Contract
Exhibit
10.2
EMPLOYMENT
AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this “Agreement”) is made
as of December 2, 2008, by and between Burlington Coat Factory Warehouse
Corporation, a Delaware corporation (the “Company”), Burlington
Coat Factory Holdings, Inc., a Delaware corporation (“Parent”), and Xxxxxx
Xxxxxxxxx (“Executive”).
WHEREAS,
the Company desires to employ Executive during the Employment Period, and
Executive is willing to accept employment with the Company, on the terms and
conditions set forth herein; and
WHEREAS,
the agreements of Executive in Sections 5, 6 and 7 are material
inducements to enter into this Agreement.
In
consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. In
this Agreement:
“Accounting Firm” has
the meaning given to that term in Section
22(b).
“Agreement” has the
meaning set forth in the preamble above.
“Arbitrator” has the
meaning given to that term in Section
21(d).
“Base Salary” has the
meaning given to that term in Section 3(a).
“Board” means the
Board of Directors of the Company.
“Cause” means
Executive (i) is convicted of a felony or other crime involving dishonesty
towards the Company or any of its Subsidiaries or material misuse of property of
the Company or any of its Subsidiaries; (ii) engages in willful misconduct
or fraud with respect to the Company or any of its Subsidiaries or any of their
customers or suppliers or an intentional act of dishonesty or disloyalty in the
course of Executive’s employment; (iii) refuses to perform Executive’s
material obligations under this Agreement (except in connection with a
Disability) as reasonably directed by the Board or the Company’s chief executive
officer, which failure is not cured within 15 days after written notice
thereof to Executive; (iv) misappropriates one or more of the Company’s or
any of its Subsidiaries material assets or business opportunities; or
(v) breaches Sections 5, 6 or 7 hereof which
breach, if capable of being cured, is not cured within 10 days of written
notice thereof has been delivered to Executive. In each such case
(other than clause (i)), such notice shall specifically describe the condition
giving rise to “Cause.” The Company may allow Executive an extension of time to
cure a breach if the Board, in its sole discretion, determines that such
extension is appropriate under the circumstances.
“Code” has the meaning
given to that term in Section
4(g).
“Company” has the
meaning set forth in the preamble above, together with its Subsidiaries and
affiliates and includes all predecessor entities.
“Competing Business”
has the meaning given to that term in Section
7(a).
“Confidential
Information” has the meaning given to that term in Section 5(a).
“Court” has the
meaning given to that term in Section
8(b).
“Current Home” has the
meaning given to that term in Section
3(i).
“Disability” means
Executive’s inability to perform the essential duties, responsibilities and
functions of Executive’s position with the Company and its Subsidiaries for a
continuous period of 180 days as a result of any mental or physical disability
or incapacity, as determined under the definition of disability in the Company’s
long-term disability plan so as to qualify Executive for benefits under the
terms of that plan or as determined by an independent physician to the extent no
such plan is then in effect. Executive shall cooperate in all
respects with the Company if a question arises as to whether Executive has
become disabled (including, without limitation, submitting to an examination by
a medical doctor or other health care specialists selected by the Company and
authorizing such medical doctor or such other health care specialist to discuss
Executive’s condition with the Company).
“Employment Period”
means the period commencing on the date hereof and ending on the date set forth
in Section 4(a).
“Equity Award
Agreements” means, (i) that certain Restricted Stock Grant Agreement,
dated as of the date hereof, by and between Executive and Parent, and (ii) that
certain Non-Qualified Stock Option Agreement, dated as of the date hereof, by
and between Executive and Parent.
“Excise Tax” has the
meaning given to that term in Section
22(a).
“Executive” has the
meaning set forth in the preamble above.
“Executive Dispute
Notice” has the meaning given to that term in Section
21(b).
“Final Determination”
has the meaning given to that term in Section
21(d).
“Good Reason” means
the occurrence of any of the following events without the written consent of
Executive: (i) a material diminution of Executive’s duties or the assignment to
Executive of duties that are inconsistent in any substantial respect with the
position, authority or responsibilities associated with Executive’s position as
set forth pursuant to Section 2(b), other than
any such authorities, duties or responsibilities assigned at any time which are
by their nature, or which are identified at the time of assignment, as being
temporary or short-term; (ii) the Company’s requiring Executive to be based
at a location which is fifty (50) or more miles from Executive’s principal
office location on the date hereof; or (iii) a material breach by the
Company of its obligations pursuant to this Agreement (including, without
limitation, its obligations pursuant to Section 3) (which such
breach goes uncured after notice and a reasonable opportunity to cure);
provided, however, no condition enumerated in the preceding shall be deemed to
be “Good Reason” unless within thirty (30) days of Executive’s knowledge of the
initial existence of such condition, Executive shall have given the Company
written notice thereof specifically describing the condition giving rise to
“Good Reason” and allowing the Company a period of thirty (30) days from the
date of receipt of the notice to remedy such
condition. Notwithstanding the foregoing, in no event will a
condition give rise to “Good Reason” hereunder unless at any time during the
period commencing ten (10) days after the expiration of the period provided in
the Executive’s notice for the Company to remedy said condition (which condition
remains unremedied) and ending one hundred and eighty (180) days after
Executive’s knowledge of the initial existence of said condition (but in all
events within two (2) years after the initial existence of said condition),
Executive shall have actually terminated his employment with the Company by
giving written notice of resignation for failure of the Company to remedy such
condition.
“Gross-Up Payment” has
the meaning given to that term in Section
22(a).
“Housing Allowance”
has the meaning given to that term in Section
3(i).
“Initial Public
Offering” shall have the meaning given to such term in the Stockholders
Agreement.
“New Home” has the
meaning given to that term in Section
3(i).
“Non-Compete Period”
has the meaning given to that term in Section
7(a).
“Parent” has the
meaning set forth in the preamble above.
“Parent Valuation
Notice” has the meaning given to that term in Section
21(b).
“Payment” has the
meaning given to that term in Section
22(a).
“Prior Employer” has
the meaning given to that term in Section
9(c).
“Prior Employer
Claims” has the meaning given to that term in Section
9(c).
“Stockholders
Agreement” has the meaning given to that term in Section
21(a).
“Subsidiaries” means
any corporation or other entity of which the securities or other ownership
interests having the voting power to elect a majority of the board of directors
or other governing body are, at the time of determination, owned by the Company,
directly or through one of more Subsidiaries.
“Target Bonus” has the
meaning given to that term in Section
3(b).
“Termination Year”
means the calendar year in which the Employment Period is
terminated.
“Underpayment” has the
meaning given to that term in Section
22(b).
“Work Product” has the
meaning given to that term in Section 6.
2. Employment, Position and
Duties.
(a) The
Company shall employ Executive and Executive hereby accepts employment with the
Company, upon the terms and conditions set forth in this Agreement for the
Employment Period.
(b) During
the Employment Period, Executive shall serve as President and Chief Executive
Officer of the Company and of Parent and shall perform the normal duties,
responsibilities and functions of a President and Chief Executive Officer of a
company of a similar size and type and shall have such power and authority as
shall reasonably be required to enable Executive to perform Executive’s duties
hereunder, subject to the power and authority of the Board to expand or limit
such duties, responsibilities, functions, power and authority and to overrule
actions of officers of the Company in a manner consistent with the traditional
responsibilities of such office. During the Employment Period,
Executive shall serve as a member of the Board and of the Board of Directors of
Parent (“Parent Board”).
