EXHIBIT 10.19
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") dated as of January 22, 2007 between
Rafaella Apparel Group, Inc. (the "Company") and Xxxxx X. Xxxxxxx (the
"Executive") (together, the "Parties").
WHEREAS, the Parties wish to establish the terms of Executive's
employment with the Company.
Accordingly, the Parties agree as follows:
1. TERM. This Agreement and the employment relationship hereunder
shall commence on March 19, 2007 (the "Effective Date") and continue from the
Effective Date until the Executive's employment terminates in accordance with
Section 4 of the Agreement. As used in this Agreement, the "Term" shall refer to
the period beginning on the Effective Date and ending on the date the
Executive's employment terminates in accordance with Section 4 of the Agreement.
In the event that the Executive's employment with the Company terminates, the
Company's obligation to continue to pay all base salary, as adjusted, bonus and
other benefits then accrued shall terminate except as may be provided for in
Section 5 of this Agreement.
2. DUTIES AND TITLE.
2.1 TITLE. The Company shall employ the Executive to render
exclusive and full-time services to the Company and its subsidiaries. The
Executive shall serve in the capacity of Chief Information Officer, Vice
President Strategic Planning of the Company, and shall report to the Chief
Executive Officer of the Company (the "CEO").
2.2 DUTIES. The Executive will have such authority and
responsibilities and will perform such duties customarily performed by a chief
information officer and vice president of strategic planning of a company in
similar lines of business as the Company and its subsidiaries or as may be
assigned to the Executive by the CEO. The Executive will devote all his full
working-time and attention to the performance of such duties and to the
promotion of the business and interests of the Company and its subsidiaries;
provided that the Executive may engage in philanthropic activities, passive
investment activities and may provide advice and assistance to the Excluded
Company (as defined below) as long as such activities and assistance do not
conflict with or materially interfere with the performance of his duties, as
reasonably determined by the Board of Directors of the Company (the "Board").
3. COMPENSATION AND BENEFITS BY THE COMPANY. As compensation for
all services performed by the Executive for the Company and its subsidiaries,
the Company shall provide the Executive the following during the Term:
3.1 BASE SALARY. The Company will pay to the Executive an annual
base salary of $400,000, payable in accordance with the customary payroll
practices of the Company ("Base Salary"). The current Base Salary shall be
reviewed annually.
3.2 BONUSES. The Executive will be eligible to receive an annual
bonus ("Bonus") based on annual pre-tax profits under a plan established by the
Company. The
Executive's target bonus shall be 50% of Base Salary, with the actual amount of
each Bonus being determined as provided under the plan. For any partial fiscal
years, the Bonus will be prorated based on the number of days of actual
employment during such fiscal year. The Bonus will be paid on September 30th of
the Company's fiscal year in which the services required for payment have been
performed.
3.3 PARTICIPATION IN EMPLOYEE BENEFIT PLANS. The Executive shall
be entitled, if and to the extent eligible, to participate in all of the
applicable benefit plans of the Company that are available to other senior
executives of the Company, on terms which are at least as favorable as the terms
for other senior executives. The Company may at any time or from time to time
amend, modify, suspend or terminate any employee benefit plan, program or
arrangement for any reason without the Executive's consent if such amendment,
modification, suspension or termination is consistent with the amendment,
modification, suspension or termination for other executives of the Company.
3.4 VACATION. The Executive shall be entitled to a paid vacation
schedule on terms at least as favorable as for other executives of the Company;
provided however that such vacation shall be a minimum of four (4) weeks of paid
vacation annually. Vacation carry-over policy shall be the same terms as those
enforced for other executives of the Company.
3.5 EXPENSE REIMBURSEMENT. The Executive shall be entitled to
receive reimbursement for all appropriate business expenses incurred by him in
connection with his duties under this Agreement in accordance with the policies
of the Company as in effect from time to time.
3.6 EQUITY GRANT. The Executive shall be eligible to participate
in the Company's Equity Incentive Plan (the "Equity Incentive Plan"). Subject to
approval by the Board (or its delegate), which approval shall not be
unreasonably withheld, the Executive shall receive an initial option to purchase
83,334 shares of the Company's common shares under the Equity Incentive Plan.
The grant date shall be the grant date as determined by the Board (or its
delegate), which shall be as soon as practicable after the Effective Date. The
exercise price for such option shall be (1) no less than fair market value of
the common stock on such date and (2) no greater than $5.33 per share. The
equity award shall be subject to the terms and conditions of the Equity
Incentive Plan and the award agreement evidencing the option grant. Executive
shall be eligible to receive other option grants under the Equity Incentive
Plan, determined on the same basis and on terms no less favorable than for other
executives of the Company.
