Exhibit 10.02
AMENDMENT NO. 4 TO EMPLOYMENT AGREEMENT
AMENDMENT No. 4 dated as of September 11, 2002 ("Amendment No. 4") to
the Employment Agreement dated August 28, 1998 as amended November 30, 1998,
January 18, 2000 and January 22, 2001 (the "Employment Agreement") by and
between G+G Retail, Inc., a Delaware corporation (the "Company"), and Scott
Galin, an individual resident at 65 Harbor Lane, Roslyn Harbor, New York 11576
(the "Executive").
The Company desires to provide for the Executive's continued employment
with the Company and the Executive wishes to accept such continued employment
upon the terms and subject to the conditions set forth in the Employment
Agreement, as amended hereby.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
18. Capitalized terms used but not defined herein shall have the
meanings set forth in the Employment Agreement.
19. The term of Executive's employment under the Employment Agreement
shall be extended through August 27, 2007. References in the Employment
Agreement to the "Employment Period" shall mean the term of Executive's
employment by the Company as extended hereby.
20. Section 3.1(a) of the Employment Agreement is amended and restated
in its entirety to read as follows:
"(a) Salary. The Executive shall continue to be paid an annual
salary of $900,000 ("Salary") which shall be payable in equal periodic
installments according to the Company's customary payroll practices,
but no less frequently than monthly. On each anniversary of the
commencement of the Employment Period after the date hereof, the
Executive's annual salary shall be increased by $25,000."
Executive's Salary shall not hereafter be automatically adjusted as previously
required pursuant to Section 3.1(a) of this Agreement in the event that
Executive becomes the Chief Executive Officer of the Company pursuant to Section
2.3(b), and no additional Salary shall hereafter be paid to Executive in annual
lump sum installments as previously required pursuant to Paragraph 2 of
Amendment No. 3 to this Agreement.
21. Section 4.1 of the Employment Agreement is hereby amended to add a
new clause (e) which shall read as follows:
"(e) upon termination by Executive within one year following a "Change
of Control" (as defined in Section 4.4A), such termination to be effective as of
the date specified in Section 4.4A.
22. Section 4 of the Employment Agreement is hereby amended to add a
new Section 4.4A which shall read as follows:
"4.4A Definition of "Change of Control"
A "Change of Control" shall have the meaning ascribed in
Section 4(b)(ii)(1) of Part B of Article Fourth of the Restated Certificate of
Incorporation of the Parent Company (which shall be deemed incorporated by
reference as if fully set forth herein). A termination of employment by
Executive following the occurrence of a Change of Control shall be deemed
effective as of the date which is 30 days following written notice thereof given
by the Executive to the Company.
23. Section 4.5(a) of the Employment Agreement is amended and restated
in its entirety to read as follows:
"(a) Termination by the Executive for Good Reason or by the
Company Without Cause. Subject to Section 4.5(e) below, in the event
that during the Employment Period, the Executive terminates his
employment with the Company for Good Reason, or the Company terminates
the Executive's employment without Cause, then the Executive shall
receive from the Company (as severance pay and liquidated damages, in
lieu of any other rights or remedies which might otherwise by available
to him under this Agreement, and to the extent permitted by law,
without any obligation on the Executive's part to mitigate damages by
seeking other employment or performance of other services) the amounts
set forth in (and payable in the manner provided in) either clause (x)
or (y) below, as the Executive shall elect. Executive's election to
receive the amount in either clause (x) or (y) below shall be set forth
in a written "Notice of Election of Remedy" given to the Company not
less than 15 days following the date on which Executive receives notice
from the Company of a termination without Cause or the date on which
the Executive has given notice to the Company of a termination for Good
reason, as the case may be. Each such notice shall be given in the
manner provided in Section 7.7 below.
(x) $2,250,000 paid in a one-time lump sum payment within 30
days following the effective date of termination of Executive's
employment; or
(y) $3,150,000 paid in 30 equal monthly installments,
commencing on the first business day of the calendar month next
following the effective date of termination of Executive's employment
and on the first business day of each of the next 29 months thereafter.
In case of any dispute as to the propriety of the termination
of the Executive's employment by the Company, the Company agrees to
continue to provide to the Executive all of the cash compensation and
benefits that would be payable to the Executive pursuant to the
Employment Agreement pending final resolution of such dispute; the
Executive shall be entitled to such legal or equitable damages or
relief as may be available to enforce his rights hereunder; and the
Executive shall be obligated to reimburse the Company for all such
compensation and benefits if it is finally determined that he was not
entitled thereto. If such termination is determined to be improper, the
Company agrees to pay to the Executive all of his attorney's fees and
expenses arising from such dispute."
