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| 8-K - DRESS BARN INC | v182781_8k.htm |
Exhibit
10.1
EMPLOYMENT
AGREEMENT
Michael
W. Rayden
This
Agreement (the “Agreement”) is effective April
23, 2010 (the “Effective
Date”) by and between Tween Brands, Inc., a Delaware corporation (the
“Company”), and Michael
W. Rayden (the “Executive”) (hereinafter
collectively referred to as “the parties”).
WHEREAS, the Executive is
currently employed as the Company’s Chief Executive Officer pursuant to that
certain Employment Agreement by and between Executive and Company dated December
3, 2008 (the “Prior Employment
Agreement”), the Executive Agreement by and between Executive and Company
dated December 3, 2008 (the “Executive Agreement”) and the
letter agreement dated June 24, 2009 by and between The Dress Barn, Inc. (the
“Parent”) and Executive
(the “Letter Agreement,”
and collectively with the Prior Employment Agreement and the Executive
Agreement, the “Prior
Agreements”);
WHEREAS, Parent, Thailand
Acquisition Corp. (“Acquisition
Sub”) and the Company entered into an Agreement and Plan of Merger dated
June 24, 2009 (the “Merger
Agreement”), pursuant to which Acquisition Sub was merged with and into
the Company, with the Company surviving the merger as a wholly owned subsidiary
of Parent;
WHEREAS, the Company and the
Executive mutually desire that Executive continue as the Company’s Chief
Executive Officer and a Director on the Parent’s Board of Directors (the “Parent Board”);
and
WHEREAS, the Company and
Executive wish to enter into this Agreement to set forth their mutual
understanding as to the terms and conditions of Executive’s continued employment
by the Company, and to supersede and replace each of the Prior Agreements in its
entirety.
NOW, THEREFORE, in
consideration of the foregoing and the respective agreements of the parties
contained herein, the parties hereby agree as follows:
1.
TERM. The initial
term of employment under this Agreement shall be for the period commencing on
the Effective Date and ending on December 3, 2013, subject to earlier
termination pursuant to Section 13 hereof; provided, however, that on December
3, 2012 and on the anniversary date of each year thereafter (collectively, the
“Renewal Date”), the
term of this Agreement shall be automatically extended for a period of one year,
unless either the Company or the Executive shall have given written notice to
the other at least 90 days prior to any Renewal Date that the term of this
Agreement shall not be so extended (such period of employment, including any
extensions, the “Term”).
2.
EMPLOYMENT.
(a)
Position. During
the Term, the Executive shall be employed as the Chief Executive Officer of the
Company or such other position of greater status and responsibilities as may be
determined by the Parent Board. If and as elected by the stockholders
to the Parent Board, the Executive agrees to so serve as a Director on the
Parent Board. The Executive shall perform the duties, undertake the
responsibilities and exercise the authority customarily performed, undertaken
and exercised by persons employed in a similar executive capacity.
(b)
Obligations. The
Executive agrees (1) to devote his best efforts and full business time and
attention to the business and affairs of the Company; (2) to exercise the
highest degree of loyalty and care with respect to the affairs of the Company;
and (3) not to commit any willful or intentional act with an objective to harm
the Company’s business or reputation. The foregoing, however, shall not preclude
the Executive from serving on corporate, civic or charitable boards or
committees or managing personal investments, so long as such activities do not
interfere with the performance of the Executive’s responsibilities
hereunder.
3.
BASE
SALARY. During the Term, the Company agrees to pay or cause to
be paid to the Executive a minimum annual Base Salary of $1,050,000 (hereinafter
referred to as the “Base
Salary”). This Base Salary will be subject to annual review and may be
increased from time to time by the Compensation and Stock Incentive Committee of
the Parent Board (the “Compensation Committee”)
considering factors such as the Executive’s responsibilities, compensation of
executives in other companies, performance of the Executive and other pertinent
factors. Such Base Salary shall be payable in accordance with the Company’s
customary practices applicable to similarly situated executives of the
Company.
4.
EQUITY
COMPENSATION. During the Term, the Company shall grant to the
Executive rights to receive shares of the Parent’s common stock (“Common Stock”) and options to
acquire shares of Common Stock as the Compensation Committee
determines. During the Term, the Chief Executive Officer of Parent
(the “Parent CEO”) shall
recommend annually to the Compensation Committee that the Executive be granted
an equity award, in the form determined by the Compensation Committee, in its
sole discretion, that has the same value (as determined by the Compensation
Committee, in its sole discretion) as any equity award made to the Parent CEO in
the normal course on an annual basis, provided that such recommendation shall
not apply to any equity awards granted to the Parent CEO that are not made in
the normal course on an annual basis. Any failure by the Compensation
Committee to make any equity awards recommended by the Parent CEO shall not
trigger any rights or entitlements on the Executive’s behalf. All
equity awards granted to the Executive shall be subject to the terms and
conditions of The Dress Barn, Inc. 2001 Stock Incentive Plan, as may be amended
from time to time, or any successor plan thereto (the “Stock Plan”).
