the Corporation.
2. Part A of the life insurance proceeds of the Policy
shall be an amount equal to:
If death occurs on or before June 14, 1996, the
amount of $3,375,000;
If death occurs on or before June 14, 1997, the
amount of $3,000,000;
If death occurs on or before June 14, 1998, the
amount of $2,625,000;
Exhibit A
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If death occurs on or before June 14, 1999, the
amount of $2,250,000;
If death occurs on or before June 14, 2000, the
amount of $1,875,000;
If death occurs on or before June 14, 2001, the
amount of $1,500,000;
If death occurs on or before June 14, 2002, the
amount of $1,125,000;
If death occurs on or before June 14, 2003, the
amount of $750,000;
If death occurs on or before June 14, 2004, the
amount of $375,000;
However, in no event shall Part A exceed the life
insurance proceeds payable under the policy.
3. Part B of the life insurance proceeds of the Policy
shall be the amount remaining after Part A of those proceeds has
been paid.
4. The beneficiary for Part B of the life insurance
proceeds shall be the Corporation. The beneficiary for Part A of
the life insurance proceeds shall be as stated in the policy
application or as changed pursuant to the terms and conditions of
the Policy by the Policyowners.
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5. The interest of any beneficiary for Part B of the
life insurance proceeds may not be assigned by the Policyowners,
and also shall not be subject to the interest of any assignee.
6. Except as specifically granted to the Corporation
pursuant to the terms of the aforesaid Split Dollar Agreement, the
Policyowners shall retain all incidence of ownership in the policy.
This Collateral Assignment may not be terminated without the
consent of the Corporation.
Dated: February , 1995
Witness Laura Phillips
Witness David L. Phillips
has retained the duplicate
of this Agreement. The Company assumes no responsibility for the
validity of the Assignment.
Dated: February , 1995
HOME OFFICE ENDORSEMENT
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Schedule B
PHILLIPS-VAN HEUSEN CORPORATION
NON-INCENTIVE STOCK OPTION AGREEMENT
AGREEMENT made and entered into this 14th day of
February, 1995, between PHILLIPS-VAN HEUSEN CORPORATION (the
"Company"), a Delaware corporation with its principal executive
offices at 1290 Avenue of the Americas, New York, New York 10104,
and LAWRENCE S. PHILLIPS (the "Optionee"), an individual residing
at 2197 N. W. 60th Road, Boca Raton, FL 33496.
W I T N E S S E T H:
WHEREAS, the Optionee is retained by the Company as a
consultant and the Company desires that he have an option to
acquire stock in the Company in order to increase his incentive and
personal interest in the welfare of the Company; and
WHEREAS, the committee (the "Committee") under the
Phillips-Van Heusen Corporation 1987 Stock Option Plan (the "Plan")
(a copy of which is delivered herewith by the Company and receipt
thereof is acknowledged by the Optionee) shall be responsible for
the administration of this Agreement, with such duties and
functions as prescribed in this Agreement only, notwithstanding
that the option hereby granted is not granted under or pursuant to
the Plan.
NOW, THEREFORE, the parties hereby agrees as follows:
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23. The Company grants to the Optionee an option (the
"Option") to purchase from the Company all or any part of an
aggregate of 100,000 shares (the "Optioned Shares") of the common
stock, $1.00 par value, of the Company (the "Common Stock"). The
Option is not intended to be an incentive stock option within the
meaning of section 422A(b) of the Internal Revenue Code of 1986
(the "Code") and this Agreement shall be construed and interpreted
in accordance with such intention.
24. The purchase price is $16.50 per share (the "Option
Price") (which is 100% of the fair market value thereof on the date
of this Agreement).
25. The Option shall not be assignable or transferable
except (x) by will and/or by the laws of descent and distribution
and (y) to the Optionee's spouse and/or lineal descendants and/or
their spouses or any trust of which the Optionee and/or the
Optionee's spouse and lineal descendants and their spouses are
beneficiaries. Any permitted transferees of the Option shall have
all of the rights of the Optionee hereunder and are, after any such
transfer, referred to as the Optionees with respect to the Option.
