Exhibit 10.3
POLO RALPH LAUREN CORPORATION
EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is made
effective as of the 30th day of April, 2007 (the “Effective
Date”), by and between Polo Ralph Lauren Corporation, a
Delaware corporation (the “Corporation”), and Mitchell
Kosh (the “Executive”).
WHEREAS,
the Executive has been employed with the Corporation pursuant to an
Employment Agreement dated April 3, 2005 (the “2005
Employment Agreement”); and
WHEREAS,
the Corporation and Executive wish to amend and restate such 2005
Employment Agreement effective as of the date hereof;
NOW
THEREFORE, in consideration of the mutual covenants and premises
contained herein, the parties hereby agree as follows:
ARTICLE I
EMPLOYMENT
1.1
Employment Term . The Corporation hereby agrees to employ
the Executive, and the Executive hereby agrees to serve the
Corporation, on the terms and conditions set forth herein. The
employment of the Executive by the Corporation shall be effective
as of the date hereof and continue until the close of business on
the third anniversary of the Effective Date of this Agreement (the
“Term”), unless terminated earlier in accordance with
Article II hereof.
1.2
Position and Duties . During the Term the Executive shall
faithfully, and in conformity with the directions of the Board of
Directors of the Corporation and any Committee thereof (the
“Board”) or the management of the Corporation
(“Management”), perform the duties of his employment,
and shall devote to the performance of such duties his full time
and attention. During the Term the Executive shall serve in such
position as the Board or Management may from time to time direct.
During the Term, the Executive may engage in outside activities
provided those activities do not conflict with the duties and
responsibilities enumerated hereunder, and provided further that
the Executive receives written approval in advance from Management
for any outside business activity that may require significant
expenditure of the Executive’s time in which the Executive
plans to become involved, whether or not such activity is pursued
for profit. The Executive shall be excused from performing any
services hereunder during periods of temporary incapacity and
during vacations in accordance with the Corporation’s
disability and vacation policies.
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.
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1.4
Compensation and Related Matters .
(a)
Base Compensation . In consideration of his services during
the Term, the Corporation shall pay the Executive cash compensation
at an annual rate of not less than six hundred twenty-five thousand
dollars ($625,000) (“Base Compensation”), less
applicable withholdings. Executive’s Base Compensation shall
be subject to such increases as may be approved by the Board or
Management. The Base Compensation shall be payable as current
salary, in installments not less frequently than monthly, and at
the same rate for any fraction of a month unexpired at the end of
the Term.
(b)
Bonus . During the Term, the Executive shall have the
opportunity to earn an annual bonus in accordance with any annual
bonus program the Corporation maintains that would be applicable to
the Executive.
(c)
Stock Awards . During the Term, the Executive shall be
eligible to participate in the Polo Ralph Lauren Long-Term Stock
Incentive Plan (the “Incentive Plan”). All grants of
stock options and restricted performance share units
(“RPSUs”), if any, are governed by the terms of the
Incentive Plan and subject to approval by the Compensation
Committee of the Board of Directors.
(d)
Car Allowance . During the Term, the Corporation shall pay
Executive a car allowance in the amount of one thousand five
hundred dollars ($1,500) per month, less applicable
withholdings.
(e)
Expenses. During the Term, the Executive shall be entitled
to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services hereunder,
including all reasonable expenses of travel and living while away
from home, provided that such expenses are incurred and
accounted for in accordance with the policies and procedures
established by the Corporation.
(f)
Vacations . During the Term, the Executive shall be entitled
to the number of vacation days in each fiscal year, and to
compensation in respect of earned but unused vacation days,
determined in accordance with the Corporation’s vacation
program. The Executive shall also be entitled to all paid holidays
given by the Corporation to its employees.
(g)
Other Benefits . The Executive shall be entitled to
participate in all of the Corporation’s employee benefit
plans and programs in effect during the Term as would by their
terms be applicable to the Executive, including, without
limitation, any deferred compensation plan, incentive plan, stock
option plan, life insurance plan, medical insurance plan, dental
care plan, accidental death and disability plan, financial
counseling program and sick/personal leave program. The Corporation
shall not make any changes in such plans or programs that would
adversely affect the Executive’s benefits thereunder, unless
such change occurs pursuant to a plan or program applicable to
other similarly situated employees of the Corporation and does not
result in a proportionately greater reduction in the rights or
benefits of the Executive as compared with other similarly situated
employees of the Corporation. Except as otherwise specifically
provided herein, nothing paid to the Executive under any plan or
program
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presently in effect or made available in the future shall be in
lieu of the Base Compensation or any bonus payable under
Sections 1.4(a) and 1.4(b) hereof.
