Employment Agreement - Samsonite Corp. and John P. Murtagh
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement"), is
effective as of October 1, 1997 (the "Effective Date"), by and between SAMSONITE
CORPORATION, a Delaware corporation (the "Company"), and JOHN P. MURTAGH (the
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desired to retain the services of the Executive
to oversee the restructuring of the Company and to perform other related duties
and therefore entered into an Employment Agreement with Executive dated August
1, 1996, (the "Original Agreement") and
WHEREAS, this restructuring of the Company and other related duties
have been substantially completed, and
WHEREAS, the parties hereto mutually agree that the role of the
Executive will therefore change to reflect new duties and responsibilities for
the Company,
THEREFORE, in consideration of the foregoing and of the premises and
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that the Original Agreement is hereby
amended and restated to read in its entirety as follows:
1. EMPLOYMENT
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The Company agrees to employ the Executive and the Executive agrees to
serve the Company on the terms and conditions set forth herein.
2. TERM
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This Agreement shall have a term (the "Term") beginning on the
Effective Date hereof and expiring on February 1, 1998.
3. POSITION AND DUTIES
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(a) The Executive shall serve as Vice President - Special Projects and
shall perform such duties and services prescribed herein and as may be
prescribed from time to time by the President and Chief Executive Officer (the
"CEO") and/or the Board of Directors of the Company or any duly authorized
committee thereof (the "Board"). The
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Executive shall perform such duties, under the supervision and direction of the
Board, to the best of his ability and in a diligent and proper manner. The
Executive shall report directly to the President and Chief Executive Officer.
(b) Nothing in this Agreement shall affect the Executive's duty of
loyalty and duty of care to the Company and its subsidiaries as provided under
applicable state laws.
4. COMPENSATION AND RELATED MATTERS
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(a) Salary. During the Executive's employment hereunder, the Company
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shall pay to the Executive a salary ("Base Salary") in equal installments in
accordance with normal payroll practices of the Company but not less frequently
than monthly. The Base Salary shall be payable at the rate of $50,000 per
annum, starting as of the Effective Date, provided that if the Company requests
the Executive's services for more than five (5) days per month, the Executive
shall be compensated for those additional days in the amount of $900 per day.
The payments of Base Salary hereunder shall not in any way limit or reduce any
other obligation of the Company hereunder, and no other compensation, benefit or
payment hereunder shall in any way limit or reduce the obligation of the Company
to pay the Executive's Base Salary hereunder. The Board, at any time and from
time to time, may increase (but not reduce) the Base Salary payable under this
Agreement, and increase in the Base Salary shall become effective at the time
indicated by the Board without the need for an amendment to this Agreement.
(b) Relocation. The Company shall have no obligation to pay any
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relocation expenses for the Executive.
(c) Expenses. The Executive shall be entitled to receive prompt reim-
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bursement from the Company of all reasonable expenses incurred by the Executive
in performing services hereunder, in accordance with the policies and procedures
established by the Company from time to time. The Executive shall furnish the
Company with evidence that such expenses were incurred as the Company may from
time to time reasonably request.
(d) Other Benefits. The Executive shall be entitled to participate in
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all of the Company's employee pension plans, welfare benefit plans, tax-deferred
savings plans, or other benefit arrangements (including any insurance or trust
arrangements maintained generally for the benefit of the Company's directors and
officers) and in which the senior executives of the Company who receive equity-
based compensation are entitled to participate (collectively, the "Company
Plans"), on the same basis as other senior executives of the Company who receive
equity-based compensation. Without limiting the generality of
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the foregoing, if the Board so determines, the Executive shall be entitled to
participate in any supplemental executive retirement plan or excess benefit plan
(a "SERP") that the Company may maintain from time to time for the benefit of
its senior executive officers who receive equity-based compensation provided
that Executive's participation shall be on the same terms and conditions as such
senior executives, all as determined by the Board. The Company and the Executive
agree that nothing in this Agreement shall preclude the Company from amending or
terminating any such employee benefit plan, policy or practice, whether now or
hereinafter in effect.
