Exhibit 10.16


 


EMPLOYMENT AGREEMENT


 


                EMPLOYMENT
AGREEMENT (“Agreement”) dated as of May 1, 2006 between Rafaella Apparel Group,
Inc. (the “Company”) and Nichole Voterwas (the “Employee”) (together, the
“Parties”).


 


                WHEREAS, the
Parties wish to establish the terms of Employee’s employment with the Company.


Accordingly, the Parties agree as follows:


 


                1.             Term.  This Agreement and the employment
relationship hereunder shall commence on May 1, 2006 (the “Effective Date”) and
continue from the Effective Date until the Executive’s employment terminates in
accordance with Section 4 of the Agreement. 
As used in this Agreement, the “Term” shall refer to the period
beginning on the Effective Date and ending on the date the Executive’s
employment terminates in accordance with Section 4 of the Agreement.  In the event that the Executive’s employment
with the Company terminates, the Company’s obligation to continue to pay all
base salary, as adjusted, bonus and other benefits then accrued shall terminate
except as may be provided for in Section 5 of this Agreement.


 


                2.             Duties and Title.


 


                                2.1           Title.  The Company shall employ the Employee to
render exclusive and full-time services to the Company and its
subsidiaries.  The Employee shall serve
in the capacity of Vice President Sourcing and Production of the Company, and
shall report to the Chief Executive Officer of the Company (the “CEO”).


 


                                2.2           Duties.  The Employee will have such authority and
responsibilities and will perform such duties customarily performed by a vice
president sourcing and production of a company in similar lines of business as
the Company and its subsidiaries or as may be assigned to the Employee by the
CEO.  The Employee will devote all her
full working-time and attention to the performance of such duties and to the
promotion of the business and interests of the Company and its subsidiaries.


 


                3.             Compensation and Benefits by the
Company.  As compensation for all
services performed by the Employee for the Company and its subsidiaries, the
Company shall provide the Employee the following during the Term:


 


                                3.1           Base Salary.  The Company will pay to the Employee an
annual base salary of $400,000, payable in accordance with the customary
payroll practices of the Company (“Base Salary”).  The current Base Salary shall be reviewed
annually.


 


                                3.2           Bonuses.  The Employee will be eligible to receive an
annual bonus (“Bonus”) based on annual pre-tax profits under a plan established
by the Company.  The Employee’s target
bonus shall be 50% of Base Salary, with the actual amount of each Bonus being
determined as provided under the plan. 
The Bonus will be paid on September 30th of the Company’s fiscal year
following the Company’s fiscal year in which the services required for payment
have been performed.  Notwithstanding the
foregoing, the minimum Bonus for the first year during the Term shall be
$50,000, payable in two equal installments. 
The first installment 


 

















 


will be paid on August 1, 2006, and the second installment will be paid
no later than September 30, 2007; provided in each case that the Employee is an
employee of the Company in good standing on the payment date.


 


                                3.3           Participation in Employee Benefit
Plans.  The Employee shall be
entitled, if and to the extent eligible, to participate in all of the
applicable benefit plans of the Company, which may be available to other senior
management employees of the Company, on the same terms as such other senior
management employees.  The Company may at
any time or from time to time amend, modify, suspend or terminate any employee
benefit plan, program or arrangement for any reason without the Employee’s
consent if such amendment, modification, suspension or termination is
consistent with the amendment, modification, suspension or termination for
other employees of the Company.  In
addition, the Employee will be eligible to participate in the executive
management option plan, which may be implemented at the discretion of the Board
of Directors of the Company.


 


                                3.4           Vacation.  The Employee shall be entitled to three (3)
weeks of paid vacation annually. 
Vacation days may not be carried over from one year to the next.


 


                                3.5           Expense Reimbursement.  The Employee shall be entitled to receive
reimbursement for all appropriate business expenses incurred by her in connection
with her duties under this Agreement in accordance with the policies of the
Company as in effect from time to time.


 


                                3.6           Equity Grant.  The Employee shall be eligible to participate
in the Company’s Equity Incentive Plan (the “Equity Incentive Plan”).  The Employee shall receive an initial grant
under the Equity Incentive Plan representing 1.0% of the value of the
outstanding capital stock of the Company on a fully-diluted, as converted basis
as of the Effective Date.  The equity
award shall be subject to the terms and conditions of the Equity Incentive Plan
and an award agreement between the Company and the Employee.