The
Executive’s prior employment with the Company and its affiliates and
subsidiaries shall be recognized for purposes of determining the Executive’s
eligibility for the accelerated vesting of his unvested equity awards under the
Parent’s Rule of 75 policy (the “Rule of 75
Policy”). Accordingly, the Company and the Executive
acknowledge that the Executive satisfied the requirements of the Rule of 75
Policy on March 25, 2010. Any earned, but unvested restricted stock
awards granted prior to the date the Executive satisfied the Rule of 75 Policy
shall become immediately vested on March 25, 2010. Any restricted
stock awards granted to the Executive after March 25, 2010 shall become
immediately vested on the date of grant for so long as the Parent maintains the
Rule of 75 Policy in force.
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In
addition, for so long as the Parent maintains the Rule of 75 Policy in force,
any stock option awards granted to the Executive shall vest in accordance with
the applicable vesting schedule, and, upon the Executive’s termination of
employment for any reason (other than for Cause (as defined below)), including
by reason of death or disability, any unvested stock option awards shall
continue to vest in accordance with the applicable vesting schedule, and each
stock option award outstanding on the Executive’s Termination Date (as defined
below) shall remain exercisable for a period of one year following the final
vesting date of such award (but in no event beyond the expiration of the
term).
5.
EMPLOYEE
BENEFITS. During the Term, the Executive shall be entitled to
participate in tax-qualified and nonqualified deferred compensation and
retirement plans, group term life insurance plans, short-term and long-term
disability plans, employee benefit plans, practices, and programs maintained by
the Company and made available to similarly situated executives generally, and
as may be in effect from time to time.
6.
BONUS
INCENTIVES. The Executive shall be entitled to participate in
such Company bonus incentive compensation programs which include similarly
situated executives of the Company as may exist from time to time (the “Incentive Plans”). The
Executive’s participation in such Incentive Plans, practices and programs shall
be on the same general basis and terms as are applicable to similarly situated
executives of the Company, although bonuses, target levels and criteria may
differ among such executives as determined by the Parent Board or the
Compensation Committee, provided that the Executive’s target payout value equal
to 120% of the Executive’s Base Salary under the Company’s annual bonus plan
shall not be reduced during the Term.
7.
LONG TERM INCENTIVE
PLAN. Effective as of January 24, 2010 and during the Term,
the Executive shall be eligible to participate in The Dress Barn, Inc. Long Term
Incentive Plan, as may be amended from time to time (the “LTI Plan”), subject to the
terms and conditions therein, with a target payout value equal to 120% of the
Executive’s Base Salary. With respect to the period from
January 24, 2010 through July 31, 2010 (the “Stub Year”), the Executive
shall be eligible to participate in the LTI Plan that covers FY2010, FY2011 and
FY2012 (the “Initial LTI
Period”). The payout, if any, to the Executive under the LTI
Plan with respect to the Initial LTI Period shall be based on the Company’s
performance for the full Initial LTI Period, as determined by the Compensation
Committee in its sole discretion, and shall be multiplied by a fraction of
thirty over thirty-six (30/36) to reflect the Executive’s commencement of
participation under the LTI Plan on January 24, 2010. Amounts payable
under the LTI Plan pursuant to this Section 7 (“LTI Awards”), if any, shall be
payable in the form of shares of restricted stock, which LTI Awards shall be
granted to the Executive as soon as practicable following the date on which the
Compensation Committee determines the achievement levels upon completion of the
relevant measurement period (the “LTI Determination
Date”). The number of shares of restricted stock the Executive
shall receive under the LTI Plan shall be based on the closing price of the
Common Stock on the LTI Determination Date. Pursuant to Section 4
hereof, each LTI Award granted to the Executive shall be fully vested on the
date of grant.
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8.
EBITDA
Bonus.
(a)
Subject to clauses (b), (c) and (d) below, the Executive shall be
eligible to receive a bonus based on the Company’s EBITDA performance (the
“EBITDA Bonus”) in an
amount equal to 10% of the sum of the Company’s positive EBITDA increments and
negative EBITDA decrements for each semi-annual period during the Performance
Period (as defined below), which incremental and decremental amounts for each
semi-annual period shall be determined by comparing the Company’s actual EBITDA
performance for such semi-annual period against the EBITDA target amount
established by the Compensation Committee for such semi-annual period as set
forth on Appendix A hereto.
(b)
The “Performance
Period” shall mean the period beginning January 24, 2010 and
ending on the last day of the Company’s fifth full fiscal year beginning
thereafter.
