Exhibit 10(c)
FIRST AMENDMENT TO RESTATED EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO RESTATED EMPLOYMENT AGREEMENT (this
"AMENDMENT") effective as of January 13, 1999, by and among Jerell, Inc., a
Texas corporation ("EMPLOYER"), Haggar Clothing Co., a Nevada corporation
("HAGGAR") and Edward D. Vierling ("EMPLOYEE"), amends that certain
Restated Employment Agreement, effective as of November 1, 1994 (the
"RESTATED AGREEMENT"), between Employer and Employee.
PRELIMINARY STATEMENTS
A. Haggar, JI Acquisition, Inc., a Texas corporation and wholly-owned
subsidiary of Haggar ("HAGGAR SUB"), Employer and certain shareholders
named therein, including Employee, have entered into an Agreement and Plan of
Merger, dated as of December 17, 1998 (the "MERGER AGREEMENT"), pursuant to
which Haggar Sub will be merged with and into Employer. Capitalized terms
used but not defined in this Amendment shall have the meanings ascribed to
them in the Merger Agreement.
B. It is a condition to Haggar's obligations to consummate the
transactions contemplated in the Merger Agreement that Employer and Employee
enter into this Amendment.
C. Simultaneously with the execution and delivery of this Agreement,
the Closing will occur and Employee will receive the amounts payable to Employee
specified in the Merger Agreement (the "TRANSACTION CONSIDERATION").
AGREEMENTS
The parties hereto desire to amend the Restated Agreement as set forth
herein. In consideration of the foregoing and the mutual covenants set forth in
the Restated Agreement, the Merger Agreement and this Amendment, the parties to
this Amendment, intending to be legally bound, hereby agree as follows:
1. AMENDMENT OF RECITALS. All references to "President and Chief
Executive Officer of Employer" in the Recitals of the Restated Agreement are
hereby amended and restated to read as "President and Chief Operating Officer
of Jerell, Inc."
2. AMENDMENT OF SECTION 1.1. The reference to "President and Chief
Executive Officer of Employer" in Section 1.1 of the Restated Agreement is
hereby amended and restated to read as "President and Chief Operating Officer
of Jerell, Inc."
3. AMENDMENT OF SECTION 1.2. The reference to "President and Chief
Executive Officer of Employer" in the first sentence of Section 1.2 of the
Restated Agreement is hereby amended and restated to read as "President and
Chief Operating Officer of Jerell, Inc."
4. AMENDMENT OF SECTION 2.1. The reference to "$200,000" in the
first sentence of Section 2.1 of the Restated Agreement is hereby amended and
restated to read as "$250,000."
5. AMENDMENT OF SECTION 2.2. Section 2.2 of the Restated Agreement
is hereby amended and restated in its entirety to read as follows:
BONUS. During the term of Employee's employment, Employee
will be eligible to receive an annual cash performance bonus (the
"ANNUAL BONUS") based the achievement of certain net income
performance targets by Employer (weighted at 70%) and Haggar
(weighted at 30%) as follows: (A) for Haggar's 1999 fiscal year,
(i) Employer must meet its net income budget and (ii) there is no
minimum income performance requirement for Haggar in order for
Employee to receive an Annual Bonus; (B) for Haggar's 2000 fiscal
year, (i) Employer must meet its net income budget and (ii) Haggar
must make at least 25% of its net income performance target in
order for Employee to receive an Annual Bonus and (C) for Haggar's
2001 fiscal year, (i) Employer must meet its net income budget and
(ii) Haggar must make at least 50% of its net income performance
target in order for Employee to receive an Annual Bonus. The base
amount of the Annual Bonus will be $150,000. The Annual Bonus will
be doubled for any year in which both Haggar's net income is 10%
above the net income performance target and Employer's net income
is 10% above the net income budget for that year. The net income
performance targets for Haggar and the net income budgets for
Employer will be established by the Board of Directors of Haggar in
its sole discretion; provided, however, that the net income budget
for Employer will be based on the projections provided to Haggar by
Employer in connection with the Merger. The net income budget for
Employer for its 1999 fiscal year is $5 million. Haggar will
notify Employee of the Haggar net income performance targets for
1999 fiscal year within 45 days after the Closing Date (as defined
in the Merger Agreement) and will notify Employee of the Haggar net
income performance targets for 2000 and 2001 fiscal years in
accordance with Haggar's customary policies regarding such
notification. Whether Employer has met its net income budget or
Haggar has met its net income performance target for any period
will be determined by Haggar in accordance with its internal
accounting practices as consistently applied for prior periods.
