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EXHIBIT 10.9
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the
31st day of May, 1996, by and between ACCESSORIES ASSOCIATES, INC., a Rhode
Island corporation with a mailing address of 500 George Washington Highway,
Smithfield, Rhode Island 02917 (the "Company"), and GERALD R. CERCE, an
individual with a residence address of 143 Meeting Street, Providence, Rhode
Island 02906 ("Executive").
INTRODUCTION
1. The Company is in the business of developing, manufacturing,
distributing and marketing ladies' and men's consumer soft lines sold in retail
stores (the "Accessories Business"). Executive conceived and developed the
concepts currently used in the Company's operations and possesses other skills
and knowledge advantageous to the Company.
2. The Company desires to employ Executive and Executive desires
to accept such employment on the terms and conditions set forth herein.
AGREEMENT
In consideration of the premises and mutual promises hereinbelow set
forth, the parties hereby agree as follows:
1. EMPLOYMENT PERIOD. The term of this Agreement (the
"Employment Period") shall commence on the date hereof and, subject to earlier
termination as hereinafter provided, shall terminate ten (10) years from the
date hereof. Thereafter, Executive's employment will continue automatically on a
year to year basis terminable by either party consistent with the terms of this
Agreement.
2. EMPLOYMENT; DUTIES. Subject to the terms and
conditions set forth herein, the Company hereby employs Executive to act as
Chairman and Chief Executive Officer of the Company during the Employment
Period, and Executive hereby accepts such employment. The duties assigned and
authority granted to Executive shall be as set forth in the By-laws of the
Company and as determined by its Board of Directors from time to time. Executive
agrees to perform his duties for the Company diligently, competently, and in a
good faith manner. The Executive may also engage in civic and charitable
activities to the extent they are not inconsistent with Executive's duties
hereunder.
3. SALARY AND BONUS.
(a) BASE SALARY. During the first year of the
Employment Period, the Company agrees to pay Executive $625,000 per year,
payable weekly in arrears. Executive's base
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salary shall not be decreased, and shall be increased on each anniversary date
of this Agreement (the "Anniversary Date"), based upon the increase in the
Consumer Price Index for all Urban Consumers (CPI-U), Boston, Massachusetts,
published by the Bureau of Labor Statistics of the United States Department of
Labor (1982-1984=100) (the "Index"). If, on an Anniversary Date, the Index shows
an increase from the base date of May 31, 1996 (the "Base Date"), then
Executive's annual base salary for the ensuing 12 months shall be the product of
(a) $601,000 and (b) one plus a percentage equal to the percentage increase in
the Index on each such Anniversary Date over the Index on the Base Date. In the
event the Bureau of Labor Statistics no longer publishes the Index the Company
shall use that index then available which most closely replicates the Index. In
addition, after the first year of the Employment Period, the Board of Directors
of the Company (or any appropriate committee thereof) shall review and may
increase the Executive's annual base salary in its discretion, based upon the
Company's performance and the Executive's particular contributions.
(b) BONUS. Executive shall be eligible for and
shall receive an annual cash bonus under the Company's Executive Incentive
Compensation Plan, subject to the discretion of the Company's Board of
Directors.
4. OTHER BENEFITS.
(a) INSURANCE AND OTHER BENEFITS. The Executive
shall be entitled to participate in, and shall receive the maximum benefits
available under, the Company's insurance programs (including health and life
insurance) and any ERISA benefit plans, as the same may be adopted and/or
amended from time to time, and shall receive all other fringe benefits that are
provided by the Company to other senior executives. The Company shall purchase a
disability insurance policy which shall provide Executive with the maximum
monthly benefit available to Executive, based upon Executive's monthly base
salary, after a six-month period of disability. The Company shall contribute the
maximum amount permitted under current law to the Executive's 401(k) Plan, and
any other Company pension or retirement plan during the Employment Period.
(b) VACATION. Executive shall be entitled to an
annual vacation of such duration as may be determined by the Board of Directors,
but not less than that generally established for other executives of Company and
in no event less than four (4) weeks, without interruption of salary.
(c) AUTOMOBILE ALLOWANCE. The Company shall
provide Executive with an automobile consistent with past practice.
(d) REIMBURSEMENT OF EXPENSES. The Company shall
reimburse Executive for all reasonable travel, entertainment and other expenses
incurred or paid by the Executive in connection with, or related to, the
performance of his duties or responsibilities under this Agreement, provided
that Executive submits to the Company substantiation of such expenses sufficient
to satisfy the record keeping guidelines promulgated from time to time by the
Internal Revenue Service. All domestic and international airline travel may be
in first class accommodations at the Executive's sole discretion.