 


                4.             Termination of Employment.


 


                                4.1           The Employee’s employment shall
terminate immediately upon her death.


 


                                4.2           The Employee’s employment shall
terminate upon the Employee’s “Disability.” 
For the purposes of this Agreement, “Disability” means a determination
by the Company in accordance with applicable law that as a result of a physical
or mental injury or illness, the Employee is unable to perform the essential
functions of her job with or without reasonable accommodation for a period of
(i) 90 consecutive days; or (ii) 180 days in any one (1) year period.


 


                                4.3           By the Company.  The Company may terminate the Employee’s
employment at any time during the Term with or without “Cause,” upon written
notice by the Company to the Executive, and the Executive’s employment will
terminate on the date specified in such written notice.


 


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                                For the purposes of this
Agreement, “Cause” means (i) commission of a felony by the Employee; (ii) acts
of dishonesty by the Employee resulting or intending to result in personal gain
or enrichment at the expense of the Company or its subsidiaries; (iii) the
Employee’s material breach of her obligations under this Agreement; (iv)
conduct by the Employee in connection with her duties hereunder that is
fraudulent, unlawful or grossly negligent, including, but not limited to, acts
of discrimination; (v) engaging in personal conduct by the Employee (including
but not limited to employee harassment or discrimination, the use or possession
at work of any illegal controlled substance) which seriously discredits or
damages the Company or its subsidiaries; (vi) contravention of specific lawful
direction from the CEO or continuing inattention to or continuing failure to
adequately perform the duties to be performed by the Employee under the terms
of Section 2.2 of this Agreement; or (vii) breach of the Employee’s covenants
set forth in Section 6 below before termination of employment; provided, that,
the Employee shall have fifteen (15) days after notice from the Company to cure
the deficiency leading to the Cause determination (except with respect to (i)
above), if curable.  A termination for
“Cause” shall be effective immediately (or on such other date set forth by the
Company).


 


                                4.4           By the Employee.  The Employee may terminate her employment
with the Company at any time during the Term for any reason, upon thirty (30)
days written notice by the Employee to the Company.


 


                5.             Severance Payment.


 


                                5.1           By the Company for Cause or by the
Employee for any reason or Due to Death or Disability.  If: (i) the Employee’s employment terminates
due to her death; (ii) the Company terminates the Employee’s employment with
the Company for Cause; (iii) the Company terminates the Employee’s employment
with the Company due to the Employee’s Disability; or (iv) the Employee
terminates her employment for any reason, then the Employee or the Employee’s
legal representatives (as appropriate), shall be entitled to receive the
following:


 


                                                (a)           the Employee’s accrued but unpaid
Base Salary, if any, to the date of termination, payable within thirty (30)
days after the termination of the Employee’s employment;


 


                                                (b)           the unpaid portion of the Bonus, if
any, relating to the fiscal year prior to the fiscal year of the Employee’s
death, Disability, resignation or termination by the Company for Cause, payable
in accordance with Section 3.2; and


 


                                                (c)           expenses reimbursable under Section
3.5 incurred but not yet reimbursed to the Executive to the date of
termination, payable within thirty (30) days after the termination of the
Employee’s employment; and


 


                                                (d)           any rights the Employee may have under
the Company’s benefit plans and the Consolidated Omnibus Budget Reconciliation
Act.


 


                                5.2           By the Company Without Cause.  If during the Term the Company terminates
Executive’s employment without Cause (which may be done at any time without
prior notice), then, in addition to the payments upon termination specified in
Section 5.1, the


 


 


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Employee shall receive, upon execution without revocation of a valid
release agreement in a form reasonably acceptable to the Company, continued
payment of Base Salary for a period of six months following the date of
termination.


 


                6.             Restrictions and Obligations of
the Employee.


 