The Annual Bonus, if any, shall be paid within 90 days after the end
of Haggar's 1999, 2000 and 2001 fiscal years, respectively.
6. AMENDMENT OF SECTION 2.3. Section 2.3 of the Restated Agreement
is hereby amended and restated in its entirety to read as follows:
OTHER BENEFITS. Employee shall be eligible to participate in
Haggar's benefit plans currently maintained by Haggar on the same
terms and conditions as other employees of Haggar.
7. ADDITION OF SECTION 2.5. A new Section 2.5 shall be added to the
Restated Agreement which shall read in its entirety as follows:
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2.5 EMPLOYMENT ESCROW AMOUNT. Pursuant to Section 2.07 of the Merger
Agreement, Employee, Haggar and the Escrow Agent have entered into an
Escrow Agreement, pursuant to which a portion of the Option
Consideration that would otherwise have been payable to Employee
pursuant to the Merger Agreement in an amount equal to $1,500,000 (the
"EMPLOYMENT ESCROW AMOUNT") has been deposited with the Escrow Agent to
be distributed as follows:
(a) $500,000 shall be paid to Employee (subject to applicable
withholding tax) within two Business Days following each of the first,
second and third anniversaries of the Closing Date; provided, however,
that Employee must remain a full-time employee of Employer for the
entire calendar year prior to a respective anniversary in order to
receive such payment, unless Employee's failure to remain a full-time
employee results from Employee's death or Disability;
(b) if Employee's employment is terminated either (i) as a result
of Employee's death or Disability or (ii) by Employer for any reason,
the remaining portion of the Employment Escrow Amount held by the Escrow
Agent, if any, shall be paid in full to Employee (subject to applicable
withholding tax); and
(c) if Employee's employment is terminated by Employee for any
reason (other than as a result of Employee's death or Disability), the
remaining portion of the Employment Escrow Amount which is held by the
Escrow Agent, if any, shall be paid in full to Haggar.
Haggar, Employer and Employee hereby agree that, notwithstanding any
other provision set forth in the Merger Agreement (including Section
3.04 and Section 3.05 thereof), $1,500,000 of the Option Consideration
that would otherwise have been payable to Employee at the Closing
pursuant to Section 3.04 of the Merger Agreement and which is being
deposited with the Escrow Agent as the Employment Escrow Amount shall
not be subject to deduction for any withholding on the date hereof;
provided, however, that upon the release of all or any portion of the
Employment Escrow Amount to Employee as contemplated in this Section
2.5, Employer and Haggar shall be entitled to deduct and withhold, or
cause to be deducted and withheld, such amounts as are required to be
deducted and withheld with respect to the making of such payment under
the Code or any provision of state, local or foreign tax law. Upon the
occurrence of an event described in this Section 2.5 requiring the
distribution of all or any portion of the Employment Escrow Amount to
Employee on the one hand, or Employer or Haggar (or any taxing
authority) on the other hand, as applicable, Haggar and Employee will
deliver to the Escrow Agent joint written instructions requesting
distribution of such
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amount to Employee on the one hand, or Employer or Haggar (or any such
taxing authority) on the other hand, as applicable.
8. ADDITION OF SECTION 2.6. A Section 2.6 shall be added to the Restated
Agreement which shall read as follows:
2.6 LONG-TERM INCENTIVES.
A. CLOSING OPTIONS. On the Closing Date, Haggar Corp., a
Nevada corporation and the sole shareholder of Haggar ("PARENT"), and
Employee shall enter into an agreement, using Parent's usual form
agreement, pursuant to which Parent will grant Employee an option (the
"STOCK OPTION") to purchase 25,000 shares of Parent's common stock, par
value $0.10 per share (the "COMMON STOCK") pursuant to Parent's 1992
Long Term Incentive Plan, at an exercise price equal to the closing
price per share of the Common Stock on the Nasdaq National Market System
on the Closing Date. The Stock Option will vest as follows: 1/3 on
January 13, 2000; 1/3 on January 13, 2001 and 1/3 on January 13, 2002;
provided, however, that the Stock Option shall vest on such dates only
if Employee remains a full-time employee of Employer from the Closing
Date though such dates of vesting.