3.7 SIGNING BONUS. On the Effective Date, the Executive shall
receive a lump sum cash payment equal to $50,000, subject to all withholdings
required by applicable law.
4. TERMINATION OF EMPLOYMENT.
4.1 The Executive's employment shall terminate immediately upon
his death.
4.2 The Executive's employment shall terminate upon the
Executive's "Disability." For the purposes of this Agreement, "Disability" means
a determination by the Company in accordance with applicable law that as a
result of a physical or mental injury or
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illness, the Executive is unable to perform the essential functions of his job
with or without reasonable accommodation for a period of (i) 90 consecutive
days; or (ii) 180 days in any one (1) year period.
4.3 BY THE COMPANY. The Company may terminate the Executive's
employment at any time during the Term with or without "Cause," upon written
notice by the Company to the Executive, and the Executive's employment will
terminate on the date specified in such written notice.
For the purposes of this Agreement, "Cause" means (i) commission
of a felony by the Executive; (ii) acts of dishonesty by the Executive resulting
or intending to result in personal gain or enrichment at the expense of the
Company or its subsidiaries; (iii) the Executive's material breach of his
obligations under this Agreement; (iv) conduct by the Executive in connection
with his duties hereunder that is fraudulent, unlawful or grossly negligent,
including, but not limited to, acts of discrimination; (v) engaging in personal
conduct by the Executive (including but not limited to employee harassment or
discrimination, the use or possession at work of any illegal controlled
substance) which seriously discredits or damages the Company or its
subsidiaries; (vi) contravention of specific lawful direction from the CEO or
continuing inattention to or continuing failure to adequately perform the duties
to be performed by the Executive under the terms of Section 2.2 of this
Agreement; or (vii) breach of the Executive's covenants set forth in Section 6
below before termination of employment; provided, that, the Executive shall have
fifteen (15) days after notice from the Company to cure the deficiency leading
to the Cause determination (except with respect to (i) above), if curable. A
termination for "Cause" shall be effective immediately (or on such other date
set forth by the Company).
4.4 BY THE EXECUTIVE. The Executive may terminate his employment
with the Company at any time during the Term for any reason, upon thirty (30)
days written notice by the Executive to the Company.
5. SEVERANCE PAYMENT.
5.1 BY THE COMPANY FOR CAUSE OR BY THE EXECUTIVE FOR ANY REASON
OR DUE TO DEATH OR DISABILITY. If: (i) the Executive's employment terminates due
to his death; (ii) the Company terminates the Executive's employment with the
Company for Cause; (iii) the Company terminates the Executive's employment with
the Company due to the Executive's Disability; or (iv) the Executive terminates
his employment for any reason, then the Executive or the Executive's legal
representatives (as appropriate), shall be entitled to receive the following:
(a) the Executive's accrued but unpaid Base Salary, if
any, to the date of termination, payable within thirty (30) days after the
termination of the Executive's employment;
(b) the unpaid portion of the Bonus, if any, relating to
the fiscal year prior to the fiscal year of the Executive's death, Disability,
resignation or termination by the Company for Cause, payable in accordance with
Section 3.2; and
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(c) expenses reimbursable under Section 3.5 incurred but
not yet reimbursed to the Executive to the date of termination, payable within
thirty (30) days after the termination of the Executive's employment; and
(d) any rights the Executive may have under the Company's
benefit plans and the Consolidated Omnibus Budget Reconciliation Act.
5.2 BY THE COMPANY WITHOUT CAUSE. If during the Term the Company
terminates Executive's employment without Cause (which may be done at any time
without prior notice), then, in addition to the payments upon termination
specified in Section 5.1, the Executive shall receive, upon execution without
revocation of a valid release agreement in a form reasonably acceptable to the
Company, continued payment of Base Salary for a period of six months following
the date of termination.
