POLO RALPH LAUREN CORPORATION EMPLOYMENT AGREEMENT
EXHIBIT 10.1
XXXX XXXXX XXXXXX CORPORATION
THIS EMPLOYMENT AGREEMENT (the “Agreement”), is made effective as of the 3rd day of January, 2005 (the “Effective Date”), by and between XXXX XXXXX LAUREN CORPORATION, a Delaware corporation (the “Corporation”), and Xxxxxx Xxxxxx (the “Executive”).
In consideration of the mutual covenants and premises contained herein, the parties hereby agree as follows:
ARTICLE I
1.3 Place of Performance. The Executive shall be employed at the principal offices of the Corporation located in New York, New York, except for required travel on the Corporation’s business.
1.4 Compensation and Related Matters.
| (i) Within thirty (30) days of the Effective Date, Corporation shall pay Executive a sign-on bonus of $250,000 (“Sign-On Bonus”), payable in accordance with the Corporation’s normal payroll practices. If Executive terminates her employment without Good Reason (as defined in Section 2.1(e)), or if the Corporation terminates Executive’s employment for Cause (as defined in Section 2.1(d)), within twelve (12) months of the Effective Date, then Executive shall repay to the Corporation the Sign-On Bonus within thirty (30) days of the date of termination of Executive’s employment. If Executive terminates her employment without Good Reason (as defined in Section 2.1(e)), or if the Corporation terminates Executive’s employment for Cause (as defined in Section 2.1(d)), more than one year but less than two |
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| years after the Effective Date, then Executive shall repay to the Corporation the Sign-On Bonus at the rate of 1/12 of the amount per month, with the first payment commencing within thirty (30) days of the date of termination of Executive’s employment. | |
| (ii) For Fiscal 2005 only, Executive shall receive a guaranteed bonus in the amount of $200,000, payable in accordance with the Corporation’s normal payroll practices and payable at the time such bonuses are normally paid by the Corporation. |
All grants of stock options and RPSUs are governed by the terms of the Incentive Plan and subject to approval by the Compensation Committee of the Board of Directors
ARTICLE II
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| entire period of six consecutive months, the Executive’s employment may be terminated by the Corporation following such six-month period. | |
| (d) Cause. The Corporation may terminate the Executive’s employment for Cause. For purposes hereof, “Cause” shall mean: |
| (i) deliberate or intentional failure by the Executive to substantially perform the material duties of the Executive hereunder (other than due to disability as defined in 2.1(c)); | |
| (ii) an intentional act of fraud, embezzlement, theft or any other material violation of law; | |
| (iii) intentional wrongful damage to material assets of the Corporation; | |
| (iv) intentional wrongful disclosure of material confidential information of the Corporation; | |
| (v) intentional wrongful engagement in any competitive activity which would constitute a breach of this Agreement and/or of the Executive’s duty of loyalty; or | |
| (vi) intentional breach of any material employment policy of the Corporation. |
| No act, or failure to act, on the part of the Executive shall be deemed “intentional” if it was due primarily to an error in judgment or negligence, but shall be deemed “intentional” only if done, or omitted to be done, by the Executive not in good faith and without reasonable belief that her action or omission was in, or not opposed to, the best interest of the Corporation. Failure to meet performance standards or objectives of the Corporation shall not constitute Cause for purposes hereof. | |
| (e) Voluntary Termination. The Executive may voluntarily terminate the Executive’s employment with the Corporation at any time, with or without Good Reason. For purposes of this Agreement, “Good Reason” shall mean (A) a material diminution in or adverse alteration to Executive’s title, position or duties, including no longer reporting to Xxxxx Xxxxxx, Chief Executive Officer, or Xxxxx Xxxxx, Chief Operating Officer, (B) the relocation of the Executive’s principal office outside the area which comprises a fifty (50) mile radius from New York City, or (C) a failure of the Corporation to comply with any material provision of this Agreement provided that the events described in clauses (A), (B), and (C) above shall not constitute Good Reason unless and until such diminution, change, reduction or failure (as applicable) has not been cured within thirty (30) days after written notice of such noncompliance has been given by the Executive to the Corporation. |
2.2 Date of Termination. The date of termination shall be:
| (a) if the Executive’s employment is terminated by the Executive’s death, the date of the Executive’s death; | |
| (b) if the Executive’s employment is terminated by reason of Executive’s Disability or by the Corporation pursuant to Sections 2.1(a) or 2.1(d), the date specified by the Corporation; and | |
| (c) if the Executive’s employment is terminated by the Executive, the date on which the Executive notifies the Corporation of her termination. |
