Exhibit 10.3

 

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450 WEST 33RD STREET

 

NEW YORK, NY 10001

 

212 884 2000 P

 

212 884 2396 F

 

NEW YORK & COMPANY

450 West 33rd Street

New York, NY 10001

 

 

Robert Luzzi

 

Re:  Letter Agreement of Employment

 

Dear Bob:

 

This letter agreement (this “Agreement”) sets forth the terms and conditions of
your employment, and your employment relationship, with Lerner New York, Inc.
(the “Company”).  Your execution of this Agreement will represent your
acceptance of all of the terms set forth below and will supercede any other
Letter Agreement of Employment entered into prior to this Agreement.

 

1.             Nature of Agreement and Relationship.  This Agreement does not
represent an employment contract for any specified term.  Your employment
relationship thus will remain “at-will,” meaning that, subject to the terms
hereof, either party to this Agreement may terminate the employment relationship
at any time for any lawful reason.

 

2.             Job Title and Duties.  Your job title will be Executive Vice
President, Creative Services.  You will be expected to devote all of your full
time efforts to the performance of the duties and responsibilities normally
associated with this position, including those from time-to-time that may be
assigned to you by your Supervisor, the President, the Chief Executive Officer,
the Chief Operating Officer or the Board of Directors of the Company (or the
designee of any of the foregoing).

 

3.             Salary.  For the 12-month period ending on the last Saturday of
each January (the last day of the fiscal year), you will receive a base salary
at the rate of $485,000 per annum (“Base Salary”), subject to the remaining
provisions of this Section.   For the remainder of the current fiscal year
starting on the date of this Agreement, your Base Salary will be pro rated based
on the number of days remaining in such fiscal year divided by 365.  At the
Company’s sole discretion, your Base Salary may be increased or decreased based
on your performance and the performance of the business.  You will be paid in
accordance with the Company’s normal payroll policies and practices, with all
applicable deductions being withheld from your paychecks.

 

4.             Bonus.  You will be eligible to participate in the Company’s then
current bonus plan, in accordance with its terms and conditions, and to receive
performance-based bonuses pursuant to any formula that may be established.  For
the Company’s current fiscal year, your bonus target for the spring bonus
(relating to the Company’s results for the first and second fiscal quarters of
each fiscal year) will be 24% of your Base Salary and for the fall bonus
(relating to the Company’s results for the third and fourth fiscal quarters of
each fiscal year) will be 36% of your Base Salary.  Any bonus will be payable in
the month following the last quarter to which that bonus relates.  All bonuses
are determined at the Company’s sole discretion, and the Company

 

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has the sole discretion to modify or terminate any bonus plan and that plan will
govern your right, if any, to a bonus payment upon termination of your
employment.

 

5.             Stock Options and Other Long-Term Incentives.  You will be
eligible to receive awards under stock option, restricted stock or other
equity-based long-term incentive plans established by the Company (or an
Affiliate) that cover executive officers of the Company.  The term “Affiliate”
means any corporation, partnership, limited liability company or other entity
(other than the Company) that controls or is controlled by the Company, whether
directly or indirectly, such as a parent company or subsidiary.  All equity
awards described in this paragraph are determined at the Company’s sole
discretion, and the Company has the sole discretion to modify or terminate any
stock option, restricted stock or other equity-based long-term incentive plan
and that plan will govern your rights, if any, relating to any equity award(s)
you have received, or may be entitled to receive, upon termination of your
employment.

 

6.             Employee Benefits.  You will be entitled to participate in all
employee benefits plans, practices and programs maintained by the Company and
made available to senior executives generally and as may be in effect from time
to time (the “Benefits Plans”).  Your participation in the Benefits Plans will
be on the same basis and terms as are applicable to senior executives of the
Company generally.  Benefits Plans include, but are not limited to, savings and
retirement plans, deferred compensation, health and prescription drug benefits,
disability benefits, other insurance programs, vacation and other leave,
merchandise discounts and business expense procedures.  Plan documents setting
forth terms of certain of the Benefits Plans are available upon request, which
plan documents control all questions of interpretation concerning applicable
Benefits Plans, including your rights, if any, upon termination of your
employment.  The Benefits Plans are subject to modification or termination by
the Company at any time, at its sole discretion, in accordance with their terms.