(c)
The EBITDA Bonus shall be paid in a lump sum and shall be
payable during the first 60 days of the fiscal year following the completion of
the Performance Period, provided that if the Executive’s employment is
terminated for any reason other than by the Company for Cause prior to the
completion of the Performance Period, the Executive shall be entitled to receive
an EBITDA Bonus based on the sum of the actual results measured through the
Termination Date (the “Termination EBITDA Bonus”),
which Termination EBITDA Bonus shall be determined by aggregating the Company’s
positive EBITDA increments and negative EBITDA decrements as compared to the
applicable EBITDA targets for each completed semi-annual period during the
Performance Period prior to the Termination Date and shall also include a
pro-rata portion of the Company’s incremental or decremental EBITDA performance
for the semi-annual period in which the Termination Date occurs as compared to
the applicable EBITDA for such period, based on the Company’s actual results for
such semi-annual period. Any Termination EBITDA Bonus payment shall
be made on the Delayed Payment Date (as defined in Section 21(b)
hereof).
(d)
Any items of gain, loss or expense for a semi-annual period related to
the following shall be excluded in any measurement of EBITDA hereunder,
provided, that with respect to this clause (d), the term “Company” shall include
any subsidiary, division, other operational unit or administrative department of
the Company:
(1) special,
unusual or non-recurring items, events or circumstances affecting the
Company or the financial statements of the Company;
(2) the
disposal of a business or discontinued operations of the Company
(3) the
operations of any business acquired by the Company during the semi-annual
period; and
(4) changes
in accounting principles or to changes in applicable law or
regulations.
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9.
OTHER
BENEFITS.
(a)
Life
Insurance.
(1) During
the Term, the Company shall maintain term life insurance coverage on the life of
the Executive in the amount of $5,000,000, the proceeds of which shall be
payable to the beneficiary or beneficiaries designated by the Executive;
and
(2) During
the Term, the Company shall be entitled to maintain a “key person” term life
insurance policy on the life of the Executive, the proceeds of which shall be
payable to the Company or its designees. The Executive agrees to undergo any
reasonable physical examination and other procedures as may be necessary to
maintain such policy.
(b)
Office and
Facilities. During the Term, the Executive shall be provided
with appropriate offices and with such secretarial and other support facilities
as are commensurate with the Executive’s status with the Company and adequate
for the performance of the Executive’s duties hereunder.
(c)
Use of Corporate
Aircraft. During the Term, Executive shall continue to be
entitled to the use of the Company’s aircraft, subject to the terms and
conditions disclosed in the Company’s proxy statement filed April 4,
2009.
(d)
Benefits Not in Lieu of
Compensation. No benefit or perquisite provided to the
Executive in this Section 9 shall be deemed to be in lieu of Base Salary, bonus
or other compensation.
10.
EXPENSES. Subject
to applicable Company policies and Section 21(c) hereof, during the Term the
Executive shall be entitled to receive prompt reimbursement of all expenses
reasonably incurred by the Executive in connection with the performance of the
Executive’s duties hereunder or for promoting, pursuing or otherwise furthering
the business or interests of the Company including, without limitation, travel,
automobile, and meal and entertainment expenses.
11.
VACATION. During
the Term, the Executive shall be entitled to four weeks of annual vacation or,
if greater, in accordance with the policies as periodically established by the
Parent Board for similarly situated executives of the Company.
12.
DEFINITIONS, TERMS AND
CONDITIONS. The Executive’s employment hereunder is subject to
the following terms:
(a)
Cause. “Cause” means that the
Executive has:
(1) pled
“guilty” or “no contest” to or has been convicted of an act which is defined as
a felony under federal or state law;
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(2) committed
an act of intentional gross misconduct, fraud, or gross neglect in connection
with the Executive’s duties or in the course of the Executive’s employment with
the Company or any affiliate, and the Parent Board shall have determined that
such act is, or could reasonably be expected to be, materially harmful to the
Company, the affiliate or the Parent; or
(3) committed
a material breach of this Agreement (including a violation of the
non-disclosure, non-compete or non-solicitation provisions set forth in Sections
14(a), 14(b) and 14(c) hereof) which is materially and demonstrably injurious to
the Company.
For
purposes of this Agreement, no act or failure to act on the part of the
Executive shall be deemed “intentional” unless it was done or omitted to be done
by the Executive not in good faith and without reasonable belief that the
Executive’s action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for Cause under this Agreement unless and until
there shall have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than two-thirds (2/3) of the Parent
Board at a meeting called and held for such purpose, after reasonable notice to
the Executive and an opportunity for the Executive, together with the
Executive’s counsel (if the Executive chooses to have counsel present at such
meeting), to be heard before the Parent Board, finding that, in the good faith
opinion of the Parent Board, the Executive had committed an act constituting
Cause and specifying the particulars of the act constituting Cause in
detail.
(b)
Notice of
Termination. “Notice of Termination” means a
written notice indicating the specific termination provision in this Agreement
relied upon and setting forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the employment under the provision
so indicated. Except for a termination of employment for Cause, any termination
by the Company shall be communicated by a Notice of Termination to the Executive
30 days prior to the Termination Date. Any termination by the Executive for any
reason other than death shall be communicated by a Notice of Termination 90 days
prior to the Termination Date. However, the Company may elect to pay
the Executive 30 or 90 days, as applicable, of Base Salary in lieu of such 30 or
90 days written notice. If the Company notifies the Executive that it will pay
the Executive in lieu of 30 or 90 days written notice, the Company may deny the
Executive further access to the Company’s offices subject to the Executive’s
right to recover any personal effects at an agreed upon time. For purposes of
this Agreement, no such purported termination of employment shall be effective
without a Notice of Termination.