(e) Incentive Bonus. The Executive shall be eligible to receive an
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annual incentive bonus (the "Incentive Bonus") in respect of the fiscal year
ending January 31, 1998. The Incentive Bonus shall be calculated on the terms
hereafter set forth in this Section 4(f). The Incentive Bonus may, subject to
the conditions set forth below, equal up to 100% of the Executive's Base Salary.
Except as provided in Section 4(f)(v) below, the Executive's Incentive Bonus
shall consist of a Target Bonus and a Project Bonus (each as defined below),
determined as follows:
(i) A portion of the Incentive Bonus (the "Target Bonus") in an
amount equal to one-half of the EBIT Attainment Percentage (as defined
below) multiplied by the Base Salary of the Executive shall be payable to
the Executive, provided that the Target Bonus shall not be paid if the EBIT
Attainment Percentage is less than eighty percent (80%). The "EBIT
Attainment Percentage" shall mean the percentage that is established as
follows: if the EBIT (as defined below) of the Company for the fiscal year
ending January 31, 1998 is
(A) less than the Minimum EBIT Target (as defined below), then
the EBIT Attainment Percentage shall equal zero percent (0%);
(B) equal to the Minimum EBIT Target, the EBIT Attainment Per-
centage shall equal eighty percent (80%);
(C) greater than the Minimum EBIT Target but less than the Annual
EBIT Target (as defined below), the EBIT Attainment Percentage shall
equal the sum of (x) eighty percent (80%) plus (y) the product of ten
percent (10%) multiplied by a fraction, the numerator of which shall
be the excess of (I) the EBIT of the Company over (II) the Minimum
EBIT Target and the denominator of which shall be the excess of the
Annual EBIT Target over the Minimum EBIT Target; or
(D) equal to or greater than the Annual EBIT Target, the EBIT At-
tainment Percentage shall equal ninety percent (90%).
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(E) greater than the Annual EBIT Target but less than the Maximum
EBIT Target (as defined below), the EBIT Attainment Percentage shall
equal the sum of (x) ninety percent (90%) plus (y) the product of ten
percent (10%) multiplied by a fraction, the numerator of which shall
be the excess of (I) the EBIT of the Company over (II) the Annual EBIT
Target and the denominator of which shall be the excess of the Maximum
EBIT Target over the Annual EBIT Target; or
(F) equal to or greater than the Maximum EBIT Target, the EBIT
Attainment percentage shall equal one hundred percent (100%).
(ii) The Board shall determine the "Annual EBIT Target" and the
"Minimum EBIT Target", and the "Maximum EBIT Target" for the fiscal year
ending January 31, 1998, and promptly after such targets have been
determined, the Board shall give the Executive written notice thereof. The
Annual EBIT Target, Minimum EBIT Target, and Maximum EBIT Target determined
by the Board shall be reasonably achievable in the good faith judgment of
the Board. The Board shall have the right, acting unilaterally and in good
faith, to adjust the Annual EBIT Target, the Minimum EBIT Target,and the
Maximum EBIT Target upon the occurrence of any acquisition, disposition or
other significant event that occurs after such targets have been
determined. For purposes of this Section 4(f), "EBIT" shall mean the
Company's consolidated earnings (excluding extraordinary gains and losses
and gains or losses from the sale of fixed assets outside of the ordinary
course of business) from continuing operations before interest and taxes
for the fiscal year ending January 31, 1998, and EBIT shall be determined
on the same basis as the Annual EBIT Target, the Minimum EBIT Target, and
the Maximum EBIT Target. Notwithstanding the foregoing, EBIT shall be
equitably adjusted by the Board (solely for the purposes of Section
4(f)(i)) to the extent that the Company's business was not conducted in the
ordinary course in accordance with past practices.
