Exhibit 99.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
(“Agreement”) dated as of April 3, 2009 between
Rafaella Apparel Group, Inc. (the “Company”) and
Lance Arneson (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 April 3, 2009 (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
Vice-President of Finance, Principal Accounting Officer and Interim
Chief Financial Officer of the Company, the Vice President of
Verrazano, Inc., the Company’s domestic wholly owned
subsidiary, and as a director of Rafaella Apparel Far East Limited,
and shall report to the Chief Executive Officer of the Company (the
“CEO”) or any other executive officer of the Company as
may be directed by the CEO or the Board of Directors of the Company
(the “Board”). Executive shall continue to serve
as the Company’s Interim Chief Financial Officer until such
time as the Company determines, in its sole discretion, that
Executive, or some other person, shall be appointed as the
permanent Chief Financial Officer.
2.2
Duties . The Executive will have such authority and
responsibilities and will perform such duties customarily performed
by a vice-president of finance, principal accounting officer and
interim chief financial officer 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. At such time as the Company
appoints Executive, or some other person, permanent Chief Financial
Officer, Executive’s duties and responsibilities hereunder
may be adjusted accordingly by the Company. 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 and passive
investment activities as long as such activities 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 $250,000, 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 25% 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 a
365-day fiscal year. The Bonus will be paid on
September 30th of the Company’s immediately subsequent
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 three (3) 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
Change in Title . At such time as Executive, or some
other person, is appointed permanent Chief Financial Officer,
Executive’s compensation hereunder shall remain
unchanged.
4.
Termination of Employment .
4.1
Due to Death of Executive . The Executive’s
employment shall terminate immediately upon his death.
4.2
Due to Disability of Executive . 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 illness, the Executive is unable to perform the
essential functions of his job with or without reasonable
accommodation for a period of 90 consecutive days in any 360-day
period.
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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 or embezzlement from the Company; (ii) other 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 from any other executive
officer of the Company to who Executive reports) 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, solely with
respect to sub-clauses (iii) and (vi) immediately
preceding, the Executive shall have fifteen (15) days after notice
from the Company to cure the deficiency (if such deficiency is
curable) leading to any such determination of Cause. 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.
4.5
Automatic Termination of Other Positions . Upon the
Executive no longer being employed by the Company for any reason
whatsoever, the Executive shall automatically be deemed to have
resigned as an officer and director of all subsidiaries of the
Company without any further action being required by the Executive,
the Company or any subsidiary of 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;
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(b)
the unpaid portion of the Bonus, if any, relating to the fiscal
year immediately 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;
(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
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 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 Info
