Kenneth Carroll Amendment to Employment Agreement
Xxxxxxx
Xxxxxxx
Amendment
to Employment Agreement
This
document (the “Amendment”) constitutes an amendment to the Employment
Agreement, as restated on June 15, 2007 (the “Current Agreement”),
between Xxxxxxx Xxxxxxx (the “Executive”) and United Retail Group, Inc.
(the “Company”), effective as of, and subject to, the occurrence of the
“Acceptance Time” (as such term is defined in the Agreement and Plan of Merger
(the “Merger Agreement”) by and among Redcats USA, Inc.
(“Parent”), Boulevard Merger Sub, Inc. and the Company). To
the extent this Amendment conflicts with any provision of the Current Agreement
or addresses subject matters not addressed in the Current Agreement, this
Amendment shall govern. Otherwise, the Current Agreement shall remain
in effect until and unless terminated in accordance with its
terms. Capitalized terms that are used and not defined herein shall
have the meaning set forth in the Merger Agreement.
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Parties:
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Xxxxxxx
Xxxxxxx, the Company and Parent.
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Contract
Term:
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Amended
to mean the period of time commencing at the Acceptance
Time and ending on the day that is 90 days after the Acceptance
Time (the “End Date”).
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Transaction
Payment
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Payment
at Acceptance Time equal to $1,079,163.30.
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Position
& Duties:
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Section
3(a) of the Current Agreement shall be amended as
follows:
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The
following shall be added at the end of the second sentence of Section
3(a)
(with the terms “Merger” and “Parent” having the definitions ascribed to
them in this Amendment): “, taking into account the Merger and the fact
that the Company is no longer a stand-alone publicly traded company.
Additionally, the Executive shall assist Parent in the integration
of the
Company and Parent including, but not limited to, assisting Parent
in
realizing synergies in connection with the Merger.”
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Compensation
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Monthly
base salary of $27,550, payable in accordance with the Company’s payroll
practice.
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No
semi-annual bonus eligibility.
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Definition
of Cause:
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Section
1(f) of the Current Agreement shall be modified as
follows:
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Paragraph
(iii) thereof shall be modified to read as follows: “(A) the Executive has
willfully and continuously failed to perform his material duties
to the
Company or (B) the Executive has failed in any material
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respect
to follow specific directions of the President and Chief Executive
Officer
of Parent or the Chief Executive Officer of the Company in the
performance
of his duties, in either case of (A) or (B) (i) other than any
such
failure resulting from the Executive's incapacity due to physical
or
mental illness and (ii) following delivery of written notice to
the
Executive from the Board of Parent identifying such failure in
detail and
identifying the manner in which such failure can be cured (if capable
of
cure) and the failure of the Executive to cure such failure in
the manner
so identified within fourteen (14) days following the delivery
of such
notice;”
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Paragraph
(iv) thereof shall be modified to read as follows: “the Executive has
engaged in willful misconduct in the performance of his duties
to the
Company in any material respect and material economic harm to the
Company
has resulted.”
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Paragraph
(v) thereof shall be deleted in its entirety.
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The
parties hereto agree that any breach (including a material breach)
of this
Amendment or the Current Agreement by the Executive following the
Acceptance Time that does not constitute “Cause” (as modified above) shall
not relieve the Company or Parent of its or their obligations under
the
Current Agreement or this Amendment.
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Termination:
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Sections
7, 8 and 14(a), (b) (other than for purposes of clause 14(b)(ii),
which
shall remain in effect as amended below solely for purposes of
references
thereto in this Amendment), (c), (d) and (e)(ii) (other than (e)(ii)(A),
(C) and (D)) of the Current Agreement shall be deleted. Section
14(f)(iv)
shall remain, and additionally shall be incorporated by reference
into
Section 14(e)(ii).
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The
reference to Section 4 in clause 14(b)(ii)(A) shall refer to the
Executive’s compensation as set forth above.
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In
no event shall the fact that the Company is no longer a stand-alone
publicly traded company constitute a breach by the Company for
purposes of
Section 14(b)(ii) of the Current Agreement.
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Change
of Control:
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Section
15(d) shall be amended to read in its entirety as set forth on
Annex A
hereto.
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Severance:
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If
the Executive remains employed with the Company through the End
Date, then
the Company shall pay to the Executive, promptly following (but
in any
event no later than 15 days after) the End Date, a lump sum cash
amount
(the “Severance Payment”) equal to $539,581.66.
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The
Severance Payment also will be paid upon any cessation of the Executive’s
employment prior to the End Date (including, without limitation,
as a
result of the Executive’s death or Permanent Disability) unless (i) the
Executive is terminated by the Company for Cause or (ii) the Executive
terminates his employment other than pursuant to Section 14(b)(ii)
of the
Current Agreement).