6. RESTRICTIONS AND OBLIGATIONS OF THE EXECUTIVE.
6.1 CONFIDENTIALITY. (a) During the course of the Executive's
service relationship with the Company and its affiliates, the Executive will
have access to certain trade secrets and confidential information relating to
the Company and its subsidiaries (the "Protected Parties") which is not readily
available from sources outside the Company. The confidential and proprietary
information and, in any material respect, trade secrets of the Protected Parties
are among their most valuable assets, including but not limited to, their
customer, supplier and vendor lists, databases, competitive strategies, computer
programs, frameworks, or models, their marketing programs, their sales,
financial, marketing, training and technical information, their product
development (and proprietary product data) and any other information, whether
communicated orally, electronically, in writing or in other tangible forms
concerning how the Protected Parties create, develop, acquire or maintain their
products and marketing plans, target their potential customers and operate their
retail and other businesses. The Protected Parties invested, and continue to
invest, considerable amounts of time and money in their process, technology,
know-how, obtaining and developing the goodwill of their customers, their other
external relationships, their data systems and data bases, and all the
information described above (hereinafter collectively referred to as
"Confidential Information"), and any misappropriation or unauthorized disclosure
of Confidential Information in any form would irreparably harm the Protected
Parties. The Executive acknowledges that such Confidential Information
constitutes valuable, highly confidential, special and unique property of the
Protected Parties. The Executive shall hold in a fiduciary capacity for the
benefit of the Protected Parties all Confidential Information relating to the
Protected Parties and their businesses, which shall have been obtained by the
Executive during the Executive's employment by the Company or its subsidiaries
and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
Except as required by law or an order of a court or governmental agency with
jurisdiction or a subpoena or other legal process, the Executive shall not,
during the period the Executive is employed by the Company or its subsidiaries
or at any time thereafter, disclose any Confidential Information, directly or
indirectly, to any person or entity for any reason or purpose whatsoever, nor
shall the Executive use it in any way, except in the course of the Executive's
employment with, and for the benefit of, the Protected Parties or to enforce any
rights or defend any claims hereunder or under any other agreement to which the
Executive is a party, provided that such disclosure is relevant to the
enforcement of such rights or defense of such claims and is only disclosed in
the formal
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proceedings related thereto. The Executive shall take all reasonable steps to
safeguard the Confidential Information and to protect it against disclosure,
misuse, espionage, loss and theft. The Executive understands and agrees that the
Executive shall acquire no rights to any such Confidential Information.
(b) All files, records, documents, drawings, specifications,
data, computer programs, evaluation mechanisms and analytics and similar items
relating thereto or to the Business (for the purposes of this Agreement,
"Business" shall be as defined in Section 6.3 hereof), as well as all customer
lists, specific customer information, compilations of product research and
marketing techniques of the Company and its subsidiaries, whether prepared by
the Executive or otherwise coming into the Executive's possession, shall remain
the exclusive property of the Company and its subsidiaries, and the Executive
shall not remove any such items from the premises of the Company and its
subsidiaries, except in furtherance of the Executive's duties under any
employment agreement.
(c) It is understood that while employed by the Company or its
subsidiaries, the Executive will promptly disclose to it, and assign to it the
Executive's interest in any invention, improvement or discovery made or
conceived by the Executive, either alone or jointly with others, which arises
out of the Executive's employment. At the Company's request and expense, the
Executive will assist the Company and its subsidiaries during the period of the
Executive's employment by the Company or its subsidiaries and thereafter in
connection with any controversy or legal proceeding relating to such invention,
improvement or discovery and in obtaining domestic and foreign patent or other
protection covering the same.
(d) As requested by the Company and at the Company's expense,
from time to time and upon the termination of the Executive's employment with
the Company for any reason, the Executive will promptly deliver to the Company
and its subsidiaries all copies and embodiments, in whatever form, of all
Confidential Information in the Executive's possession or within his control
(including, but not limited to, memoranda, records, notes, plans, photographs,
manuals, notebooks, documentation, program listings, flow charts, magnetic
media, disks, diskettes, tapes and all other materials containing any
Confidential Information) irrespective of the location or form of such material.
If requested by the Company, the Executive will provide the Company with written
confirmation that all such materials have been delivered to the Company as
provided herein.
6.2 NON-SOLICITATION OR HIRE. During the Term and for a period of
six (6) months following the termination of the Executive's employment for any
reason, the Executive shall not directly or indirectly solicit or attempt to
solicit or induce, directly or indirectly, (a) any party who is a customer of
the Company or its subsidiaries, or who was a customer of the Company or its
subsidiaries at any time during the twelve (12) month period immediately prior
to the date the Executive's employment terminates, for the purpose of marketing,
selling or providing to any such party any services or products offered by or
available from the Company or its subsidiaries, (b) any supplier to the Company
or any subsidiary to terminate, reduce or alter negatively its relationship with
the Company or any subsidiary or in any manner interfere with any agreement or
contract between the Company or any subsidiary and such supplier or (c) any
employee of the Company or any of its subsidiaries or any person who was an
employee of the Company or any of its subsidiaries during the twelve (12) month
period immediately prior to the date the Executive's employment terminates to
terminate such employee's employment
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relationship with the Protected Parties in order, in either case, to enter into
a similar relationship with the Executive, or any other person or any entity in
competition with the Business of the Company or any of its subsidiaries.
