Exhibit 10.5


 





 


	
   

  	
  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


 


 


John DeWolf


 


Re:  Letter Agreement of
Employment


 


Dear John:


 


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, Real Estate. 
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 $350,000 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


 


1

















 


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) month “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


 


2

















 


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:


 


3

















 


(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.


 


4

















 


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 of 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


 


5

















 


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


 


6

















 


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/ John DeWolf

  	
   

  	
  Dated:

  	
  March 13, 2006

  
	
  John DeWolf

  	
   

  	
   

  	
   

  
	
  Executive Vice President,
  Real Estate

  	
   

  	
   

  	
   

  
						



 


7