SEVERANCE AGREEMENT
Exhibit 10.72
This Severance Agreement (the “Agreement”) is made as of March 31, 2008 between The Talbots,
Inc., a Delaware corporation (together with its subsidiaries, the “Company”) and Xxxx Xxxxxx (the
“Executive”). This Agreement sets forth the agreement of the parties relating to the severance
arrangements for the Executive under certain circumstances. Capitalized terms used in this
Agreement are defined in Section 7 hereof.
1. Severance Pay and Associated Benefits Upon a Qualified Termination.
(a) Severance Benefits. In the event of a Qualified Termination, and subject to the
terms of this Agreement, the Company will provide to the Executive the payments and benefits
described in this Section 1 (collectively, the “Severance Benefits”).
(b) Severance Pay. Subject to the terms of this Agreement, in the event of a
Qualified Termination, the Company will pay to the Executive severance pay in the gross amount
equal to 1.0 times the Executive’s annual base salary in effect immediately prior to such
termination (the “Severance Payment”), payable in equal installments in accordance with normal
Company payroll practices over a 12 month period beginning immediately following the Termination
Date (the “Severance Period”).
(c) Benefits Continuation. Subject to the terms of this Agreement, upon any such
Qualified Termination, the Company will also arrange for the Executive to continue to participate
(through COBRA or otherwise), on substantially the same terms and conditions as in effect for the
Executive (including any required employee contribution) immediately prior to such termination, in
the medical and dental programs provided to the Executive immediately prior to such termination
until the earlier of (i) the end of the Severance Period, or (ii) such time as the Executive is
eligible to be covered by comparable benefits of a subsequent employer. The Executive agrees to
notify the Company promptly if and when the Executive begins employment with another employer and
if and when the Executive becomes eligible to participate in any benefit or other welfare plans,
programs or arrangements of another employer. Executive agrees that any automobile/housing
allowance or other personal benefits provided by the Company to the Executive immediately prior to
such termination will cease as of the Termination Date. The Company, however, may choose to make
any separate arrangements with the Executive to assist with the transfer of any such benefits.
(d) Retirement Benefits. Nothing in this Agreement will modify or otherwise limit any
of the Executive’s rights and benefits as may exist under the terms of any qualified, nonqualified
or supplemental retirement, 401(k), savings or deferred compensation plans of the Company
(excluding any severance or severance compensation plans) (“Retirement Plans”), nor will any
benefits or amounts payable under any such Retirement Plans reduce or offset any Severance Benefits
afforded to the Executive under this Agreement.
(e) Equity Awards.
(i) If in the event of a Qualified Termination the Executive still holds one or more options
to purchase shares of Company stock which have not expired and have not been fully exercised, the
Executive (or his or her heirs or estate), at any time within 3 years after the Termination Date
(but in no event after the option has expired), may exercise any such options with respect to any
shares as to which the Executive could have exercised the options on the Termination Date.
(ii) The Executive agrees that until the expiration of 6 months from the Termination Date, the
Executive will not engage in the purchase or sale of the Company’s common stock (including without
limitation any “cashless exercise” of any stock options involving the sale of any Company common
stock as part of such option exercise) during any trading window “blackout” or “quiet period”
applicable to management level employees (“Quiet Period”); provided that in no event shall the
Executive be prohibited from making a purchase or sale of the Company’s stock or exercising stock
options for the Company’s stock if such sale, purchase or exercise is made pursuant to a written
plan for trading securities within the meaning of Rule 10b5-1 under the Securities Exchange Act of
1934, as amended (a “10b5-1 Trading Plan”), and such 10b5-1 Trading Plan is consistent with the
Company’s xxxxxxx xxxxxxx policy and has been approved by the Company. The Executive acknowledges
that the Company reserves the right to modify the Quiet Period from time to time in its sole and
absolute discretion. The Company will provide the Executive with notice of Quiet Periods and
changes thereto at the time it provides such notice to the Company’s management level employees.
In addition, the Executive agrees to notify the Company’s General Counsel prior to exercising any
options or trading in the Company’s common stock within such 6 month period following the
Termination Date to ascertain whether such transaction would violate any Quiet Period covered by
this subsection (e)(ii).
(f) Withholdings. The Company may deduct from the Executive’s Severance Payment and
any other payments otherwise due to the Executive, such withholding taxes and similar governmental
payments and charges as may be required.
(g) Timing for Payment; Section 409A Restrictions. Notwithstanding anything in this
Agreement to the contrary, it is the intention of the parties that this Agreement comply with
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and any regulations or
other guidance issued thereunder, and this Agreement and the payments of any benefits hereunder
will be operated and administered accordingly. Specifically, but not by limitation, the Executive
agrees that if, at the time of termination of employment, the Company is considered to be publicly
traded and the Executive is considered to be a specified employee, as defined in Section 409A (and
as determined as of December 31 preceding the Executive’s termination of employment, unless the
Executive’s termination of employment occurs prior to April 30, in which case the determination
will be made as of the second preceding December 31), then some or all of such payments to be made
under this Agreement as a result of the Executive’s termination of employment will be deferred for
no more than 6 months following such termination of employment, if and to the extent the delay in
such payments is necessary in order to comply with the requirements of Section 409A of the Code.