 

7.             Severance Pay.  Upon your termination of employment by the
Company and all Affiliates without Cause (as defined below), but subject to your
performance of all post-employment obligations set forth in this Agreement and
also subject to your signing a release of claims in a form acceptable to the
Company, you will be entitled to receive severance pay for twelve (12) months
“Severance Period” at your final Base Salary (“Severance Pay”), beginning the
first pay period following your separation date and ending upon the earlier of: 
(i)  your receipt of 52 such payments or (ii) your first day of employment with
another employer, whichever is earlier.  If you obtain employment at an annual
salary that is lower than your final Base Salary, you will continue to receive
the differential between the two rates of pay for the balance of the 52 weeks.
This Severance Pay, which will be subject to applicable deductions required by
law, will be paid on the Company’s regular payroll dates for the balance of the
twelve (12) month “Severance Period” following your termination date, as
outlined above.  For purposes of this Agreement, “Cause” means: (i) your
wrongful misappropriation of the Company’s or an Affiliate’s assets of a
material value; (ii) any physical or mental impairment that renders you
incapable of performing the essential functions of your position with reasonable
accommodations; (iii) your conviction of, or pleading “guilty” or “no contest”
to, a felony; (iv) your intentionally causing the Company or an Affiliate to
violate a material local state or federal law in any material respect; (v) your
willful refusal to comply with a significant, lawful and proper policy,
directive or decision of your supervisor or the Board in furtherance of a
legitimate business purpose or your willful refusal to perform the duties
reasonably assigned to you consistent with your functions, duties and
responsibilities, in each case, in any material respect, and only if not
remedied within thirty (30) days after receipt of written notice from the
Company; or (vi) your breach of this Agreement, in any material respect, not
remedied within thirty (30) days after receipt of written notice from the
Company.

 

8.             Confidential Information, Intellectual Property.

 

8.1           Confidentiality.  You agree to not disclose, distribute, publish,
communicate or in any way cause to be disclosed, distributed, published, or
communicated in any way or at any time, Confidential Information (as defined
herein), or any part of

 

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Confidential Information, to any person, firm, corporation, association, or any
other operation or entity except on behalf of the Company in performance of your
duties and responsibilities for the Company, and then only in a fashion
consistent with protecting the Confidential Information from unauthorized use or
disclosure, except as otherwise approved by the Company.  You further agree not
to use or permit the reproduction of any Confidential Information except on
behalf of the Company in your capacity as an employee of the Company.  You agree
to take all reasonable care to avoid the unauthorized disclosure or use of any
Confidential Information.  You assume responsibility for and agree to indemnify
and hold harmless the Company from and against any disclosure or use of the
Confidential Information in violation of this Agreement.

 

8.2           Confidential Information.  For the purpose of this Agreement,
“Confidential Information” shall mean any written or unwritten information which
relates to and/or is used in the Company’s business (including, without
limitation, information related to the names, addresses, buying habits and other
special information regarding past, present and potential customers, employees
and suppliers of the Company; customer and supplier contracts and transactions
or price lists of the Company and suppliers; all agreements, files, books, logs,
charts, records, studies, reports, processes, schedules and statistical
information relating to the Company; all products, services, programs and
processes sold, and all computer software licensed or developed by the Company;
data, plans and specifications related to present and/or future development
projects of the Company; financial and/or marketing data respecting the conduct
of the present or future phases of business of the Company; computer programs,
computer- and/or web-based training programs, systems and/or software; ideas,
inventions, trademarks, business information, know-how, processes, techniques,
improvements, designs, redesigns, creations, discoveries and developments of the
Company; and finances and financial information of the Company) which the
Company deems confidential and proprietary, which is generally not known to
others outside the Company, or which gives or tends to give the Company a
competitive advantage over persons who do not possess such information or the
secrecy of which is otherwise of value to the Company in the conduct of its
business regardless of when and by whom such information was developed or
acquired, and regardless of whether any of these are described in writing,
copyrightable or considered copyrightable, patentable or considered patentable. 
“Confidential Information” shall not include general industry information or
information which is publicly available or otherwise known to those persons
outside the Company working in the area of the business of the Company or is
otherwise in the public domain without breach of this Agreement or information
which you have lawfully acquired without an obligation to maintain the
information in confidence from a source other than the Company.  “Confidential
Information” specifically includes information received by the Company from
others, including the Company’s clients, that the Company has an obligation to
treat as confidential and also includes any confidential information acquired or
obtained by you while in the employment of any of the Company’s subsidiary or
affiliated companies or any company which has been acquired by the Company.

