EMPLOYMENT AGREEMENT
Exhibit 99.1
THIS AGREEMENT is made as of March 4, 2009, among The Yankee Candle Company, Inc., a Massachusetts corporation (the “Company”), and Xx. Xxxxxx Xxxx (“Executive”).
WHEREAS, the Executive is currently employed by the Company as President and Chief Operating Officer (“COO”);
WHEREAS, effective October 1, 2009, Executive will be promoted from COO to Chief Executive Officer (“CEO”) of the Company, and shall remain President;
WHEREAS, the Company and Executive desire to set forth the terms and conditions of Executive’s employment and promotion to CEO;
WHEREAS, the Company and Executive are also parties to that certain Executive Severance Agreement, dated as of September 15, 2006, as amended as of December 31, 2008 (the “Severance Agreement”); and
WHEREAS, except as set forth below, the execution of this Agreement shall not in any manner amend or modify the Severance Agreement and the parties agree that the Severance Agreement shall remain in full force and effect following the execution of this Agreement in accordance with its terms.
NOW, THEREFORE, 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. Employment. 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 period beginning on the date hereof and ending as provided in Section 4 hereof (the “Employment Period”).
2. Position and Duties.
(a) From the date hereof until October 1, 2009, Executive shall continue to serve as President and COO, and report to the CEO and/or the Board of Managers (the “Board”) of YCC Holdings LLC (“YCC Holdings”). Effective October 1, 2009, Executive shall no longer serve as COO, and shall serve as the President and CEO of the Company, YCC Holdings and each subsidiary of YCC Holdings, and shall perform such duties as are consistent with such position, and shall report directly to the Board and/or its Chairman.
(b) Prior to an initial public offering of either the Company, YCC Holdings or its subsidiary, Yankee Holding Corp. (“IPO”), Executive shall serve as a member of the Board, and a member of the board of directors of the Company and each subsidiary of YCC Holdings, so long as he remains the CEO hereunder.
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(c) During the Employment Period, Executive shall devote his full business time and attention to the business and affairs of the Company and its Affiliates. This provision shall not be deemed to preclude the Executive from accepting appointment to or continuing to serve on any board of directors or trustees of any business corporation set forth on Exhibit A, or any charitable organization, membership in professional societies, lecturing or the acceptance of honorary positions, that are in any case incidental to his employment by the Company and which are not adverse to or in conflict with the interests of the Company, its business or prospects, financial or otherwise, or otherwise materially interfere with Executive’s ability to perform his duties.
(d) Executive will perform his duties, responsibilities and functions at the Company’s headquarters in Massachusetts.
(e) For purposes of this Agreement, “Affiliates” shall mean any person controlling, controlled by or under common control with another person (for avoidance of doubt, as used herein “Affiliates” of the Company shall not include any unrelated portfolio companies controlled by Madison Dearborn Partners, LLC). For purposes of this definition only, “control” means the possession, directly or indirectly, of the power to direct to direct the management and policies of a person whether through the ownership of voting securities, contract or otherwise.
3. Compensation and Benefits.
(a) During the Employment Period, Executive’s rate of base salary (“Base Salary”) shall be as follows:
| Through February 28, 2009 |
$ | 500,000 per annum | |
| From March 1, 2009 through September 30, 2009 |
$ | 650,000 per annum | |
| From October 1, 2009 through February 28, 2010 |
$ | 700,000 per annum | |
| Effective March 1, 2010 |
$ | 750,000 per annum |
Commencing in January 2011 and annually thereafter, the Base Salary shall be subject to review for increases. The Base 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. In addition, during the Employment Period, Executive shall be entitled to participate in all of the Company’s employee benefit programs generally available to senior executive employees of the Company on the same terms as other participants therein (including but not limited to life insurance, disability insurance and health insurance).