26. The Option, subject to the condition that it shall
not be exercised after February 13, 2005, may be exercised in whole
at any time or in part from time to time.
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27. Neither the Optionee nor the Optionee's legal
representatives, legatees or distributees shall be or be deemed to
be the holder of any shares of the Common Stock covered by the
Option unless and until the Optionee exercises the Option, or any
portion hereof. The Optionee shall be deemed to become an owner of
record of the Common Stock covered by the Option on the date the
Option is exercised and payment of the Option Price was made
irrespective of the date of delivery of share certificates. Upon
payment of the purchase price thereof, shares issued upon exercise
of the Option shall be validly issued and outstanding, fully paid
and nonassessable, not subject to preemptive rights, or other
contractual rights to purchase securities of the Company, and free
of all liens, claims and encumbrances.
28. In order to exercise the Option, the Optionee shall
give written notice of intent to exercise the Option to the Chief
Financial Officer of the Company or his delegate, in form and
substance reasonably satisfactory to the Committee, specifying the
number of shares of the Common Stock with respect to which the
Option is being exercised, and accompanied by payment to the
Company of the amount of the Option Price for the numbers of shares
of the Common Stock so specified.
29. A. Unless the shares to be issued upon the exercise
of the Option shall be registered prior to the issuance thereof
under the Securities Act of 1933 (the "Securities Act"), the
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Optionee shall, as a condition of the Company's obligation to issue
such shares, give a representation in writing that he is acquiring
such shares for his own account as an investment and not with a
view to, or for sale in connection with, the distribution of any
thereof in violation of the Securities Act.
B. In the event of the death of the Optionee, an
additional condition of exercising the Option shall be the delivery
to the Company of such tax waivers and other documents as the
Committee shall reasonably determine. The executors,
administrators and legal representatives of the Optionee shall have
all of the rights of the Optionee hereunder and are, after the
death of the Optionee, referred to as the Optionee with respect to
the Option.
C. The Optionee shall, as an additional condition
of exercising the Option, make such arrangements with the Company
with respect to withholding as the Committee shall reasonably
determine.
30. In the event that a dividend shall be declared upon
the Common Stock payable in shares of the Common Stock, the
Optioned Shares shall be adjusted by adding to each such share the
number of shares which would be distributable thereon if such share
had been outstanding on the date fixed for determining the
stockholders entitled to receive such stock dividend. In the event
that the outstanding shares of the Common Stock shall be changed
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into or exchanged for a different number or kind of shares of stock
or other securities of the Company or of another corporation,
whether through reorganization, recapitalization, stock split-up,
combination of shares, sale of assets, merger or consolidation in
which the Company is the surviving corporation, then, there shall
be substituted for each Optioned Share the number and kind of
shares of stock or other securities into which each outstanding
share of the Common Stock shall be so changed, or for which each
such share shall be exchanged. In the event that there shall be
any change, other than as specified in this paragraph 8, in the
number or kind of outstanding shares of the Common Stock, or of any
stock or other securities into which the Common Stock shall have
been changed, or for which it shall have been exchanged, then, if
the Committee shall, in its discretion reasonably exercised,
determine that such change equitably requires an adjustment in the
number or kind of Optioned Shares, such adjustment shall be made by
the Committee. In the case of any such substitution or adjustment
as provided for in this paragraph 8, the Option Price for each
Optioned Share shall be the Option Price for all shares of stock or
other securities which shall have been substituted for such
Optioned Share or to which such share shall have been adjusted in
accordance with the provisions in this paragraph 8. No adjustment
or substitution provided for in this paragraph 8 shall require the
Company to sell a fractional share hereunder. In the event of the
dissolution or liquidation of the Company, or a merger,
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reorganization or consolidation in which the Company is not the
surviving corporation, then, except as otherwise provided in the
second sentence of this paragraph 8, the Option, to the extent not
theretofore exercised, shall terminate forthwith.