(iii) A portion of the Incentive Bonus in a target amount equal to a
maximum of fifty percent (50%) of the Base Salary of the Executive (the
"Project Bonus") shall be payable to the Executive to the extent that the
Board determines that the Executive has satisfactorily completed certain
projects (the "Annual Projects") established by the Board in accordance
with this subparagraph (iii); provided that the Board may award a Project
Bonus between eighty percent (80%) and one hundred percent (100%)of the
target amount based upon its evaluation of the manner in which the
Executive completes the Annual Projects. The Company shall determine the
Annual Projects for the fiscal year ending January 31, 1998 and promptly
after such projects have been determined, the Board shall give the Execu-
tive written notice thereof. The Annual Projects determined by the Board
shall be
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reasonably achievable in the good faith judgment of the Board. The
Executive acknowledges that the Annual Projects established by the Board
may not be measured by financial results or other quantifiable standards
and may depend on subjective judgments by the Board, and the Executive
agrees that the determination of the Board as to the extent to which such
Annual Projects have been satisfactorily completed shall be conclusive for
all purposes, provided that such determination shall be made in good faith.
(iv) The Incentive Bonus (including the Target Bonus and the Project
Bonus) shall be paid not more than 30 days after a determination by the
Board that applicable performance goals have been met, and such
determination shall be made not later than 10 days following the filing of
a Form 10-K for the Company, or if the Company is not required to file a
Form 10-K, not later than 10 days following the date upon which the
Company's audited financial statements first become available.
(A) Vacation and Other Absences. Executive shall not receive any
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paid vacation days.
(B) Services Furnished. The Company shall have no obligation to
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provide the Executive with office space or secretarial assistance or other
services.
5. TERMINATION
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The Executive's employment hereunder may be terminated under the
following circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon
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his death.
(b) Disability. If the Board determines in good faith, based on
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medical evidence acceptable to it, that the Executive has become physically or
mentally disabled or incapacitated during his employment hereunder for a
continuous period of ninety (90) days to such an extent that he shall be unable
to perform his duties hereunder then, notwithstanding the provisions of
Section 2, the Company may, after the expiration of said ninety (90) day period
and during the continuance of such disability or incapacity, give to the
Executive a Notice of Termination (as defined in Section 5(e) hereof) of the
Executive's employment hereunder and such employment shall terminate on the date
provided in Section 5(f) hereof.
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(c) Termination by the Company. The Company may terminate the
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Executive's employment hereunder at any time with or without Cause. For
purposes of this Agreement, the Company shall have "Cause" to terminate the
Executive's employment hereunder upon (A) the engaging by the Executive in
willful misconduct that is materially injurious to the Company, (B) the
embezzlement or misappropriation of funds or property of the Company by the
Executive or the conviction of the Executive of a felony or the entrance of a
plea of guilty by the Executive to a felony or (C) the failure or refusal by the
Executive to devote his full business time and attention (as described in
Section 3(b) of this Agreement) to the performance of his duties and
responsibilities hereunder or any other breach by the Executive of this
Agreement in any material respect if such breach has not been cured by the
Executive within thirty (30) days after the Preliminary Notice (as defined
below) has been given to the Executive. For purposes of this paragraph, no act,
or failure to act, on the Executive's part shall be considered "willful" unless
done, or omitted to be done, by him not in good faith and without reasonable
belief that his action or omission was in the best interest of the Company. The
Executive shall not be deemed to have been terminated for Cause, unless the
Company shall have given the Executive (i) notice (the "Preliminary Notice")
setting forth, in reasonable detail the facts and circumstances claimed to
provide a basis for termination for Cause, (ii) a reasonable opportunity for the
Executive, together with his counsel, to be heard before the Board and (iii) a
Notice of Termination stating that, in the good faith judgement of the Board,
the Executive was guilty of conduct set forth in clauses (A), (B) or (C) above,
and specifying the particulars thereof in reasonable detail. Upon receipt of
the Preliminary Notice, the Executive shall have thirty (30) days in which to
appear before the Board with counsel, or take such other action as he may deem
appropriate, and such thirty (30) day period is hereby agreed to as a reasonable
opportunity for the Executive to be heard.
