Employment Agreement - J Crew Operating Corp. and Blair Gordon
December 12, 2001
Mr. Blair Gordon
359 West 20th Street, #4
New York, NY 10011
Dear Blair:
Pursuant to our discussions regarding your employment with J. Crew
Operating Corp. (the "Company"), we thought it would be useful to lay out the
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terms and conditions of our agreement in this letter agreement ("Agreement") for
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both parties to sign.
1. Employment.
(a) The Company hereby agrees to employ you during the "Employment Period"
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(as defined below) as Executive Vice President and Creative Director, and you
hereby agree to serve the Company in such capacity. You shall report to the
Chief Executive Officer of the Company.
(b) During the Employment Period, you shall devote your full business time
and energy, attention, skills and ability to the performance of your duties and
responsibilities hereunder and shall faithfully and diligently endeavor to
promote the business and best interests of the Company. Accordingly, you may
not, directly or indirectly, without the prior written consent of the Company,
operate, participate in the management, operations or control of, or act as an
employee, officer, consultant, agent or representative of, any type of business
or service (other than as an employee of the Company), provided that it shall
not be a violation of the foregoing for you to (i) act or serve as a director,
trustee or committee member of any civic or charitable organization, and (ii)
manage your personal, financial and legal affairs, so long as such activities
(described in clauses (i) or (ii)) do not interfere with the performance of your
duties and responsibilities to the Company as provided hereunder.
2. Employment Period.
(a) The "Employment Period" shall begin as of January 7, 2002 (the
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"Effective Date") and shall terminate ("Termination Date") upon the earliest to
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occur of (i) the third anniversary of the Effective Date, (ii) your death or
Disability (as defined below), (iii) voluntary termination of employment by you
in advance of the Termination Date on at least two months prior notice, (iv)
termination of employment by the Company without Cause (as defined below) or (v)
termination of employment by the Company for Cause.
(b) Upon termination of the Employment Period for any reason, you shall be
entitled to any earned but unpaid Base Salary (as defined in Section 3(a) below)
as of the Termination
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Date. If the Company terminates the Employment Period without Cause, you will be
entitled to continuation of your Base Salary as in effect immediately prior to
such termination and medical benefits for a period of twelve (12) months after
the date of such termination (the "Salary Continuation Payments"), provided that
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the Salary Continuation Payments are subject to and conditioned upon your
execution of a valid general release and waiver (reasonably acceptable to the
Company), waiving all claims that you may have against the Company, its
successors, assigns, affiliates, employees, officers and directors and your
compliance with the provisions set forth in Paragraph 4 hereof. The Company
shall have no additional obligations under this Agreement.
(c) For purposes of this Agreement, the term "Cause" shall mean (i) the
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conviction for a felony, (ii) willful misconduct or gross negligence in
connection with the performance of your duties as an employee of the Company,
(iii) a material breach of this Agreement, including without limitation, your
failure to perform your duties and responsibilities hereunder or adhere to
corporate policies, (iv) a fraudulent act or omission by you adverse to the
reputation of the Company or any affiliate, and (v) the disclosure by you of any
Confidential Information (as defined in Section 4(c) hereof) to persons not
authorized to know same. If subsequent to the termination of your employment, it
is discovered that your employment could have been terminated for Cause, your
employment shall, at the election of the Company, in its sole discretion, be
deemed to have been terminated for Cause. In addition, for purposes of this
Agreement, the term "Disability" shall mean your incapacity due to physical or
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mental illness or injury, which results in your being unable to perform your
duties hereunder for a period of ninety (90) consecutive working days, and
within thirty (30) days after the Company notifies you that your employment is
being terminated for Disability, you shall not have returned to the performance
of your duties on a full-time basis.
3. Compensation and Benefits.
(a) During the Employment Period, your annual base salary shall be
$400,000 ("Base Salary") and shall be paid pursuant to regular Company payroll
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practices for the senior executives of the Company. The Base Salary will be
reviewed annually by the Company.
(b) In addition to the Base Salary, in each fiscal year during the
Employment Period beginning with the fiscal year ending February 3, 2003 ("FY
2002"), you will have the opportunity to earn an annual bonus ("Annual Bonus")
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at the following percentages of your Base Salary if both the Company achieves
certain performance objectives (which will be determined by the Company for each
such fiscal year in accordance with the Company's bonus plan) and you achieve
your performance goals established by the Company: Threshold - 25%, Target - 50%
and Stretch - 100% of Base Salary. Notwithstanding the foregoing, for the FY
2002, your Annual Bonus will be at least $100,000 (the "Guaranteed Bonus")
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regardless of whether the performance objectives for such fiscal year are
achieved. Any Annual Bonus (including the Guaranteed Bonus) will be paid only if
you are actively employed with the Company and not in breach of this Agreement
on the date of payment (as described below). The Annual Bonus will be paid no
later than May 1 following the fiscal year for which it relates.