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The
Executive shall not be entitled under any circumstances to severance
payments or benefits other than the Severance Payment, and only
in
accordance with the terms set forth above.
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Transfer
of Insurance:
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In
the event that the Executive’s employment with the Company terminates on
the End Date, or prior to the End Date unless (i) the Executive
is
terminated by the Company for Cause or (ii) the Executive terminates
his
employment other than pursuant to Section 14(c)(ii) of the Current
Agreement (as amended), then the Company will transfer to the Executive
ownership of all term life insurance policies (including any “key man”
policies) insuring the life of the Executive and then held by the
Company;
provided, that (i) such transfer is allowed under the terms of
the
applicable policies and (ii) the Executive shall pay any costs
incurred in
connection with such transfer.
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No
Mitigation; No Offset:
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The
Executive shall be under no obligation to seek other employment
and there
shall be no offset against any amounts due the Executive under
this
Amendment or the Current Agreement on account of any remuneration
attributable to any subsequent employment that the Executive may
obtain.
Additionally, amounts owed to the Executive under this Amendment
or the
Current Agreement shall not be offset by any claims the Company
or Parent
may have against the Executive.
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Section
14(e)(i) of the Current Agreement shall be deleted and replaced
with the
preceding bullet.
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Restrictive
Covenants:
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The
Executive shall be bound by the provisions of Sections 11(a) and
(d) of
the Current Agreement, during the Contract Term and for 36 months
thereafter; provided, however, that in the event of a termination
of
employment pursuant to which the Executive is entitled to receive
Severance, the Executive shall be bound by the provisions of such
Sections
11(a) and (d) only in the event that the Company shall timely remit
the
Severance Payment.
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Section
11(e) of the Current Agreement shall be deleted and replaced with
the
preceding bullet.
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Section
409A:
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This
Amendment is intended to comply with the requirements of Section
409A of
the Internal Revenue Code of 1986, as amended, (the "Code"), and
the
regulations and guidance issued thereunder, and shall be interpreted
in a
manner consistent therewith. In the event the parties determine
in good faith that there is a reasonable likelihood that any portion
of
this Amendment does not comply with final regulations or other
guidance
under Section 409A, the parties agree that they shall further amend
this
agreement and that such amendment shall be drafted in compliance
with
Section 409A, but in such manner as will preserve the terms and
intent of
this Amendment to the extent reasonably possible and in such a
manner that
will not result in a material negative economic impact to the Company
or
the Executive.
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Other
Definitions:
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“Affiliated
Companies” shall mean, with respect to the Company, any corporation,
limited partnership, general partnership, association, joint-stock
company, joint venture, trust, bank, trust company, land trust,
business
trust, fund or any organized groups of persons, whether or not
a legal
entity, that is directly or indirectly controlled by, controlling
or under
common control with the Company.
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“Business
of the Company” shall mean the operation of a retail operation which
markets and sells apparel for women principally in sizes 14 and
larger and
any other future business in which the Company and its subsidiaries
and
Affiliated Companies engage that produces more than 10% of the
Company’s
or Parent’s consolidated sales.
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Compensation
Arrange-
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The
Company represents and warrants to Parent and the Executive that
the
Compensation Committee of the Board
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ment
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of
Directors of the Company, consisting solely of independent directors,
has
approved by resolution the Employment Agreement and this Amendment
and the
transactions contemplated thereby and hereby as an employment
compensation, severance or other employee benefit arrangement,
in
accordance with the requirements of Rule 14d-10(d)(2) under the
Securities
Exchange Act of 1934 and the instructions thereto.
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Notices
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Section
21 of the Current Agreement shall be amended to read in its entirety
as
follows:
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“all
notices, requests and other communications to any party hereunder
shall be
in writing and shall be deemed given if delivered personally, or
sent by
overnight courier (providing proof of delivery) to the parties
at the
following addresses:
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If
to Parent or the Company, to:
Redcats
USA, Inc.
000
Xxxxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attention: Chief
Executive Officer
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with
a copy (which shall not constitute notice) to:
Wachtell,
Lipton, Xxxxx & Xxxx
00
Xxxx 00xx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx
X. Xxxxx, Esq.
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If
to the Executive, to the address of the Executive most recently
on the
books and records of the Company
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By
signing below, the parties hereto agree to be bound by the terms of this
Amendment as described above.
Signed,
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Redcats
USA, Inc.
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By:
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/s/ Xxxxxxx X. Xxxxxxx |
By:
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/s/ Faintreny Xxxx |
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Xxxxxxx
Xxxxxxx
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Name:
Faintreny Xxxx
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United
Retail Group, Inc.