 

8.3           Invention Ownership.  With respect to information, inventions and
discoveries developed, made or conceived by you, either alone or with others, at
any time during your employment by the Company and whether or not within normal
working hours, arising out of such employment or pertinent to any field of
business or research in which, during such employment, the Company is engaged or
(if such is known to or ascertainable by you) is considering engaging, you
agree:

 

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(a)           that all such information, inventions and discoveries, whether or
not patented or patentable, shall be and remain the sole property of the
Company;

 

(b)           to disclose promptly to an authorized representative of the
Company all such information, inventions and discoveries and all information in
your possession as to possible applications and uses thereof;

 

(c)           not to file any patent applications relating to any such invention
or discovery except with the prior consent of an authorized representative of
the Company; and

 

(d)           at the request of the Company, and without expense or additional
compensation to you, to execute such documents and perform such other acts as
the Company deems necessary, to obtain patents on such inventions in a
jurisdiction or jurisdictions designated by the Company, and to assign to the
Company or its designee such inventions and all patent applications and patents
relating thereto.

 

Both the Company and you intend that all original works of authorship within the
purview of the copyright laws of the United States authored or created by you in
the course of your employment with the Company will be works for hire within the
meaning of such copyright laws.

 

8.4           Confidentiality of Inventions; Return of Materials and
Confidential Information.  With respect to the information, inventions and
discoveries referred to in Section 8.3, and also with respect to all other
information, whatever its nature and form and whether obtained orally, by
observation, from graphic materials, or otherwise (except such as is generally
available through publication) obtained by you during or as a result of your
employment by the Company and relating to any product, service, process, or
apparatus or to any use of any of them, or to materials, tolerances,
specifications, costs (including manufacturing costs), prices, or to any plans
of the Company, you agree:

 

(a)           to hold all such information, inventions and discoveries in strict
confidence and not to publish or otherwise disclose any portion thereof except
with the prior consent of an authorized representative of the Company;

 

(b)           to take all reasonable precautions to ensure that all such
information, inventions, and discoveries are properly protected from access by
unauthorized persons;

 

(c)           to make no use of any such information, invention, or discovery
except as required or permitted in the performance of your duties and
responsibilities for the Company; and

 

(d)           upon termination of your employment by the Company, or at any time
upon request of the Company, to deliver to the Company all graphic materials and
all substances, models, prototypes and the like containing or relating to
Confidential Information or any such information, invention, or discovery, all
of which graphic materials and other things shall be and remain the sole
property of the Company.  The term “graphic materials” includes letters,
memoranda, reports, notes, notebooks, books of account, drawings, prints,
specifications, formulae, data printouts, microfilms, magnetic tapes and disks
and other documents and recordings, together with all copies thereof.

 

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9.             Non-Solicitation.  Regardless of whether you are eligible to
receive Severance Pay, you agree that, if your employment with the Company ends
for any reason, you will not, for a period if eighteen (18) months following
such termination of employment, (i) directly or indirectly, either for yourself
or for any other person, business, company or entity, hire from the Company or
any Affiliate, or attempt to hire, divert or take away from the Company or any
Affiliate, any of the then current officers or employees of the Company or any
Affiliate, (ii) interfere with or harm, or attempt to interfere with or harm,
the relationship of the Company or any Affiliate with any person who at any time
was an employee, customer or supplier of the Company or any Affiliate or
otherwise had a business relationship with the Company or any Affiliate, or
(iii) unless compelled by law to do so, directly or indirectly, knowingly make
any statement or other communication that impugns or attacks the reputation or
character of the Company or any Affiliate, or damages the goodwill of the
Company or any Affiliate, or knowingly take any action, directly or indirectly,
that would interfere with any contractual or customer or supplier relationships
of the Company or any Affiliate.

