EXHIBIT 10.48
RETENTION AGREEMENT
THIS AGREEMENT made this 27th day of January, 1999 between
Filene's Basement, Inc., a corporation, with its principal office
in Wellesley, Massachusetts (the "Company"), and Xxxxxxx X.
Xxxxxxxxx ("Executive").
Executive has been a key executive of the Company and an
integral part of its management.
The Company recognizes that the possibility of a change in
control of the Company may result in the departure or distraction
of management to the detriment of the Company and its
shareholders.
The Company wishes to assure Executive of certain benefits
should his employment terminate in specified circumstances
following a change in control of the Company.
In consideration of these premises and other good and
valuable consideration, the parties agree as follows:
1. Benefits Upon A Qualified Termination. Executive shall be
entitled to the following benefits upon the first to occur of a
Qualified Termination or a termination of Executive's employment
for any reason (whether by the Company or by Executive) during
the one month period beginning on the first day of the twelfth
calendar month beginning after a Change in Control:
1. Cash Payment. The Company shall pay to Executive the
following amounts in a lump sum, in cash, within 30 days
following his Date of Termination:
(1) an amount equal to the accrued and unpaid portion, if any,
of Executive's base salary through the Date of Termination; and
(2) an amount equal to three (3) times Executive's Annual
Salary.
In the event Executive is entitled to payments under any long
term disability plan of the Employer during the first thirty-six
(36) months following his Date of Termination, he shall repay
such amounts to the Company; provided, that such repayments shall
in no event exceed the amount determined under (ii) above.
2. Benefits. Until the close of the thirty-sixth (36th) month
following Executive's Date of Termination, the Employer shall
maintain in full force and effect for the continued benefit of
Executive and his family all life insurance and medical
(including dental) benefits to which the Executive and his family
were entitled immediately prior to the Change in Control (or if
Executive's title was changed to a level below that of
Executive's Current Title within 180 days before the commencement
of a Standstill Period, all such benefits to which Executive and
his family were entitled immediately prior to such change, if the
benefits thereunder are greater), on terms and conditions not
less favorable to Executive and his family than when Executive
was still employed, provided that Executive's continued
participation is possible under the provisions of such plans and
programs. In the event that Executive is ineligible to
participate in such plans or programs, the Employer shall arrange
upon comparable terms to provide Executive and his family with
benefits substantially similar to those which they are entitled
to receive under such plans and programs. Until the close of the
thirty-sixth (36th) month following Executive's Date of
Termination, the Employer shall also continue for Executive's
benefit all other fringe benefits to which Executive is entitled
under any employment agreement between Executive and the Company
in effect immediately prior to the Change in Control (or if
Executive's title was changed to a level below that of
Executive's Current Title within 180 days before the commencement
of a Standstill Period, immediately prior to such change). This
provision requires the continued accrual of benefits for
Executive until the close of the thirty-sixth (36th) month
following the Executive's Date of Termination, under any employee
benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, ("ERISA"))
maintained by the Company; provided that if any applicable law
prevents the accrual of such benefits under any such benefit plan
subject to Section 401 of the Internal Revenue Code of 1986, as
amended, then any such accrual shall be provided instead under a
benefit plan which is unfunded and is maintained primarily for
the purposes of providing deferred compensation for a select
group of management or highly compensated employees, as described
in Section 201 of ERISA. The Employer's obligations hereunder
with respect to life or medical (including dental) coverage or
benefits shall be deemed satisfied to the extent (but only to the
extent) of any such coverage or benefits provided by another
employer.