(c)
Termination
Date. “Termination Date” means the
date on which the Executive incurs a “separation from service” within the
meaning of Treasury Regulation Section 1.409A-1(h).
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13.
TERMINATION
OF EMPLOYMENT; COMPENSATION UPON TERMINATION.
(a)
Termination by Company with
Cause. The Company shall be entitled to immediately terminate
the Executive’s employment for Cause after giving a Notice of Termination. Such
Notice of Termination shall state in detail the particular act or acts or
failure or failure to act that constitute the grounds on which the proposed
termination for Cause is based. If during the Term, the Executive’s employment
is terminated by the Company for Cause, the Company’s sole obligation hereunder
shall be to pay or reimburse the Executive (or facilitate a tax qualified
rollover of) the following amounts:
(1) the
Executive’s accrued Base Salary and accrued vacation not paid as of the
Termination Date;
(2) the
Executive’s vested benefits as of the Termination Date pursuant to the Company’s
benefit, retirement, incentive and other plans;
(3) any
and all monies advanced to or expenses incurred by the Executive pursuant to
Section 10 through the Termination Date (collectively with the amounts described
in clauses 1 and 2 above, the “Accrued Amounts”);
and
(4) the
premiums provided for in Section 9(a)(1) through the end of the calendar year in
which the Termination Date occurs. The Executive’s entitlement to any other
benefits shall be determined in accordance with the applicable terms and
conditions of the Company’s and/or Parent’s employee benefit plans then in
effect.
(b)
Termination by Company Without Cause, or
by Executive for any Reason.
(1) Severance Payment. The
Company may terminate the Executive for any reason other than Cause and the
Executive may terminate his employment with the Company for any reason,
including death and disability, after giving a Notice of
Termination. If the Executive’s employment is terminated by the
Company during the Term for any reason other than for Cause or by the Executive
for any reason, subject to the Executive’s execution (and non-revocation) of a
general release of claims in favor of the Company within sixty (60) days
following the Termination Date, the sole obligation of the Company, its
affiliates and its and their related persons and entities hereunder shall be to
pay the Executive a lump sum payment in the gross amount of $9,106,365 (the
“Severance Payment”) on
the Delayed Payment Date (as defined in Section 21(b) hereof). The
Severance Payment reflects the entirety of the severance amounts and benefits
payable to the Executive from the Company and the Parent upon a termination by
the Company for any reason other than Cause or by the Executive for any reason,
and notwithstanding anything contained in the Prior Agreements, the Executive
shall not be entitled to amounts or benefits in excess of the Severance Payment
upon such termination of employment, other than vested and accrued, but unpaid,
benefits and amounts, including the Accrued Amounts.
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(2) Rabbi Trust. On
the Termination Date, the Severance Payment shall be deposited into a “rabbi
trust,” solely to the extent permitted by Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”), and shall remain in
the rabbi trust until the expiration of the Delay Period (as defined in Section
21(b) hereof). During the time that the Severance Payment is held in
the rabbi trust, the Severance Payment shall be invested as determined by the
Company, and shall be credited with investment earnings. The amount
payable to the Executive on the Delayed Payment Date shall be equal to the sum
of (i) the Severance Payment, (ii) any earnings attributable to the investment
of the Severance Payment during the Delay Period while the Severance Payment is
held in the rabbi trust, and (iii) the difference between the amount under (ii)
and $400,000.
(c)
Restricted Stock, Stock
Options. For purposes of this Agreement, unless otherwise
indicated herein, restricted stock and stock options shall vest and be
exercisable according to the terms of the Stock Plan.
(d)
No Duty to
Mitigate. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no payment hereunder shall be offset or reduced by the amount
of any compensation or benefits provided to the Executive in any subsequent
employment.
14.
EXECUTIVE
COVENANTS.
(a)
Unauthorized Disclosure,
Nondisparagement. The Executive shall not, during the term of
this Agreement and thereafter, make any disparaging comments which may be
harmful to the Company’s reputation or any Unauthorized
Disclosure. The Company shall use commercially reasonable efforts to
cause the officers and directors of the Company not to make any disparaging
comments which may be harmful to the Executive’s
reputation. For purposes of this Agreement, “Unauthorized Disclosure” shall
mean disclosure by the Executive without the prior written consent of the Parent
Board to any person other than a person to whom disclosure is reasonably
necessary or appropriate in connection with the performance by the Executive of
duties as an executive of the Company or as may be legally required, of any
information relating to the business or prospects of the Company (including, but
not limited to, any confidential information with respect to any of the
Company’s customers, products, methods of distribution, strategies, business and
marketing plans and business policies and practices); provided, however, that
such term shall not include the use or disclosure by the Executive, without
consent, of any information known generally to the public (other than as a
result of disclosure by the Executive in violation of this Section 14(a)). This
confidentiality covenant has no temporal, geographical or territorial
restriction. The foregoing shall not be violated by truthful
statements in response to legal process, required governmental testimony or
filings, or administrative or arbitral proceedings (including, without
limitation, depositions in connection with such proceedings).