31. The existence of the Option shall not affect in any
way the right or power of the Company or its stockholders to make
or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure
or its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference stock
ahead of or affecting the Common Stock or the rights thereof, or
the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other
corporate act or proceeding whether of a similar character or
otherwise.
32. In case:
(a) the Company shall declare a dividend (or any
other distribution) on its Common Stock other than regular
quarterly cash dividends; or
(b) the Company shall authorize the distribution to
any holders of the Common Stock of any additional shares of capital
stock of any class or other securities convertible, exercisable or
exchangeable into shares of capital stock or any options, rights or
warrants to subscribe therefor; or
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(c) there shall be any capital stock reorganization
or reclassification of the Common Stock (other than a subdivision
or combination of the outstanding Common Stock and other than a
change in the par value of the Common Stock), or any consolidation
or merger to which the Company is a party or any exchange of
securities with another corporation or any conversion of the shares
purchasable upon the exercise of the Option into securities of
another corporation or any sale or transfer of all or substantially
all of the assets; or
(d) a voluntary or involuntary dissolution,
liquidation or winding up of the Company; or a sale of all or
substantially all of its property, asset and business shall be
proposed;
then the Company shall cause to be provided to the
Optionee at least 20 days prior to the applicable date hereinafter
specified, a notice stating (i) the date on which a record is to be
taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such
dividend, distribution or securities convertible into or
exercisable or exchangeable for shares of Common Stock are to be
determined, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, statutory exchange, sale,
transfer, dissolution, liquidation or winding up is expected to
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become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange or
convert their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
consolidation, merger, statutory exchange, sale, transfer,
dissolution, liquidation or winding up.
33. As a condition of the granting of the Option, the
Optionee agrees, for himself and his personal representatives, that
any dispute or disagreement which may arise under or as a result of
or pursuant to this Agreement shall be initially determined by the
Committee, in its discretion reasonably exercised.
34. Promptly upon receipt of a written request of the
Optionee that the Company effect the registration under the
Securities Act of the resale by the Optionee to the public of all
the Optioned Shares, the Company will file, at its sole expense, a
Registration Statement on Form S-3 or any similar available short
form Registration Statement under the Securities Act covering such
resale, and the Company will use its best efforts to cause such
Registration Statement to be declared effective under the
Securities Act within 30 days after the date of such request and to
remain effective until the earlier to occur of such resale of all
of the Optioned Shares or the expiration of 90 days of
effectiveness of such Registration Statement. The Company shall
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indemnify the Optionee for liabilities arising under the Securities
Act in accordance with customary practice.
35. This Agreement constitutes the entire agreement
between the Company and the Optionee with respect to the matters
covered hereby and may not be modified except by a written
instrument signed by or on behalf of the Company and the Optionee.
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IN WITNESS WHEREOF, the Company has caused this Agreement
to be executed by a duly authorized officer, and the Optionee has
executed this Agreement, as of the day and year first above
written.
PHILLIPS-VAN HEUSEN CORPORATION
By /s/ Bruce J. Klatsky
ACCEPTED AND AGREED TO:
/s/ Lawrence S. Phillips
Optionee
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Schedule C
INDEMNITY AGREEMENT
This Indemnity Agreement (this "Agreement") is made
and entered into as of the day of February, 1995 by and between
PHILLIPS-VAN HEUSEN CORPORATION, a Delaware corporation (the
"Company"), and LAWRENCE S. PHILLIPS ("Indemnitee").