(c) During
the Employment Period, Executive shall (i) render such administrative,
financial and other executive and managerial services to the Company and its
Subsidiaries which are consistent with Executive’s position as the Board may
from time to time direct, (ii) report to the Board and devote Executive’s
best efforts and Executive’s full business time and attention (except for
permitted vacation periods and reasonable periods of illness or other
incapacity) to the business and affairs of the Company and its Subsidiaries and
(iii) submit to the Board all business, commercial and investment
opportunities presented to Executive or of which Executive becomes aware which
relate to the business of the Company and its Subsidiaries, and unless approved
by the Board in writing, Executive shall not pursue, directly or indirectly, any
such opportunities on Executive’s own behalf. Executive shall also
perform the foregoing duties and functions as President and Chief Executive
Officer of Parent, as applicable, as the Parent Board shall direct, and in such
capacity shall report to the Parent Board. Executive shall perform
Executive’s duties, responsibilities and functions to the Company and its
Subsidiaries hereunder to the best of Executive’s abilities in a diligent,
trustworthy and professional manner.
3. Compensation and
Benefits.
(a) During
the Employment Period, Executive’s base salary shall be a minimum of $850,000
per annum (as increased or decreased in accordance with this Agreement from time
to time, the “Base
Salary”), which salary shall be payable by the Company in regular
installments in accordance with the Company’s general payroll practices (in
effect from time to time). Executive’s Base Salary will be subject to
annual review and increase (but not decrease) by the Board during the Employment
Period. Any such increased Base Salary shall be Executive’s “Base
Salary” for all purposes thereafter under this Agreement.
(b) Executive
shall be entitled to participate in the Company’s Senior Management Bonus Plan
approved by the Board or a committee thereof, as in effect from time to time,
with a target annual bonus of one hundred percent (100%) of Executive’s Base
Salary (“Target
Bonus”) or such greater amount as the Board in its sole discretion may
from time to time determine. Any bonus earned by Executive for the
portion of the fiscal year ending on May 30, 2009 shall be pro rated based
on the number of days worked by Executive for the Company in such fiscal
year.
(c) The
Board, or a committee or appointee thereof, during the term of this Agreement,
shall review annually, or at more frequent intervals which the Board determines
is appropriate, Executive’s compensation and may award Executive compensation as
the Board deems appropriate in its sole discretion; provided, however, that
Executive’s Base Salary shall not be reduced pursuant to any such review or
otherwise.
(d) Executive
shall be entitled to twenty (20) days of paid vacation each calendar year in
accordance with the Company’s policies, which if not taken in any year may not
be carried forward to any subsequent calendar year and no compensation shall be
payable in lieu thereof. Such vacation will accrue as of January 1 of
each year, except that if Executive’s employment commences after January 31 of
any calendar year, Executive shall accrue twenty (20) days of paid vacation pro
rated for the number of full calendar months remaining in the calendar year in
which the Employment Period commences.
(e) During
the Employment Period, the Company shall reimburse Executive for all reasonable
business expenses incurred by Executive in the course of performing Executive’s
duties, responsibilities and functions under this Agreement which are consistent
with the Company’s policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the Company’s requirements
with respect to reporting and documentation of such expenses.
(f) The
Company shall provide Executive with the use of an automobile which has an
original purchase price not in excess of $50,000. Such automobile
shall be replaced with a new model of comparable make and model from time to
time in accordance with Company policy then in effect, but at least every three
(3) years. The Company shall be responsible for all costs and
expenses incurred in operation, maintenance, insurance and repair of such
automobile.
(g) In
addition to participation in the Senior Management Bonus Plan and the awards to
Executive under the Equity Award Agreements, Executive shall be entitled to
participate, on the same basis as other executives of comparable level in the
Company, in any compensation, bonus, incentive, award, deferred compensation,
pension, retirement, stock award, stock option or other benefit, plan or
arrangement of the Company (including, without limitation, any plan sponsored by
the entity owning or controlling the Company, or any affiliate of such entity)
now existing or hereafter adopted, all upon terms at least as favorable as those
enjoyed by other salaried employees of comparable level of the Company; provided, however, the Company
may restrict or exclude Executive’s participation in any such plan, or the
benefits thereunder, on such terms and conditions as the Company shall in its
sole discretion determine, if at any time Executive shall be working fewer than
five days a week or on other part-time basis during regular business
days. Executive also shall be entitled to hospital, health,
disability, medical and life insurance, and any other benefits enjoyed, from
time to time, by other salaried employees of the Company of comparable level,
all upon terms as favorable as those enjoyed by other salaried employees of
comparable level of the Company. Notwithstanding anything in this
Section 3(g) to the
contrary, if the Company adopts any change in the benefits provided for other
salaried employees of the Company of comparable level, and such policy is
uniformly applied to all such employees of the Company (and any successor or
acquirer of the Company, if any), then no such change shall be deemed a breach
by the Company of this Section 3(g).
(h) Executive
will be indemnified and defended for acts performed (or omissions made) in
Executive’s capacity as an officer or director of the Company to the fullest
extent specified in the Company’s certificate of incorporation and bylaws and as
permitted under Delaware law. During Executive’s employment and
membership on the Board and the Parent Board and for not less than six (6) years
following the latest termination thereof, the Company or Parent (or both), as
the case may be, shall insure Executive under a contract of directors and
officers liability insurance to the same extent as members of the Board or the
Parent Board, as applicable, are so insured.
(i) As soon
as reasonably practicable (but not later than thirty (30) days) following the
date on which Executive commences employment with the Company, the Company will
make a one-time payment to Executive in an aggregate amount of $300,000 in order
for Executive to pay certain expenses he may incur in connection with his
relocation from Oconomowoc, Wisconsin (the “Current Home”) to a
non-temporary residence within reasonable commuting distance from the Company’s
principal offices in Burlington, New Jersey (the “New
Home”). Such payment shall be subject to all customary
withholding, payroll and other taxes and shall not, for the avoidance of doubt,
be grossed up for any such taxes. In addition, for the period from
the date hereof to the earlier of (x) six (6) months after the date hereof, and
(y) the time Executive sells his Current Home and relocates to a New Home, the
Company will reimburse to the Executive reasonable temporary housing
accommodations for Executive and his family (not to exceed $3,000.00 per month)
(the “Housing
Allowance”). Executive acknowledges that he will be solely
responsible for the excess of the amount of Executive’s actual cost of housing
accommodations over $3,000.00 per month. The Company shall also
reimburse Executive for any applicable federal and state income taxes paid by
Executive resulting from the inclusion in his taxable income of the Housing
Allowance, including all such taxes imposed on such reimbursement (grossed up),
payable to Executive at the same time that Executive files his federal and state
income tax returns for the year in which reimbursed amounts are included in
Executive’s taxable income and based on the highest marginal state and federal
income tax rates for such year. The Company shall also reimburse
Executive for any applicable federal and state employment taxes paid by
Executive resulting from the inclusion in his taxable wages of the Housing
Allowance, including all such taxes imposed on such reimbursement (grossed up),
payable to Executive at the same time as the employment taxes are due to be
withheld from Executive. Executive agrees to provide to the Company
documentation showing that the reimbursed amounts are taxable at such rates for
the year in question. The obligation of the Company to provide
reimbursement for Executive’s federal tax liability will be adjusted to take
into account the federal tax benefit, if any, of state income taxes applicable
to the inclusion in taxable income of the amount of such amounts paid or
reimbursed, regardless of the year in which such federal tax benefit is realized
by Executive.
