Exhibit 10.6


 


	
   

  	
  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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


 


Kevin Finnegan


 


Re:  Letter Agreement of Employment


 


Dear Kevin:


 


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, National Sales Leader.  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 $388,000  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 


 


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Company’s sole
discretion, and the Company 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
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 


 


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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:


 


(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 


 


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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.


 


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.  


 


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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 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 


 


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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 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: 

  	
  June 19, 2006

  
	
  Name:

  	
  Richard P. Crystal

  	
   

  	
   

  	
   

  
	
   

  	
  Chief Executive Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/
  Kevin Finnegan

  	
   

  	
  Dated:

  	
  May 30, 2006

  
	
  Kevin
  Finnegan

  	
   

  	
   

  	
   

  
	
  Executive
  Vice President, National Sales Leader

  	
   

  	
   

  	
   

  
						



 


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