B. ADDITIONAL OPTIONS. Subject to approval by Haggar's Board
of Directors and a performance review of Employee, Employee will be
eligible to receive annual grants of options to purchase 10,000 to
25,000 shares of parent's Common Stock following each of the first three
fiscal years of Parent following the Closing Date.
9. AMENDMENT OF ARTICLE III. Article III of the Restated Agreement
is hereby amended and restated in its entirety to read as follows:
3.1 NONDISCLOSURE. Employee expressly covenants and agrees that
he will not, during his employment with Employer or for a period of
two years after the termination of his employment, irrespective of
the manner or cause of the termination, directly or indirectly,
reveal, divulge, disclose, or communicate to any person, firm, or
corporation (other than authorized officers, directors, and
employees of Employer, Parent, Haggar or any of their respective
subsidiaries), in any manner whatsoever, any Confidential
Information (herein defined) of Employer, Parent, Haggar or any of
their respective subsidiaries without the prior written consent of
a duly authorized officer of Employer.
3.2 DEFINITION OF "CONFIDENTIAL INFORMATION". As used herein,
"Confidential Information" means information of any kind, nature,
and description disclosed to, discovered by, or otherwise known by
Employee as a direct or indirect consequence of or through his
employment with
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Employer, Parent, Haggar or any of their respective subsidiaries,
not generally known in the business in which Employer, Parent,
Haggar and their respective subsidiaries are or may become engaged
(other than through or as a result of Employee's unauthorized
disclosure), about the business, merchandise, processes and
services, conducted by or provided by Employer, Parent, Haggar or
any of their respective subsidiaries, including, but not limited
to, information relating to the research, developments, inventions,
product lines, designs, purchasing, finances and financial affairs,
marketing, merchandising, clients, customers or persons or concerns
likely to become clients or customers, any past or present
merchandise or supply sources, or persons or concerns likely to
become merchandise or supply sources in the future, system designs,
procedure manuals, the prices they obtain or have obtained or at
which they sell or have sold services or products, the names of
their personnel, automated data programs, reports, personnel
procedures, and supply and service resources. Without regard to
whether any or all of the foregoing matters would be deemed to be
confidential, material, or important, the parties hereto stipulate
that, between them, the same are important, material, and
confidential and if disclosed would materially affect the
successful conduct of the business of the Employer, Parent, Haggar
and their respective subsidiaries and their respective goodwill.
3.3 RETURN OF EMPLOYER INFORMATION. Upon termination of this
Agreement or Employee's employment, unless authorized to the
contrary in writing by a duly authorized officer of Employer,
Employee will surrender to Employer all proprietary information
relating to Employer, Parent, Haggar and each of their respective
subsidiaries, and their respective businesses, including, but not
limited to, Confidential Information, all lists, Rolodex cards,
charts, schedules, reports, financial statements, books and
records, designs, and all copies thereof, of Employee (regardless
of whether such information may have been prepared or complied by
Employee) and any and all other property belonging to Employer,
Parent, Haggar and their respective subsidiaries. Employee shall
have no right to copy or otherwise reproduce any of the items set
forth above, which items are the respective sole and exclusive
property of either Employer, Parent, Haggar or their respective
subsidiaries.