                                6.1           Confidentiality.  (a) 
During the course of the Employee’s service relationship with the
Company and its affiliates, the Employee will have access to certain trade
secrets and confidential information relating to the Company and its
subsidiaries (the “Protected Parties”) which is not readily available from
sources outside the Company.  The confidential
and proprietary information and, in any material respect, trade secrets of the
Protected Parties are among their most valuable assets, including but not
limited to, their customer, supplier and vendor lists, databases, competitive
strategies, computer programs, frameworks, or models, their marketing programs,
their sales, financial, marketing, training and technical information, their
product development (and proprietary product data) and any other information,
whether communicated orally, electronically, in writing or in other tangible
forms concerning how the Protected Parties create, develop, acquire or maintain
their products and marketing plans, target their potential customers and
operate their retail and other businesses. 
The Protected Parties invested, and continue to invest, considerable
amounts of time and money in their process, technology, know-how, obtaining and
developing the goodwill of their customers, their other external relationships,
their data systems and data bases, and all the information described above
(hereinafter collectively referred to as “Confidential Information”), and any
misappropriation or unauthorized disclosure of Confidential Information in any
form would irreparably harm the Protected Parties.  The Employee acknowledges that such
Confidential Information constitutes valuable, highly confidential, special and
unique property of the Protected Parties. 
The Employee shall hold in a fiduciary capacity for the benefit of the
Protected Parties all Confidential Information relating to the Protected
Parties and their businesses, which shall have been obtained by the Employee
during the Employee’s employment by the Company or its subsidiaries and which
shall not be or become public knowledge (other than by acts by the Employee or
representatives of the Employee in violation of this Agreement).  Except as required by law or an order of a
court or governmental agency with jurisdiction, the Employee shall not, during
the period the Employee is employed by the Company or its subsidiaries or at
any time thereafter, disclose any Confidential Information, directly or
indirectly, to any person or entity for any reason or purpose whatsoever, nor
shall the Employee use it in any way, except in the course of the Employee’s
employment with, and for the benefit of, the Protected Parties or to enforce
any rights or defend any claims hereunder or under any other agreement to which
the Employee is a party, provided that such disclosure is relevant to the
enforcement of such rights or defense of such claims and is only disclosed in
the formal proceedings related thereto. 
The Employee shall take all reasonable steps to safeguard the
Confidential Information and to protect it against disclosure, misuse, espionage,
loss and theft.  The Employee understands
and agrees that the Employee shall acquire no rights to any such Confidential
Information.


 


                                                (b)           All files, records, documents,
drawings, specifications, data, computer programs, evaluation mechanisms and
analytics and similar items relating thereto or to the Business (for the
purposes of this Agreement, “Business” shall be as defined in Section 6.3
hereof), as well as all customer lists, specific customer information,
compilations of product research and marketing techniques of the Company and
its subsidiaries, whether prepared by the Employee or otherwise coming into the
Employee’s possession, shall remain the exclusive


 


 


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property of the Company and its subsidiaries, and the Employee shall not
remove any such items from the premises of the Company and its subsidiaries,
except in furtherance of the Employee’s duties under any employment agreement.


 


                                                (c)           It is understood that while employed
by the Company or its subsidiaries, the Employee will promptly disclose to it,
and assign to it the Employee’s interest in any invention, improvement or
discovery made or conceived by the Employee, either alone or jointly with
others, which arises out of the Employee’s employment.  At the Company’s request and expense, the
Employee will assist the Company and its subsidiaries during the period of the
Employee’s employment by the Company or its subsidiaries and thereafter in
connection with any controversy or legal proceeding relating to such invention,
improvement or discovery and in obtaining domestic and foreign patent or other
protection covering the same.


 


                                                (d)           As requested by the Company and at
the Company’s expense, from time to time and upon the termination of the
Employee’s employment with the Company for any reason, the Employee will
promptly deliver to the Company and its subsidiaries all copies and
embodiments, in whatever form, of all Confidential Information in the
Employee’s possession or within her control (including, but not limited to, memoranda,
records, notes, plans, photographs, manuals, notebooks, documentation, program
listings, flow charts, magnetic media, disks, diskettes, tapes and all other
materials containing any Confidential Information) irrespective of the location
or form of such material.  If requested
by the Company, the Employee will provide the Company with written confirmation
that all such materials have been delivered to the Company as provided herein.


 


                                6.2           Non-Solicitation or Hire.  During the Term and for a period of six (6)
months following the termination of the Employee’s employment for any reason,
the Employee shall not directly or indirectly solicit or attempt to solicit or
induce, directly or indirectly, (a) any party who is a customer of the Company
or its subsidiaries, or who was a customer of the Company or its subsidiaries
at any time during the twelve (12) month period immediately prior to the date
the Employee’s employment terminates, for the purpose of marketing, selling or
providing to any such party any services or products offered by or available
from the Company or its subsidiaries, (b) any supplier to the Company or any
subsidiary to terminate, reduce or alter negatively its relationship with the
Company or any subsidiary or in any manner interfere with any agreement or
contract between the Company or any subsidiary and such supplier or (c) any
employee of the Company or any of its subsidiaries or any person who was an
employee of the Company or any of its subsidiaries during the twelve (12) month
period immediately prior to the date the Employee’s employment terminates to
terminate such employee’s employment relationship with the Protected Parties in
order, in either case, to enter into a similar relationship with the Employee,
or any other person or any entity in competition with the Business of the
Company or any of its subsidiaries.