WHEREAS, Indemnitee has been a director of the
Company since 1951 and served as an officer of the Company from
1951 through 1994;
WHEREAS, Indemnitee has agreed to resign as a
director of the Company and to serve as a consultant to the Company
in accordance with the terms of that certain letter agreement,
dated as of the date hereof, between Indemnitee and the Company
(the "Letter Agreement");
WHEREAS, the By-laws of the Company (the "By-laws")
provide that the Company shall indemnify any person to the fullest
extent permitted by the Delaware General Corporation Law (the
"DGCL");
WHEREAS, DGCL Section 145(f) expressly recognizes
that the indemnification provisions of the DGCL are not exclusive
of any other rights to which a person seeking indemnification may
be entitled under bylaw, agreement, vote of stockholders or
disinterested directors or otherwise;
WHEREAS, the Company, in connection with, and as a
condition of, Indemnitee's agreement to enter into the Letter
Agreement, has agreed to provide Indemnitee with the benefits
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the promises,
conditions and representation set forth herein, and for other good
and valuable consideration, the adequacy and receipt of which are
hereby acknowledged, the Company and Indemnitee hereby agree as
follows:
Section 1. Definitions. The following terms, as
used herein, shall have the following meanings:
(a) "Covered Claim" shall mean any claim against
Indemnitee (whether such claim is asserted by or in the right of
the Company or otherwise) based upon or arising out of any past,
present or future act, omission, neglect or breach of duty,
including, without limitation, any actual or alleged error,
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omission, misstatement or misleading statement, that Indemnitee may
commit or suffer, or may have committed or suffered, while serving
in his capacity as a director, officer, employee and/or agent of
the Company and/or, at the Company's request, as a director,
officer, employee and/or agent of another corporation, partnership,
joint venture, trust or other enterprise, provided that such claim:
(i) is not solely based upon and does
not arise solely out of Indemnitee gaining in fact
any personal profit or advantage to which
Indemnitee is not legally entitled;
(ii) is not for any accounting of profits
made from the purchase or sale by Indemnitee of
securities of the Company within the meaning of
Section 16(b) of the Securities Exchange Act of
1934, as amended, or similar provisions of any
state law; and
(iii) is not based solely upon and
does not arise solely out of Indemnitee's knowingly
fraudulent, deliberately dishonest or willful
misconduct.
Notwithstanding the foregoing, Covered Claim shall not include any
claim against Indemnitee (whether such claim is asserted by or in
the right of the Company or otherwise) based upon or arising out of
any future act, omission, neglect or breach of duty, including,
without limitation, any actual or alleged error, omission,
misstatement or misleading statement, that Indemnitee may commit or
suffer which are not committed or suffered in connection with
Indemnitee's provision of services to the Company pursuant to, and
in accordance with, the Letter Agreement.
(b) "Determination" shall mean a determination,
based upon the facts known at the time, made by:
(i) the Board of Directors of the
Company, by the vote of a majority of the directors
who are not parties to the action, suit or
proceeding in question ("Disinterested Directors"),
at a meeting at which there is a quorum;
(ii) if there are no such Disinterested
Directors, or if directed by a majority of such
Disinterested Directors at a meeting of the Board
of Directors of the Company at which there is a
quorum, by independent legal counsel in a written
opinion;
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(iii) the stockholders of the
Company; or
(iv) a court of competent jurisdiction in
a final, nonappealable adjudication.
For the purposes hereof, "independent legal counsel" as used in
Section 1(b)(ii) hereof shall not be any person or firm who, under
applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or
the Indemnitee in an action to determine the Indemnitee's rights
under this Agreement.
(c) "Payment" shall mean any and all amounts that
Indemnitee is or becomes legally obligated to pay in connection
with a Covered Claim, including, without limitation, damages,
judgments, amounts paid in settlement, reasonable costs of
investigation, reasonable fees of attorneys, costs of
investigative, judicial or administrative proceedings or appeals,
and costs of attachment or similar bonds.