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(b)
Non-Competition. During
the Non-Competition Period defined below, the Executive shall not, directly or
indirectly, without the prior written consent of the Parent Board, own, manage,
operate, join, control, be employed by, consult with or participate in the
ownership, management, operation or control of, or be connected with (as a
stockholder, partner or otherwise), any business, individual, partner, firm,
corporation, or other entity that competes or plans to compete, directly or
indirectly, with the Company, its products, or any division, subsidiary or
affiliate of the Company (other than dressbarn, maurices or any other business
acquired by Parent after November 25, 2009 and not engaged in the same business
as the Company); provided, however, that the “beneficial ownership” by the
Executive after termination of employment with the Company, either individually
or as a member of a “group,” as such terms are used in Rule 13d of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), of not
more than two percent (2%) of the voting stock of any publicly held corporation,
shall not be a violation of Section 14 of this Agreement.
The “Non-Competition Period” means
the period the Executive is employed by the Company plus two (2) years from the
Termination Date if the Executive’s employment is terminated (i) by the Company
for any reason, (ii) by the Executive for any reason, or (iii) by reason of
either the Company’s or the Executive’s decision not to extend the term of this
Agreement as contemplated by Section 1 hereof.
(c)
Non-Solicitation. During
the No-Raid Period defined below, the Executive shall not, either directly or
indirectly, alone or in conjunction with another party, recruit or hire, or
attempt to recruit or hire, interfere with or harm, or attempt to interfere with
or harm, the relationship of the Company, and/or its subsidiaries with, any
person who at any time was an employee, customer or supplier of the Company
and/or its subsidiaries or otherwise had a business relationship with the
Company and/or its subsidiaries.
The
“No-Raid Period” means
the period the Executive is employed by the Company plus two (2) years from the
Termination Date if the Executive’s employment is terminated (i) by the Company
for any reason, (ii) by the Executive for any reason, or (iii) by reason of
either the Company’s or the Executive’s decision not to extend the term of this
Agreement as contemplated by Section 1 hereof.
(d)
Delivery of Documents
Upon Termination. The Executive shall deliver to the Company
or its designee at the termination of the Executive’s employment all
correspondence, memoranda, notes, records, drawings, sketches, plans, customer
lists, product compositions, and other documents and all copies thereof, made,
composed or received by the Executive, solely or jointly with others, that are
in the Executive’s possession, custody, or control at termination and that are
related in any manner to the past, present, or anticipated business of the
Company, its subsidiaries and/or affiliates. In this regard, the Executive
hereby grants and conveys to the Company all right, title and interest in and
to, including without limitation, the right to possess, print, copy, and sell or
otherwise dispose of, any reports, records, papers, summaries, photographs,
drawings or other documents, and writings, and copies, abstracts or summaries
thereof, that may be prepared by the Executive or under the Executive’s
direction or that may come into the Executive’s possession in any way during the
term of the Executive’s employment with the Company that relate in any manner to
the past, present or anticipated business of the Company, its subsidiaries
and/or affiliates.
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(e)
Intellectual
Property. The Executive shall hold in trust for the benefit of
the Company, and shall disclose promptly and fully to the Company in writing,
and hereby assigns, and binds the Executive’s heirs, executors, and
administrators to assign, to the Company any and all inventions, discoveries,
ideas, concepts, improvements, copyrightable works, and other developments (the
“Developments”)
conceived, made, discovered or developed by the Executive, solely or jointly
with others, during the term of the Executive’s employment by the Company,
whether during or outside of usual working hours and whether on the Company’s
premises or not, that relate in any manner to the past, present or anticipated
business of the Company, its subsidiaries and/or affiliates. All works of
authorship created by the Executive, solely or jointly with others, shall be
considered works made for hire under the Copyright Act of 1976, as amended, and
shall be owned entirely by the Company. Any and all such Developments shall be
the sole and exclusive property of the Company, whether patentable,
copyrightable, or neither, and the Executive shall assist and fully cooperate in
every way, at the Company’s expense, in securing, maintaining, and enforcing,
for the benefit of the Company or its designee, patents, copyrights or other
types of proprietary or intellectual property protection for such Developments
in any and all countries. Within one (1) year following the end of the term of
this Agreement and without limiting the generality of the foregoing, any
Development of the Executive relating to any subject matter on which the
Executive worked or was informed during the Executive’s employment by the
Company shall be conclusively presumed to have been conceived and made prior to
the termination of the Executive’s employment (unless the Executive clearly
proves that such Development was conceived and made following the termination of
the Executive’s employment), and shall accordingly belong and be assigned to the
Company and shall be subject to this Agreement.