 


                                6.3           Non-Competition.  During the Term and for a period of six (6)
months following the termination of Employee’s employment by the Company (for
any reason), the Employee shall not, whether individually, as a director,
manager, member, stockholder, partner, owner, employee, consultant or agent of
any business, or in any other capacity, other than on behalf of the Company or
a subsidiary, organize, establish, own, operate, manage, control, engage in,
participate in, invest in, permit her name to be used by, act as a consultant
or advisor to, render services for (alone or in association with any person,
firm, corporation or


 


 


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business organization), or otherwise assist any person or entity that
engages in or owns, invests in, operates, manages or controls any venture or
enterprise which engages or proposes to engage in the women’s career and casual
separates clothing business in the geographic locations where the Company and
its subsidiaries engage or propose to engage in such business (the
“Business”).  Notwithstanding the
foregoing, nothing in this Agreement shall prevent the Employee from owning for
passive investment purposes not intended to circumvent this Agreement, less
than five percent (5%) of the publicly traded common equity securities of any
company engaged in the Business (so long as the Employee has no power to
manage, operate, advise, consult with or control the competing enterprise and
no power, alone or in conjunction with other affiliated parties, to select a
director, manager, general partner, or similar governing official of the
competing enterprise other than in connection with the normal and customary
voting powers afforded the Employee in connection with any permissible equity
ownership).


 


                                6.4           Property.  The Employee acknowledges that all originals
and copies of materials, records and documents generated by her or coming into
her possession during her employment by the Company or its subsidiaries are the
sole property of the Company and its subsidiaries (“Company Property”).  During the Term, and at all times thereafter,
the Employee shall not remove, or cause to be removed, from the premises of the
Company or its subsidiaries, copies of any record, file, memorandum, document,
computer related information or equipment, or any other item relating to the
business of the Company or its subsidiaries, except in furtherance of her
duties under the Agreement.  When the
Employee’s employment with the Company terminates, or upon request of the
Company at any time, the Employee shall promptly deliver to the Company all
copies of Company Property in her possession or control.


 


                7.             Nondisparagement.  The Employee agrees that she will not at any
time (whether during or after the Term) publish or communicate to any person or
entity any Disparaging (as defined below) remarks, comments or statements
concerning the Company, Cerberus Capital Management, L.P., their parents, subsidiaries
and affiliates, and their respective present and former members, partners,
directors, officers, shareholders, employees, agents, attorneys, successors and
assigns.  “Disparaging” remarks, comments
or statements are those that impugn the character, honesty, integrity or
morality or business acumen or abilities in connection with any aspect of the
operation of business of the individual or entity being disparaged.


 


                8.             Remedies; Specific Performance.  The Parties acknowledge and agree that the
Employee’s breach or threatened breach of any of the restrictions set forth in
Section 6 will result in irreparable and continuing damage to the Protected
Parties for which there may be no adequate remedy at law and that the Protected
Parties shall be entitled to equitable relief, including specific performance
and injunctive relief as remedies for any such breach or threatened or
attempted breach.  The Employee hereby
consents to the grant of an injunction (temporary or otherwise) against the
Employee or the entry of any other court order against the Employee prohibiting
and enjoining her from violating, or directing her to comply with any provision
of Section 6.  The Employee also agrees
that such remedies shall be in addition to any and all remedies, including damages,
available to the Protected Parties against her for such breaches or threatened
or attempted breaches.  In addition,
without limiting the Protected Parties’ remedies for any breach of any
restriction on the Employee set forth in Section 6, except as required by law,
the Employee shall not be entitled to any payments set forth in Section 5.2
hereof if the Employee has breached the covenants applicable to the Employee
contained in Section 6, the Employee will immediately return to the Protected
Parties any such payments


 


 


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previously received under Section 5.2 upon such a breach, and, in the
event of such breach, the Protected Parties will have no obligation to pay any
of the amounts that remain payable by the Company under Section 5.2.