(j) For the
period from the date hereof to the time Executive shall become eligible for
participation in the Company’s health and medical plans, the Company shall
reimburse Executive for the excess of the costs paid by Executive to his former
employer for the purchase of continuation of health benefits under the
Consolidated Omnibus Budget Reconciliation Act as administered by such company
over the Executive’s current contributions to such plans.
(k) Notwithstanding
anything herein to the contrary, in the event Executive’s employment with the
Company is terminated either voluntarily by Executive (other than for Good
Reason or due to his Disability) or for Cause by the Company within eighteen
(18) months after the commencement of Executive’s employment, Executive shall
immediately repay to the Company the after-tax amount of the $300,000 one-time
relocation payment and the pre-tax amount of the Housing Allowance and tax
gross-up paid on Executive’s behalf by the Company or reimbursed to Executive by
the Company pursuant to Section 3(i)
above.
4. Termination and Payment
Terms.
(a) The
Employment Period shall commence on the date hereof and shall terminate, (i)
immediately upon Executive’s resignation, death or Disability, or (ii) by
resolution of the Board, with or without Cause, at any time. Except
as otherwise provided herein, any termination of the Employment Period by the
Company shall be effective as specified in a written notice from the Company to
Executive.
(b) If the
Employment Period is terminated:
(i) by
resolution of the Board (other than for Cause) or by Executive resigning for
Good Reason, Executive shall be entitled to receive (1) all previously
earned and accrued but unpaid Base Salary and vacation and unpaid business
expenses up to the date of such termination, (2) any unpaid bonus (if any)
earned by Executive for the fiscal year prior to the Termination Year, but then
unpaid, and any other amounts owed under Section 3(i) or Section 23,
(3) the pro rata portion of Executive’s Target Bonus (pursuant to Section 3(b) hereof)
during the Termination Year, to the extent targets thereunder are achieved for
such year, after such termination or expiration, pro rated based on the number
of days of the Termination Year or the Expiration Year, as applicable, prior to
the date of termination, which payment shall be made when the bonus payments for
such Termination Year are otherwise due; (4) severance pay in the full
amount of Base Salary at the time of termination from the date of termination
through the period ending on the second (2nd) anniversary of the date of
termination; and (5) full continuation of Executive’s hospital, health,
disability, medical and life insurance benefits during the two (2) year
severance period (to the extent any of those benefits cannot be provided by
Company during the two (2) year severance period, the Company will provide
Executive with a sum of money calculated to permit Executive to obtain the same
benefits individually, grossed up for tax purposes so that Executive remains
whole); or
(ii) for any
other reason, including as a result of Executive’s death, Disability, voluntary
resignation for other than Good Reason or by resolution of the Board for Cause,
Executive’s sole entitlement shall be to receive all previously earned and
accrued but unpaid Base Salary, vacation and unpaid business expenses up to the
date of such termination and Executive shall not be entitled to any further Base
Salary, bonus payments or benefits for that year or any future year, except as
required by law, or to any other severance compensation of any
kind.
(c) Executive
agrees that: (i) Executive shall be entitled to the payments and services
provided for in Sections 4(b)(i)(3), 4(b)(i)(4), and 4(b)(i)(5), if any, if and
only if Executive has executed and delivered the Release attached as Exhibit A and
seven (7) days have elapsed since such execution without any revocation thereof
by Executive and Executive has not breached as of the date of termination of the
Employment Period the provisions of Sections 5, 6 and 7 hereof and does
not breach such sections or such covenants at any time during the period for
which such payments or services are to be made; and (ii) the Company’s
obligation to make such payments and services will terminate upon the occurrence
of any such breach during such period. Executive shall not have any
obligation to mitigate the amounts payable to him pursuant to Sections 4(b)(i)(3), 4(b)(i)(4), or 4(b)(i)(5) by seeking or
accepting alternative employment; provided, that Executive’s rights to receive
the benefits provided for in Section 4(b)(i)(5) shall cease at
such time as he is eligible to be covered under the hospital, health,
disability, medical or life insurance benefits, as apply, of any subsequent
employer.
(d) Except as
stated above, any payments pursuant to Section 4(b) shall be
paid by the Company in regular installments in accordance with the Company’s
general payroll practices, and following such payments the Company shall have no
further obligation to Executive pursuant to this Section 4 except as
provided by law. All amounts payable to Executive as compensation
hereunder shall be subject to all customary withholding, payroll and other
taxes. Except as set forth in the Equity Award Agreements, the
Company shall be entitled to deduct or withhold from any amounts payable to
Executive any federal, state, local or foreign withholding taxes, excise tax, or
employment taxes imposed with respect to Executive’s compensation or other
payments or Executive’s ownership interest in the Company (including, without
limitation, wages, bonuses, dividends, the receipt or exercise of equity options
and/or the receipt or vesting of restricted equity).
(e) Executive
hereby agrees that except as expressly provided herein, no severance
compensation of any kind, nature or amount shall be payable to Executive and
except as expressly provided herein, Executive hereby irrevocably waives any
claim for severance compensation.
(f) Except as
provided in Sections
4(b)(i) and 4(b)(ii) above,
all of Executive’s rights pursuant to Section 3 (other than
Section 3(h))
shall cease upon the termination of the Employment Period.
(g) Notwithstanding
anything herein to the contrary, if, at the time any payment is payable to
Executive pursuant to the provisions of Section 4(b)(i) above
as a result of Executive’s “separation from service” (within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the
regulations promulgated thereunder, the Company or any company in the affiliate
group in which the Company’s financial statements are consolidated in accordance
with generally accepted accounting principles has a class of equity securities
traded on an established domestic or foreign securities market or otherwise
including, without limitation, trading on an American exchange only as American
Depositary receipts and Executive is designated a “specified person” (as such
term is defined in Section 409A of the Code and the regulations promulgated
thereunder) on a list prepared by the Company periodically pursuant to Section
409A of the Code and the regulations promulgated thereunder, then during the six
month period from and after the date of Executive’s “separation from service”
the amount payable to Executive pursuant to the provisions of Section 4(b)(i) of
the Employment Agreement shall not exceed the lesser of (x) two times
Executive’s annual base compensation or (y) two times the amount determined
pursuant to Section 401(a)(17) of the Code, and any excess amount which accrues
to Executive during such period shall be withheld during such period and paid to
Executive in a lump sum, together with interest at the applicable federal rate
in effect on the date of termination under Section 1274(d) of the Code, upon the
expiration of six months after the date of “separation from service” (or , if
earlier than the end of such six month period, upon Executive’s
death). Any further amounts payable to Executive pursuant to Section 4(b)(i)
thereafter accruing shall be paid on their scheduled payment dates.
5. Confidential
Information.
