AGREEMENT made as of the 26th day of October, 1993, between Polo Ralph
Lauren Corporation, a New York corporation (the 'Company'), and Cheryl L.
Sterling (the 'Executive').
The Executive is presently employed by the Company as the President of
its Polo Ralph Lauren Retail and Licensing Co. division.
The Board of Directors of the Company (the 'Board') recognizes that the
Executive's contribution to the growth and success of the Company will be
substantial. The Board desires to provide for the continued employment of the
Executive and to make employment arrangements with the Company which the board
has determined will reinforce and encourage the attention and dedication to the
Company of the Executive as a member of the Company's management, in the best
interest of the Company. The Executive is willing to commit herself to serve
the Company, on the terms and conditions herein provided.
In order to effect the foregoing, the Company and the Executive wish to
enter into an employment agreement on the terms and conditions set forth below.
Accordingly, in consideration of the premises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive,
and the Executive hereby agrees to serve the Company, on the terms and
conditions set forth herein.
2. Term. The employment of the Executive by the Company as
provided in Section 1 pursuant to this Agreement will be effective on the date
hereof. Executive will serve at the direction and pleasure of the Board.
3. Position and Duties. The Executive shall serve in the capacity
described above and shall have such responsibilities, duties and authority as
she may have as of the date hereof (or which arise from any comparable position
as a key executive officer to which she may be appointed after the date hereof)
and as may from time to time be assigned to the Executive by the Board that are
consistent with such responsibilities, duties and authority. The Executive
shall devote substantially all her working time and efforts to the business and
affairs of the Company.
4. Compensation and Related Matters.
(a) Salary. During the period of the Executive's employment
hereunder, the Company shall pay to the Executive an annual salary determined
by the Board. Such salary shall be paid in substantially equal installments on
a basis consistent with the Company's payroll practices. This salary shall be
subject to annual review by the Board.
(b) Expenses. During the term of the Executive's employment
hereunder, the Executive shall be entitled to receive prompt reimbursement for
all reasonable and customary expenses incurred by the Executive in performing
services hereunder, including all expenses of travel and living expenses while
away from home on business or at the request of and in the service of the
Company, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company.
(c) Other Benefits. During the term of Executive's employment
hereunder, Executive shall be entitled to participate in or receive benefits
under any medical, pension, profit sharing or other employee benefit plan or
arrangement generally made available by the Company now or in the future to its
executives and key management employees (or to their family members), subject
to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Nothing paid to the Executive
under any plan or arrangement presently in effect or made available in the
future shall be deemed to be in lieu of the salary payable to the Executive
pursuant to paragraph (a) of this Section.
(d) Vacations. The Executive shall be entitled to reasonable
vacations consistent with past practice.
(a) Termination by Company. The Executive's employment hereunder
may be terminated by the Board at any time with or without cause.
(b) Termination by the Executive. The Executive may terminate her
employment hereunder for Good Reason. For purposes of this Agreement, 'Good
Reason' shall mean (A) the assignment to the Executive of a title or duties
inconsistent with those of a senior executive of the Company; (B) a reduction
by the Board of the Executive's salary; or (C) a failure by the Company to
comply with any material provision of this Agreement which has not been cured
within thirty (30) days after notice of such noncompliance has been given by
the Executive to the Company.
(c) Any termination of the Executive's employment by the Company or
by the Executive (other than termination pursuant to section 6(d)(i) hereof)
shall be communicated by written Notice of Termination to the other party
hereto in accordance with Section 11 hereof. If termination is pursuant to
Sections 6(d)(ii)-(iii) or 5(b) hereof, the 'Notice of Termination' shall mean
a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
6. Compensation Upon Termination
(a) If Company shall terminate Executive's employment for any reason
other than an Enumerated Reason as set forth in Section 6(d) hereof or if
Executive resigns for Good Reason pursuant to Section 5(b) hereof, then so long
as Executive complies with Section 8 hereof Executive shall be entitled to the
(i) Continued salary payments (less applicable withholdings) for
a period of thirty-six (36) months from the date of termination at the
rate and in the manner in effect on such date (unless employment is
terminated by Executive for Good Reason pursuant to Section 5(b) hereof
as a result of a salary reduction in which case salary payments shall
continue at the rate in effect prior to such reduction).
(ii) Continued participation in the Company's health benefit
plans during the severance period, provided if Executive is provided
with similar coverage by a successor employer, any such coverage by the
Company shall cease;
(iii) Continued use of Company automobile until the then
existing auto lease term expires; and
(iv) Waiver of collateral interest securing return to Company of
premium for Executive's existing Split Dollar Life Insurance Policy.
If a Change of Control shall have occurred prior to the date of
termination, Executive shall be entitled at her option, exercisable in writing
within fifteen days of the date of termination, to receive the equivalent of the
thirty-six (36) months' salary continuation pursuant to subsection (i) above in
two equal lump sum installments, the first payable within 30 days of the date of
termination and the second on the first anniversary of the date of termination.