Upon expiration of such 6
month period (or, if earlier, the Executive’s death), any payments so withheld hereunder from
the Executive hereunder will be distributed to the Executive, with a payment of interest thereon
credited at a rate of prime plus 1% (with such prime rate to be determined as of the actual payment
date).
2. Release and Waiver.
The Company’s obligation to make the payments and provide the benefits to the Executive as set
forth in Section 1 above will be conditioned upon and subject to the Executive having delivered to
the Company an executed full and unconditional release (that is not subject to revocation) of any
and all claims against the Company, its parent entities, affiliates, employee benefit plans and
fiduciaries, and their respective officers, employees, directors, agents and representatives
satisfactory in form and content to the Company’s counsel.
3. Cooperation.
In connection with a Qualified Termination or any other termination of the Executive’s
employment, the Executive agrees to reasonably cooperate with the Company prior to and in the 60
day period immediately following the Termination Date, subject to the Executive’s other
commitments, in promptly transitioning the Executive’s duties and activities within the Company to
the person or persons designated by the Company to receive them.
4. Nondisparagement; Non-Solicitation; Confidentiality.
(a) Nondisparagement. In connection with a Qualified Termination or any other
termination of the Executive’s employment, Executive agrees not to take action or make any
statement, written or oral, in the 1 year period following the Termination Date which is intended
to materially disparage the Company or its business.
(b) Non-Solicitation. The Executive agrees that, during the 1 year period following a
Qualified Termination or any other termination of the Executive’s employment, the Executive will
not directly or indirectly solicit, attempt to hire, or hire any employee of the Company (or any
person who may have been employed by the Company during the last year of the term of the
Executive’s employment with the Company), or actively assist in such hiring by any other person or
business entity or encourage, induce or attempt to induce any such employee to terminate his or her
employment with the Company.
(c) Confidentiality. The Executive will not in any manner following a Qualified
Termination or any other termination of the Executive’s employment, directly or indirectly, without
the express prior written consent of the Company, disclose or use any Confidential Information of
the Company. “Confidential Information” will include all information concerning the Company or any
parent, subsidiary, affiliate, employee, customer or supplier or other business associate of the
Company or any affiliate (including but not limited to any trade secrets or other confidential,
proprietary or private matters), which has been or is received by the Executive from the Company,
or from any parent, subsidiary, affiliate or customer or supplier or other business associate of
the Company, and which is not known or generally available to the public.
5. Remedies.
The Executive acknowledges and affirms that money damages cannot adequately compensate the
Company for any breach by the Executive of Section 4 of this Agreement and that the Company is
entitled to equitable relief (without posting any bond) in any federal or state court in
Massachusetts or other court of competent jurisdiction to prevent or otherwise restrain any actual
or threatened breach of the provisions of said Section and/or compel specific performance of, or
other compliance with, the terms thereof.
6. Miscellaneous.
(a) At-Will Employment. This Agreement is not a contract to employ the Executive for
a definite time period, and is not intended to be and does not constitute a contract or part of a
contractual agreement for continued employment, either express or implied, between the Company and
the Executive, it being acknowledged that the Executive’s employment is “at will” and that either
the Executive or the Company may terminate the employment relationship at any time, for any or no
reason, with or without Cause and with or without prior notice, but subject to the Executive’s
rights to Severance Benefits under the terms provided hereunder.
(b) Successors and Assigns. This Agreement and all of the provisions hereof shall be
binding upon, and inure to the benefit of, the parties hereto and their successors (including
successors by merger, consolidation, sale or similar transaction, permitted assigns, executors,
administrators, personal representatives, heirs and distributees). This Agreement is personal in
nature and the rights and obligations of the Executive under this Agreement shall not be assigned
or transferred by the Executive.
(c) Attorneys Fees. Each party shall bear his or her or its own attorney’s fees and
expenses.
(d) Governing Law. This Agreement shall be interpreted in accordance with the
substantive laws of The Commonwealth of Massachusetts and without regard to any conflict of laws
provisions.
(e) Effect on Other Agreements; Modification. This Agreement constitutes the entire
agreement between the Executive and the Company with respect to the subject matter of this
Agreement. This Agreement may be modified only in a writing signed by both parties. For as long
as this Agreement is in effect, to the degree there is any conflict between the severance payments
and benefit provisions to which the Executive is then entitled under this Agreement and those of
any other written agreement which continues to be in effect between the Company and the Executive,
such conflict shall be resolved by the Company in good faith by affording the Executive the more
favorable severance payments or benefits contained in any such agreement. Notwithstanding the
foregoing, nothing herein relieves the Executive from the obligation to comply with the restrictive
covenants of all such agreements or from the consequences of noncompliance therewith regardless
under which agreement the severance payments and/or severance benefits may be deemed to have been
made. Furthermore, for purposes of clarification only, if an Executive receives severance pay and
benefits under one agreement, the Executive shall not be entitled to severance pay or benefits
under any other agreement, plan or arrangement.