(f)
Remedies. The
Executive agrees that any breach of the terms of this Section 14 would result in
irreparable injury and damage to the Company for which the Company would have no
adequate remedy at law; the Executive therefore also agrees that in the event of
said breach or any threat of breach, the Company shall be entitled to an
immediate injunction and restraining order to prevent such breach and/or
threatened breach and/or continued breach by the Executive and/or any and all
persons and/or entities acting for and/or with the Executive, without having to
prove damages, and to all costs and expenses, including reasonable attorneys’
fees and costs, in addition to any other remedies to which the Company may be
entitled at law or in equity. The terms of this paragraph shall not prevent the
Company from pursuing any other available remedies for any breach or threatened
breach hereof, including but not limited to the recovery of damages from the
Executive. The Executive and the Company further agree that the provisions of
the covenants not to compete and solicit are reasonable and that the Company
would not have entered into this Agreement but for the inclusion of such
covenants herein. Should a court determine, however, that any provision of the
covenants is unreasonable, either in period of time, geographical area, or
otherwise, the parties hereto agree that the covenant should be interpreted and
enforced to the maximum extent which such court or arbitrator deems
reasonable.
The
provisions of this Section 14 shall survive any termination of this Agreement,
and the existence of any claim or cause of action by the Executive against the
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of the covenants and agreements of
this Section 14; provided, however, that this paragraph shall not, in and of
itself, preclude the Executive from defending against the enforceability of the
covenants and agreements of this Section 14.
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15.
ADJUSTMENT TO
PAYMENTS.
(a) Section
280G Tax Gross-Up. If the Severance Payment, or the acceleration of
stock option vesting, or the payment or distribution of any employee benefits or
similar benefits under any plan, program, or agreement which is applicable to
the Executive are subject to excise tax pursuant to Code Section 4999 (or
any similar federal or state excise tax), the Company shall pay to the Executive
such additional compensation as is necessary (after taking into account all
federal, state, and local income taxes payable by the Executive as a result of
the receipt of such additional compensation) to place the Executive in the same
after-tax position the Executive would have been in had no such excise tax (or
any interest or penalties thereon) been paid or incurred with respect to any of
such amounts (the “Tax
Gross-Up”). The Company shall pay such additional compensation at the
time when the Company determines that any payment is subject to the excise tax
under Section 4999 of the Code, but in no event later than December 31
of the year after the year in which the Executive remits such excise
tax.
(b)
Section 409A
Gross-Up. If the Company determines that the payment of the
Severance Payment will cause the Executive to incur additional tax or interest
under Code Section 409A, or if the Internal Revenue Service (the “IRS”)
imposes additional tax or interest under Code Section 409A due to the payment of
the Severance Payment, the Company shall pay to the Executive such additional
compensation as is necessary (after taking into account all federal, state, and
local income taxes payable by the Executive as a result of the receipt of such
additional compensation) to place the Executive in the same after-tax position
the Executive would have been in had no such additional tax (or any interest or
penalties thereon) been paid or incurred with respect to any of such amounts,
provided that such amount shall be reduced by $400,000 (such reduced amount, the
“409A
Gross-Up”). The Company shall pay such additional compensation
as soon as administratively practicable after the earlier of the time when the
Company makes its determination that such additional tax or interest under Code
Section 409A will be imposed and the time such additional tax or interest under
Code Section 409A is due to be paid to the IRS. In no event, however,
shall such payment be made after December 31 of the year after the year in which
the Executive remits such additional tax or interest.
(c)
Calculation of
Gross-Up. The calculation of any Tax Gross-Up and 409A
Gross-Up pursuant to this Section 15 shall be approved by the Company’s
independent certified public accounting firm engaged by the Company, and the
calculation shall be provided to the Executive in writing. The Executive shall
then be given fifteen (15) days, or such longer period as the Executive
reasonably requests, to accept or reject the calculation of the Tax-Gross-Up or
409A Gross-Up, as applicable. If the Executive rejects the calculation of the
Tax-Gross-Up or 409A Gross-Up, as applicable and the parties are thereafter
unable to agree within an additional forty-five (45) days, the arbitration
provisions of Section 18 shall control. The Company shall reimburse the
Executive for all reasonable legal and accounting fees incurred with respect to
the calculation of the Tax-Gross-Up or 409A Gross-Up, as applicable, and any
disputes related thereto in accordance with Section 18
hereof.
11
(d)
Amount of
Gross-Up. For purposes of determining the amount of any Tax
Gross-Up or Section 409A Gross-Up, as applicable, pursuant to this Section 15,
the Executive’s actual marginal rate of federal income taxation in the calendar
year in which the Tax Gross-Up or Section 409A Gross-Up, as applicable, is to be
made shall be used, and the actual marginal rates of state and local income
taxation in the state and locality of the Executive’s residence applicable to
the Executive in the calendar year in which the Tax Gross-Up or Section 409A
Gross-Up, as applicable, is to be made shall be used, net of the maximum
reduction in federal income taxes which could be obtained from deduction of such
state and local taxes if paid in such year, after taking into account the
limitation on the deductibility of itemized deductions, including such state and
local taxes, under Section 68 of the Code.