2.3 Effect of Termination of Employment.
(a) If the Executive’s employment is terminated by the Corporation, pursuant to Section 2.1(a), or if the Executive resigns for Good Reason pursuant to Section 2.1(e), the Executive shall only be entitled to the following:
| (i) Severance. Subject to Section 4.1(a) hereof, the Corporation shall: (a) continue to pay the Executive, in accordance with the Corporation’s normal payroll practice, her Base Compensation, as in effect immediately prior to such termination of employment, for the longer of the balance of the Term or the one-year period commencing on the date of such termination (whichever period is applicable shall be referred to herein as the “Severance Period”); and (b) pay to the Executive, on the last business day of the Severance Period, an amount equal to the bonus paid to the Executive for the calendar year prior to the year in which her employment is terminated. Notwithstanding the foregoing, in order to receive any |
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| severance benefits under this Section 2.3(a)(i), the Executive must sign and not timely revoke a release and waiver of claims against the Corporation, its successors, affiliates, and assigns in a form acceptable to the Corporation. | |
| (ii) Stock. The Executive’s rights with respect to any stock options and RPSUs granted to the Executive by the Corporation shall be governed by the provisions of the Corporation’s Incentive Plan and respective award agreements, if any, except as provided in Section 4.1(a). | |
| (iii) Welfare Plan Coverages. The Executive shall continue to participate during the Severance Period in any group medical, dental or life insurance plan she participated in prior to the date of her termination, under substantially similar terms and conditions as an active employee; provided that participation in such group medical, dental and life insurance plan shall correspondingly cease at such time as the Executive (a) becomes eligible for a future employer’s medical, dental and/or life insurance coverage (or would become eligible if the Executive did not waive coverage) or (b) violates any of the provisions of Article III as determined by the Corporation. Notwithstanding the foregoing, the Executive may not continue to participate in such plans on a pre-tax or tax-favored basis. | |
| (iv) Retirement Plans. Without limiting the generality of the foregoing, it is specifically provided that the Executive shall not accrue additional benefits under any pension plan of the Corporation (whether or not qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended) during the Severance Period. |
(b) If the Executive’s employment is terminated by reason of the Executive’s death or Disability, pursuant to Sections 2.1(b) and 2.1(c), the Executive (or the Executive’s designee or estate) shall only be entitled to whatever welfare plans benefits are available to the Executive pursuant to the welfare plans the Executive participated in prior to such termination, and whatever stock options may have been granted to the Executive by the Corporation the terms of which shall be governed by the provisions of the respective award agreements under which such stock options were granted.
(c) If the Executive’s employment is terminated by the Corporation for Cause or by the Executive without Good Reason (as defined in Section 2.1(e)), the Executive shall receive only that portion of the Executive’s then current Base Compensation payable through the Executive’s termination date. The Executive’s rights with respect to any stock options granted to the Executive by the Corporation shall be governed by the provisions of the respective award agreements under which such stock options were granted. The Corporation shall have no further obligations to the Executive as a result of the termination of the Executive’s employment.
ARTICLE III
(a) The Corporation and the Executive acknowledge that: (i) the Corporation has a special interest in and derives significant benefit from the unique skills and experience of the Executive; (ii) the Executive will use and have access to proprietary and valuable Confidential Information (as defined in Section 3.2 hereof) during the course of the Executive’s employment; and (iii) the agreements and covenants contained herein are essential to protect the business and goodwill of the Corporation or any of its subsidiaries, affiliates or licensees. Accordingly, except as hereinafter noted, the Executive covenants and agrees that during the Term, and for the remainder of such Term following the termination of Executive’s employment, the Executive shall not provide any labor, work, services or assistance (whether as an officer, director, employee, partner, agent, owner, independent contractor, stockholder or otherwise) to a “Competing Business.” For purposes hereof, “Competing Business” shall mean any business engaged in the designing, marketing or distribution of premium lifestyle products, including but not limited to apparel, home, accessories and fragrance products, which competes in any material respects with the Corporation or any of its subsidiaries, affiliates or licensees, and shall include, without limitation, those brands and companies that the Corporation and the Executive have
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(b) The non-compete provisions of this Section shall no longer be applicable to Executive if she has been notified pursuant to Section 2.1(a) hereof that her services will no longer be required during the Term or if the Executive has terminated her employment for Good Reason pursuant to Section 2.1(e).
