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EXHIBIT 10.15
EMPLOYMENT AGREEMENT
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This Employment Agreement (the "Agreement") is entered into as of the
19th day of July, 1999, by and between AAi.FosterGrant, Inc., a Rhode Island
corporation with a mailing address of 500 George Washington Highway, Smithfield,
Rhode Island 02917 (the "Company"), and John R. Ranelli, an individual with a
residence address of 223 Giants Neck Road, Niantic, Connecticut 06359
("Executive").
INTRODUCTION
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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").
2. The Company desires to employ Executive and Executive desires to
accept such employment on the terms and conditions set forth herein.
AGREEMENT
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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 termination as
hereinafter provided, shall continue for an unlimited number of successive two
(2) year periods, the first of such periods beginning on the date hereof and
each subsequent period beginning on the first day of each month thereafter.
2. EMPLOYMENT; DUTIES. Subject to the terms and conditions set forth
herein, the Company hereby employs Executive to act as President, Chief
Operating Officer and a member of the office of the Chief Executive Officer of
the Company during the Employment Period, and Executive hereby accepts such
employment. The Company shall recommend to the shareholders the election of
Executive as a director of the Company for the Employment Period. The duties
assigned and authority granted to Executive shall be as set forth in the By-laws
of the Company and as determined by the Chairman and Chief Executive Officer
from time to time. All officers holding the title of Executive Vice President or
above shall report to the Office of the Chief Executive Officer. 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. Executive may also be a member of not more than three other company
boards of directors so long as such membership does not conflict with
Executive's performance of his duties under this Agreement. The Executive shall
report to the Chairman.
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3. SALARY AND BONUS.
(a) BASE SALARY. During the first twelve (12) months of the
Employment Period, the Company agrees to pay Executive $350,000 per year,
payable weekly in arrears. During the second twelve (12) months of employment,
the Company agrees to pay Executive $400,000 per year, payable weekly in
arrears. Executive's base salary shall not be decreased, and after the first
twenty-four (24) months 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 July, 2000 (the "Base Date"), then Executive's
annual base salary for the ensuing 12 months shall be the product of (a)
$400,000 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 twenty-four (24) months, the Chief Executive Officer
of the Company shall review and may increase the Executive's annual base salary
in his 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 of up to fifty percent (50%) of his annual base salary under
the Company's Executive Incentive Compensation Plan ("Annual Target Bonus
Amount"), subject to the discretion of the Company's Board of Directors. Sixty
percent (60%) of any such bonus shall be based upon the Company's overall
financial goals and forty percent (40%) shall be based on personal goals for the
Executive established by mutual agreement between Executive and the Chief
Executive Officer.
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, supplemental 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 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 qualified and
non-qualified 401(k) Plan, Supplemental 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 Chief Executive Officer, 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 offered to senior
executives generally.
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(c) AUTOMOBILE ALLOWANCE. The Company shall provide Executive
with a monthly automobile allowance consistent with the plan adopted or to be
adopted by the Company for other senior executives.
(d) REIMBURSEMENT OF MOVING AND OTHER EXPENSES. The Company
shall reimburse Executive for all reasonable moving expenses incurred in
Executive's move from his present residence to a temporary residence one located
in Rhode Island or nearby Southern Massachusetts, 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. Additionally, the Company will pay all
closing costs and moving expenses incurred by Executive (including the federal
and state income taxes payable with respect thereto) in relocating to permanent
residence in the same geographic area.
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 Chief Executive Officer 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 which specifically identifies the manner in which the Chief Executive
Officer believes that Executive has not performed his duties 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) TERMINATION BY THE EXECUTIVE. Executive may terminate this
Agreement at any time by providing written notice to the Company.
(b) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may
terminate this Agreement at any time, without Cause by providing written notice
to Executive. As used in this Agreement, the term "without Cause" shall mean
termination for any reason not specified in Section 5 hereof, including the
death or disability of Executive.
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(c) CHANGE IN CONTROL. A "Change in Control" will be deemed to
have occurred if: (1) a Takeover Transaction occurs; or (2) any election of
directors of the Company takes place (whether by the directors then in office or
by the stockholders at a meeting or by written consent) and a majority of the
directors in the office following such election are individuals who were not
nominated by a vote of two-thirds of the members of the Board of Directors
immediately preceding such election; or (3) the Company effectuates a complete
liquidation of the Company or a sale or disposition of all or substantially all
of its assets. A "Change in Control" shall not be deemed to include, however, a
merger or sale of stock, assets or business of the Company if the Executive
immediately after such event owns, or in connection with such event immediately
acquires (other than in the Executive's capacity as an equity holder of the
Company or as a beneficiary of its employee stock ownership plan or profit
sharing plan), any stock of the buyer or any affiliate thereof which, at the
time of Executive's initial investment in such stock, had a purchase price or
fair market value greater than $50,000.