 

10.           Non-Competition. If you resign your employment, or if your
employment is terminated with Cause, for a period of eighteen (18) months
following such employment termination, you may not and will not, within the
United States of America, directly or indirectly, without the prior written
consent of the Company’s chief executive officer or its Board of Directors
(which may be given or withheld in its sole discretion), own, manage, operate,
join, control, be employed by, consult with or participate in the ownership,
management, operation or control of, or be connected with (as a stockholder,
partner or otherwise) any business, partnership, firm, company, corporation or
other entity engaged in the retail business of women’s fashion apparel, 
accessories and related products or any other product sold or intended to be
sold by the Company or an Affiliate during your employment with the Company. 
Notwithstanding the foregoing, your beneficial ownership after your termination
of employment with the Company, either individually or as a member of a group,
of not more than two percent (2%) of the voting stock of any publicly held
corporation shall not be a violation of this provision.

 

11.           Remedies.  You acknowledge that money will not adequately
compensate the Company for the substantial damages that will arise upon the
breach of any provision of Sections 8, 9 and 10 of this Agreement and that the
Company would have no adequate remedy at law.  For this reason, any claim the
Company may make that you have breached or are threatening to breach Sections 8,
9, or 10 is not subject to mandatory arbitration under Section 14.  Instead, if
you breach or threaten to breach any provision of Sections 8, 9 or 10, the
Company will be entitled, in addition to other rights and remedies, to specific
performance, injunctive relief and other equitable relief to prevent or restrain
any breach or threatened breach of Sections 8, 9 or 10.  The Company may obtain
such relief from (i) any court of competent jurisdiction, (ii) an arbitrator
acting pursuant to Section 14 hereof,  or (iii) a combination of the two (e.g.,
by simultaneously seeking arbitration under Section 14 and a temporary
injunction from a court pending the outcome of the arbitration).  It shall be
the Company’s sole and exclusive right to elect which approach to use to
vindicate its rights.  You also agree that in the event of a breach (or any
threat of breach) the Company shall be entitled to obtain an immediate
injunction and restraining order to prevent such breach and/or threatened breach
and/or continued breach, without having to prove damages, and to obtain all
costs and expenses, including reasonable attorneys’ fees and costs.  In
addition, the existence of any claim or cause of action by you against the
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of the restrictive covenants of this
Agreement.

 

12.           Acknowledgment of Reasonableness.  You and the Company
specifically agree that the provisions of the restrictive covenants contained in
this Agreement, including the post-employment covenants regarding
non-solicitation and non-competition, are reasonable and that the Company would
not have entered into this Agreement but for the inclusion of such covenants. 
You understand that the Company’s business is nationwide, and, therefore, a
nationwide restrictive covenant is reasonable.  If a court or arbitrator
determines that any provision of any such restrictive covenant is unreasonable,
whether in period of time, geographical area, or otherwise, you and the Company
agree that the covenant shall be

 

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interpreted and enforced to the maximum extent which a court or arbitrator deems
reasonable.  In addition, you and the Company authorize any such court or
arbitrator to reform these restrictions to the minimum extent necessary.

 

13.           Company Property.  Upon your termination of employment for any
reason, you will promptly return to the Company all Company-related documents
and Company property within your possession or control.