(a) Executive
acknowledges and agrees that the information, observations and data (including
trade secrets) obtained by Executive while employed by the Company and its
Subsidiaries concerning the business or affairs of the Company and its
Subsidiaries are the confidential information (“Confidential
Information”), and the property, of the Company and/or its
Subsidiaries. Without limiting the foregoing, the term “Confidential
Information” shall be interpreted as broadly as possible to include all
observations, data and other information of any sort that are (i) related
to any past, current or potential business of the Company or any of its
Subsidiaries or any of their respective predecessors, and any other business
related to any of the foregoing, and (ii) not generally known to and
available for use by those within the line of business or industry of the
Company or by the public (except to the extent such information has become
generally known to and available for use by the public as a direct or indirect
result of Executive’s acts or omissions) including all (A) Work Product (as
defined below); (B) information concerning development, acquisition or
investment opportunities in or reasonably related to the business or industry of
the Company or any of its Subsidiaries of which Executive is aware or becomes
aware during the term of his employment; (C) information identifying or
otherwise concerning any current, former or prospective suppliers, distributors,
contractors, agents or customers of the Company or any of its Subsidiaries;
(D) development, transition, integration and transformation plans,
methodologies, processes and methods of doing business; (E) strategic,
marketing, promotional and financial information (including all financial
statements), business and expansion plans, including plans and information
regarding planned, projected and/or potential sales, pricing, discount and cost
information; (F) information identifying or otherwise concerning employees,
independent contractors and consultants; (G) information on new and
existing programs and services, prices, terms, and related information;
(H) the terms of this Agreement; (I) all information marked, or
otherwise designated, as confidential by the Company or any of its Subsidiaries
or which Executive should reasonably know is confidential or proprietary
information of the Company or any of its Subsidiaries; (J) all information
or materials similar or related to any of the foregoing, in whatever form or
medium, whether now existing or arising hereafter (and regardless of whether
merely stored in the mind of Executive or employees or consultants of the
Company or any of its Subsidiaries, or embodied in a tangible form or medium);
and (K) all tangible embodiments of any of the foregoing.
(b) Therefore,
Executive agrees that, except as required by law or court order, including,
without limitation, depositions, interrogatories, court testimony, and the like
(and in such case provided that Executive must give the Company and/or its
Subsidiaries, as applicable, prompt written notice of any such legal
requirement, disclose no more information than is so required and seek, at the
Company’s sole cost and expense, confidential treatment where available and
cooperate fully with all efforts by the Company and/or its Subsidiaries to
obtain a protective order or similar confidentiality treatment for such
information) or in connection with Executive’s performance of his duties
hereunder, Executive shall not disclose to any unauthorized person or entity or
use for Executive’s own purposes any Confidential Information without the prior
written consent of the Board, unless and to the extent that the Confidential
Information becomes generally known to and available for use by the public other
than as a direct or indirect result of Executive’s acts or
omissions. Executive shall deliver to the Company at the termination
of the Employment Period, or at any other time the Company may request, all
memoranda, notes, plans, records, reports, computer tapes, printouts and
software and other documents and data (and copies thereof) embodying or relating
to the Confidential Information (including any Work Product (as defined below))
or the business of the Company and its Subsidiaries which Executive may then
possess or have under Executive’s control and if, at any time thereafter, any
such materials are brought to Executive’s attention or Executive discovers them
in his possession or control, Executive shall deliver such materials to the
Company immediately upon such notice or discovery.
6. Intellectual Property,
Inventions and Patents. Executive acknowledges and agrees that
all discoveries, concepts, ideas, inventions, innovations, improvements,
developments, methods, specifications, designs, analyses, drawings, reports,
patents and patent applications, processes, programs, systems, software,
firmware, materials, plans, sketches, models, know-how, devices, developments,
data, databases, technology, trade secrets, works of authorship, copyrightable
works and mask works (whether or not including any confidential information) and
all registrations or applications related thereto, all other intellectual
property or proprietary information and all similar or related information
(whether or not patentable or copyrightable and whether or not reduced to
tangible form or practice) which relate to the Company’s or any of its
Subsidiaries’ actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by Executive (whether alone or jointly with others) while employed by the
Company or its predecessors and its Subsidiaries (“Work Product”) shall
be deemed to be “work made for hire” (as defined in the Copyright Act, 17
U.S.C.A. § 101 et seq., as amended) and owned exclusively by the
Company. To the extent that any Work Product is not deemed to be
“work made for hire” under applicable law, and all right, title and interest in
and to such Work Product have not automatically vested in the Company, Executive
hereby (A) irrevocably assigns, transfers and conveys, and shall assign
transfer and convey, to the full extent permitted by applicable law, all right,
title and interest in and to the Work Product on a worldwide basis to the
Company (or such other person or entity as the Company shall designate), without
further consideration, and (B) waives all moral rights in or to all Work
Product, and to the extent such rights may not be waived, agrees not to assert
such rights against the Company or its respective licensees, successors or
assigns. Executive shall, at the Company’s expense, execute all
documents and perform all actions reasonably requested by the Board (whether
during or after the Employment Period) to establish, confirm, evidence,
effectuate, maintain, protect, enforce, perfect, record, patent or register any
of the Company’s rights hereunder (including, without limitation, assignments,
consents, powers of attorney and other instruments).
7. Non-Compete,
Non-Solicitation.
(a) In
further consideration of the compensation to be paid to Executive hereunder,
Executive acknowledges and agrees that during the course of Executive’s
employment with the Company and its Subsidiaries Executive shall become familiar
with the Company’s trade secrets and with other Confidential Information and
that Executive’s services have been and shall be of special, unique and
extraordinary value to the Company and its Subsidiaries, and therefore,
Executive agrees that, during his or her employment with the Company and for a
period of two (2) years thereafter (the “Non-Compete Period”),
Executive shall not directly or indirectly (whether as an owner, partner,
shareholder, agent, officer, director, employee, independent contractor,
consultant or otherwise) own any interest in, operate, invest in, manage,
control, participate in, consult with, render services for (alone or in
association with any person or entity), in any manner engage in any business
activity on behalf of a Competing Business within any geographical area in which
the Company or its Subsidiaries operates or plan to operate. Nothing
herein shall prohibit Executive from being a passive owner of not more than 2%
of the outstanding stock of any class of a corporation which is publicly traded,
so long as Executive has no active participation in the business of such
corporation. For purposes of this paragraph, “Competing Business”
means each of the following entities, together with their respective
subsidiaries and affiliates: TJ Maxx, Marshalls, Xxxx Stores,
Xxxxx Mart, Century 21, Xxxxxx Xxxxx, Xxxxxxxxxxxxx Stores, Daffy Dan’s, XX
Xxxxxx, Bob’s Stores, and TK Maxx.
(b) During
the Non-Compete Period, Executive shall not, directly or indirectly, and shall
ensure that any person or entity controlled by Executive does not,
(i) induce or attempt to induce any employee of the Company or any
Subsidiary to leave the employ of the Company or such Subsidiary, or in any way
interfere with the relationship between the Company or any Subsidiary and any
employee thereof, (ii) hire, directly or through another person, any person
(whether or not solicited) who was an executive of the Company or any Subsidiary
at any time within the one year period before Executive’s termination from
employment, (iii) induce or attempt to induce any customer, supplier,
licensee, licensor, franchisee or other business relation of the Company or any
Subsidiary to cease doing business with the Company or such Subsidiary, engage
in or assist any person or entity in engaging in any Competing Business or in
any way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company or any Subsidiary (Executive
understands that any person or entity that Executive contacted during the one
year period prior to the date of Executive’s termination of employment for the
purpose of soliciting sales from such person or entity shall be regarded as a
“potential customer” of the Company and its Subsidiaries as to whom the Company
has a protectible proprietary interest) or (iv) make or solicit or
encourage others to make or solicit directly or indirectly any defamatory
statement or communication about the Company or any of its Subsidiaries or any
of their respective businesses, products, services or activities (it being
understood that such restriction shall not prohibit truthful testimony compelled
by valid legal process).