(e)
Adjustments to
Gross-Up. If the excise or additional taxes imposed on the
Executive are subsequently determined to be less than the amount taken into
account with respect to the Tax Gross-Up or Section 409A Gross-Up, as
applicable, the Executive shall repay to the Company at the time the reduction
in excise or additional taxes is finally determined, the portion of the Tax
Gross-Up or Section 409A Gross-Up, as applicable, attributable to such
reduction. Notwithstanding the Executive’s acceptance or rejection of
the Tax Gross-Up or Section 409A Gross-Up, as applicable, calculation, if the
excise or additional taxes are determined to exceed the amount taken into
account with respect to the Tax Gross-Up or Section 409A Gross-Up, as
applicable, the Company shall make an additional Tax Gross-Up or Section 409A
Gross-Up, as applicable, payment to the Executive in respect of such excess at
the time the amount of such excess is finally determined. Any
adjustments to the Tax Gross-Up or Section 409A Gross-Up, as applicable, shall
only be made to the extent permitted by law.
16.
EXECUTIVE
REPRESENTATION. The Executive expressly represents and
warrants to the Company that the Executive is not a party to any contract or
agreement and is not otherwise obligated in any way, and is not subject to any
rules or regulations, whether governmentally imposed or otherwise, which will or
may restrict in any way the Executive’s ability to fully perform the Executive’s
duties and responsibilities under this Agreement.
17.
SUCCESSORS AND
ASSIGNS.
(a)
This Agreement shall be binding upon and shall inure to the benefit of
the Company, its successors and assigns, and the Company shall require any
successor or assign to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place. The term
“Company” as used herein shall include any such successors and assigns to the
Company’s business and/or assets. The term “successors and assigns” as used
herein shall mean a corporation or other entity acquiring or otherwise
succeeding to, directly or indirectly, all or substantially all the assets and
business of the Company (including this Agreement) whether by operation of law
or otherwise.
(b)
Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Executive, the Executive’s beneficiaries or
legal representatives, except by will or by the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive’s legal personal representative.
12
18.
ARBITRATION. Except
with respect to the remedies set forth in Section 14(f), as a method for
resolving any dispute arising out of this Agreement, the Executive, in the
Executive’s sole discretion, may select binding arbitration in accordance with
this Section 18. Except as provided otherwise in this Section 18, arbitration
pursuant to this Section 18 shall be governed by the Commercial Arbitration
Rules of the American Arbitration Association. If the Executive wishes to
arbitrate an issue under this Section 18, the Executive shall deliver written
notice to the Company, including a description of the issue to be arbitrated.
Within fifteen (15) days after the Executive demands arbitration, the Company
and the Executive shall each appoint an arbitrator. Within fifteen (15)
additional days, these two arbitrators shall appoint the third arbitrator by
mutual agreement; if they fail to agree within this fifteen (15) day period,
then the third arbitrator shall be selected promptly pursuant to the rules of
the American Arbitration Association for Commercial Arbitration. The arbitration
panel shall hold a hearing in Columbus, Ohio, within 90 days after the
appointment of the third arbitrator. The fees and expenses of the arbitrators,
and any American Arbitration Association fees, shall be paid by the Company.
Both the Company and the Executive may be represented by counsel and may present
testimony and other evidence at the hearing. Within 90 days after commencement
of the hearing, the arbitration panel will issue a written decision; the
majority vote of two of the three arbitrators shall control. The majority
decision of the arbitrators shall be binding on the parties, and the parties may
not pursue other available legal remedies if the parties are not satisfied with
the majority decision of the arbitrator. The Executive shall be entitled to seek
specific performance of the Executive’s rights under this Agreement during the
pendency of any dispute or controversy arising under or in connection with this
Agreement.
19.
NOTICE. For the
purposes of this Agreement, notices and all other communications provided for in
this Agreement (including the Notice of Termination) shall be in writing and
shall be deemed to have been duly given when personally delivered or sent by
registered or certified mail, return receipt requested, postage prepaid, or upon
receipt if overnight delivery service is used, addressed as
follows:
TO THE
EXECUTIVE:
Michael
W. Rayden
5014
Kitzmiller Road
New
Albany, Ohio 43054
TO THE
COMPANY:
Tween
Brands, Inc.
8323
Walton Parkway
New
Albany, Ohio 43054
Attn:
Michael C. Keane, Senior Vice President – Human Resources
WITH COPY
TO THE PARENT:
The Dress
Barn, Inc.
30
Dunnigan Drive
Suffern,
New York 10901
Attn:
David R. Jaffe, Chief Executive Officer, with a copy to Gene Wexler, General
Counsel
13
20.
SETTLEMENT OF
CLAIMS. Except as otherwise provided, the Company’s obligation
to make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company may have against the Executive or others.
21.
CODE
SECTION 409A.
(a)
Although the Company does not guarantee to the Executive any particular
tax treatment relating to the payments and benefits paid in accordance with the
terms and conditions of this Agreement, it is the intent of the parties that
payments and benefits under this Agreement comply with or be exempt from Code
Section 409A and the regulations and guidance promulgated thereunder
(collectively “Code Section
409A”) and, accordingly, to the maximum extent permitted, this Agreement
shall be interpreted to be in compliance therewith. The parties agree
to reasonably cooperate to take all further actions necessary to satisfy the
requirements of Code Section 409A.