6.3 NON-COMPETITION. During the Term and for a period of six (6)
months following the termination of Executive's employment by the Company (for
any reason), the Executive shall not, whether individually, as a director,
manager, member, stockholder, partner, owner, employee, consultant or agent of
any business, or in any other capacity, other than on behalf of the Company or a
subsidiary, organize, establish, own, operate, manage, control, engage in,
participate in, invest in, permit his name to be used by, act as a consultant or
advisor to, render services for (alone or in association with any person, firm,
corporation or business organization), or otherwise assist any person or entity
that engages in or owns, invests in, operates, manages or controls any venture
or enterprise which engages or proposes to engage in the women's career and
casual separates clothing business in the geographic locations where the Company
and its subsidiaries engage or propose to engage in such business (the
"Business"). Notwithstanding the foregoing, nothing in this Agreement shall
prevent the Executive from owning for passive investment purposes not intended
to circumvent this Agreement, less than five percent (5%) of the publicly traded
common equity securities of any company engaged in the Business (so long as the
Executive has no power to manage, operate, advise, consult with or control the
competing enterprise and no power, alone or in conjunction with other affiliated
parties, to select a director, manager, general partner, or similar governing
official of the competing enterprise other than in connection with the normal
and customary voting powers afforded the Executive in connection with any
permissible equity ownership).
6.4 PROPERTY. The Executive acknowledges that all originals and
copies of materials, records and documents generated by him or coming into his
possession during his employment by the Company or its subsidiaries are the sole
property of the Company and its subsidiaries ("Company Property"). During the
Term, and at all times thereafter, the Executive shall not remove, or cause to
be removed, from the premises of the Company or its subsidiaries, copies of any
record, file, memorandum, document, computer related information or equipment,
or any other item relating to the business of the Company or its subsidiaries,
except in furtherance of his duties under the Agreement. When the Executive's
employment with the Company terminates, or upon request of the Company at any
time, the Executive shall promptly deliver to the Company all copies of Company
Property in his possession or control.
6.5 BUSINESS EXCEPTION. Notwithstanding anything else in this
Agreement to the contrary, the Executive's ownership interest in, or advisory
work for, Beau Soleil LLC, any successor thereto, or any other women's apparel
business that is at least majority-owned by Xxxx Xxxxxxx (the "Excluded
Company") shall not constitute a violation of this Agreement. The Excluded
Company is expressly excluded from the definition of "Business" for purposes of
this Section 6.
7. NONDISPARAGEMENT. The Executive agrees that he will not at any
time (whether during or after the Term) publish or communicate to any person or
entity any Disparaging (as defined below) remarks, comments or statements
concerning the Company, Cerberus Capital Management, L.P., their parents,
subsidiaries and affiliates, and their respective present and former members,
partners, directors, officers, shareholders, employees, agents, attorneys,
successors and assigns. "Disparaging" remarks, comments or statements are those
that
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impugn the character, honesty, integrity or morality or business acumen or
abilities in connection with any aspect of the operation of business of the
individual or entity being disparaged.
8. REMEDIES; SPECIFIC PERFORMANCE. The Parties acknowledge and
agree that the Executive's breach or threatened breach of any of the
restrictions set forth in Section 6 will result in irreparable and continuing
damage to the Protected Parties for which there may be no adequate remedy at law
and that the Protected Parties shall be entitled to equitable relief, including
specific performance and injunctive relief as remedies for any such breach or
threatened or attempted breach. The Executive hereby consents to the grant of an
injunction (temporary or otherwise) against the Executive or the entry of any
other court order against the Executive prohibiting and enjoining him from
violating, or directing him to comply with any provision of Section 6. The
Executive also agrees that such remedies shall be in addition to any and all
remedies, including damages, available to the Protected Parties against him for
such breaches or threatened or attempted breaches. In addition, without limiting
the Protected Parties' remedies for any breach of any restriction on the
Executive set forth in Section 6, except as required by law, the Executive shall
not be entitled to any payments set forth in Section 5.2 hereof if the Executive
has breached the covenants applicable to the Executive contained in Section 6,
the Executive will immediately return to the Protected Parties any such payments
previously received under Section 5.2 upon such a breach, and, in the event of
such breach, the Protected Parties will have no obligation to pay any of the
amounts that remain payable by the Company under Section 5.2.