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By:
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/s/ Xxxxxxx Xxxxxxxx | ||
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Name:
Xxxxxxx Xxxxxxxx
Chairman, President and
Chief Executive Officer
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Date:
September 10, 2007
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ANNEX
A
In
the event that any payment or benefit received or to be received by Executive
pursuant to the terms of the Current Agreement or this Amendment (the
"Contract Payments") or in connection with the Executive's termination of
employment or contingent upon a Change of Control of the Company pursuant
to any
plan or arrangement or other agreement with the Company (or any affiliate)
("Other Payments" and, together with the Contract Payments, the
"Payments") would be subject to the excise tax (the "Excise Tax")
imposed by Section 4999 of the Code, as determined as provided below, the
Company shall pay to Executive, at the time specified below, an additional
amount (the "Gross-Up Payment") such that the net amount retained by the
Executive, after deduction of the Excise Tax on the Payments and any federal,
state and local income or other tax and Excise Tax upon the payment provided
for
by this paragraph, and any interest, penalties or additions to tax payable
by
the Executive with respect thereto, shall be equal to the total value of
the
Payments at the time such Payments are to be made. All financial
determinations required to be made under this Annex A, including whether
and
when a Gross-Up Payment is required, the amount of such Gross-Up Payment
and the
assumptions to be utilized in arriving at such determination, shall be made
by a
nationally recognized certified public accounting firm designated by the
Company
and reasonably acceptable to the Executive (the “Accounting
Firm”). The Accounting Firm shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days
of
the receipt of notice from the Executive that there has been a Payment or
such
earlier time as is requested by the Company. All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any
determination by the Accounting Firm shall be binding upon the Company and
the
Executive. For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed to pay federal income tax at the highest
marginal rates of federal income taxation applicable to individuals in the
calendar year in which the Gross-Up Payment is to be made and state and local
income taxes at the highest effective rates of taxation applicable to
individuals as are in effect in the state and locality of the Executive's
residence or place of employment in the calendar year in which the Gross-Up
Payment is to be made, net of the maximum reduction in federal income taxes
that
can be obtained from deduction of such state and local taxes, taking into
account any limitations applicable to individuals subject to federal income
tax
at the highest marginal rates.
The
Gross-Up Payments provided for in the preceding paragraph shall be made prior
to
the imposition upon the Executive or payment by the Executive of any Excise
Tax.
The
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
a Gross-Up Payment. Such notification shall be given as soon as practicable
but
no later than 30 days after the 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. The Executive shall not pay
such claim prior to the expiration of the 30 day period following the date
on
which the Executive 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 the Executive in writing prior to the expiration
of such
period that it desires to contest such claim, the Executive shall:
give
the Company any information reasonably requested by the Company relating
to such
claim;
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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 and reasonably satisfactory to the
Executive;
cooperate
with the Company in good faith in order to effectively contest such claim;
and
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, but not limited to, additional interest and penalties
and
related legal, consulting or other similar fees) incurred in connection with
such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or other tax (including interest and
penalties with respect thereto) imposed as a result of such representation
and
payment of costs and expenses.
The
Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of
such claim and may, at its sole option, either direct the Executive to pay
the
tax claimed and xxx for a refund or contest the claim in any permissible
manner,
and the Executive agrees to prosecute such contest to a determination before
any
administrative tribunal, in a court of initial jurisdiction and in one or
more
appellate courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to pay such claim
and
xxx for a refund, the Company shall advance the amount of such payment to
the
Executive on an interest-free basis, and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or other tax (including
interest or penalties with respect thereto) imposed with respect to such
advance
or with respect to any imputed income with respect to such advance; and
provided, further, that if the Executive is required to extend the
statute of limitations to enable the Company to contest such claim, the
Executive may limit this extension solely to such contested amount. The
Company's control of the contest shall be limited to issues with respect
to
which a Gross-Up Payment would be payable hereunder and the Executive shall
be
entitled to settle or contest, as the case may be, any other issue raised
by the
Internal Revenue Service or any other taxing authority. In addition, no position
may be taken nor any final resolution be agreed to by the Company without
the
Executive's consent if such position or resolution could reasonably be expected
to adversely affect the Executive (including any other tax position of the
Executive unrelated to the matters covered hereby).
As
a result of the uncertainty in the application of Section 4999 of the Code
at
the time of the initial determination by the Company or the Tax Counsel
hereunder, it is possible that Gross-Up Payments which will not have been
made
by the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies and the Executive thereafter is required to pay to
the
Internal Revenue Service an additional amount in respect of any Excise Tax,
the
Company or the Tax Counsel shall determine the amount of the Underpayment
that
has occurred and any such Underpayment shall promptly be paid by the Company
to
or for the benefit of the Executive.
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The
Executive shall file his tax returns in a manner consistent with the position
taken by the Company in respect of the matters described in this Annex
A.
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