(d) Termination by the Executive. The Executive may voluntarily
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terminate his employment hereunder at any time with or without Good Reason. For
purposes of this Agreement, "Good Reason" shall mean, so long as the Executive
has not been guilty of the conduct set forth in clauses (A), (B) or (C) of
Section 5(c) hereof, (i) a failure by the Company to comply with any material
provision of this Agreement that has not been cured within thirty (30) days
after written notice of such noncompliance has been given by the Executive to
the Company or (ii) the assignment to the Executive by the Company (without the
consent of the Executive) of duties inconsistent with the Executive's position,
duties or responsibilities as Vice President-Special Projects, including, but
not limited to, any material reduction in such position, duties or
responsibilities or material change in his title. The Executive's election to
terminate under this Section 5(d) shall be made by giving Notice of Termination
not later than 60 days from, as applicable, the date that the Company fails to
cure under (i) above, or the assignment of duties under (ii) above.
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(e) Notice of Termination. Any termination of the Executive's
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employment by the Company or by the Executive (other than termination pursuant
to Section 5(a) hereof) shall be communicated by written Notice of Termination
to the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances, if any, claimed to provide a basis for termination
of the Executive's employment under the provision so indicated.
(f) Date of Termination. Except to the extent otherwise herein pro-
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vided, "Date of Termination" shall mean (i) if the Executive's employment is
terminated pursuant to Section 5(a), the date of his death, (ii) if the
Executive's employment is terminated pursuant to Section 5(b) or (c), the date
of or a later date specified in the Notice of Termination, (iii) if the
Executive's employment is terminated pursuant to Section 5(d), the date on which
the Notice of Termination is given and (iv) if this Agreement is continued in
effect to the end of the Term, the last day of the Term. Except as provided in
and subject to Section 6 hereof, the Company shall not have any obligation to
Executive for salary continuation, severance or termination pay upon termination
of this Agreement.
6. COMPENSATION UPON TERMINATION
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(a) If the Executive's employment is terminated (i) by the Company
for Cause, (ii) by the Executive other than for Good Reason, or (iii) by reason
of the Executive's death or disability (pursuant to Section 5(b) hereof), then
the Company shall pay the Executive his full Base Salary through the Date of
Termination (to the extent not otherwise paid through the Date of Termination)
at the rate in effect immediately prior to the Date of Termination, provided
that if the Executive's employment hereunder terminates by reason of his death,
the Company shall continue to make salary payments at the rate of the Base
Salary then in effect in respect of the month following the date of death. In
addition, notwithstanding any provision to the contrary in this Agreement, the
Executive shall continue to participate in, and shall receive all accrued
benefits to which the Executive is entitled under, all of the Company Plans,
through the Date of Termination, provided that the Executive shall not be
entitled to any portion of the Incentive Bonus unless such bonus shall be
payable pursuant to Section 4(f) on or before the Date of Termination. With
respect to the Incentive Bonus, if the Date of Termination occurs after the end
of the Fiscal Year and prior to the determination of whether the performance
goals for the Fiscal Year were met, such Incentive Bonus shall be payable, if it
is determined that such goals were met, in accordance with the provisions of
Section 4(f) hereof.
(b) If the Executive's employment is terminated (i) by the Company
without Cause (other than for disability pursuant to Section 5(b) hereof), or
(ii) by the Executive for Good Reason, then the Company shall pay to the
Executive, as severance pay
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in a lump sum, not later than the fifth day following the Date of Termination,
to the extent not otherwise paid through the Date of Termination, the
Executive's full Base Salary through the Date of Termination.