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(c) As soon as practicable after the Effective Date, the Company will
cause J. Crew Group, Inc. to grant you an option (the "Option") to purchase
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30,000 shares of common stock of J. Crew Group, Inc. (the "Common Stock") at an
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exercise price equal to the fair market value of a share of Common Stock
calculated in accordance with the provisions of the Option Plan. The Option
shall be subject to and governed by the terms and conditions of the 1997 J. Crew
Group, Inc. Stock Option Plan, as amended from time to time (the "Option Plan",
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a copy of which has been provided to you), and shall be evidenced by a stock
option grant agreement as provided under the Option Plan. Twenty percent of the
shares underlying the Option shall vest and become exercisable on each of the
first through the fifth anniversaries of the grant date, provided that you are
still employed by the Company on such anniversary.
(d) During the Employment Period, you will be entitled to participate in
the Company's benefit package made generally available to associates of the
Company upon the terms and conditions thereof, except where specifically
provided herein. Currently, the Company's benefit package includes 25 PTO days
(beginning February 2002), holidays, life insurance, medical insurance, a
matching 401(k) tax deferred savings plan, a health flexible spending account,
and the employee discount. The Company reserves the right to change these
benefits at any time in its sole discretion.
4. Additional Agreements; Confidentiality.
(a) As additional consideration for the Company entering into this
Agreement, you agree that for a period of twelve months following the
Termination Date, you shall not, directly or indirectly, (i) engage (either as
owner, investor, partner, employer, employee, consultant or director) in or
otherwise perform services for any Competitive Business (as defined below) which
operates within a 100 mile radius of the location of any store of the Company or
its affiliates or in the same area as the Company directs its mail order
operations or any other area in which the Company or any of its subsidiaries
conducts business or in which the Company or any of its subsidiaries' customers
are located as of the Termination Date, provided that the foregoing restriction
shall not prohibit you from owning a passive investment of not more than 5% of
the total outstanding securities of any publicly-traded company, and (ii)
solicit or cause another to solicit any customers or suppliers of the Company or
any of its affiliates to terminate or otherwise adversely modify their
relationship with the Company or any such affiliate. The term "Competitive
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Business" means the retail, mail order and internet apparel and accessories
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business and any other business the Company or any of its affiliates is engaged
in on the Termination Date.
(b) During the Employment Period and for a period of two years following
the Termination Date, you shall not, directly or indirectly, solicit, hire, or
seek to influence the employment decisions of, any employee of the Company or
any of its subsidiaries on behalf of any person or entity other than the
Company.
(c) You agree that during the Employment Period and thereafter you will
hold in strict confidence any proprietary or Confidential Information related to
the Company or its affiliates. For purposes of this Agreement, the term
"Confidential Information" shall mean all information of the Company and its
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affiliates in whatever form which is not generally known to
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the public, including without limitation, customer lists, trade practices,
marketing techniques, fit specifications, design, pricing structures and
practices, research, trade secrets, processes, systems, programs, methods,
software, merchandising, distribution, planning, inventory and financial
control, store design and staffing. Upon termination of your employment, you
shall not take, without the prior written consent of the Company, any drawing,
specification or other document or computer record (in whatever form) of the
Company or its affiliates embodying any Confidential Information and will return
any such information (in whatever form) then in your possession.
(d) You agree that during the Employment Period and thereafter you shall
not disclose any information regarding the existence or substance of this
Agreement to any third party (including employees of the Company) without the
prior written consent of the Chief Executive Officer of the Company, except as
may be required by law, other than to your spouse or your professional advisers
for purposes of discussing the subject matter hereof and, with respect to such
professional advisers, you agree to inform them of your obligations hereunder
and take all reasonable steps to ensure that such professional advisers do not
disclose the existence or substance hereof. Further, during the Employment
Period and thereafter you agree not to directly or indirectly disparage or
defame the Company, its affiliates or any of their directors, officers or
employees.
(e) You also agree that breach of the provisions provided in this
Paragraph 4 would cause the Company to suffer irreparable harm for which money
damages would not be an adequate remedy and therefore, if you breach any of the
provisions in this Paragraph 4, the Company will be entitled to an injunction
restraining you from violating such provision without the posting of any bond.