24. Section 4.5 of the Employment Agreement is hereby amended (i) to
redesignate clause (e) of such Section as clause (f), and (ii) to add a new
clause (e) which shall read as follows:
"(e) Termination upon a Change of Control. If, during
the Employment Period, Executive terminates his employment following a
Change of Control pursuant to clause (e) of Section 4.1, or if the
Company terminates Executive's employment without Cause or Executive
terminates his employment for Good Reason within one year following a
Change of Control, then, in any such case, notwithstanding the
provisions of Section 4.5(a), Executive shall receive from the Company
(as severance pay and liquidated damages, in lieu of any other rights
or remedies which might otherwise be available to him under this
Agreement, and to the extent permitted by law, without any obligation
on the Executive's part to mitigate damages by seeking other employment
or otherwise and without any offset for any compensation earned as a
result of any such other employment or performance of other services)
the amounts set forth in (and payable in the manner provided in) either
clause (r) or (s) below, as the Executive shall elect. Executive's
election to receive the amount in either clause (r) or (s) below shall
be set forth in a written "Notice of Election of Remedy" given to the
Company concurrently with notice of Executive's election to terminate
his employment following a Change of Control (whether such termination
is pursuant to clause (e) of Section 4.1 or for Good Reason or
otherwise), or not later than 15 days following the date on which
Executive receives notice from the Company of its election to terminate
Executive's employment without Cause, as the case may be. Each such
notice shall be given in the manner provided in Section 7.7 below.
(r) $2,475,000 paid in a one-time lump sum payment within 30
days following the effective date of termination of Executive's
employment; or
(s) $2,925,000 paid in 30 equal monthly installments,
commencing on the first business day of the calendar month next
following the effective date of termination of Executive's employment
and on the first business day of each of the next 29 months thereafter.
Notwithstanding the foregoing, in the event it is determined that (i)
part or all of the compensation and benefits to be paid to the Executive under
this Agreement and outside of this Agreement constitute "parachute payments"
under Section 280G of the Code, and (ii) the payment of benefits under this
Agreement will cause the Executive to incur excise tax under Section 4999 of the
Code, the following limitation shall apply:
If the aggregate present value of such parachute payments (the
"Parachute Amount") equals or exceeds 2.99 times the Executive's Base
Amount, then the amounts otherwise payable to or for the benefit of the
Executive pursuant to this Agreement, and taken into account in
calculating the Parachute Amount, shall be reduced, as further
described below, to the extent necessary so that the Parachute Amount
is equal to 2.99 times the Executive's "Base Amount".
As a result of the uncertainty in the application of Section 280G of the Code at
the time of a determination hereunder, it is possible that payments will be made
by the Company which should not have been made in view of the foregoing
limitation ("Overpayment"). In the event that there is a final determination by
the Internal Revenue Service, or a final determination by a court of competent
jurisdiction, that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to the Executive which the Executive shall
repay to the Company together with interest at the applicable Federal rate
provided for in Section 7872(f)(2)
of the Code; provided, however, that no amount shall be payable by the Executive
to the Company if and to the extent such payment would not reduce the amount
which is subject to taxation under Section 4999 of the Code."
25. Section 5.2 of the Employment Agreement is hereby amended to add
new clauses (e) and (f) which shall read as follows:
"(e) If the Board of Directors of the Parent Company shall authorize,
propose, enter into negotiations with respect to or approve a Sale
Transaction of the type described in Section 2(b)(3) of Section FOURTH
Part A of the Restated Certificate of Incorporation of the Parent
Company, Executive shall use Executive's best efforts to assist in the
Sale Transaction process, provide full access to information and
facilities of the Company and otherwise fully cooperate in connection
with any such Sale Transaction or in the transition of Executive's
duties hereunder, as the Employment Committee of the Board of Directors
of the Company shall reasonably request, provided, however, that
nothing herein shall be deemed to require Executive to refrain from
terminating his employment with the Company following a Change of
Control pursuant to clause (e) of Section 4.1, and Executive may
disclose to any interested party in connection with a Sale Transaction
his intention to terminate his employment following completion of any
such Sale Transaction."
"(f) Executive acknowledges his obligations pursuant to Section 2.6(b)
of that certain Stockholders Agreement, dated August 28, 2002, among
the Parent Company, Pegasus G&G Retail, L.P., Pegasus Partners, L.P.,
Pegasus Related Partners, L.P., Jay Galin, Executive and other
management stockholders of the Parent Company set forth on Schedule 1
thereto and, without in any way limiting his obligations under such
Stockholders Agreement, hereby agrees to fully satisfy his obligations
arising under such Section 2.6(b)."
26. Except as specifically amended above, the Employment Agreement is
and shall continue to be in full force and effect and is hereby ratified and
confirmed in all respects.
27. This Amendment No. 4 shall be governed by and construed in
accordance with the laws of the State of New York without regard to conflicts of
laws principles.
28. This Amendment No. 4 may be executed in one or more counterparts,
each of which shall be deemed to be an original copy of this Amendment No. 4 and
all of which, when taken together, shall be deemed to constitute one and the
same agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this Amendment
No. 4 on the date and year first above written.
G+G RETAIL, INC.
By:/s/ Jay Galin
________________________________________
Jay Galin
Chairman and Chief Executive Officer
/s/ Scott Galin
___________________________________________
Scott Galin