3. Gross-Up. Notwithstanding any other provision in this
Agreement to the contrary, in the event that any benefit, payment
or distribution provided by the Employer and/or the Company to or
for the benefit of the Executive (whether paid or payable or
distributed or distributable or otherwise provided pursuant to
the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this paragraph
(c)) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code"), or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax
together with any such interest and penalties are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive from the Company an additional
payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or
penalties) with respect to the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payment. The determination as to whether a
Gross-Up Payment is due shall be made as soon as practicable
following the Date of Termination (and at such other time or
times, such as upon any Change of Control, as may be necessary to
accomplish the purposes of this paragraph) by Xxxxxx Xxxxxxxx LLP
or by such other firm of certified public accountants as the
Company shall designate prior to the Change in Control, within
sixty (60) days after the Executive becomes entitled to receive
any Payment subject to Section 4999 of the Code. The Company
shall pay all fees and expenses of the accountants related to the
aforesaid determination. The Company shall pay any Gross-Up
Payment or Payments within thirty (30) days of the determinations
hereinabove described.
2. Noncompetition. Upon a Change in Control, any agreement by
Executive not to engage in competition with the Company
subsequent to the termination of his employment, whether
contained in an employment contract or other agreement, shall no
longer be effective.
3. No Duty to Mitigate Damages. Executive's benefits under
this Agreement shall be considered compensation in consideration
of past service and his continued service from the date of this
Agreement, and his entitlement thereto shall neither be governed
by any duty to mitigate damages by seeking further employment nor
offset by any compensation which he may receive from future
employment.
4. Payments Under Other Agreements. In the event that
Executive has an employment contract or any other agreement with
the Company (or a Subsidiary) which entitles him to payments upon
the termination of his employment, the amount of any payments
under such other agreements shall be reduced (but not below zero)
by the payments to be made under Section 1(A), and such offset
shall be applied only against comparable benefits, so that cash
payments under such other agreements shall be the only payments
reduced by amounts paid under Section 1(A). Notwithstanding the
foregoing, any benefit payable in accordance with the terms of
the Executive Severance Plan entered into by the Executive and
Filenes' Basement Corp. (and any amendment thereto) shall not be
reduced by payments under this Agreement.
5. Withholding. Anything to the contrary notwithstanding, all
payments required to be made by the Company hereunder to
Executive shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company
may reasonably determine it should withhold pursuant to any
applicable law or regulation.
6. Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be
settled exclusively by arbitration in Boston, Massachusetts in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect, and judgment upon the
award rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof.
7. Legal Fees and Expenses. The Company shall pay, as
incurred, to the full extent allowed by law, all legal,
accounting and other fees and expenses, including but not limited
to counsel fees, stenographer fees, printing costs, etc.
reasonably incurred by Executive, regardless of the outcome, in
(a) contesting or disputing that the termination of his
employment during a Standstill Period is for Cause or other than
for good reason (as defined in paragraph (J) of Exhibit A), or
(b) in obtaining any right or benefit to which Executive is
entitled under this Agreement or any other agreement with the
Company, or (c) in defending against any claim or contest brought
by the Company or others with respect to the validity or
enforceability under any provisions of this Agreement or any
other agreement with the Executive, or the guarantee of
performance thereof. Any amount payable under this Agreement
that is not paid when due shall accrue interest at the applicable
Federal rate as from time to time provided for in Section
7872(f)(2)(A) of the Code, until paid in full.
8. Termination of Employment. Nothing in this Agreement shall
be construed as limiting the Employer's right to terminate
Executive's employment, subject to the provision of benefits as
herein described.
9. Notices. All notices shall be in writing and shall be
deemed given five days after mailing in the continental United
States by registered or certified mail, or upon personal receipt
after delivery, telex, telecopy or telegram, to the party
entitled thereto at the address stated below or to such changed
address as the addressee may have given by a similar notice:
To the Company: Filene's Basement, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
To Executive: At his home address, as last shown
on
the records of the Company
10. Severability. In the event that any provision of this
Agreement shall be determined to be invalid or unenforceable in
any jurisdiction, it shall continue to be enforceable in all
other jurisdictions and in any event the remaining provisions
shall remain in full force and effect to the fullest extent
permitted by law.
11. General Provisions.
1. Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors. If
Executive dies while any amounts are still owing under this
Agreement, such amounts shall be paid to Executive's estate or to
such person as Executive shall have designated in writing to the
Company. This Agreement shall not otherwise be assignable by
Executive.