Section 2. Indemnification. The Company shall
indemnify and hold harmless Indemnitee against and from any and all
Payments to the extent that:
(a) the Company shall not have advanced expenses to
Indemnitee pursuant to the provisions of Article VII of the By-laws
or otherwise and no determination shall have been made pursuant to
such Article or the DGCL that the Indemnitee is not entitled to
indemnification;
(b) Indemnitee shall not already have received
payment on account of such Payments pursuant to one or more valid
and collectable insurance policies; and
(c) such indemnification by the Company is not
unlawful.
The Company shall have no obligation to indemnify Indemnitee under
this Agreement for any amounts paid in a settlement of any action,
suit or proceeding effected without the Company's prior written
consent, which consent shall not be unreasonably withheld. Without
Indemnitee's prior written consent, the Company shall not settle
any claim in any manner that (x) would impose any obligation on
Indemnitee which would not be indemnified against by the Company
under this Agreement and (y) does not include a complete and
irrevocable release of Indemnitee. Indemnitee shall not
unreasonably withhold his consent to any proposed settlement.
Section 3. Indemnification Procedure; Advancements
of Costs and Expenses.
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(a) Promptly after receipt by Indemnitee of notice
of the commencement or threat of commencement of any action, suit
or proceeding, Indemnitee shall, if indemnification with respect
thereto may be sought from the Company under this Agreement, notify
the Company thereof in writing. Failure to give such notice shall
not affect right to indemnification provided herein except and to
extent the Company is materially prejudiced by such failure.
(b) If, at the time of receipt of such notice the
Company has directors' and officers' liability insurance in effect,
and such insurance would provide insurance with respect to the
Covered Claim, the Company shall give prompt notice of the
commencement of such action, suit or proceeding to the insurers in
accordance with the procedures set forth in the respective policies
in favor of Indemnitee. The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on
behalf of Indemnitee, all Payments payable as a result of such
action, suit or proceeding in accordance with the terms of such
policies.
(c) Subject to Section 3(d), all costs and
expenses, including reasonable fees of attorneys, incurred by
Indemnitee in defending or investigating such action, suit or
proceeding shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding; provided, however,
that no such costs or expenses shall be paid by the Company if,
with respect to such action, suit or proceeding, a Determination is
made that:
(i) Indemnitee did not act in good faith
and in a manner Indemnitee reasonably believed to
be in or not opposed to the best interests of the
Company; or
(ii) in the case of any criminal action
or proceeding, Indemnitee had reasonable cause to
believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that the
Indemnitee did not satisfy the foregoing standard of conduct to the
extent applicable thereto.
Indemnitee hereby undertakes to and agrees that he will repay the
Company for any costs or expenses advanced by or on behalf of the
Company pursuant to this Section 3(c) if it shall ultimately be
determined by a court of competent jurisdiction in a final,
nonappealable adjudication that Indemnitee is not entitled to
indemnification under this Agreement.
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(d) If the Company shall advance the costs and
expenses of any such action, suit or proceeding pursuant to Section
3(c) of this Agreement, it shall be entitled to assume the defense
of such action, suit or proceeding, if appropriate, with counsel
reasonably satisfactory to Indemnitee, upon delivery to Indemnitee
of written notice of its election so to do. After delivery of such
notice, the Company shall not be liable to Indemnitee under this
Agreement for any costs or expenses subsequently incurred by
Indemnitee in connection with such defense other than costs and
expenses of investigation; provided, however, that:
(i) Indemnitee shall have the right to
employ separate counsel in any such action, suit or
proceeding provided that the fees and expenses of
such counsel incurred after delivery of notice by
the Company of its assumption of such defense shall
be at Indemnitee's own expense; and
(ii) the fees and expenses of counsel
employed by Indemnitee shall be at the expense of
the Company if (aa) the employment of counsel by
Indemnitee has previously been authorized by the
Company, (bb) Indemnitee shall have reasonably
concluded that there is, or will likely be, a
conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or
(cc) the Company shall not, in fact, have employed
counsel to assume the defense of such action, suit
or proceeding.