(f) Execution. This Agreement may be executed in one or more counterparts, each of
which when so executed shall be deemed to be an original, and all such counterparts together shall
constitute but one and the same instrument.
(g) Notices. For the purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given when
delivered or when mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:
To the Company:
The Talbots, Inc.
Xxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Senior Vice President/Human Resources, Talbots
Xxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Senior Vice President/Human Resources, Talbots
with a copy to:
The Talbots, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxx, Xxx Xxxx 00000
Attn: General Counsel
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxx, Xxx Xxxx 00000
Attn: General Counsel
To the Executive:
Xxxx Xxxxxx
[Home Address]
[Home Address]
7. Definitions.
For purposes of this Agreement, the following terms shall have the meanings indicated below:
(a) “Cause” for termination by the Company of the Executive’s employment shall mean
(i) any material breach by the Executive of this Agreement or any other agreement to which the
Executive and the Company are both parties (which is not cured within 45 days following written
notice from the Company), (ii) any act or omission to act by the Executive which may have a
material and adverse effect on the Company’s business or on the Executive’s ability to perform
services for the Company, including, without limitation, the commission of any crime involving
moral turpitude or any felony, or (iii) any material misconduct or material neglect of duties by
the Executive in connection with the business or affairs of the Company.
(b) “Code” shall have the meaning given that term in Section 1(g) hereof.
(c) “Disability” shall mean the Executive’s inability, because of physical or mental
illness or injury, substantially to perform his or her duties of his or her position as a result
of physical incapacity for a continuous period of at least six (6) months. Any dispute at to
the Executive’s incapacitation shall be resolved by an independent physician selected by the
Company’s Board of Directors and reasonably acceptable to the Executive or his or her legal
representative, whose determination shall be final and binding upon both the Executive and the
Company.
(d) “Executive” shall mean the individual named in the first paragraph of this
Agreement.
(e) “Good Reason” for termination by the Executive of the Executive’s employment shall
be a termination based on one or more of the following events occurring without the Executive’s
express written consent: (a) a substantial adverse reduction in the Executive’s duties, other than
during any period of illness or incapacity, such that the Executive no longer has the title of, or
serves, as a senior executive of a major branded business of the Company; (b) a material reduction
by the Company in the Executive’s annual base salary as in effect on the date hereof or as the same
may be increased from time to time; (c) during the first two years of your employment, the
Company’s requiring that the Executive’s principal place of business be at an office located more
than 35 miles from New York City, NY, except for required travel on the Company’s business,
including regular travel to and from the Company’s corporate headquarters and its other locations;
(d) following the first two years of employment, the Company’s requiring that the Executive’s
principal place of business be at an office located more than 35 miles from the site of the
Executive’s then principal place of business, except for relocation to the Company’s then principal
headquarters location or for required travel on the Company’s business, including regular travel
to and from the Company’s corporate headquarters and its other locations; or (e) a material breach
of the Company’s obligations to Executive under the February 19, 2008 Offer Letter (“Offer Letter”)
except for matters covered in (a) through (d) of this provision; which, with respect to subsections
(a) through (e) above, is not remedied by the Company within 45 days of receipt of written notice
of such event delivered by the Executive to the Company; provided, that the Executive may only
exercise his or her right to terminate employment for Good Reason within the 90 day period
immediately following the occurrence of any of the events described in subsections (a) through (e)
above.
(f) “Qualified Termination” shall mean the Executive’s employment by the Company is
terminated, (i) by the Executive for Good Reason or (ii) by the Company for any reason other than
for Cause, death, Disability, or retirement at or after age 65.
(g) “Quiet Period” shall have the meaning given that term in Section 1(e)(ii) hereof.
(h) “Retirement Plans” shall have the meaning given that term in Section 1(d) hereof.
(i) “Severance Benefits” shall have the meaning given that term in Section 1(a)
hereof.
(j) “Severance Payment” shall have the meaning given that term in Section 1(b) hereof.
(k) “Severance Period” shall have the meaning given that term in Section 1(b) hereof.
(l) “Termination Date” shall mean the date that the Executive’s employment with the
Company terminates for any reason or no reason.
[signature page follows]
IN WITNESS WHEREOF, the parties have executed this Severance Agreement as of the date first
above written.
| THE TALBOTS, INC. |
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| By: | /s/ Xxxx Xxxxx, III | |||
| Duly Authorized | ||||
| EXECUTIVE |
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| /s/ Xxxx Xxxxxx | ||||
| Xxxx Xxxxxx | ||||
| Executive Vice President/Chief Marketing Officer | ||||