2. Amendment or Modification; Waiver. This Agreement may not
be amended unless agreed to in writing by Executive and the
Company. No waiver by either party of any breach of this
Agreement shall be deemed a waiver of a subsequent breach.
3. Titles. No provision of this Agreement is to be construed
by reference to the title of any section.
4. Termination of Agreement Outside of Standstill Period. This
Agreement shall be automatically terminated upon the first to
occur of (i) the termination of Executive's employment for any
reason, whether voluntary or involuntary, at any time other than
during a Standstill Period or (ii) the 180th day after a change
in Executive's title to a level below that of Executive's Current
Title unless a Standstill Period was in effect on the date of
such change or within 180 days thereafter.
5. Governing Law. The validity, interpretation, performance
and enforcement of this Agreement shall be governed by the laws
of The Commonwealth of Massachusetts.
F. Successor to Company. The Company shall require
any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business or assets of the Company expressly to assume and agree
to perform this Agreement to the same extent that the Company
would be required to perform it if no such succession had taken
place. Failure of the Company to obtain an assumption of this
Agreement at or prior to the effectiveness of any succession
shall be a breach of this Agreement and shall constitute Good
Reason if the Executive elects to terminate employment, except
that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the
Date of Termination. As used in this Agreement, "Company" shall
mean the Company as defined above and any successor to its
business or assets as aforesaid which assumes and agrees to
perform this Agreement, by operation of law or otherwise.
G. Guaranty. FBC hereby agrees to guaranty the
payment and performance of all the obligations of the Company set
forth in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
FILENE'S BASEMENT, INC.
By:_/s/_Samuel J. Gerson_____
FILENE'S BASEMENT CORP.
By:_/s/_Samuel J. Gerson_______
/s/ Xxxxxxx X. Carothers_______
Xxxxxxx X. Xxxxxxxxx, Executive
EXHIBIT A
Definitions
The following terms as used in this Agreement shall have the
following meanings:
A. "Annual Salary" shall mean the Executive's salary in
the calendar year incorporating the Date of Termination or the
Change in Control (or if the Executive's title was changed to a
level below that of Executive's current title within one hundred
eighty (180) days before the commencement of the Standstill
Period, the date of such change), whichever is highest. For
purposes of this definition, "salary" means the Executive's
highest annual base salary for such year plus the Executive's
average annual earned bonus over the three previous years
(whether or not paid in such year); provided that for purposes of
calculating the amount described in Section I(A)(ii) in the event
of a Qualified Termination occurring by the reason of a Distress
Liquidation, "salary" shall be determined without regard to
bonuses.
B. "Cause" shall mean misappropriation of company assets,
conviction of a felony, wilful and continual failure to perform
reasonable assigned duties (other than as a result of Disability
or death) which failure is not cured within thirty (30) days
after a written demand for substantial performance is received by
the Executive from the Board of Directors of the Company which
specifically identifies the manner in which the Board of
Directors believes the Executive does not substantially perform
the Executive's duties, or Executive's wilful engagement in
illegal conduct or gross misconduct which is materially and
demonstrably injurious to the Company.
In respect of any termination during a Standstill Period,
Executive shall not be deemed to have been terminated for Cause
until the later to occur of (i) the 30th day after notice of
termination is given and (ii) the delivery to Executive of a copy
of a resolution duly adopted by the affirmative vote of not less
than a majority of the Company's directors at a meeting called
and held for that purpose (after reasonable notice to Executive),
and at which Executive together with his counsel was given an
opportunity to be heard, finding that Executive was guilty of
conduct described in the definition of "Cause" above, and
specifying the particulars thereof in detail.
C. "Change in Control" shall have the meaning set forth in
Exhibit B.
D. "Company" shall mean Filene's Basement, Inc. or any
successor.
E. "Current Title" shall mean Executive's title on the
date 180 days prior to the commencement of a Standstill Period.
F. "Date of Termination" shall mean the date on which
Executive's employment by the Employer is terminated.
G. "Distress Liquidation" shall mean a liquidation of the
Company in circumstances where the Board of Directors of the
Company has determined that the value of the Company's assets in
liquidation would exceed the book value of the unliquidated
enterprise.