(e) All payments on account of the Company's
advancement obligations under Section 3(c) of this Agreement shall
be made within ten (10) days of Indemnitee's written request
therefor. All other payments on account of the Company's
obligations under this Agreement shall be made within thirty (30)
days of Indemnitee's written request therefor, unless a
Determination is made that the claims giving rise to Indemnitee's
request are not payable under this Agreement. Each request for
payment hereunder shall be accompanied by evidence of Indemnitee's
incurrence of the costs and expenses for which such payment is
sought.
Section 4. Amendment to Certificate or By-laws.
The Company shall not adopt any amendment to the Certificate of
Incorporation or By-laws of the Company the effect of which would
be to deny, diminish or encumber the Indemnitee's rights to
indemnity pursuant to the Certificate of Incorporation or By-laws
of the Company, the DGCL or any other applicable law as applied to
any act or failure to act occurring in whole or in part prior to
the date (the "Effective Date") upon which the amendment was
approved by the Board of Directors of the Company or the
-41-
stockholders of the Company, as the case may be. In the event that
the Company shall adopt any amendment to the Certificate of
Incorporation or By-laws of the Company the effect of which is to
so deny, diminish or encumber the Indemnitee's rights to indemnity,
such amendment shall apply only to acts or failures to act
occurring entirely after the Effective Date thereof.
Section 5. Enforcement of Indemnification; Burden
of Proof. If a claim for indemnification or advancement of costs
and expenses under this Agreement is not paid in full by or on
behalf of the Company within the time period specified in Section
3(e) of this Agreement, Indemnitee may at any time thereafter bring
suit against the Company to recover the unpaid amount of such
claim. In any such action, the Company shall have the burden of
proving that indemnification is not required under this Agreement.
It is the intent of the Company that the Indemnitee not be required
to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because
the cost and expense thereof would substantially detract from the
benefits intended to be extended to the Indemnitee hereunder.
Accordingly, if the Company fails to comply with any of its
obligations under the Agreement or in the event that the Company or
any other person takes any action to declare the Agreement void or
unenforceable, or institutes any action, suit or proceeding
designed (or having the effect of being designed) to deny, or to
recover from, the Indemnitee the benefits intended to be provided
to the Indemnitee hereunder, the Company irrevocably authorizes the
Indemnitee from time to tine to retain counsel of his choice, at
the expense of the Company as hereafter provided, to represent the
Indemnitee in connection with the initiation or defense of any
litigation or other legal action, whether by or against the Company
or any director, officer, stockholder or other person affiliated
with the Company, in any jurisdiction. Regardless of the outcome
thereof, the Company shall pay and be solely responsible for any
and all costs, charges and expenses, including without limitation
reasonable attorneys' and others' fees and expenses, reasonably
incurred by the Indemnitee as a result of the Company or any person
contesting the validity or enforceability of this Agreement or any
provision thereof as aforesaid; provided, however, that the Company
shall not so pay or be so responsible if it is determined by a
court of competent jurisdiction that to so pay and be so
responsible would be unlawful.
Section 6. Employee Benefit Plans. The term "other
enterprise," as used in this Agreement, shall include employee
benefit plans. All references in this Agreement to, "serving...at
the Company's request" shall include any service by Indemnitee as
a director, officer, employee and/or agent of the Company which
imposes duties on, or involves services by, Indemnitee with
respect to an employee benefit plan, its participants or
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beneficiaries. If Indemnitee acts in good faith and in a manner he
reasonably believes to be in the interests of the participants and
beneficiaries of an employee benefit plan, then, for purposes of
Section 3(c)(i) hereof, Indemnitee shall be deemed to have acted in
a manner he "reasonably believed to be in or not opposed to the
best interests of the Company."
Section 7. Rights Not Exclusive. The rights to
indemnification and advancement of costs and expenses provided
hereunder shall not be deemed exclusive of any other rights to
which Indemnitee may be entitled under any charter document, bylaw,
agreement, insurance policy, vote of stockholders or disinterested
directors or otherwise.