 


                9.             Other Provisions.


 


                                9.1           Notices.  Any notice or other communication required or
which may be given hereunder shall be in writing and shall be delivered
personally, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid or overnight mail and shall be deemed given when
so delivered personally, or sent by facsimile transmission or, if mailed, four
(4) days after the date of mailing or one (1) day after overnight mail, as
follows:


 


                                                (a)           If the Company, to:


 


Rafaella Apparel Group, Inc.


1411 Broadway

New York, New York  10018


Attention: 
Secretary


Telephone: 
(212) 403-0300

Fax  (212) 764-9275


 


                                                (b)           If the Employee, to the Employee’s
home address reflected in the Company’s records.


 


                                9.2           Entire Agreement.  This Agreement contains the entire agreement
between the Parties with respect to the subject matter hereof and supersedes
all prior agreements, written or oral, with respect thereto.


 


                                9.3           Representations and Warranties by
Employee.  The Employee represents
and warrants that she is not a party to or subject to any restrictive
covenants, legal restrictions or other agreements in favor of any entity or
person which would in any way preclude, inhibit, impair or limit the Employee’s
ability to perform her obligations under this Agreement, including, but not
limited to, non-competition agreements, non-solicitation agreements or
confidentiality agreements.


 


                                9.4           Waiver and Amendments.  This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the Parties or, in the
case of a waiver, by the party waiving compliance.  No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any right, power or privilege
hereunder, nor any single or partial exercise of any right, power or privilege
hereunder, preclude any other or further exercise thereof or the exercise of
any other right, power or privilege hereunder.


 


 


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                                9.5           Governing Law, Dispute Resolution
and Venue.


 


                                                (a)           This Agreement shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and not to be performed entirely within such state, without
regard to conflicts of laws principles.


 


                                                (b)           The parties agree irrevocably to
submit to the exclusive jurisdiction of the federal courts or, if no federal
jurisdiction exists, the state courts, located in the City of New York, Borough
of Manhattan, for the purposes of any suit, action or other proceeding brought
by any party arising out of any breach of any of the provisions of this
Agreement and hereby waive, and agree not to assert by way of motion, as a
defense or otherwise, in any such suit, action, or proceeding, any claim that
it is not personally subject to the jurisdiction of the above-named courts,
that the suit, action or proceeding is brought in an inconvenient forum, that
the venue of the suit, action or proceeding is improper, or that the provisions
of this Agreement may not be enforced in or by such courts.  In addition, the parties agree to the waiver
of a jury trial.


 


                                9.6           Assignability by the Company and
the Employee.  This Agreement, and
the rights and obligations hereunder, may not be assigned by the Company or the
Employee without written consent signed by the other party; provided that the
Company may assign the Agreement to any successor that continues the business
of the Company.


 


                                9.7           Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.


 


                                9.8           Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.


 


                                9.9           Severability.  If any term, provision, covenant or
restriction of this Agreement, or any part thereof, is held by a court of
competent jurisdiction of any foreign, federal, state, county or local
government or any other governmental, regulatory or administrative agency or
authority to be invalid, void, unenforceable or against public policy for any
reason, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected or impaired or invalidated.  The
Employee acknowledges that the restrictive covenants contained in Section 6 are
a condition of this Agreement and are reasonable and valid in temporal scope
and in all other respects.


 


                                9.10         Judicial Modification.  If any court determines that any of the
covenants in Section 6, or any part of any of them, is invalid or
unenforceable, the remainder of such covenants and parts thereof shall not
thereby be affected and shall be given full effect, without regard to the
invalid portion.  If any court determines
that any of such covenants, or any part thereof, is invalid or unenforceable
because of the geographic or temporal scope of such provision, such court shall
reduce such scope to the minimum extent necessary to make such covenants valid
and enforceable.


 


                                9.11         Tax Withholding.  The Company or other payor is authorized to
withhold from any benefit provided or payment due hereunder, the amount of
withholding taxes


 


 


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due any federal, state or local authority in respect of such benefit or
payment and to take such other action as may be necessary in the opinion of the
Board to satisfy all obligations for the payment of such withholding taxes.


 


                IN WITNESS
WHEREOF, the Parties hereto, intending to be legally bound hereby, have
executed this Agreement as of the day and year first above mentioned.


 


 


	
   

  	
  EMPLOYEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Nichole Voterwas

  	
   

  
	
   

  	
  Name: Nichole Voterwas

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RAFAELLA APPAREL GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christa Michalaros

  	
   

  
	
   

  	
   

  	
  Name: Christa Michalaros

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  
					



 


 


 


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