H. "Employer" means the Company and its Subsidiaries, or
any of them, as the context requires.
I. "Executive" shall have the meaning set forth in the
first paragraph of this Agreement.
J. "FBC" means Filene's Basement Corp., a Massachusetts
corporation, which owns one hundred percent of the voting common
stock of the Company.
K. "Qualified Termination" shall mean the termination of
Executive's employment during a Standstill Period (1) by the
Company other than for Cause, or (2) by Executive for good
reason, or (3) by reason of death or incapacity. For purposes of
the preceding sentence, "incapacity" means a long-term disability
(as defined in the Employer's long-term disability plan, if any,
covering Executive) or other impairment of health that renders
Executive unable to perform his duties to the satisfaction of the
Compensation Committee of the Board of Directors of the Company.
If by reason of incapacity Executive is unable to perform his
duties for at least six months in any 12-month period, upon
written notice by the Company the employment of Executive shall
be deemed to have terminated by reason of incapacity.
For purposes of this definition, termination for "good
reason" shall mean the voluntary termination by Executive of his
employment (A) within 120 days after the occurrence without
Executive's express written consent of any of the events
described in clauses (I), (II), (III), (IV), (V) or (VI) below,
provided that Executive gives notice to the Company at least 30
days in advance requesting that the situation described in those
clauses be remedied, and the situation remains unremedied upon
expiration of such 30-day period; or (B) within 120 days after
the occurrence without Executive's express written consent of the
events described in clause (VII) below, provided that Executive
gives notice to the Company at least 30 days in advance:
(I) the assignment to him of any duties inconsistent in any
respect with his positions, duties, responsibilities,
reporting requirements, and status with the Employer
immediately prior to a Change in Control, or a
substantive change in Executive's titles or offices as
in effect immediately prior to a Change in Control, or
any removal of Executive from or any failure to reelect
him to such position, except in connection with the
termination of Executive's employment by the Employer
for Cause or by Executive other than for good reason;
or any other action by the Employer which results in a
diminishment in such position, authority, duties or
responsibilities, other than an isolated, insubstantial
and inadvertent action which is remedied by the
Employer promptly after receipt of notice thereof given
by Executive; or
(II) if Executive's rate of base salary for any fiscal year
is less than 100 percent of the rate of base salary
paid to Executive in the completed fiscal year
immediately preceding the Change in Control, or if
Executive's total cash compensation opportunities,
including salary and incentives, for any fiscal year
are less than 100 percent of the total cash
compensation opportunities made available to executive
in the completed fiscal year immediately preceding the
Change in Control; or
(III) the failure of the Employer to continue in effect
any benefits or perquisites, or any pension, life
insurance, medical insurance or other benefit plan in
which Executive was participating immediately prior to
a Change in Control unless the Employer provides
Executive with a plan or plans that provide
substantially similar benefits, or the taking of any
action by the Employer that would adversely affect
Executive's participation in or materially reduce
Executive's benefits under any of such plans or deprive
Executive of any material fringe benefit enjoyed by
Executive immediately prior to a Change in Control; or
(IV) any purported termination of Executive's employment by
the Employer for Cause during a Standstill Period which
is not effected in compliance with paragraph (b) of
this Exhibit; or
(V) any relocation of Executive of more than 30 miles from
the place where Executive was located at the time of
the Change in Control; or
(VI) any other breach by the Company of any provision of
this Agreement; or
(VII) the Company sells or otherwise disposes of, in one
transaction or a series of related transactions, assets
or earning power aggregating more than 30 percent of
the assets (taken at asset value as stated on the books
of the Company determined in accordance with generally
accepted accounting principles consistently applied) or
earning power of the Company (on an individual basis)
or the Company and its subsidiaries (on a consolidated
basis) to any other Person or Persons (as those terms
are defined in Exhibit B).
L. "Standstill Period" shall be the period commencing on
the date of a Change in Control and continuing until the close of
business on the last business day of the 36th calendar month
following such Change in Control.