(d) TAKEOVER TRANSACTION. A "Takeover Transaction" shall mean
(i) a merger or consolidation of the Company with, or an acquisition of the
Company or all or substantially all of its assets by, any other corporation,
other than a merger, consolidation or acquisition in which the individuals who
were members of the Board of Directors of the Company immediately prior to such
transaction continue to constitute a majority of the Board of Directors of the
surviving corporation (or, in the case of an acquisition involving a holding
company, constitute a majority of the Board of Directors of the holding company)
for a period of not less than twelve (12) months following the closing of such
transaction, or (ii) when any person or entity or group of persons or entities
(other than any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any one or more of the present stockholders of
the Company or their affiliates) either related or acting in concert becomes
after the date hereof the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of securities of the Company
representing more than fifty percent (50%) of the total number of votes that may
be cast for the election of directors of the Company.
6.2 EXECUTIVE'S RIGHT-TO-TERMINATE. Executive may terminate
Executive's employment for Good Reason at any time during the term of this
Agreement. For purposes of this Agreement, "Good Reason" shall mean any of the
following (without Executive's express written consent):
(a) a Change in Control provided that in such event Executive
may exercise his right only within the twelve month period next following such
Change in Control.
(b) the assignment to Executive by the Company of any duties
materially inconsistent with Executive's status with the Company or a material
alteration in the nature or status of Executive's responsibilities from those in
effect on the date hereof, or a material reduction in Executive's titles or
offices as in effect on the date hereof, or any removal of Executive from, or
any failure to reelect Executive to, any of such positions, except in connection
with the termination of his employment for Disability or Cause or as a result of
Executive's death or by Executive other than for Good Reason;
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(c) a reduction by the Company in Executive's Salary as in
effect on the date hereof or as the same may be increased from time to time
during the term of this Agreement;
(d) except if such action applies to all senior executive
officers of the Company generally, any failure by the Company to continue in
effect its present Executive Incentive Compensation Plan, any fringe benefits,
the taking of any action by the Company which would, directly or indirectly,
materially reduce Executive's benefits or deprive Executive of any fringe
benefits enjoyed by Executive at the date hereof, or the failure by the Company
to provide Executive with the number of paid vacation days to which Executive is
entitled at the date hereof;
(e) a relocation of the Company's principal executive offices to
a location more than 50 miles from their current location in, or the Company's
requiring Executive to be based anywhere other than the Company's principal
executive offices; or
(f) any material breach, uncured after reasonable notice, by the
Company of any provisions of this Agreement.
6.3 SEVERANCE.
(a) WITHOUT CAUSE. If the Company terminates this Agreement
without Cause, or if Executive has the right to terminate this Agreement
pursuant to Section 6.2 hereof, then commencing on the date of termination of
this Agreement, the Company shall provide Executive with a severance package
which shall consist of the following: (i) for a period equal to two (2) years
after the date of termination (A) 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 and (B) continuation of all benefits under
Section 4; and (ii) payment on the first business day of each month of an amount
equal to one-twelfth of the Executive's Annual Target Bonus Amount under the
Company's Executive Incentive Compensation Plan for the year of termination.
(b) GENERAL RELEASE. As a condition precedent to receiving any
severance payment, the Executive shall execute a general release of any and all
claims which Executive or his heirs, executors, agents or assigns might have
against the Company, its subsidiaries, affiliates, successors, assigns and its
past, present and future employees, officers, directors, agents and attorneys.
(c) WITHHOLDING. All payments made by the Company under this
Agreement shall be net of any tax or other amounts required to be withheld by
the Employer under applicable law.
7. DEATH OR DISABILITY. In the event of the Executive's death or
disability, the Employment Period 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
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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") provided that the Company has not otherwise breached its
obligations under the Agreement. 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
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 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.
(a) 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
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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.
(b) The Company will not disclose the terms and conditions of
Executive's employment, unless it is required by law to do so.
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:
223 Giants Neck Road
Niantic, Connecticut 06359
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.
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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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AAi.FosterGrant, Inc.
By: /s/ Gerald F. Cerce
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Title: Chairman
EXECUTIVE:
/s/ John R. Ranelli
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John R. Ranelli
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