As used herein, the term 'Change of Control' shall mean Ralph Lauren or members
of his family (or trusts created for their benefit) no longer control 50% or
more of the voting power of the then outstanding securities of the Company
entitled to vote for the election of the Company's Directors.
(b) If the Executive's employment is terminated by her death, the
Company shall pay any amounts due to the Executive through the date of her
(c) If the Executive's employment shall be terminated by the Company
pursuant to Section 6(d)(ii) or (iii) for an Enumerated Reason or by the
Executive for other than Good Reason, the Company shall pay the Executive her
full salary through the date of termination at the rate in effect at the time
Notice of Termination is given and the Company shall have no further
obligations to the Executive under this Agreement but Executive shall be bound
by Section 8 hereof.
(d) The term 'Enumerated reason' with respect to termination by the
Company of Executive's employment shall mean any one of the following reasons:
(i) Death. The Executive's employment hereunder shall terminate
upon her death.
(ii) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness, the Executive shall have been absent
from her duties hereunder on a full-time basis for the entire period of
six consecutive months, and within thirty (30) days after written Notice
of Termination is given (which may occur before or after the end of such
six month period) shall not have returned to the performance of her
duties hereunder on a full-time basis, the Company may terminate the
Executive's employment hereunder.
(iii) Cause. The Company shall have 'Cause' to terminate the
Executive's employment hereunder upon (1) the willful and continued
failure by the Executive to substantially perform her duties hereunder
after demand for substantial performance is delivered by the Company
that specifically identifies the manner in which the Company believes
the Executive has not substantially performed her duties, or (2)
Executive's conviction of any crime (whether or not involving the
Company) constituting a felony or (3) the willful engaging by the
Executive in misconduct which is materially injurious to the Company,
monetarily or otherwise (including, but not limited to, conduct that
constitutes competitive activity, as defined in Section 8) or which
subjects, or if generally known, would subject the Company to public
ridicule or embarrassment. For purposes of this paragraph, no act, or
failure to act, on the Executive's part shall be considered 'willful'
unless done, or omitted to be done, by her not in good faith and without
reasonable belief that her action or omission was in the best interest
of the Company. Notwithstanding the foregoing, the Executive shall not
be deemed to have been terminated for Cause without (x) reasonable
written notice to the Executive setting forth the reasons for the
Company's intention to terminate for Cause, (y) an opportunity for the
Executive, together with her counsel, to be heard before the Board, and
(z) delivery to the Executive of a Notice of Termination, as defined in
Section 5(c) hereof, from the Board finding that in the good faith
opinion of the Board the Executive was guilty of conduct set forth above
in clauses (1)-(3) hereof, and specifying the particulars thereof in
7. Mitigation. Executive shall have no duty to mitigate the
payments provided for in Section 6(a) by seeking other employment or otherwise
and such payment shall not be subject to reduction for any compensation received
by Executive from employment in any capacity following the termination of
Executive's employment with the Company.
(a) Executive agrees that for the duration of her employment and
for a period of three (3) years from the date of termination thereof, she will
not, on her own behalf or on behalf of any other person or entity, hire,
solicit, or encourage
to leave the employ of the Company or its subsidiaries or affiliates any person
who is an employee of any of such companies.
(b) Executive agrees that for the duration of her employment and
for a period of three (3) years from the date of termination thereof, Executive
will take no action which is intended, or would reasonably be expected, to harm
(e.g., making public derogatory statements or misusing confidential Company
information, it being acknowledged that Executive's employment with a competitor
in and of itself shall not be deemed to be harmful to the Company) the Company
or any of its subsidiaries or their reputation.
9. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, the 'Company' shall mean the Company
as hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section
9 or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts are payable to her hereunder all such amounts unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. Notice. For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when personally delivered with
receipt acknowledged or five business days after having been mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Cheryl L. Sterling
106 Central Park South
New York, New York 10019
If to the Company:
Polo Ralph Lauren Corporation
650 Madison Avenue
New York, New York 10022
Attention: General Counsel
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
11. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York without regard to its conflicts of law principles.
12. Validity. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. Arbitration. any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
the City of New York before a single arbitrator in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however,
that the Company shall be entitled to seek a restraining order or injunction in
any court of competent jurisdiction to prevent any continuation of any
violation of the provisions of Section 8 of this Agreement and the Executive
hereby consents that such restraining order or injunction may be granted
without the necessity of the Company's posting any bond, and provided further
that the Executive shall be entitled to seek specific performance of her right
to be paid until the date of termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement. Fees and
expenses payable to the American Arbitration Association and the arbitrator
shall be shared equally by the Company and by the Executive, but the parties
shall otherwise bear their own costs in connection with the arbitration;
provided that the arbitrator shall be entitled to include as part of the award
to the prevailing party the reasonable legal fees and expenses incurred by such
party in an amount not to exceed $25,000.
15. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior
agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and canceled.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and the Executive has hereunto set her hand, effective as of the 26th
day of October, 1993.
POLO RALPH LAUREN CORPORATION
By /s/ Peter Strom
/s/ Cheryl L. Sterling
Executive: Cheryl L. Sterling