M. "Subsidiary" shall mean any corporation in which the
Company owns, directly or indirectly, 50 percent or more of the
total combined voting power of all classes of stock.
EXHIBIT B
Definition of Change in Control
"Change in Control" means the occurrence of any one of the
events specified in Sections I and II, below:
I. With respect to FBC, the events shall be as follows:
A. any 'person' as such term is used in Section 13(d) and
14(d) of the 1934 Act (other than (i) of FBC, (ii) any
subsidiary of FBC, (iii) any trustee or other fiduciary
holding securities under an employee benefit plan of
FBC or of any subsidiary of FBC, (iv) any company
owned, directly or indirectly, by the stockholders of
FBC in substantially the same proportions as their
ownership of stock of the Company, or (v) the Company)
becomes the 'beneficial owner' (as defined in Section
13(d) of the 1934 Act), together with all Affiliates
and Associates (as such terms are used in Rule 12b-2 of
the General Rules and Regulations under the 0000 Xxx)
of such person, directly or indirectly, of securities
of FBC representing 35% or more of the combined voting
power of FBC's then outstanding securities;
B. the stockholders of FBC approve a merger or
consolidation of FBC with any other company, other than
(1) a merger or consolidation which would result in the
voting securities of FBC outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity), in combination
with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of
FBC or any subsidiary of FBC, at least 65% of the
combined voting securities of FBC or such surviving
entity outstanding immediately after such merger or
consolidation or (2) a merger or consolidation effected
to implement a recapitalization of FBC (or similar
transaction) in which no 'person' (with the exception
given and the method of determining 'beneficial
ownership' used in clause (a) of this definition)
acquires more than 50% of the combined voting power of
FBC's then outstanding securities;
C. such time as individuals who at the date of this
Agreement constitute the Board, and any new director
(other than a director designated by a person who has
entered into an agreement with FBC to effect a
transaction described in clause (A), (B) or (D) of this
definition) whose election by FBC's stockholders was
approved by a vote of at least two-thirds (2/3 ) of the
directors then still in office who either were
directors at the date of this Agreement or whose
election or nomination for election was previously so
approved cease for any reason to constitute at least a
majority thereof; or
D. the stockholders of FBC approve a plan of complete
liquidation of FBC or an agreement for the sale or
disposition by FBC of all or substantially all of FBC's
assets.
For purposes of this Section I of Exhibit B, the term
"Board" means the Board of Directors of FBC and the term "Stock"
means the common stock of FBC.
II. With respect to the Company, the events shall be as follows:
A. any 'person' as such term is used in Section 13(d) and
14(d) of the 1934 Act (other than (i) of the Company,
(ii) any subsidiary of the Company, (iii) any trustee
or other fiduciary holding securities under an employee
benefit plan of the Company or of any subsidiary of the
Company, (iv) any company owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership
of stock of the Company, or (v) FBC) becomes the
'beneficial owner' (as defined in Section 13(d) of the
1934 Act), together with all Affiliates and Associates
(as such terms are used in Rule 12b-2 of the General
Rules and Regulations under the 0000 Xxx) of such
person, directly or indirectly, of securities of the
Company representing 35% or more of the combined voting
power of the Company's then outstanding securities;
B. the stockholders of the Company or FBC approve a merger
or consolidation of the Company with any other company,
other than (1) a merger or consolidation which would
result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving
entity), in combination with the ownership of any
trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any subsidiary
of the Company, at least 65% of the combined voting
securities of the Company or such surviving entity
outstanding immediately after such merger or
consolidation or (2) a merger or consolidation effected
to implement a recapitalization of the Company (or
similar transaction) in which no 'person' (with the
exception given and the method of determining
'beneficial ownership' used in clause (a) of this
definition) acquires more than 50% of the combined
voting power of the Company's then outstanding
securities;
C. the stockholders of the Company or FBC approve a plan
of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or
substantially all of the Company's assets.
For purposes of this Section II of Exhibit B, the term
"Stock" means the common stock of the Company.