8. Enforcement.
(a) Executive
acknowledges and agrees that the Company entered into this Agreement in reliance
on the provisions of Sections 5, 6 and 7 and the
enforcement of this Agreement is necessary to ensure the preservation,
protection and continuity of the business of the Company and its Subsidiaries
and other Confidential Information and goodwill of the Company and its
Subsidiaries to the extent and for the periods of time expressly agreed to
herein. Executive acknowledges and agrees that he has carefully read
this Agreement and has given careful consideration to the restraints imposed
upon Executive by this Agreement, and is in full accord as to their necessity
for the reasonable and proper protection of confidential and proprietary
information of the Company and its Subsidiaries now existing or to be developed
in the future. Executive expressly acknowledges and agrees that each
and every restraint imposed by this Agreement is reasonable with respect to
subject matter, time period and geographical area.
(b) Notwithstanding
any provision to the contrary herein, the Company or its Subsidiaries may
pursue, at its discretion, enforcement of Sections 5, 6 and 7 in any court of
competent jurisdiction (each a “Court”).
(c) Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein. More specifically, if any Court determines
that any of the covenants set forth in Sections 5, 6 and 7 are overbroad
or unreasonable under applicable law in duration, geographical area or scope,
the parties to this Agreement specifically agree and authorize such Court to
rewrite this Agreement to reflect the maximum duration, geographical area and/or
scope permitted under applicable law.
(d) Because
Executive’s services are unique and because Executive has intimate knowledge of
and access to Confidential Information and Work Product, the parties hereto
agree that money damages would not be an adequate remedy for any breach of Sections 5, 6 and 7, and any breach
of the terms of Sections 5, 6 and 7 would result in
irreparable injury and damage to the Company and its Subsidiaries for which the
Company and its Subsidiaries would have no adequate remedy at
law. Therefore, in the event of a breach or threatened breach of
Sections 5, 6 and 7, the Company or
its successors or assigns, in addition to any other rights and remedies existing
in their favor at law or in equity, shall be entitled to specific performance
and/or immediate injunctive or other equitable relief from a Court in order to
enforce, or prevent any violations of, the provisions hereof (without posting a
bond or other security), without having to prove damages. The terms
of this Section
8 shall not
prevent the Company or any of its Subsidiaries from pursuing any other available
remedies for any breach or threatened breach of this Agreement, including the
recovery of damages from Executive.
9. Executive’s Representations;
Prior Employment.
(a) Executive
hereby represents and warrants to the Company that, subject to the
acknowledgements and agreements of Company, Parent, and Executive set forth in
Section 9(c)
below, (i) the execution, delivery and performance of this Agreement by
Executive does not and shall not conflict with, breach, violate or cause a
default under any contract, agreement, covenant, restriction, instrument, order,
judgment or decree to which Executive is a party or by which he is bound
(including any arising out of any prior employment), (ii) Executive is not
a party to or bound by any contract, agreement, covenant, restriction,
instrument, order, judgment or decree with any other person or entity (including
any arising out of any prior employment) that would restrict Executive from
performing the services contemplated hereunder, and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.
(b) Executive
hereby agrees that he shall not improperly use or disclose confidential
information or trade secrets, if any, of any former employers or any other
person or entity to whom Executive owes an obligation of confidentiality, and
that he shall not bring onto the premises of the Company any unpublished
documents or any property belonging to any former employer or any other person
or entity to whom Executive owes an obligation of confidentiality.
(c) The
Company and Parent acknowledge that Executive previously entered into an
employment agreement, dated August 1, 2006, with his former employer (the “Prior Employer”)
which contains restrictive covenants among other provisions that have been
disclosed to the Company and Parent. Executive has informed the Prior
Employer prior to Executive’s entering into this Agreement of his decision to
accept employment with the Company and that he will be acting as the President
and Chief Executive Officer of the Company. Executive has not been
informed of, and Executive has no knowledge of, any objection on the part of the
Prior Employer to his decision to accept employment with the Company or act as
its President and Chief Executive Officer, and Executive is entering into a
separation agreement with the Prior Employer which confirms that no such
objection exists. Executive shall keep the Company informed regarding
any communications, whether written or oral, that he receives from his Prior
Employer and which concern his decision to accept employment with the Company
and act as its President and Chief Executive Officer, and Executive shall not
amend or modify any provision of the separation agreement he is entering into
with the Prior Employer which would have a material adverse effect on Company or
Parent.
(d) In the
event that the Prior Employer threatens or asserts any claim that Executive, by
accepting the position of, and acting as, the President and Chief Executive
Officer of the Company, has breached or violated any employment,
non-competition, confidentiality, or other similar agreement that would
materially limit Executive’s ability to perform any of his duties under this
Agreement or subject Executive to legal expenses or liability for damages,
(collectively, “Prior
Employer Claims”), the Company shall indemnify and hold harmless
Executive (and his heirs, legatees and distributees in the event of his death)
against any damages, amounts paid in settlement and expenses (including legal
fees and expenses) incurred by Executive and arising from any such Prior
Employer Claims. The Company shall have the right to select any
counsel reasonably acceptable to Executive to represent Executive in connection
with any Prior Employer Claims, and the Company shall have the right to settle
or compromise any Prior Employer Claim indemnified hereby.
(e) In the
event that the Prior Employer brings any Prior Employer Claims, the Company
shall have the option to terminate Executive’s employment with the
Company. In the event of any such termination, and notwithstanding
anything in this Agreement to the contrary, (i) Executive shall have the right
to receive the benefits set forth in Sections 4(b)(i)(1),
4(b)(i)(2), and
4(b)(i)(4)
(except that for purposes of this Section 9(e), the
phrase “second (2nd) anniversary” in Section 4(b)(i)(4)
shall be replaced with “first (1st) anniversary”), subject to compliance by him
with the other applicable provisions of Section 4 (including
Sections 4(b)
and 4(c)), (ii)
Executive shall continue to be entitled to the benefit of the indemnification
set forth in Section
3(h) (including directors and officers liability insurance)
and Section
9(d) above, and (iii) Executive shall not have the right to any other
payments, bonuses, or benefits of any kind following such termination, and all
of Executive’s right, title, and interest in all of the equity securities and
other benefits granted to him pursuant to this Agreement and the Equity Award
Agreements shall be cancelled in their entirety without any consideration
payable in connection therewith and without regard to any of the provisions of
such agreements that would otherwise apply in such circumstances.
(f) EXECUTIVE
HEREBY ACKNOWLEDGES, AGREES AND REPRESENTS THAT EXECUTIVE HAS CONSULTED WITH
INDEPENDENT LEGAL COUNSEL REGARDING EXECUTIVE’S RIGHTS AND OBLIGATIONS UNDER
THIS AGREEMENT AND THE TERMS OF THE RELEASE ATTACHED AS EXHIBIT A AND THAT
EXECUTIVE FULLY UNDERSTANDS THE TERMS AND CONDITIONS CONTAINED HEREIN AND
THEREIN.
10. Survival. Sections 3(h) and
(k) and Sections 4 through 23, inclusive, shall
survive and continue in full force in accordance with their terms
notwithstanding the termination of the Employment Period.