In addition to the foregoing, until such time as the Executive becomes eligible
for coverage under a program maintained or sponsored by a subsequent employer of
the Executive (not including self-employment), the Company shall, at the
Company's expense, allow the Executive to continue to participate, for the
remainder of the Term, to the same extent and upon the same terms as the
Executive participated in such plans immediately prior to the termination of his
employment, in the Company's medical reimbursement and other welfare benefit
plans in which the Executive was entitled to participate immediately prior to
the Date of Termination; provided that the Executive's continued participation
in such plan shall be continued pursuant to this sentence only to the extent
permissible under the general terms and provisions of such plans and applicable
law.
7. LEGAL FEES; REIMBURSEMENT OF CERTAIN EXPENSES
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The Company shall promptly reimburse the Executive for the reasonable
legal fees and expenses incurred by the Executive in connection with enforcing
or defending any right or benefit of the Executive pursuant to this Agreement
or instruments related thereto; provided that the Company shall have no
obligation to reimburse the Executive for any such fees and expenses unless the
resolution of any action taken by the Executive to enforce such right is in
favor of the Executive. In addition, the Company hereby agrees that the amount
of any such legal fees and expenses reimbursed to the Executive in connection
with enforcing any right or benefit provided to the Executive by the Company
pursuant to or in accordance with this Agreement shall not be taken into account
by the Company in determining the aggregate compensation paid or payable to the
Executive under this Agreement.
8. INDEMNIFICATION
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The Company shall indemnify the Executive (and his legal
representatives), unless expressly prohibited by applicable law, against all
losses, claims, damages, liabilities, costs, charges and expenses incurred or
sustained by him or his legal representatives in connection with any action,
suit or proceeding to which he (or his legal representatives) may be made a
party by reason of his being or having been a director, officer or employee of
the Company (including payment of expenses in advance of the final disposition
of the proceeding). The Company further agrees, upon demand by the Executive,
promptly to reimburse the Executive for, or pay, any loss, claim, damage,
liability or expense, unless expressly prohibited by applicable law, to which
the Company has agreed to indemnify the Executive pursuant to Sections 7 and 8
hereof. If any action, suit or proceeding is brought
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or threatened against the Executive in respect of which indemnity may be sought
against the Company pursuant to the foregoing, the Executive shall notify the
Company promptly in writing of the institution of such action, suit or
proceeding. Such action, suit or proceeding shall be defended by and be under
the exclusive control of the Company and its counsel; except that the Executive
shall have the right to designate separate counsel, acceptable to the Executive
in his sole discretion, and, to the extent of a conflict of interest with the
Company, the right to direct, control and supervise the Executive's defense of
such action, suit or proceeding.
9. TAXES
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The Company shall deduct from all amounts payable under this Agreement
all federal, state, local and other taxes required by law to be withheld with
respect to such payments.
10. CONFIDENTIALITY AND NONCOMPETITION
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(a) Unless otherwise required by law or judicial process, the
Executive shall keep confidential all confidential information known to the
Executive concerning the Company and its businesses during his employment with
the Company and for the shorter of three (3) years following the termination of
the Executive's employment with the Company or until such information is
publicly disclosed by the Company or otherwise becomes publicly disclosed other
than through the Executive's actions; provided, that the Executive shall provide
notice to the Company in advance of any disclosure required by law or judicial
process in a timely manner to permit the Company to oppose such compelled
disclosure.
(b) The Executive agrees that during his employment with the Company
and for a period of one (1) year thereafter (unless such employment is
terminated by the Company pursuant to Section 5(c) without Cause or by the
Executive pursuant to Section 5(d) with Good Reason, provided that the Company
does not contest that such termination was for Good Reason), he shall not,
directly or indirectly, as a principal, officer, director, employee or in any
other capacity whatsoever, without the prior written consent of the Company,
engage in, or be or become interested or acquire any ownership of any kind in,
or become associated with, or make loans or advance property to any person
engaged in or about to engage in, any business activity that is in substantial
competition (in excess of 15% of net sales of the business) with any of the
businesses engaged in by the Company during the Term in any of the geographic
areas in which such businesses are then conducted by the Company or have been
conducted by the Company during the twelve months preceding the termination of
the Executive's employment. Nothing in this Agreement shall prevent the
Executive from making or holding any investment in any amount in securities
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traded on any national securities exchange or traded in the over the counter
market, provided said investments do not exceed one percent (1%) of the issued
and outstanding stock of any one such corporation.