(b) In addition to the Base Salary, during each fiscal year during the Employment Period beginning with the year ending on or about December 31, 2009, Executive will be eligible to earn an annual bonus under the Company’s Management Incentive Plan (“MIP”) equal to 100% (the “Target Bonus Percentage”) of Executive’s Base Salary actually paid for such fiscal year based on achievement of targeted performance metrics for such period, as established by the Board in good faith after consultation with Executive. In addition, the Board in good faith after consultation with Executive shall also establish threshold performance metrics and superior performance metrics which, if achieved, will result in a bonus payment of 5% (for threshold performance metric achievement) and 200% (for superior performance metric
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achievement) of the Target Bonus Percentage (with the bonus payment to be determined in accordance with calibration table approved by the Board under the MIP for achievement of performance metrics between threshold and target, or between target and superior, as applicable). The 5%/200% payout levels for threshold and superior achievement shall be subject to revision in any given year to make them consistent with the payout levels set for other executive officers under the MIP. Executive is eligible to receive payment of any annual bonus for a fiscal year only if Executive remains employed by the Company throughout such fiscal year; provided, that if the Employment Period is terminated as a result of Executive’s death or Disability, Executive (or his estate in the case of death) shall be entitled to a pro rated portion of his annual bonus to be determined in good faith by the Board based on the year’s bonus metrics and the Company’s performance to date. If Executive’s employment is terminated for any reason after the completion of any fiscal year but prior to the payment of any accrued target annual bonus earned in such fiscal year, Executive shall be entitled to payment of such earned but not yet paid annual bonus, except in the case of a termination of Executive’s employment for Cause, in which case Executive shall not be entitled to an annual bonus. For purposes of the Severance Agreement, the “incentive award target” shall equal the Target Bonus Percentage multiplied by the Executive’s annual Base Salary. Any bonus payable pursuant to this Section 3(b) shall be payable in the calendar year following the fiscal year to which such bonus relates; provided, however, that if the relevant fiscal year ends in January such bonus shall be payable in the calendar year in which the fiscal year ends.
(c) During the Employment Period, the Company shall reimburse Executive for all reasonable business expenses incurred by him in the course of performing his duties and responsibilities under this Agreement, consistent with the Company’s policies.
(d) In connection with your promotion to CEO, effective as of October 1, 2009, you will be granted 23,744 Class C Units under YCC Holdings’ 2007 Incentive Equity Plan (as amended from time to time, the “Plan”). The Class C Units shall have a “participation threshold” equal to the fair market value (as defined pursuant to the Plan) of Class C Units at the time of said grant, 20% of which units shall be vested as of the date of grant and the remainder of which shall vest on a daily basis over four (4) years. In addition, in connection and contemporaneously with the foregoing grant, Executive shall purchase up to $15,000 worth of Class A Units under the Plan, as determined by the Company in accordance with the Plan. The Class A units shall be fully vested when purchased. The foregoing grant of Class C units and purchase of Class A units shall be fully subject to the terms and conditions of the Plan and the related Plan documents, which shall in all events supersede anything contained in this summary paragraph. Executive will be provided with the actual equity documentation governing these units at or promptly following his appointment as CEO.
(e) Effective in respect of a termination of your employment after October 1, 2009, the “Severance Period” as defined in the Severance Agreement shall be increased from 18 months to 24 months, and the percentage in 4.2(b) of the Severance Agreement shall be increased from 150% to 200%.
(f) All amounts payable to Executive as compensation hereunder shall be subject to all required and customary withholding by the Company and its Affiliates.
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4. Term. The Employment Period shall begin on the date of this Agreement and end on the three-year anniversary of this Agreement, and thereafter, the Employment Period shall automatically renew for successive one (1) year periods, unless either party provides written notice to the other party of its intention not to renew the Employment Period at least thirty (30) days prior to the expiration of the current term (a “Notice of Non-Renewal”). Notwithstanding the foregoing, the Employment Period shall terminate immediately (i) upon Executive’s resignation (with or without Good Reason), death or Disability or (ii) if the Company terminates the Employment Period at any time for Cause or without Cause. 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. “Good Reason”, “Disability” and “Cause” shall have the meanings ascribed thereto in the Severance Agreement; provided that for purposes of this Agreement and the Severance Agreement, the definition of Good Reason shall also include if Executive is removed from the Board other than for Cause. In addition, any termination of Executive’s employment following a non-renewal of this Agreement after the Company provides a Notice of Non-Renewal shall be treated as a termination by the Company without Cause under the Severance Agreement.
5. Executive’s Representations. Executive hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity 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. Executive hereby acknowledges and represents that he has consulted with independent legal counsel regarding his rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein.
6. Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by reputable overnight courier service or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:
Notices to Executive:
last address on file with the Company
Notices to the Company:
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The Yankee Candle Company, Inc.
00 Xxxxxx Xxxxxx Xxx
Xxxxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
with copies (which shall not constitute notice) to:
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Fax: 000-000-0000
Attn: Xxxxxx X. Xxxx, P.C.
Xxxxxxx X. Xxxxx
Madison Dearborn Partners
Three First Xxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Fax: 000-000-0000
Attention: Xxxxx X. Xxxxxx
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 so delivered, sent or mailed.