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(e) MEMBERSHIP AND SERVICE FEES. The Company
shall pay the professional and other fees reasonably incurred by Executive in
connection with (i) an annual medical examination of Executive, (ii) the annual
planning for and preparation of Executive's personal income tax returns, (iii)
annual review of and planning Executive's financial situation by a financial
planner, (iv) annual membership in an airline travel club, (v) annual membership
in a social or health club of Executive's choice, and (vi) annual membership in
a golf or country club of Executive's choice.
(f) LODGING IN NEW YORK. Executive currently
owns an apartment unit located at 415 East 54th Street, New York, New York. The
Company shall reimburse Executive for all reasonable lodging, entertainment and
other expenses incurred or paid by the Executive in connection with, or related
to, the performance of his duties or responsibilities in New York City. The
Company shall reimburse Executive for actual lodging at the apartment on a per
diem basis at a rate equal to the daily rate charged in Manhattan to business
travellers by first-class hotels in a premium location.
(g) SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN. The
Company shall pay all annual payments for the Executive's Supplemental Employee
Retirement Plan ("SERP"). Notwithstanding any other provisions in this Agreement
to the contrary, the Company shall continue to make all payments on behalf of
the Executive to the SERP during and after the Employment Period. Upon
termination of the SERP, the Company shall deliver the proceeds of such SERP to
Executive or the Executive's beneficiaries in accordance with the SERP.
5. TERMINATION BY THE COMPANY WITH CAUSE. Upon prior
written notice to Executive, the Company may terminate this Agreement if any of
the following events shall occur:
(a) the conviction of Executive for a crime
involving fraud or moral turpitude;
(b) deliberate dishonesty of the Executive with
respect to the Company or any of its subsidiaries; or
(c) the refusal of the Executive to follow the
reasonable and lawful written instructions of the Board of Directors of the
Company with respect to the services to be rendered and the manner of rendering
such services by Executive, provided such refusal is material and repetitive and
is not justified or excused either by the terms of this Agreement or by actions
taken by the Company in violation of this Agreement, and with respect to the
first two refusals Executive has been given reasonable written notice and
explanation thereof and reasonable opportunity to cure and no cure has been
effected within a reasonable time after such notice.
6. TERMINATION BY THE EXECUTIVE; TERMINATION BY THE
COMPANY WITHOUT CAUSE.
6.1 NOTICE/EVENTS/DEFINED TERMS.
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(a) Executive may terminate this Agreement at
any time by providing written notice to the Company.
(b) The Company may terminate this Agreement at
any time, WITHOUT CAUSE, as defined below, upon six (6) months prior written
notice to Executive.
(c) As used in this Agreement, the term "WITHOUT
CAUSE" shall mean termination for any reason not specified in Section 5 hereof,
and shall include, without limitation: (i) the Company's materially reducing
Executive's duties or authority as Chief Executive Officer; and (ii) the
disability of Executive; or (iii) the Executive's death.
6.2 SEVERANCE.
(a) If the Company terminates this Agreement,
WITHOUT CAUSE, the Company shall provide Executive with a severance package
which shall consist of the following: (i) payment on the first business day of
each month of an amount equal to one-twelfth of the Executive's then current
annual base salary under Section 3(a) hereof; (ii) payment on the first business
day of each month of an amount equal to one-twelfth of Executive's most recent
bonus under Section 3(b) hereof; and (iii) continuation of all benefits under
Section 4.
(b) The Company's obligation to make the
payments and provide the benefits required by this Section 6.2 shall commence on
the date of termination of this Agreement by the Company, WITHOUT CAUSE, and
continue for a period equal to the greater of: (i) two (2) years, or (ii) the
duration of the Non-compete Period under Section 8 hereof.
7. DEATH OR DISABILITY. In the event of the Executive's
death or disability, employment will automatically terminate effective as of the
date of such death or disability. As used in this Agreement, the term
"disability" shall mean inability on the part of Executive for a period of more
than six (6) months in the aggregate during any twelve (12) month period to
perform the services contemplated under this Agreement. A determination of
disability shall be made by a physician satisfactory to both the Executive and
the Company, provided that if the Executive and the Company do not agree on a
physician, the Executive and the Company shall each select a physician and these
two physicians together shall select a third physician, whose determination as
to disability shall be binding on all parties.
8. NON-COMPETITION. During the Employment Period and
after termination of this Agreement by the Executive under Section 6.1(a), or by
the Company under Section 5 or Section 6.1(b), the Company may restrict the
Executive's subsequent involvement in the Restricted Business Activities, as
defined below, for the period ending two (2) years after the date of termination
of this Agreement (the "Non-compete Period"). As used in this Agreement, the
term "Restricted Business Activities" shall mean the marketing and sale of
ladies' and men's consumer soft lines to retail stores, which the Company sold
and marketed during Executive's employment with the Company. During the
Non-compete Period, Executive shall not, without the written approval of the
Company, directly or indirectly, either as an individual, partner, joint
venturer, employee or agent for any person, company, corporation or association,
or as an officer, director
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or stockholder of a corporation or otherwise, enter into or engage in or have a
proprietary interest in the Restricted Business Activities other than the
ownership of (a) the stock of the Company then held by Executive, and (b) no
more than five percent (5%) of the securities of any other publicly-held
company. The minimum period for which Executive shall be provided the severance
package set forth in Section 6.2 hereof shall be two (2) years. The Non-compete
period may be extended for up to an additional three (3) years, at the option of
the Company, provided that the Company continues to make the monthly payments
and provides the benefits required under Section 6.2 hereof, for such additional
period.