(c) It is acknowledged by the Executive that the Corporation has determined to relieve the Executive from any obligation of non-competition for periods after the Term, and/or if the Corporation terminates the Executive’s employment under Section 2.1(a) or if the Executive has terminated her employment for Good Reason pursuant to Section 2.1(e). In consideration of that, and in consideration of all of the compensation provisions in this Agreement (including the potential for the award of stock options that may be made to the Executive), Executive agrees to the provisions of Section 3.1 and also agrees that the non-competition obligations imposed herein, are fair and reasonable under all the circumstances.
(a) The Corporation owns and has developed and compiled, and will own, develop and compile, certain proprietary techniques and confidential information as described below which have great value to its business (referred to in this Agreement, collectively, as “Confidential Information”). Confidential Information includes not only information disclosed by the Corporation and/or its affiliates and licensees to Executive, but also information developed or learned by Executive during the course of, or as a result of, employment hereunder, which information Executive acknowledges is and shall be the sole and exclusive property of the Corporation. Confidential Information includes all proprietary information that has or could have commercial value or other utility in the business in which the Corporation is engaged or contemplates engaging, and all proprietary information the unauthorized disclosure of which could be detrimental to the interests of the Corporation. Whether or not such information is specifically labeled as Confidential Information by the Corporation is not determinative. By way of example and without limitation, Confidential Information includes any and all information developed, obtained or owned by the Corporation and/or its affiliates and licensees concerning trade secrets, techniques, know-how (including designs, plans, procedures, processes and research records), software, computer programs, innovations, discoveries, improvements, research, development, test results, reports, specifications, data, formats, marketing data and plans, business plans, strategies, forecasts, unpublished financial information, orders, agreements and other forms of documents, price and cost information, merchandising opportunities, expansion plans, designs, store plans, budgets, projections, customer, supplier and subcontractor identities, characteristics and agreements, and salary, staffing and employment information. Notwithstanding the foregoing, Confidential Information shall not in any event include (A) Executive’s personal knowledge and know-how relating to merchandising and business techniques which Executive has developed over her career in the apparel business and of which Executive was aware prior to her employment, or (B) information which (i) was generally known or generally available to the public prior to its disclosure to Executive; (ii) becomes generally known or generally available to the public subsequent to disclosure to Executive through no wrongful act of any person or (iii) which Executive is required to disclose by applicable law or regulation (provided that Executive provides the Corporation with prior notice of the contemplated disclosure and reasonably cooperates with the Corporation at the Corporation’s expense in seeking a protective order or other appropriate protection of such information).
(b) Executive acknowledges and agrees that in the performance of her duties hereunder the Corporation will from time to time disclose to Executive and entrust Executive with Confidential Information. Executive also acknowledges and agrees that the unauthorized disclosure of Confidential Information, among other things, may be prejudicial to the Corporation’s interests, and an improper disclosure of trade secrets. Executive agrees that she shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any corporation, partnership, individual or other third party, other than in the course of her assigned duties and for the benefit of the Corporation, any Confidential Information, either during her term of employment or thereafter.
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(c) The Executive agrees that upon leaving the Corporation’s employ, the Executive shall not take with the Executive any software, computer programs, disks, tapes, research, development, strategies, designs, reports, study, memoranda, books, papers, plans, information, letters, e-mails, or other documents or data reflecting any Confidential Information of the Corporation, its subsidiaries, affiliates or licensees.
(d) During Executive’s term of employment, Executive will disclose to the Corporation all designs, inventions and business strategies or plans developed for the Corporation, including without limitation any process, operation, product or improvement. Executive agrees that all of the foregoing are and will be the sole and exclusive property of the Corporation and that Executive will at the Corporation’s request and cost do whatever is necessary to secure the rights thereto, by patent, copyright or otherwise, to the Corporation
(a) The Executive acknowledges and agrees that in the event the Corporation reasonably determines that the Executive has breached any provision of this Article III, that such conduct will constitute a failure of the consideration for which stock options had been awarded, and notwithstanding the terms of any stock option award agreement, plan document, or other provision of this Agreement to the contrary, the Corporation may notify the Executive that she may not exercise any unexercised stock options and the Executive shall immediately forfeit the right to exercise any stock option of the Corporation that remains unexercised at the time of such notice and Executive waives any right to assert that any such conduct by the Corporation violates any federal or state statute, case law or policy.