10. AMENDMENT OF ARTICLE IV. Article IV of the Restated Agreement is
hereby amended and restated in its entirety to read as follows:
EMPLOYEE COVENANTS
As a condition to continued employment and in consideration of the
compensation paid to Employee under Paragraph 2.1, the Bonus
structure set forth in Paragraph 2.2, the disclosure of
Confidential Information and the Transaction Consideration received
by Employee, Employee hereby agrees
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that for a period of 12 months following Employee's termination of
employment and for the period extending beyond the 12 months in
which Employee is receiving payments provided for hereunder,
Employee will not directly or indirectly, either through any kind
of ownership (other than ownership of securities of a publicly held
corporation of which Employee owns less than one percent of any
class of outstanding securities), or lending relationship or as a
director, officer, principal, agent, employee, employer, advisor,
consultant, co-partner, or in any individual or representative
capacity whatever, either for his own benefit or for any other
person or business entity, without the written consent of Employer:
(i) compete in any way with Employer, Parent, Haggar or any of
their respective subsidiaries anywhere in the United States;
(ii) hire any employee of Employer, Parent, Haggar or any of
their respective subsidiaries or in any way try to influence any
employee of Employer, Parent, Haggar or any of their respective
subsidiaries to terminate his employment with Employer, Parent,
Haggar or any of such subsidiaries; and
(iii) directly or indirectly request or advise any present or
future merchandise resource, supply resource, or service resource
of Employer, Parent, Haggar or any of their respective subsidiaries
to increase the price of, withdraw, curtail or cancel the
furnishing of sales of merchandise, supplies or services to
Employer, Parent, Haggar or any such subsidiary.
Anything in this Article IV to the contrary notwithstanding, the
covenant contained in paragraph (i) above shall be applicable only
in the event Employee voluntarily terminates employment hereunder
or is terminated for "cause" (as defined herein) by Employer.
11. AMENDMENT OF ARTICLE V. Article V of the Restated Agreement is
hereby amended and restated in its entirety to read as follows:
SURVIVAL OF COVENANTS
In the event of termination of this Agreement for any reason, then
the covenants contained in Article III and Article IV hereof shall
survive the termination of Employee's employment with Employer.
Employee agrees that the salary, bonus, participation in the
benefit plans of the Employer, access to Confidential Information
and the Transaction Consideration received by Employee constitute
full and complete compensation to Employee for all Employee's
obligations, covenants and services and for all general and
specific assignments under this Agreement.
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12. AMENDMENT OF SECTION 6.1. Section 6.1 of the Restated Agreement is
hereby amended and restated in its entirety to read as follows:
RIGHT TO INJUNCTION. Employee agrees that a violation on his part
of any covenant contained in Article III and IV of this Agreement
will cause such damage to Employer, Parent, Haggar and their
respective subsidiaries as will be irreparable, and for that reason
Employee further agrees that Employer, Parent, Haggar and their
respective subsidiaries shall be entitled as a matter of right to
an injunction from any court of competent jurisdiction restraining
any further violation of said covenants by Employee, his employer,
employees, partners, or agents. Such right to injunction shall be
cumulative and in addition to whatever other remedies Employer,
Parent, Haggar and their respective subsidiaries may have,
including, specifically, recovery of damages. Employee and
Employer hereby expressly acknowledge and agree that such covenants
and agreements shall be construed in such a manner as to be
enforceable under applicable laws if a court of competent
jurisdiction determines that limitations on such covenants and
agreements are required.
13. AMENDMENT OF SECTION 6.3. Section 6.3 of the Restated Agreement is
hereby amended and restated in its entirety to read as follows:
INDEPENDENT COVENANTS. The covenants and agreements contained in
Articles III and IV herein shall be construed as covenants or
agreements independent of any other provision of this Agreement and
the allegation or existence of any claim or cause of action of
Employee against Employer, Parent, Haggar or any of their
respective subsidiaries, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by
Employer, Parent, Haggar or any of their respective subsidiaries,
of the covenants contained therein; provided, however, if Employer
is in default of any salary or Bonus payments required to be made
to Employee hereunder and fails to make such payment 30 days after
receipt of written notice of default from Employee, then the
covenants contained in Article IV shall not be enforceable against
Employee.
14. AMENDMENT OF SECTION 6.5. Section 6.5 of the Restated Agreement is
hereby amended and restated in its entirety to read as follows:
EMPLOYEE REPRESENTATIONS. Insofar as the covenants set out in
Articles III and IV are concerned, Employee specifically
acknowledges and agrees as follows: (i) the covenants are
reasonable and necessary to protect the goodwill and business
interest of Employer, Parent, Haggar and their respective
subsidiaries; (ii) the time duration and geographical area
limitations of the covenants are reasonable and necessary to
protect the goodwill and business interest of Employer, Parent,
Haggar and their respective subsidiaries, (iii) the consideration
for the covenants is the
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employment and continued employment of Employee by Employer, the
monetary considerations set forth in Article II hereof and the
Transaction Consideration received by Employee; (iv) the covenants
are not oppressive to Employee and do not impose a greater
restraint on Employee than is necessary to protect the goodwill and
other business interests of Employer, Parent, Haggar and their
respective subsidiaries, and (v) upon termination of employment
hereunder for any reason Employee believes he will be able to earn
a livelihood without violating the provisions of Articles III and
IV.