Section 8. Subrogation. In the event of payment
under this Agreement by or on behalf of the Company, the Company
shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who promptly shall execute, at
the sole expense of the Company, all papers that may be required
and, at the sole expense of the Company, promptly shall do all
things that may be necessary to secure such rights, including,
without limitation, the execution of such documents as may be
necessary to enable the Company effectively to bring suit to
enforce such rights.
Section 9. Choice of Law. This Agreement shall be
governed by and construed and enforced in accordance with the laws
of the State of New York without reference to the conflicts of law
provisions thereof.
Section 10. Jurisdiction. The Company and
Indemnitee hereby irrevocably consent to the jurisdiction of the
courts of the State of New York for all purposes in connection with
any action, suit or proceeding which arises out of or relates to
this Agreement, and agree that any action instituted under this
Agreement shall be brought only n the state courts of the State of
New York.
Section 11. Attorney's Fees. Subject to Section 5
hereof, if any action, suit or proceeding is commenced in
connection with or related to this Agreement, the prevailing party
shall be entitled to have its costs and expenses, including,
without limitation, reasonable fees of attorneys and reasonable
expenses of investigation, paid by the losing party.
Section 12. Severability. In the event that any
provision of this Agreement shall be declared invalid or
unenforceable, such invalidity or enforceability shall not affect
the validity or enforceability of the other provisions of this
Agreement, it being hereby agreed that such provisions are
severable and that this Agreement shall be construed in all
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respects as if such invalid or unenforceable provisions were
omitted.
Section 13. Successors and Assigns. This Agreement
shall be binding upon all successors and assigns of the Company,
including any transferee of all or substantially all of its assets
and any successor by merger or otherwise by operation of law, and
shall be binding upon and inure to the benefit of the heirs, legal
representatives, successors and assigns of Indemnitee.
Section 14. Notices. All notices and
communications hereunder shall be in writing and shall be sent by
registered or certified mail, return receipt requested, addressed
to the party for whom or for which intended, in the case of the
Company, to its then principal executive office, or at such other
address of which the Company shall have given notice to Indemnitee
in the manner herein provided, and in the case of Indemnitee, at
his residence address as set forth in the records of the Company
(which is currently 2197 N.W. 60th Road, Boca Raton, Florida
33496) or at such other address of which he shall have given notice
to the Company in the manner herein provided, with a copy of all
such notices and communications to be given concurrently to
Rosenman & Colin, 575 Madison Avenue, New York, New York 10022,
Attention: Edward H. Cohen, Esq. and to Shereff, Friedman, Hoffman
& Goodman, LLP, 919 Third Avenue, New York, NY 10022, Attention:
Martin Nussbaum, Esq.
Section 15. Prior Agreements; Waivers. This
Agreement contains the entire understanding between the parties
hereto with respect to the subject matter hereof and, except as
contemplated hereby, supersedes all prior agreements and
understandings with respect to the subject matter hereof. No
waiver shall be deemed to be made by either of the parties to any
of its or his rights hereunder unless that waiver shall be in a
writing signed by the waiving party and any such waiver shall only
be effective to the extent set forth therein.
Section 16. Descriptive Headings. The descriptive
headings in this Agreement are included for the convenience of the
parties only and shall not affect the construction of this
Agreement.
Section 17. Counterparts. This Agreement may be
executed in two counterparts, both of which taken together shall
constitute one document.
Section 18. Amendment. No amendment, modification,
termination or cancellation of this Agreement shall be effective
unless made in writing and signed by each of the parties hereto.
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IN WITNESS WHEREOF, the Company and Indemnitee have
executed this Agreement as of the day and year first above written.
PHILLIPS-VAN HEUSEN CORPORATION
By:
Name:
Title:
Name: Lawrence S. Phillips
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