(b) If the Corporation reasonably determines that the Executive has breached any provision contained in this Article III, the Corporation shall have no further obligation to make any payment or provide any benefit whatsoever to the Executive pursuant to this Agreement, and may also recover from the Executive all such damages as it may be entitled to at law or in equity. In addition, the Executive acknowledges that any such breach is likely to result in immediate and irreparable harm to the Corporation for which money damages are likely to be inadequate. Accordingly, the Executive consents to injunctive and other appropriate equitable relief upon the institution of proceedings therefor by the Corporation in order to protect the Corporation’s rights hereunder. Such relief may include, without limitation, an injunction to prevent: (i) the breach or continuation of Executive’s breach; (ii) the Executive from disclosing any trade secrets or Confidential Information (as defined in Section 3.2); (iii) any Competing Business from receiving from the Executive or using any such trade secrets or Confidential Information; and/or (iv) any such Competing Business from retaining or seeking to retain any employees of the Corporation.
3.6 Except for Section 3.1 (Non-Compete) and Section 3.3 (Non-Solicitation of Employees), the provisions of this Article III shall survive the termination of this Agreement and Executive’s Term of employment. Sections 3.1 and 3.3 shall survive as specified herein.
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ARTICLE IV
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The Gross-up Payment provided for above shall be paid on the 30th day (or such earlier date as the Excise Tax becomes due and payable to the taxing authorities) after it has been determined that the Change of Control Payments (or any portion thereof) are subject to the Excise Tax; provided, however, that if the amount of such Gross-up Payment or portion thereof cannot be finally determined on or before such day, the Corporation shall pay to the Executive on such day an estimate, as determined by counsel or auditors selected by the Corporation and reasonably acceptable to the Executive, of the minimum amount of such payments. The Corporation shall pay to the Executive the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Corporation to the Executive, payable on the fifth day after demand by the Corporation (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). The Corporation shall have the right to control all proceedings with the Internal Revenue Service that may arise in connection with the determination and assessment of any Excise Tax and, at its sole option, the Corporation may pursue or forego any and all administrative appeals, proceedings, hearings, and conferences with any taxing authority in respect of such Excise Tax (including any interest or penalties thereon); provided, however, that the Corporation’s control over any such proceedings shall be limited to issues with respect to which a Gross-up Payment would be payable hereunder, and the Executive shall be entitled to settle or contest any other issue raised by the Internal Revenue Service or any other taxing authority. The Executive shall cooperate with the Corporation in any proceedings relating to the determination and assessment of any Excise Tax and shall not take any position or action that would materially increase the amount of any Gross-up Payment hereunder).
ARTICLE V
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If to the Executive: Xxxxxx Xxxxxx 0000 Xxxxxxx Xxxx Xxxx Xxx Xxxxxx, XX 00000 |
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If to the Corporation: Xxxx Xxxxx Lauren Corporation 000 Xxxxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000 Attn: Xxxxxxxx X. Xxxx Senior Vice President — Human Resources Fax: (000) 000-0000 |
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| or to such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. |
5.3 Governing Law. The validity, interpretation, construction, performance, and enforcement of this Agreement shall be governed by the laws of the State of New York without reference to New York’s choice of law rules. In the event of any dispute, the Executive agrees to submit to the jurisdiction of any court sitting in New York State.
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| XXXX XXXXX LAUREN CORPORATION |
| /s/ XXXXXXXX XXXX | /s/ XXXXXX XXXXXX | |
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By: Xxxxxxxx Xxxx Title: Senior Vice President — Human Resources |
Xxxxxx Xxxxxx |
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SCHEDULE A
Abercrombie & Xxxxx
Xxx Xxxxxx
Xxxxxx Brothers
Burberry
Xxxxxx Xxxxx
Chanel
Crate & Barrel
Xxxxxxx’x Inc.
Federated Department Stores, Inc.
Gap Inc.
Giorgio Armani
Gucci Group
Xxxxxx
Xxxx Boss
J. Crew
X.X. Penney Company Inc.
Xxxxx Apparel Group
Limited Brands
Liz Claiborne Inc.
LVMH
May Department Stores Co.
Xxxxxxx Xxxx, Inc.
Nautica
Neiman Marcus Group, Inc.
Nordstrom
Prada Group
Richemont Group
Saks Inc.
Xxxxxxxxx Ferragamo Italia S.P.A.
TJX Companies, Inc.
Xxxxx Xxxxxxxx
Xxxxxxx Sonoma Group
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