 

14.           Arbitration of Disputes.  Except as set forth in Section 11, any
dispute, claim or difference arising out of or in relation to your employment
will be settled exclusively by binding arbitration administered by the American
Arbitration Association under its National Rules for the Resolution of
Employment Disputes before a single arbitrator. The Executive expressly
understands and agrees that claims subject to arbitration under this section
include asserted violations of the Employee Retirement and Income Security Act
of 1974; the Age Discrimination in Employment Act; the Older Worker’s Benefit
Protection Act; the Americans with Disabilities Act; Title VII of the Civil
Rights Act of 1964 (as amended); the Family and Medical Leave Act; and any law
prohibiting discrimination, harassment or retaliation in employment, whether
based on federal, state or local law; any claim of breach of contract, tort,
promissory estoppel or detrimental reliance, defamation, intentional infliction
of emotional distress; or the public policy of any state, or any other federal,
state or local law. The arbitration will be held in New York, New York unless
you and the Company (each a “Party,” and jointly, the “Parties”) mutually agree
otherwise.  To the extent permitted by law, each Party will bear its own costs
and fees of the arbitration, and other fees and expenses of the arbitrator will
be borne equally by the Parties; provided, however, that the arbitrator will be
empowered to require any one or more of the Parties to bear all or any portion
of fees and expenses of the Parties and/or the fees and expenses of the
arbitrator in the event that the arbitrator determines such Party has acted in
bad faith.  The arbitrator will have the authority to award any remedy or relief
that a court of the State of New York could order or grant.  The decision and
award of the arbitrator will be binding on all Parties.  Either Party to the
arbitration may seek to have the ruling of the arbitrator entered in any court
having jurisdiction thereof.  Each Party agrees that it will not file suit,
motion, petition or otherwise commence any legal action or proceeding for any
matter which is required to be submitted to arbitration as contemplated herein,
except in connection with the enforcement of an award rendered by an arbitrator
and except to seek the issuance of an injunction or temporary restraining order
pending a final determination by the arbitrator.

 

15.           Post-Termination Cooperation.  As is required of you during
employment, you agree that during and after employment with the Company you
will, without expense or additional compensation to you, cooperate with the
Company or any Affiliate in the following areas:

 

15.1         Cooperation With the Company.  You agree [a] to be reasonably
available to answer questions for the Company’s (or any Affiliate’s) officers
regarding any matter, project, initiative or effort for which you were
responsible while employed by the Company and [b] to cooperate with the Company
(and with any Affiliate) during the course of all third-party proceedings
arising out of the Company’s (or any Affiliate’s) business about which you have
knowledge or information.  For purposes of this Agreement, [c] “proceedings”
includes internal investigations, administrative investigations or proceedings
and lawsuits (including pre-trial discovery and trial testimony) and
[d] ”cooperation” includes [i] your being reasonably available for interviews,
meetings, depositions, hearings and/or trials without the need for subpoena or
assurances by the Company (or any Affiliate), [ii] providing any and all
documents in your possession that relate to the proceeding, and [iii] providing
assistance in locating any and all relevant notes and/or documents.

 

15.2         Cooperation With Media.  You agree not to communicate with, or give
statements to, any member of the media (including print, television or radio
media) relating to

 

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any matter (including pending or threatened lawsuits or administrative
investigations) about which you have knowledge or information (other than
knowledge or information that is not Confidential Information as defined in
Section 8.2) as a result of employment with the Company.  You also agree to
notify the Chief Executive Officer or his designee immediately after being
contacted by any member of the media with respect to any matter affected by this
section.

 

16.           Entire Agreement.  This Agreement constitutes your entire
agreement with the Company relating to the subject mater hereof, and superseded
in its entirety any and all prior agreements, understandings or arrangements
with the Company.

 

17.           Governing Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York.

 

18.           Survival of Provisions.  Sections 8 to 12, 14, 15, 17 and 18 will
survive the termination of your employment for any reason and shall not be
affected by any transfer(s) between the Company and its Affiliate(s).

 

19.           Understandings and Representations.  You should not sign this
Agreement until you understand its terms and conditions.  Your execution of this
Agreement represents your acknowledgement that you have take all steps you
believe necessary, including consultation with financial and/or legal advisors
of your choice, to understand this Agreement.

 

 

Sincerely,

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

/s/ Richard P. Crystal

 

Dated:

March 13, 2006

Name:

Richard Crystal

 

 

 

 

Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Robert Luzzi

 

Dated:

March 13, 2006

Robert Luzzi

 

 

 

Executive Vice President, Creative

 

 

 

 

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