9. INDEMNIFICATION. The Company agrees, to the extent permitted
by applicable law and its organizational documents, to indemnify, defend and
hold harmless the Executive from and against any and all losses, suits, actions,
causes of action, judgments, damages, liabilities, penalties, fines, costs or
claims of any kind or nature ("Indemnified Claim"), including reasonable legal
fees and related costs incurred by Executive in connection with the preparation
for or defense of any Indemnified Claim, whether or not resulting in any
liability, to which Executive may become subject or liable or which may be
incurred by or assessed against Executive, relating to or arising out of his
employment by the Company or the services to be performed pursuant to this
Agreement, provided that the Company shall only defend, but not indemnify or
hold Executive harmless, from and against an Indemnified Claim in the event
there is a final, non-appealable, determination that Executive's liability with
respect to such Indemnified Claim resulted from Executive's willful misconduct
or gross negligence. The Company's obligations under this section shall be in
addition to any other right, remedy or indemnification which Executive may have
or be entitled to at common law or otherwise.
10. OTHER PROVISIONS.
10.1 NOTICES. Any notice or other communication required or which
may be given hereunder shall be in writing and shall be delivered personally,
sent by facsimile transmission or sent by certified, registered or express mail,
postage prepaid or overnight mail and shall be deemed given when so delivered
personally, or sent by facsimile transmission or, if mailed, four (4) days after
the date of mailing or one (1) day after overnight mail, as follows:
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(a) If the Company, to:
Rafaella Apparel Group, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Secretary
Telephone: (000) 000-0000
Fax (000) 000-0000
(b) If the Executive, to the Executive's home address
reflected in the Company's records.
10.2 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the Parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto.
10.3 REPRESENTATIONS AND WARRANTIES BY EXECUTIVE. The Executive
represents and warrants that he is not a party to or subject to any restrictive
covenants, legal restrictions or other agreements in favor of any entity or
person which would in any way preclude, inhibit, impair or limit the Executive's
ability to perform his obligations under this Agreement, including, but not
limited to, non-competition agreements, non-solicitation agreements or
confidentiality agreements.
10.4 WAIVER AND AMENDMENTS. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
Parties or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any
right, power or privilege hereunder, nor any single or partial exercise of any
right, power or privilege hereunder, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.
10.5 GOVERNING LAW, DISPUTE RESOLUTION AND VENUE.
(a) This Agreement shall be governed and construed in
accordance with the laws of the State of New York applicable to agreements made
and not to be performed entirely within such state, without regard to conflicts
of laws principles.
(b) The parties agree irrevocably to submit to the
exclusive jurisdiction of the federal courts or, if no federal jurisdiction
exists, the state courts, located in the City of New York, Borough of Manhattan,
for the purposes of any suit, action or other proceeding brought by any party
arising out of any breach of any of the provisions of this Agreement and hereby
waive, and agree not to assert by way of motion, as a defense or otherwise, in
any such suit, action, or proceeding, any claim that it is not personally
subject to the jurisdiction of the above-named courts, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper, or that the provisions of this Agreement may
not be enforced in or by such courts. In addition, the parties agree to the
waiver of a jury trial.
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10.6 ASSIGNABILITY BY THE COMPANY AND THE EXECUTIVE. This
Agreement, and the rights and obligations hereunder, may not be assigned by the
Company or the Executive without written consent signed by the other party;
provided that the Company may assign the Agreement to any successor that
continues the business of the Company.
10.7 COUNTERPARTS. 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.
10.8 HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning of terms
contained herein.
10.9 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement, or any part thereof, is held by a court of competent
jurisdiction of any foreign, federal, state, county or local government or any
other governmental, regulatory or administrative agency or authority to be
invalid, void, unenforceable or against public policy for any reason, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected or
impaired or invalidated. The Executive acknowledges that the restrictive
covenants contained in Section 6 are a condition of this Agreement and are
reasonable and valid in temporal scope and in all other respects.
10.10 JUDICIAL MODIFICATION. If any court determines that any of
the covenants in Section 6, or any part of any of them, is invalid or
unenforceable, the remainder of such covenants and parts thereof shall not
thereby be affected and shall be given full effect, without regard to the
invalid portion. If any court determines that any of such covenants, or any part
thereof, is invalid or unenforceable because of the geographic or temporal scope
of such provision, such court shall reduce such scope to the minimum extent
necessary to make such covenants valid and enforceable.
10.11 TAX WITHHOLDING. The Company or other payor is authorized
to withhold from any benefit provided or payment due hereunder, the amount of
withholding taxes due any federal, state or local authority in respect of such
benefit or payment and to take such other action as may be necessary in the
opinion of the Board to satisfy all obligations for the payment of such
withholding taxes.
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IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound
hereby, have executed this Agreement as of the day and year first above
mentioned.
EXECUTIVE
/s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
RAFAELLA APPAREL GROUP, INC.
By: /s/ Xxxxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Chief Executive Officer
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