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EXHIBIT 10.13
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 FELIX PORCARO, JR., an
individual with a residence address of 5 Lori Ellen Drive, Lincoln, Rhode Island
02865 ("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 assisted in the conception and
development of 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 three (3) 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 Vice Chairman 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.
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3. SALARY AND BONUS.
(a) BASE SALARY. During the first year of the Employment
Period, the Company agrees to pay Executive $201,400 per year, payable weekly in
arrears. Executive's base 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
equal to the product of (a) $201,400 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 a minimum monthly benefit
equal to sixty percent (60%) of Executive's monthly base salary, subject to a
maximum monthly benefit of $15,000 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
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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.
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.
(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, by providing written notice to the
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Executive. 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 Vice Chairman of the Company; or (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 Executive's obligations 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 6.1(b), the Company may restrict the Executive's
subsequent involvement in the Restricted Business Activities, as defined below,
for the period ending one (1) year 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
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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
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 Non-compete period may be extended for up to an additional two (2)
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,
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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.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and thereof and supersedes 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:
5 Lori Ellen Drive
Lincoln, Rhode Island 02865
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.
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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.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the Company and any successors and assigns of the Company.
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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
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EXECUTIVE:
/s/ Felix Porcaro, Jr.
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Felix Porcaro, Jr.
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