11. Notices. Any
notice provided for in this Agreement shall be in writing and shall be either
personally delivered, sent by reputable overnight courier service with
confirmation of delivery, sent by facsimile (with evidence of transmission) or
mailed by first class mail, return receipt requested, to the recipient at the
address below indicated:
To
Executive:
Xxxxxx
Xxxxxxxxx
At the
last known New Home (or subsequent residence) address set forth on the personnel
records of the Company
To the
Company:
Burlington
Coat Factory Warehouse Corporation
0000
Xxxxx 000
Xxxxxxxxxx,
Xxx Xxxxxx 00000
Attention:
General Counsel
Facsimile
No.: (000) 000-0000
with
copies (which shall not constitute notice) to:
Xxxx
Capital Partners, LLC
000
Xxxxxxxxxx Xxxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attention:
Jordan Hitch
Facsimile
No.: (000) 000-0000
Xxxxxxxx
& Xxxxx LLP
000 X.
Xxxxxxxx Xx.
Xxxxxxx,
XX 00000
Attention: Xxxxxxx
X. Xxxxxxxxx, P.C.
Xxxxxxx X.
Xxxxxxxx
Facsimile
No.: (000) 000-0000
or such
other address or to the attention of such other person as the recipient party
shall have specified by prior written notice to the sending
party. Any notice under this Agreement shall be deemed to have been
given when personally delivered, one (1) business day following delivery to the
overnight courier service, if given by facsimile, when such facsimile is
transmitted to the applicable fax number specified above and the appropriate
facsimile confirmation is received, or if so mailed, on receipt.
12. Complete
Agreement. This Agreement and those other documents expressly
referred to herein embody the complete agreement and understanding among the
parties hereto and supersede and preempt any prior understandings, agreements or
representations by or among the parties hereto, written or oral, which may have
related to the subject matter hereof in any way.
13. Counterparts. This
Agreement may be executed in separate counterparts, each of which is deemed to
be an original and all of which taken together constitute one and the same
agreement.
14. Successors and
Assigns. This Agreement is intended to bind and inure to the
benefit of and be enforceable by Executive, the Company, Parent, and their
respective heirs, successors and assigns; provided, that the
services provided by Executive under this Agreement are of a personal nature and
rights and obligations of Executive under this Agreement shall not be
assignable.
15. Choice of
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, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York. In furtherance of the foregoing, the internal law of the State
of New York shall control the interpretation and construction of this Agreement,
even though under that jurisdiction’s choice of law or conflict of law analysis,
the substantive law of some other jurisdiction would ordinarily
apply.
16. Consent to
Jurisdiction. EACH OF THE PARTIES IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE STATE OR FEDERAL COURTS LOCATED IN THE CITY AND
STATE OF NEW YORK IN THE BOROUGH OF MANHATTAN FOR THE PURPOSES OF ANY SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED AGREEMENT
OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH OF THE
PARTIES HERETO FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR
DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH IN
SECTION 11 SHALL BE
EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING WITH RESPECT TO
ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION IN THIS SECTION 16. EACH
OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO
THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS
AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY IN THE STATE OR FEDERAL COURTS LOCATED IN THE CITY AND STATE OF NEW YORK
IN THE BOROUGH OF MANHATTAN AND HEREBY AND THEREBY FURTHER IRREVOCABLY AND
UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
17. Waiver of Jury
Trial. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF
THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT AFTER HAVING THE OPPORTUNITY TO
CONSULT WITH COUNSEL, EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY
JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS
AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.
18. Amendment and
Waiver. The provisions of this Agreement may be amended or
waived only with the prior written consent of the Company (as approved by the
Board) and Executive, and no course of conduct or course of dealing or failure
or delay by any party hereto in enforcing or exercising any of the provisions of
this Agreement (including, without limitation, the Company’s right to terminate
the Employment Period for Cause) shall affect the validity, binding effect or
enforceability of this Agreement or be deemed to be an implied waiver of any
provision of this Agreement.
19. Key Man Life
Insurance. The Company may apply for and obtain and maintain a
key man life insurance policy in the name of Executive together with other
executives of the Company in an amount deemed sufficient by the Board, the
beneficiary of which shall be the Company. Executive shall submit to
physical examinations and answer reasonable questions in connection with the
application and, if obtained, the maintenance of, as may be required, such
insurance policy, the findings of which shall be held in the strictest
confidence and used exclusively for the purpose of obtaining such
insurance.
20. Executive’s
Cooperation. During the Employment Period and thereafter,
Executive shall cooperate with the Company and its Subsidiaries in any internal
investigation or administrative, regulatory or judicial proceeding as reasonably
requested by the Company (including, without limitation, Executive being
available to the Company upon reasonable notice for interviews and factual
investigations, appearing at the Company’s request to give testimony without
requiring service of a subpoena or other legal process, volunteering to the
Company all pertinent information and turning over to the Company all relevant
documents which are or may come into Executive’s possession, all at times and on
schedules that are reasonably consistent with Executive’s other permitted
activities and commitments). In the event the Company requires
Executive’s cooperation in accordance with this section after the termination of
the Employment Period, the Company shall reimburse Executive for all of
Executive’s reasonable costs and expenses incurred, in connection therewith,
plus pay Executive a reasonable amount per day for Executive’s time
spent.
21. Stockholders Agreement;
Buyback Valuation, etc.
(a) Executive
hereby agrees that he shall be party to, and bound by all of the terms and
provisions of, that certain Stockholders Agreement, dated as of April 13, 2006,
by and among Parent, the Investors (as such term is defined therein), and the
other Stockholders (as such term is defined therein) party thereto (the “Stockholders
Agreement”). Executive shall be deemed to be a “Manager” for
purposes of the Stockholders Agreement and shall, except to the extent otherwise
set forth herein, have all the rights of, and be subject to all of the
obligations of, a Manager as set forth in the Stockholders
Agreement.
(b) In the
event of any exercise of the Company Call Option (as such term is defined in the
Stockholders Agreement) with respect to Executive, Parent shall simultaneously
deliver to Executive its determination of Fair Market Value (as such term is
defined in the Stockholders Agreement) for purposes of such exercise (the “Parent Valuation
Notice”). Executive may, at his option, elect to dispute any
Parent Valuation Notice by delivering written notice thereof (an “Executive Dispute
Notice”) to Parent within twenty-one (21) business days of the date of
transmission of such Parent Valuation Notice; provided, that any Executive
Dispute Notice must include Executive’s determination of Fair Market
Value. If Executive does not timely deliver an Executive Dispute
Notice in compliance with the provisions of this Section 21(b), then
the applicable Parent Valuation Notice shall be final and binding.
(c) In the
event of any proper delivery of an Executive Dispute Notice, Executive and
Parent shall negotiate in good faith for a period of fifteen (15) business days
to resolve their dispute. Any agreement between Executive and Parent
regarding an Executive Dispute Notice shall be in writing executed by the
parties and thereupon shall be final and binding. In the event
Executive and Parent are unable to resolve their dispute following such fifteen
(15) business day period, such dispute shall be resolved as set in Section 21(d)
below.