If the Company shall institute any action or proceeding to enforce the terms of
any such provision, you hereby waive the claim or defense that the Company has
an adequate remedy at law and you agree not to assert in any such action or
proceeding the claim or defense that the Company has an adequate remedy at law.
The foregoing shall not prejudice the Company's right to require you to account
for and pay over to the Company, and you hereby agree to account for and pay
over, the compensation, profits, monies, accruals and other benefits derived or
received by you as a result of any transaction constituting a breach of any of
the provisions set forth in this Paragraph 4.
5. Representations. The parties hereto hereby represent and warrant that they
have the authority to enter into this Agreement and perform their respective
obligations hereunder. You hereby represent and warrant to the Company that (i)
the execution and delivery of this Agreement and the performance of your duties
hereunder shall not constitute a breach of or otherwise violate any other
agreement or arrangement to which you are a party or by which you are bound, and
(ii) you will not use or disclose any confidential information obtained by you
in connection with your former employment with respect to your duties and
responsibilities hereunder.
6. Miscellaneous.
(a) Any notice or other communication required or permitted under this
Agreement shall be effective only if it is in writing and shall be deemed to be
given when delivered
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personally or four days after it is mailed by registered or certified mail,
postage prepaid, return receipt requested or one day after it is sent by a
reputable overnight courier service and, in each case, addressed as follows:
If to the Company:
J. Crew Operating Corp.
770 Broadway
Twelfth Floor
New York, NY 10003
Attention: General Counsel
If to you:
Mr. Blair Gordon
359 West 20th Street, #4
New York, NY 10011
or to such other address as any party may designate by notice to the other.
(b) This Agreement constitutes the entire agreement between you and the
Company with respect to your employment by the Company, and supersedes and is in
full substitution for any and all prior understandings or agreements with
respect to your employment.
(c) This Agreement shall inure to the benefit of and be an obligation of
the Company's assigns and successors; however you may not assign any of your
rights or duties hereunder to any other party.
(d) No provision of this Agreement may be amended or waived, unless such
amendment or waiver is specifically agreed to in writing and signed by you and
an officer of the Company duly authorized to execute such amendment. The failure
by either you or the Company at any time to require the performance by the other
of any provision hereof shall in no way affect the full right to require such
performance at any time thereafter, nor shall the waiver by you or the Company
of a breach of any provision hereof be taken or held to be a waiver of any
succeeding breach of such provision or a waiver of the provision itself or a
waiver of any other provision of this Agreement.
(e) You and the Company acknowledge and agree that each of you has
reviewed and negotiated the terms and provisions of this Agreement and has had
the opportunity to contribute to its revision. Accordingly, the rule of
construction to the effect that ambiguities are resolved against the drafting
party shall not be employed in the interpretation of this Agreement. Rather, the
terms of this Agreement shall be construed fairly as to both parties and not in
favor or against either party.
(f) Any provision of this Agreement (or portion thereof) which is deemed
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this Paragraph, be ineffective to the extent of such
invalidity, illegality or unenforceability, without
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affecting in any way the remaining provisions thereof in such jurisdiction or
rendering that or any other provisions of this Agreement invalid, illegal, or
unenforceable in any other jurisdiction. If any covenant should be deemed
invalid, illegal or unenforceable because its scope is considered excessive,
such covenant shall be modified so that the scope of the covenant is reduced
only to the minimum extent necessary to render the modified covenant valid,
legal and enforceable.
(g) The Company may withhold from any amounts payable to you hereunder all
federal, state, city or other taxes that the Company may reasonably determine
are required to be withheld pursuant to any applicable law or regulation (it
being understood, that you shall be responsible for payment of all taxes in
respect of the payments and benefits provided herein).
(h) This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
instrument.
(i) The headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of
any provision hereof.
(j) This Agreement and all amendments thereof shall, in all respects, be
governed by and construed and enforced in accordance with the internal laws
(without regard to principles of conflicts of law) of the State of New York.
Each party hereto hereby agrees to and accepts the exclusive jurisdiction of any
court in New York County or the U.S. District Court for the Southern District of
New York in respect of any action or proceeding relating to the subject matter
hereof, expressly waiving any defense relating to jurisdiction or forum non
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conveniens, and consents to service of process by U.S. certified or registered
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mail in any action or proceeding with respect to this Agreement.
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If the terms of this letter Agreement meet with your approval, please
sign and return one copy to me.
Sincerely,
/s/ MARK SARVARY
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Mark Sarvary
Chief Executive Officer
Agreed to and Accepted:
/s/ BLAIR GORDON
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Blair Gordon
Date: 12-13-01
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