ARTICLE II
TERMINATION OF EMPLOYMENT
2.1
Termination of Employment . The Executive’s employment
may terminate prior to the expiration of the Term under the
following circumstances:
(a)
Without Cause . The Executive’s employment shall
terminate upon the Corporation’s notifying the Executive that
his services will no longer be required.
(b)
Death . The Executive’s employment shall terminate
upon the Executive’s death.
(c)
Disability . If, as a result of the Executive’s
incapacity due to physical or mental illness, the Executive shall
have been absent and unable to perform the duties hereunder on a
full-time basis for an 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) failure
by the Executive to perform the duties of the Executive hereunder
(other than due to disability as defined in 2.1(c)), provided that
the conduct described in this Section 2.1(d)(i) shall not
constitute Cause unless and until such failure by Executive to
perform his duties hereunder has not been cured to the satisfaction
of the Corporation, in its sole discretion, within fifteen
(15) days after notice of such failure has been given by the
Corporation to Executive; or
(ii) an
act of fraud, embezzlement, theft, breach of fiduciary duty,
dishonesty, or any other misconduct or any violation of law (other
than a traffic violation) committed by the Executive; or
(iii) any
action by the Executive causing damage to or misappropriation of
Corporation assets; or
(iv) the
Executive’s wrongful disclosure of confidential information
of the Corporation or any of its affiliates; or
(v) the
Executive’s engagement in any competitive activity which
would constitute a breach of this Agreement and/or of the
Executive’s duty of loyalty; or
(vi) the
Executive’s breach of any employment policy of the
Corporation, including, but not limited to, conduct relating to
falsification of business records, violation of the
Corporation’s code of business conduct & ethics,
harassment, creation of a hostile work environment, excessive
absenteeism, insubordination, violation of the Corporation’s
policy on drug & alcohol use, or violent acts or threats of
violence; or
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(vii) performance
by the Executive of his employment duties in a manner deemed by the
Corporation, in its sole discretion, to be grossly negligent;
or
(viii) the
commission of any act by the Executive, whether or not performed in
the workplace, which subjects or, if publicly known, would be
likely to subject the Corporation to public ridicule or
embarrassment, or would likely be detrimental or damaging to the
Corporation’s reputation, goodwill, or relationships with its
customers, suppliers, vendors, licensees or employees.
(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,
base salary, position or duties, including no longer reporting to
Ralph Lauren, Chief Executive Officer, or Roger Farah, 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 pursuant to Section 2.1(c) 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 his
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,
his 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 fiscal year
prior to the fiscal year in which his employment is terminated. If
the Corporation has not paid any such bonus to the Executive, then
the Corporation shall not be obligated to make any bonus
payment
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to the
Executive. Under no circumstances shall the Executive be entitled
to any pro-rated bonus payment for the fiscal year in which his
employment is terminated. Notwithstanding the foregoing, in order
to receive any 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 Awards . The Executive’s rights with respect to
any stock options and RPSUs provided to the Executive by the
Corporation shall be governed by the provisions of the
Corporation’s Incentive Plan and the respective award
agreements, if any, under which such awards were granted, 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 or
dental insurance plan he participated in prior to the date of his
termination, under substantially similar terms and conditions as an
active employee; provided that participation in such group
medical or dental insurance plan shall only continue for as long as
permitted under COBRA and further, shall correspondingly cease at
such time as the Executive (a) becomes eligible for a future
employer’s medical and/or dental 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 in its sole discretion.
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.
(v)
Section 409A. This Agreement is not intended to
constitute a “nonqualified deferred compensation plan”
within the meaning of Section 409A of the Internal Revenue
Code of 1986, as amended, and the rules and regulations issued
thereunder (the “Code”). The above payment structure is
based on the Corporation’s current understanding of its
applicable requirements under Section 409A of the Code.
Notwithstanding the foregoing, if any payments of money or other
benefits due to Executive hereunder could reasonably be expected to
cause the application of an accelerated or additional tax under
Section 409A of the Code, such payments or other benefits
shall be restructured in the sole discretion of the Corporation in
a manner which does not cause such an accelerated or additional
tax.
(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 awards may have been
provided to the Executive by the Corporation the terms of which
shall be governed by the provisions of the Corporation’s
Incentive Plan and the respective award agreements, if any, under
which such stock awards were provided.
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(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 awards provided
to the Executive by the Corporation shall be governed by the
provisions of the Corporation’s Incentive Plan and the
respective award agreements, if any, under which such stock awards
were provided.
ARTICLE III
COVENANTS OF THE EXECUTIVE
3.1
Non-Compete .
(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, servic
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