(d) Any
dispute regarding an Executive Dispute Notice shall be resolved as
follows. Within ten (10) business days following the expiration of
the period set forth in Section 21(c) above,
Parent shall select an independent investment bank, valuation firm, or other
similar person experienced in the valuation of securities and who is reasonably
acceptable to Executive to act as an arbitrator for the parties; provided, that
if Parent and Executive are unable to agree, in good faith, on the identity of
such person, then each of Parent and Executive shall select an independent
investment bank, valuation firm, or other similar person experienced in the
valuation of securities, and the two persons so selected shall select a third
independent investment bank, valuation firm, or other similar person experienced
in the valuation of securities, and the third such person so selected shall act
as the arbitrator for the parties. The person so selected to act as
arbitrators shall be the “Arbitrator”. The
Arbitrator shall conduct its Arbitration, (i) pursuant to the rules of the
American Arbitration Association, and (ii) so that a final determination of Fair
Market Value (the “Final Determination”)
is rendered no later than forty-five (45) days following the selection of the
Arbitrator. The Final Determination shall no be greater than the
greatest value claimed by either party nor lower than the lowest value claimed
by either party. The Final Determination shall be final and binding
on the parties.
(e) Each
party shall bear their own fees and expenses resulting from the delivery of any
Executive Dispute Notice; provided, that the fees and expenses of the Arbitrator
shall be allocated between the parties based on their relative success in the
Final Determination. For example, if Parent asserts that Fair Market
Value is $90, and Executive asserts that Fair Market Value is $100, and the
Final Determination states that Fair Market Value is $94, then Parent shall bear
40% (i.e., ($94-$90)/($100-$90)) of the fees and expenses of the Arbitrator and
Executive shall bear 60% (i.e., ($100-$94)/($100-$90)) of the fees and expenses
of the Arbitrator.
(f) Notwithstanding
any to the contrary in the Stockholders Agreement, if the Fair Market Value is
finally determined pursuant to the dispute resolution process set forth in this
Section 21 to
be an amount at least ten percent (10%) greater than the valuation set forth in
the applicable Parent Valuation Notice, then the person or persons exercising
the Company Call Option shall have the right to revoke such exercise by giving
written notice thereof no later than fifteen (15) business days following the
final determination of Fair Market Value, which revocation shall be irrevocable
and the Company Call Right under the Stockholders Agreement shall thereupon in
all respects terminate.
(g) Notwithstanding
anything to the contrary in the Stockholders Agreement, any deadlines for the
closing of any purchase pursuant to the Company Call Option shall be tolled
during the resolution of the dispute process set forth in this Section
21.
22. Excise Tax
Payments.
(a) If it
shall be determined that any benefit provided to Executive, or payment or
distribution by or for the account of the Company or Parent, or any other
amounts in the nature of compensation, to or for the benefit of Executive, in
each case pursuant to this Agreement, any of the Equity Award Agreements or any
other plan, arrangement or agreement with the Company or any affiliate, and
occurring after an Initial Public Offering (a “Payment”), would be
subject to the excise tax imposed by Section 4999 of the Code, or any interest
or penalties are incurred by Executive with respect to such excise tax resulting
from any action or inaction by the Company or Parent (such excise tax, together
with any such interest and penalties, collectively, the “Excise Tax”), then
Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”)
from the Company in an amount such that after payment by Executive of the Excise
Tax and all other federal, state and local income, employment, excise and other
taxes that are imposed on the Gross-Up Payment, Executive retains an amount of
the Gross-Up Payment equal to the sum of (A) the Excise Tax imposed upon the
Payments and (B) the product of any deductions disallowed because of the
inclusion of the Gross-up Payment in Executive’s adjusted gross income and the
highest applicable marginal rate of federal income taxation for the calendar
year in which the Gross-Up Payment is to be made.
(b) Subject
to the provisions of Section 22(c), all
determinations required to be made under this Section 22, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by the Company’s independent, certified public accounting firm or
such other certified public accounting firm as may be designated by Executive
and shall be reasonably acceptable to the Company (the “Accounting Firm”)
which shall provide detailed supporting calculations both to the Company and
Executive within 15 business days of the receipt of notice from Executive that
there has been a Payment, or such earlier time as is requested by the
Company. If the Accounting Firm is serving as accountant or auditor
for the individual, entity or group effecting a change in the ownership or
effective control (as defined for purposes of Section 280G of the Code) of the
Company, Executive shall appoint another nationally recognized accounting firm
which is reasonably acceptable to the Company to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 22, shall be
paid by the Company to Executive within five days of the receipt of the
Accounting Firm’s determination. Subject to Section 22(c), any
determination by the Accounting Firm shall be binding upon the Company and
Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that additional Gross-Up Payments
shall be required to be made to compensate Executive for amounts of Excise Tax
later determined to be due, consistent with the calculations required to be made
hereunder (an “Underpayment”). If
the Company exhausts its remedies pursuant to Section 22(c) and
Executive is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Executive.
(c) Executive
shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as practicable but
no later than ten (10) business days after Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. Executive shall not
pay such claim prior to the expiration of the thirty (30) day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due). If the Company notifies Executive in writing prior to the
expiration of such period that they desire to contest such claim, Executive
shall: (i) give the Company any information reasonably requested by the Company
relating to such claim; (ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company; (iii) cooperate
with the Company in good faith effectively to contest such claim; and (iv)
permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties incurred in connection
with such contest) and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses.
23. Executive’s Legal
Fees. The Company shall pay the reasonable, documented fees
and expenses of one counsel retained by Executive in connection with the
negotiation and preparation of this Agreement and the Equity Award
Agreements.
* * * * *
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.
BURLINGTON
COAT FACTORY WAREHOUSE CORPORATION
By: /s/
Xxxx Xxxx
Name:
Xxxx Xxxx
Title:
EVP
BURLINGTON
COAT FACTORY HOLDINGS, INC.
By: /s/
Xxxx Xxxx
Name:
Xxxx Xxxx
Title:
EVP
/s/
Xxxxxx Xxxxxxxxx
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Xxxxxx
Xxxxxxxxx
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Exhibit
A
GENERAL
RELEASE
I, Xxxxxx
Xxxxxxxxx, in consideration of and subject to the performance by Burlington Coat
Factory Warehouse Corporation, a Delaware corporation (together with its
subsidiaries, the “Company”), of its
obligations with respect to the payment of severance pursuant to Sections 4(b)(i)(3), 4(b)(i)(4) and 4(b)(i)(5) of the Employment
Agreement, dated as of December 2, 2008 (the “Agreement”) and this
General Release (the “General Release”), do
hereby release and forever discharge as of the date hereof the Company, its
subsidiaries and affiliates and all present and former directors, officers,
agents, representatives, employees, successors and assigns of the Companies and
their subsidiaries and affiliates and the Company’s direct and indirect owners
(collectively, the “Released Parties”) to
the extent provided below.
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1.
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I
understand that any payments paid to me under Sections 4(b)(i)(3), 4(b)(i)(4) and 4(b)(i)(5) of the
Agreement represent consideration for signing this General Release and are
not salary or wages to which I was already entitled. I understand and
agree that I will not receive the payments specified in Sections 4(b)(i)(3), 4(b)(i)(4) and 4(b)(i)(5) of the
Agreement unless I execute this General Release and do not revoke this
General Release within the time period permitted hereafter or breach this
General Release or Sections 5, 6 or 7 of the
Agreement. Such payments will not be considered compensation
for purposes of any employee benefit plan, program, policy or arrangement
maintained or hereafter established by the Company or its
affiliates. I also acknowledge and represent that I have
received all salary, wages and bonuses that I am entitled to receive (as
of the date hereof) by virtue of any employment by the
Company.
