Exhibit 10.3
POLO RALPH LAUREN
CORPORATION
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (the
“Agreement”) is made effective as of the 14th day of
October, 2009 (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 30, 2007 (the “2007 Employment
Agreement”); and
WHEREAS, the Corporation and
Executive wish to amend and restate such 2007 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 seventy-five thousand dollars ($675,000)
(“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 Corporation 1997 Long-Term Stock Incentive Plan (the
“Incentive Plan”). All grants to the Executive of stock
options and restricted performance share units
(“RPSUs”), if any, are governed by the terms of the
Incentive Plan and are subject, in all cases, to approval by the
Compensation Committee of the Board of Directors in its sole
discretion.
(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 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 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.
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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
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 breach of
Section 5.7 herein or 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 termination of employment by the Executive within
sixty (60) days following the occurrence of (A) a
material diminution in or adverse alteration to Executive’s
title, base salary, position or duties, including no longer
reporting to the Chairman & Chief Executive Officer, or
the President & 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 (1) until the Executive provides
written notice to the Corporation of the existence of such
diminution, change, reduction, relocation or failure within thirty
(30) days of its occurrence and (2) unless 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 2.3(a)(v) and Section 4.1(a) hereof, the
Corporation shall: (a) beginning with the first payroll period
following the 30 th day following the date of termination of
Executive’s employment, continue to pay the Executive,
in
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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”), provided that the initial payment shall include
Base Compensation amounts for all payroll periods from the date of
termination through the date of such initial payment; 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 most recently completed 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 in such
prior fiscal year, then the Corporation shall not be obligated to
make any bonus payment to the Executive. Under no circumstances
shall the Executive be entitled to any 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 on or prior to the 30 th day following the date of termination of
Executive’s employment.
(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 .
Notwithstanding any provision in this Agreement to the contrary, no
amounts shall be payable pursuant to Section 2.3(a) or
Section 4.1(a) unless the Executive’s termination of
employment constitutes a “separation from service”
within the meaning of Section 1.409A-1(h) of the Department of
Treasury Regulations. If the Executive is determined to be a
“specified employee” for purposes of
Section 409A(a)(2)(B)(i) of the Internal Revenue Code, as
amended, and the rules and regulations issued thereunder (the
“Code”), then no payment that is payable under Sections
2.3(a)(i) or 4.1(a) hereof (the “Severance Payment”) on
account of Executive’s “separation from service”
shall be made before the date that is at least six months after the
Executive’s “separation from service” (or if
earlier,
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the date of the Executive’s
death) if and to the extent that the Severance Payment constitutes
deferred compensation (or may be nonqualified deferred
compensation) under Section 409A of the Code and such deferral
is required to comply with the requirements of Section 409A of
the Code. For the avoidance of doubt, no portion of the Severance
Payment shall be delayed for six months after the Executive’s
“separation from service” if such portion
(x) constitutes a “short term deferral” within the
meaning of Section 1.409A-1(a)(4) of the Department of
Treasury Regulations, or (y) (A) it is being paid due to
the Corporation’s termination of the Executive’s
employment without Cause or the Executive’s termination of
employment for Good Reason; (B) it does not exceed two times
the lesser of (1) the Executive’s annualized
compensation from the Corporation for the calendar year prior to
the calendar year in which the termination of the Executive’s
employment occurs, or (2) the maximum amount that may be taken
into account under a qualified plan pursuant to
Section 401(a)(17) of the Code for the year in which the
Executive’s employment terminates; and (C) the payment
is required under this Agreement to be paid no later than the last
day of the second calendar year following the calendar year in
which the Executive incurs a “separation from service.”
For purposes of Section 409A of the Code, the
Executive’s right to receive installment payments pursuant to
Section 2.3(a) shall be treated as a right to receive a series
of separate and distinct payments. To the extent that any
reimbursement of any expense under Section 1.4(e) or in-kind
benefits provided under this Agreement are deemed to constitute
taxable compensation to the Executive, such amounts will be
reimbursed or provided no later than December 31 of the year
following the year in which the expense was incurred. The amount of
any such expenses reimbursed or in-kind benefits provided in one
year shall not affect the expenses or in-kind benefits eligible for
reimbursement or payment in any subsequent year, and the
Executive’s right to such reimbursement or payment of any
such expenses will not be subject to liquidation or exchange for
any other benefit. The determination of whether the Executive is a
“specified employee” for purposes of
Section 409A(a)(2)(B)(i) of the Code as of the time of the
Executive’s separation from service shall made by the
Corporation in accordance with the terms of Section 409A of
the Code and applicable guidance thereunder (including without
limitation Treasury Regulation Section 1.409A-1(i) and any
successor provision thereto).
(b) If the Executive’s
employment is terminated by reason of the Executive’s death
or disability, pursuant to Sections 2.1(b) or 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.
(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.
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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 e