(b)
A termination of employment shall not be deemed to have occurred for
purposes of any provision of this Agreement providing for the payment of any
amounts or benefits that are considered “nonqualified deferred compensation”
under Code Section 409A upon or following a termination of employment unless
such termination is also a “separation from service” within the meaning of Code
Section 409A and, for purposes of any such provision of this Agreement,
references to a “termination,” “termination of employment” or like terms shall
mean “separation from service.” If the Executive is deemed on the
date of termination to be a “specified employee” within the meaning of that term
under Code Section 409A(a)(2)(B), then with regard to any payment or the
providing of any benefit made subject to this Section 21(b), to the extent
required to be delayed in compliance with Code Section 409A(a)(2)(B), such
payment or benefit shall be made or provided at the date which is the later of
(i) eighteen (18) months following January 1, 2009 and (ii) the earlier of (A)
expiration of the six (6)-month period measured from the date of the Executive’s
“separation from service,” and (B) the date of the Executive’s death (the “Delay
Period”). Upon the expiration of the Delay Period, all
payments and benefits delayed pursuant to this provision (whether they would
have otherwise been payable in a single sum or in installments in the absence of
such delay) shall be paid or reimbursed to the Executive in a lump sum on the
first business day following the end of the Delay Period (the “Delayed Payment Date”), and
any remaining payments and benefits due under this Agreement shall be paid or
provided in accordance with the normal payment dates specified for them
herein.
(c) All
expenses or other reimbursements paid pursuant to this Agreement that are
taxable income to the Executive shall in no event be paid later than the end of
the calendar year next following the calendar year in which the Executive incurs
such expense. With regard to any provision herein that provides for
reimbursement of costs and expenses or in-kind benefits, except as permitted by
Section 409A, (i) the right to reimbursement or in-kind benefits shall not be
subject to liquidation or exchange for another benefit, (ii) the amount of
expenses eligible for reimbursement, of in-kind benefits, provided during any
taxable year shall not affect the expenses eligible for reimbursement, or
in-kind benefits to be provided, in any other taxable year, provided that the
foregoing clause (ii) shall not be violated with regard to expenses reimbursed
under any arrangement covered by Code Section 105(b) solely because such
expenses are subject to a limit related to the period the arrangement is in
effect and (iii) such payments shall be made on or before the last day of the
Executive’s taxable year following the taxable year in which the expense
occurred.
14
22.
MISCELLANEOUS. No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by the
Executive and the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreement or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement.
23.
GOVERNING LAW;
JURISDICTION. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Ohio without
giving effect to conflict of law principles thereof. The parties hereby consent
to the exclusive jurisdiction of the state courts of the State of Ohio and venue
in Franklin County, Ohio.
24.
SEVERABILITY. The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
25.
ENTIRE
AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, if any, understandings and arrangements, oral
or written, between the parties hereto with respect to the subject matter
hereof, including, but not limited to the Prior Agreements. Executive
acknowledges and agrees that by entering into this Agreement, Executive hereby
forfeits and waives any right to payments or benefits under such Prior
Agreements to which Executive otherwise may have been eligible or entitled to
receive thereunder.
[remainder
of page intentionally blank]
15
IN WITNESS WHEREOF, the
Company and Parent have caused this Agreement to be executed by its duly
authorized officer and the Executive has executed this Agreement as of the day
and year first above written.
|
TWEEN
BRANDS, INC.
|
||
|
By:
|
/s/ Michael
C. Keane
|
|
|
Michael
C. Keane
|
||
|
Senior
Vice President – Human Resources
|
||
|
EXECUTIVE
|
||
|
/s/
Michael Rayden
|
||
|
Michael
Rayden
|
||
|
Chief
Executive Officer of
|
||
|
Tween
Brands, Inc.
|
||
|
Solely
with respect to Sections 2(a), 3, 4, 6, 7, 8,
11,
12(a), 13, 14(a), 14(b), and 19 of this
Agreement,
|
||
|
THE DRESS BARN,
INC.
|
||
|
/s/
David Jaffe
|
||
|
David
Jaffe
|
||
|
President
& Chief Executive
Officer
|
||
16
Appendix
A
EBITDA
Targets
|
($
in thousands)
|
||||||||
|
Year
|
Spring
|
Fall
|
||||||
|
2010
|
$ | 26,274 | * | $ | - | |||
|
2011
|
$ | 33,994 | $ | 84,893 | ||||
|
2012
|
$ | 41,608 | $ | 94,871 | ||||
|
2013
|
$ | 46,121 | $ | 101,204 | ||||
|
2014
|
$ | 50,058 | $ | 106,795 | ||||
|
2015
|
$ | 54,742 | $ | 113,492 | ||||
| * Actual approved Spring 2010 Budget | ||||||||