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2.
|
Except
as provided in paragraphs 4, 12 and 13 below and except for the provisions
of the Agreement which expressly survive the termination of my employment
with the Company, I knowingly and voluntarily (for myself, my heirs,
executors, administrators and assigns) release and forever discharge the
Company and the other Released Parties from any and all claims, suits,
controversies, actions, causes of action, cross-claims, counter-claims,
demands, debts, compensatory damages, liquidated damages, punitive or
exemplary damages, other damages, claims for costs and attorneys’ fees, or
liabilities of any nature whatsoever in law and in equity, both past and
present (through the date this General Release becomes effective and
enforceable) and whether known or unknown, suspected, or claimed against
the Company or any of the Released Parties which I, my spouse, or any of
my heirs, executors, administrators or assigns, may have, which arise out
of or are connected with my employment with, or my separation or
termination from, the Company (including, but not limited to, any
allegation, claim or violation, arising under: Title VII of the Civil
Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age
Discrimination in Employment Act of 1967, as amended (including the Older
Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended;
the Americans with Disabilities Act of 1990; the Family and Medical Leave
Act of 1993; the Worker Adjustment Retraining and Notification Act; any
applicable Executive Order Programs; the Fair Labor Standards Act; or
their state or local counterparts; or under any other federal, state or
local civil or human rights law, or under any other local, state, or
federal law, regulation or ordinance; or under any public policy, contract
or tort, or under common law; or arising under any policies, practices or
procedures of the Company; or any claim for wrongful discharge, breach of
contract, infliction of emotional distress, defamation; or any claim for
costs, fees, or other expenses, including attorneys’ fees incurred in
these matters) (all of the foregoing collectively referred to herein as
the “Claims”).
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3.
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I
represent that I have made no assignment or transfer of any right, claim,
demand, cause of action, or other matter covered by paragraph 2
above.
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4.
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I
agree that this General Release does not waive or release any rights or
claims that I may have under the Age Discrimination in Employment Act of
1967 which arise after the date I execute this General Release. I
acknowledge and agree that my engagement and employment by, and separation
from employment with the Company in compliance with the terms of the
Agreement shall not serve as the basis for any claim or action (including,
without limitation, any claim under the Age Discrimination in Employment
Act of 1967).
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5.
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In
signing this General Release, I acknowledge and intend that it shall be
effective as a bar to each and every one of the Claims hereinabove
mentioned or implied. I expressly consent that this General Release shall
be given full force and effect according to each and all of its express
terms and provisions, including those relating to unknown and unsuspected
Claims (notwithstanding any state statute that expressly limits the
effectiveness of a general release of unknown, unsuspected and
unanticipated Claims), if any, as well as those relating to any other
Claims hereinabove mentioned or implied. I acknowledge and agree that this
waiver is an essential and material term of this General Release and that
without such waiver the Company would not have agreed to make any payments
pursuant to the terms of Sections 4(b)(i)(3), 4(b)(i)(4) and 4(b)(i)(5) of the
Agreement. I further agree that in the event I should bring a
Claim seeking damages against the Company or any other Released Party, or
in the event I should seek to recover against the Company or any other
Released Party in any Claim brought by a governmental agency on my behalf,
this General Release shall serve as a complete defense to such Claims. I
further agree that I am not aware of any pending charge or complaint of
the type described in paragraph 2 as of the execution of this General
Release.
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6.
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I
agree that neither this General Release, nor the furnishing of the
consideration for this General Release, shall be deemed or construed at
any time to be an admission by the Company, any Released Party or myself
of any improper or unlawful
conduct.
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7.
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I
agree that I will forfeit all amounts payable by the Company pursuant to
Sections
4(b)(i)(3), 4(b)(i)(4), and 4(b)(i)(5) of the
Agreement if I challenge the validity of this General
Release. I also agree that if I violate this General Release by
suing the Company or the other Released Parties, I will return all
severance payments received by me pursuant to Sections 4(b)(i)(3), 4(b)(i)(4), and 4(b)(i)(5) of the
Agreement.
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8.
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I
agree that this General Release is confidential and agree not to disclose
any information regarding the terms of this General Release, except to my
immediate family and any tax, legal or other advisor I have consulted
regarding the meaning or effect hereof or as required by law, and I will
instruct each of the foregoing not to disclose the same to
anyone.
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9.
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Any
non-disclosure provision in this General Release does not prohibit or
restrict me (or my attorney) from responding to any inquiry about this
General Release or its underlying facts and circumstances by the
Securities and Exchange Commission (SEC), the National Association of
Securities Dealers, Inc. (NASD), any other self-regulatory organization or
governmental entity.
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10.
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I
agree that, as of the date hereof, I have returned to the Company any and
all property, tangible or intangible, relating to its business, which I
possessed or had control over at any time (including, but not limited to,
company-provided credit cards, building or office access cards, keys,
computer equipment, manuals, files, documents, records, software, customer
data base and other data) and that I shall not retain any copies,
compilations, extracts, excerpts, summaries or other notes of any such
manuals, files, documents, records, software, customer data base or other
data other than such documents as are generally or publicly known; provided, that
such documents are not known as a result of my breach or actions in
violation of the Agreement or this General
Release.
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11.
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Notwithstanding
anything in this General Release to the contrary, this General Release
shall not relinquish, diminish, or in any way affect any rights or claims
arising out of any breach by the Company or by any Released Party of the
Agreement after the date hereof or any other rights or claims I may have
against the Company or any Released Party arising after the date
hereof.
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12.
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Whenever
possible, each provision of this General Release shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this General Release is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision or any other jurisdiction, but this General
Release shall be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provision had never been
contained herein.
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13.
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BY
SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:
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(i)
|
I
HAVE READ IT CAREFULLY;
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(ii)
|
I
UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS,
INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN
EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF
1964, AS AMENDED; THE EQUAL PAY ACT OF 1963 AND THE AMERICANS WITH
DISABILITIES ACT OF 1990;
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(iii)
|
I
VOLUNTARILY CONSENT TO EVERYTHING IN
IT;
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(iv)
|
I
HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I
HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION I HAVE CHOSEN NOT
TO DO SO OF MY OWN VOLITION;
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(v)
|
I
HAVE HAD AT LEAST 21 DAYS (OR 45 DAYS, AS REQUIRED BY LAW) FROM THE DATE
OF MY RECEIPT OF THIS RELEASE SUBSTANTIALLY IN ITS FINAL FORM ON
_______________ __, _____ TO CONSIDER IT AND THE CHANGES MADE SINCE THE
_______________ __, _____ VERSION OF THIS RELEASE ARE NOT MATERIAL AND
WILL NOT RESTART THE REQUIRED 21-DAY (OR 45-DAY, AS APPLICABLE)
PERIOD;
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(vi)
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ANY
CHANGES TO THE AGREEMENT SINCE DECEMBER 2, 2008 EITHER ARE NOT MATERIAL OR
WERE MADE AT MY REQUEST.
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(vii)
|
I
UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS RELEASE TO
REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE
UNTIL THE REVOCATION PERIOD HAS EXPIRED WITHOUT NOTICE OF ANY SUCH
REVOCATION HAVING BEEN RECEIVED BY THE
COMPANY;
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(viii)
|
I
HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE
ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT;
AND
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(ix)
|
I
AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED,
WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY
AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY
ME.
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DATE: _____________ ____________________________________
Xxxxxx Xxxxxxxxx