15. AMENDMENT OF SECTION 7.1. Section 7.1 of the Restated Agreement is
hereby amended and restated in its entirety to read as follows:
TERM. Except for earlier termination specifically provided for
herein, the term of this Agreement shall commence on November 1,
1994, and shall be in force until September 30, 1999, at which time
Employee and Haggar or one of its subsidiaries shall negotiate in
good faith to enter into a three-year employment contract with
economic terms based upon, and consistent with, the letter from
Haggar to Employee dated November 18, 1998. Such agreement will be
subject to approval by Haggar's Board of Directors, and will
supersede all prior agreements relating to Employee's employment
with Employer, including the Restated Agreement.
16. AMENDMENT OF SECTION 7.2. The last two sentences of Section 7.2(A)
and the last two sentences of Section 7.2(B) of the Restated Agreement are
hereby deleted in their entirety.
17. AMENDMENT OF SECTION 7.4. Section 7.4 of the Restated Agreement is
hereby amended and restated in its entirety to read as follows:
TERMINATION BY EMPLOYEE. Employee may voluntarily terminate
employment hereunder by giving 30 days' advance written notice of
such termination to Employer. In the event Employee exercises his
right to terminate this Agreement, Employee shall be entitled only
to accrued salary to date of termination.
18. AMENDMENT OF SECTION 8.1. The following mailing address for Haggar
shall be added to Section 8.1 of the Restated Agreement:
Haggar Clothing Co.
6113 Lemmon Avenue
Dallas, Texas 75209
19. AMENDMENT OF SECTION 8.2. Section 8.2 of the Restated Agreement
is hereby amended and restated in its entirety to read as follows:
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This Agreement, as amended, the Merger Agreement and the Escrow
Agreement contain the entire agreement of the parties hereto with
respect to the matters set forth therein and supersede all prior
agreements and understandings, oral or written, if any, between the
parties hereto. No modification or amendment of the terms,
conditions or provisions herein may be made otherwise than by
written consent signed by the parties hereto.
20. GOVERNING LAW. The laws of the State of Texas shall govern the
validity, construction, enforcement and interpretation of this Amendment.
21. PARTIES BOUND. This Amendment and the rights and obligations
hereunder shall be binding upon and inure to the benefit of Employer, Haggar and
Employee, and their respective heirs, personal representatives, successors and
assigns; provided, however, that Employee may not assign any rights or
obligations hereunder without the express written consent of Employer.
22. THIRD-PARTY BENEFICIARIES. Employee hereby acknowledges and
agrees that Parent and each of its subsidiaries are intended to be third-party
beneficiaries of the provisions of this Amendment and, as such, shall be
entitled to rely upon and enforce this Amendment to the same extent as if they
are a signatory hereto.
23. COUNTERPARTS. This Amendment may be signed in any number of
counterparts, each executed counterpart constituting an original but all
together constituting only one instrument.
24. HEADINGS. The section headings contained in this Amendment are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Amendment.
25. EFFECT OF AMENDMENT. Except as amended hereby, the terms and
provisions of the Restated Agreement shall remain in full force and effect and
are hereby in all respects ratified and confirmed by the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
EMPLOYER:
JERELL, INC.
By: /s/ Norman L. Spencer
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Name: Norman L. Spencer
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Title: Secretary
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HAGGAR:
HAGGAR CLOTHING CO.
By: /s/ Frank D. Bracken
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Name: Frank D. Bracken
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Title: President & COO
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EMPLOYEE:
/s/ Edward D. Vierling
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EDWARD D. VIERLING
[SIGNATURE PAGE TO FIRST AMENDMENT TO RESTATED EMPLOYMENT AGREEMENT]