11. SUCCESSORS; BINDING AGREEMENT
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(a) This Agreement shall be binding upon and inure to the benefit of
the Company and any successor of the Company, including, without limitation, any
corporation or corporations acquiring directly or indirectly all or a
substantial portion of the stock, business or assets of the Company, whether by
merger, consolidation, sale or otherwise (and such successor shall thereafter be
deemed the "Company" for the purposes of this Agreement).
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would be
still payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided hereunder, shall be paid in accordance with the terms
of this Agreement to the Executive's devisee, legatee, or other beneficiary or,
if there be no such beneficiary, to the Executive's estate.
12. NOTICE
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For purposes of this Agreement, notices, demands and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given (i) when hand delivered, (ii) when sent if sent
by overnight mail, overnight courier or facsimile transmission or (iii) when
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
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John P. Murtagh
3511 Northwest 61st Circle
Boca Raton, FL 33496
If to the Company:
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Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239
Attention: Board of Directors
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c/o Corporate Secretary
(with a copy to the attention of General
Counsel at the same address)
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. SURVIVORSHIP
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The respective rights and obligations of the parties hereunder set
forth in Sections 6, 7, 8, 9, and 10 of this Agreement shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.
14. REPRESENTATIONS AND WARRANTIES
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The Company represents and warrants that (a) it is fully authorized
and empowered to enter into this Agreement and that its Board has approved the
terms of this Agreement, (b) the execution of this Agreement and the performance
of its obligations under this Agreement shall not violate or result in a breach
of the terms of any material agreement to which the Company is a party or by
which it is bound, (c) no approval by any governmental authority or body is
required for it to enter into this Agreement, and (d) this Agreement is valid,
binding and enforceable against the Company in accordance with its terms, except
to the extent affected or limited by applicable bankruptcy laws or other
statutes governing the rights of creditors generally and any regulations or
interpretations thereof. The Executive represents and warrants that his
execution of this Agreement and his performance of his duties and
responsibilities under this Agreement shall not violate or result in a breach of
the terms of any material agreement to which he is a party or by which he is
bound.
15. MISCELLANEOUS
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(a) Entire Agreement. The parties hereto agree that this Agreement
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and the Amended and Restated Stock Option Agreement dated October 1, 1997
contain the entire understanding and agreement between them, and supersede all
prior understandings and agreements between the parties respecting the
employment by the Company of the Executive, including the Employment Agreement
effective as of August 1, 1996, by and between Samsonite Corporation and John P.
Murtagh and the Stock Option Agreement of the same date, and that the provisions
of this Agreement may not be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by the parties hereto.
No waiver by either party hereto at any time of any breach by the other
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party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
(b) Waiver. No waiver by either party hereto at any time of any
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breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
(c) Choice of Law. The validity, interpretation, construction and
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performance of this Agreement shall be governed by the laws of the State of New
York without giving effect to the conflict of laws principles thereof.
16. VALIDITY
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The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other
provision or provisions of this Agreement, which shall remain in full force
and effect.
17. COUNTERPARTS
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This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused its name to be subscribed
to this Agreement by its duly authorized representative and the Executive has
executed this Agreement as of the date and the year first above written.
SAMSONITE CORPORATION
By: /s/ Richard R. Nicolosi
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Print Name: Richard R. Nicolosi
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Title: President & CEO
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/s/ John P. Murtagh
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John P. Murtagh
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