7. Severability. 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 of this Agreement or any action in 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.
8. Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way; provided that this Agreement shall not in any manner supersede or preempt any of Executive’s rights as a director and officer of the Company under the Merger Agreement, dated as of October 24, 2006, by and among the Company, YCC Holdings and the other parties thereto.
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9. No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.
10. 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.
11. Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, the Company and their respective heirs, successors and assigns, except that Executive may not assign his rights or delegate his duties or obligations hereunder without the prior written consent of the Company.
12. Disputes; Governing Law; Expenses. All disputes under this Agreement shall be governed by the procedures set forth in Section 5 of the Severance Agreement, and the governing law and jurisdiction provisions of Section 7.6 of the Severance Agreement, and the expense reimbursement provisions of Section 4.10 of the Severance Agreement, shall also apply to disputes hereunder. The standard of review in any dispute shall be on a de novo basis.
13. 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.
14. Certain Taxes.
(a) The Company and its Affiliates shall be entitled to deduct or withhold from any amounts owing from the Company or any of its Affiliates to Executive any federal, state, local or foreign withholding taxes, excise tax, or employment taxes (“Taxes”) imposed with respect to Executive’s compensation or other payments from the Company or any of its Affiliates 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). In the event the Company or any of its Affiliates does not make such deductions or withholdings, Executive shall indemnify the Company and its Affiliates for any amounts paid with respect to any such Taxes, together with any interest, penalties and related expenses thereto.
(b) If, following an IPO, there occurs a change in “the ownership or effective control” or “a substantial portion of the assets”, within the meaning of Section 280G of the Code (a “CIC Event”), of the company whose equity securities are offered in the IPO, the Company will pay to the Executive an amount that, on an after-tax basis (including federal income, excise and social security taxes, and state and local income taxes), equals any excise tax that is determined to be payable by the Executive pursuant to Section 4999 of the Code (and any interest or penalties related to the imposition of such excise tax), by reason of any entitlements, whether under or outside of this Agreement and the Severance Agreement, that are described in
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Section 280G(b)(2)(A)(i) of the Code to the extent such entitlements result from such CIC Event.
(c) Any payments that the Company is required to pay to the Executive pursuant to this Section 14 shall be paid within ten (10) days after determination of the amount of such payments by the Company but in no event later than the end of the calendar year following the calendar year in which the corresponding taxes are remitted.
15. Corporate Opportunity. During the Employment Period, Executive shall submit to the Board all business, commercial and investment opportunities or offers presented to Executive or of which Executive becomes aware which relate to the business of manufacturing, distributing or selling (whether wholesale or retail) candles, candle products or accessories, home fragrances or candle related home décor accessories at any time during the Employment Period (“Corporate Opportunities”). Unless approved by the Board, Executive shall not accept or pursue, directly or indirectly, any Corporate Opportunities on Executive’s own behalf.
16. Executive’s Cooperation. During the Employment Period, Executive shall cooperate with the Company and its Affiliates in any internal investigation, any administrative, regulatory or judicial investigation or proceeding or any dispute with a third party 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 activities and commitments); provided that the Executive shall not be obligated pursuant to this Section 16 to provide assistance that would unreasonably interfere with the Executive’s business or personal activities. In the event the Company requires Executive’s cooperation in accordance with this Section 16, the Company shall reimburse Executive for reasonable travel expenses (including lodging and meals) upon submission of receipts.
17. Confidentiality and Non-competition and Non-solicitation Agreements. Executive hereby reaffirms his obligations under Section 7.3 of the Severance Agreement and under the Proprietary and Confidential Information Agreement between the Company and Executive dated , 200_. and acknowledges and agrees that Executive’s promotion to CEO and the Company’s other obligations under this Agreement constitute additional consideration for such obligations of Executive.
18. Notwithstanding the other provisions hereof, this Agreement is intended to comply with the requirements of Section 409A of the Code. Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted to comply with Section 409A of the Code. Any reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the period of time specified in this Agreement, (ii) the amount of expenses eligible for reimbursement, or in kind benefits provided, during a calendar year may
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not affect the expenses eligible for reimbursement, or in kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first written above.
| The Yankee Candle Company, Inc. | ||
| By: | /s/ Xxxxx X. Xxxxx | |
| Its: | Chairman and Chief Executive Officer | |
| /s/ Xxxxxx X. Xxxx | ||
| Xxxxxx X. Xxxx | ||
Exhibit A
The A.T. Cross Company