The Executive recognizes and agrees that because a violation
by him of his obligations under this Section 8 will cause irreparable harm to
the Company that would be difficult to quantify and for which money damages
would be inadequate, the Company shall have the right to injunctive relief to
prevent or restrain any such violation, without the necessity of posting a bond.
Executive expressly agrees that the character, duration and
scope of this covenant not to compete are reasonable in light of the
circumstances as they exist at the date upon which this Agreement has been
executed. However, should a determination nonetheless be made by a court of
competent jurisdiction at a later date that the character, duration or
geographical scope of this covenant not to compete is unreasonable in light of
the circumstances as they then exist, then it is the intention of both Executive
and the Company that this covenant not to compete shall be construed by the
court in such a manner as to impose only those restrictions on the conduct of
Executive which are reasonable in light of the circumstances as they then exist
and necessary to assure the Company of the intended benefit of this covenant to
compete.
9. CONFIDENTIALITY COVENANTS. Executive understands that
Company may impart to him confidential business information including, without
limitation, designs, financial information, personnel information, real estate
information, and the like (collectively "Confidential Information"). Executive
hereby acknowledges Company's exclusive ownership of such Confidential
Information.
Executive agrees as follows: (1) only to use the Confidential
Information to provide services to Company; (2) only to communicate the
Confidential Information to fellow employees, agents and representatives on a
need-to-know basis; and (3) not to otherwise disclose or use any Confidential
Information. Upon demand by Company or upon termination of Executive's
employment, Executive will deliver to Company all manuals, photographs,
recordings, and any other instrument or device by which, through which, or on
which Confidential Information has been recorded and/or preserved, which are in
my Executive's possession, custody or control.
10. GOVERNING LAW/JURISDICTION. This Agreement shall be
governed by and interpreted and governed in accordance with the laws of the
State of Rhode Island. The parties agree that this Agreement was made and
entered into in Rhode Island and each party hereby consents to the jurisdiction
of a competent court in Rhode Island to hear any dispute arising out of this
Agreement.
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11. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and thereof and supercedes any and all previous agreements, written and
oral, regarding the subject matter hereof between the parties hereto. This
Agreement shall not be changed, altered, modified or amended, except by a
written agreement signed by both parties hereto.
12. NOTICES. All notices, requests, demands and other
communications required or permitted to be given or made under this Agreement
shall be in writing and shall be deemed to have been given if delivered by hand,
sent by generally recognized overnight courier service, telex or telecopy, or
certified mail, return receipt requested.
(a) to the Company at:
500 George Washington Highway
Smithfield, Rhode Island 02917
(b) to the Executive at:
143 Meeting Street
Providence, Rhode Island 02906
Any such notice or other communication will be considered to
have been given (i) on the date of delivery in person, (ii) on the third day
after mailing by certified mail, provided that receipt of delivery is confirmed
in writing, (iii) on the first business day following delivery to a commercial
overnight courier or (iv) on the date of facsimile transmission (telecopy)
provided that the giver of the notice obtains telephone confirmation of receipt.
Either party may, by notice given to the other party in
accordance with this Section, designate another address or person for receipt of
notices hereunder.
13. SEVERABILITY. If any term or provision of this
Agreement, or the application thereof to any person or under any circumstance,
shall to any extent be invalid or unenforceable, the remainder of this
Agreement, or the application of such terms to the persons or under
circumstances other than those as to which it is invalid or unenforceable, shall
be considered severable and shall not be affected thereby, and each term of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.
The invalid or unenforceable provisions shall, to the extent permitted by law,
be deemed amended and given such interpretation as to achieve the economic
intent of this Agreement.
14. WAIVER. The failure of any party to insist in any one
instance or more upon strict performance of any of the terms and conditions
hereof, or to exercise any right or privilege herein conferred, shall not be
construed as a waiver of such terms, conditions, rights or privileges, but same
shall continue to remain in full force and effect. Any waiver by any party of
any violation of, breach of or default under any provision of this Agreement by
the other party shall not be construed as, or constitute, a continuing waiver of
such provision, or waiver of any other violation of, breach of or default under
any other provision of this Agreement.
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15. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the Company and any successors and assigns of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ACCESSORIES ASSOCIATES, INC.
By: /s/ Gerald F. Cerce
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Title: Chairman
EXECUTIVE:
/s/ Gerald F. Cerce
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Gerald F. Cerce
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