EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of November
23, 1998, between H. XXXXX XXXXXXXX (the "Executive") and THE TALBOTS, INC., a
Delaware corporation (the "Company").
W I T N E S S E T H
WHEREAS, the Company desires to employ the Executive, and the
Executive desires to be employed by the Company on the terms, provisions and
conditions hereinafter provided;
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and undertakings herein set forth, the
parties hereto agree as follows:
1. Engagement. The Company hereby agrees to employ the Executive, and the
Executive hereby accepts such employment, as Executive Vice President and
Chief Merchandising Officer of the Company, on the terms and conditions set
forth herein, unless and until such employment hereunder shall have been
terminated as provided in this Agreement.
2. Title and Duties. During his employment by the Company, the Executive shall
render his services as Executive Vice President and Chief Merchandising
Officer of the Company, shall perform duties consistent with his title as
the President of the Company shall reasonably request, shall serve as a
director on the Board of Directors of the Company (the "Board"), so long as
the Executive is duly elected by the stockholders of the Company, and shall
devote his full business time and best efforts to his duties hereunder and
the business and affairs of the Company (except during vacation periods and
reasonable periods of illness or other incapacity); provided, however, that
the Executive may from time to time engage in such other pursuits,
including, without limitation personal legal and personal financial affairs
as shall not interfere with the proper performance of his duties and
obligations hereunder. The Executive also agrees that upon termination of
his employment hereunder for any reason, he shall resign immediately from
the Board.
3. Compensation. As compensation for his services to the Company hereunder,
the Company shall pay to the Executive the following:
(A) Base Salary and Signing Bonus
(i) The Executive shall receive base salary
at the rate of not less than $450,000.00 per annum (the "Base Salary
Rate"), payable in substantially equal installments, in accordance with the
normal payroll practices of the Company.
(ii) The Board, or a duly appointed
committee thereof, shall consider, on an annual basis, the nature, extent
and advisability, if any, of an increase in the Executive's annual base
salary; provided, however, that in no event shall the Executive's base
salary during the term hereof be less than the Base Salary Rate.
(iii) The Executive acknowledges that, on
November 23, 1998 the Company paid him a signing bonus of $50,000.
(B) Annual Incentive Bonus. The Executive shall be eligible to
receive an annual incentive bonus pursuant to the Company's Management
Incentive Program, as same may be amended or superseded from time to time
(the Management Incentive Program, as same may be amended or superseded
from time to time, is hereinafter referred to as the "MIP").
Notwithstanding the foregoing, for the Company's Fiscal Year 1999, the
Company shall pay the Executive a minimum guaranteed bonus of $150,000,
which shall be payable on or before March 31, 2000. The Company and the
Executive agree that the Executive's right to receive the guaranteed bonus
provided for in this paragraph is contingent only upon his employment not
having been terminated prior to the closing date of the Company's Fiscal
Year 1999 because of his resignation, unless such resignation is with Good
Reason (as that term is defined in paragraph 6(H) below), or under
paragraphs 6(C) or 6(D) below.
(C) Executive Stock Based Incentive Plan.
(i) General. The Executive shall be eligible
to receive such incentive compensation as may be awarded from time to time
pursuant to the Company's Executive Stock Based Incentive Plan as same may
be amended or superseded from time to time (the Executive Stock Based
Incentive Plan, as same may be amended or superseded from time to time, is
hereinafter referred to as the "Plan"). All awards to the Executive
(including those under subparagraph 3(C)(ii) below) shall be subject to the
terms of the Plan. The Company agrees that (i) the terms of any grant of
stock options the Compensation Committee of the Board (the "Committee")
makes to the Executive under the Plan shall provide that upon the
termination of the Executive's employment hereunder pursuant to paragraph
6(F) hereof, the Executive's right to exercise any then unexercised, vested
stock options shall be a period of not less than three (3) years from the
date of such termination, and (ii) the terms of any grant of restricted
stock the Committee makes to the Executive under the Plan shall provide for
the acceleration of such stock's vesting requirements upon the termination
of the Executive's employment hereunder pursuant to paragraph 6(H) hereof.
(ii) Current Restricted Stock and Stock
Option Awards. Upon commencement of the Executive's employment hereunder,
the Company shall make the following awards to the Executive pursuant to
the Plan: (a) 15,000 shares of Common Stock of the Company, $0.01 par value
per share, at a purchase price to the Executive of $0.01 per share (the
"Restricted Shares"), which shares shall be non-transferable until they are
fully vested on the dates set forth below and in accordance with the terms
of the Restricted Stock Agreement to be executed by the Company and the
Executive, and shall be subject to a repurchase option held by the Company
and exercisable in certain events specified in the Restricted Stock
Agreement; and (b) options to purchase 25,000 shares of Common Stock of the
Company, $0.01 par value per share, pursuant to and subject to the terms
and conditions of a Nonqualified Stock Option Agreement to be executed by
the Company and the Executive, with an exercise price equal to the closing
price of the Company's common stock on the New York Stock Exchange on
November 23, 1998 (the "Options"). The Restricted Shares shall vest as
follows: (i) 5,000 shares on November 23, 2001; (ii) 5,000 shares on
November 23, 2002; and (iii) 5,000 shares on November 23, 2003. The
Executive's entitlement to exercise the Options shall vest as follows: (i)
33 1/3% of the total shares subject to the option on November 23, 1999;
(ii) 33 1/3% of the total shares subject to the option on November 23,
2000; and (iii) 33 1/3% of the total shares subject to the option on
November 23, 2001.
(D) Deferred Compensation. The Executive shall be eligible to
participate in any deferred compensation program of the Company as may be
in effect from time to time.
4. Benefits. Subject to the provisions of this Agreement, the Company shall
provide the following benefits to the Executive for services rendered
during the term of his employment hereunder:
(A) Insurance and Retirement Benefits. The Executive
shall be entitled to such insurance benefits of the Company as may be in
effect from time to time and generally available to employees at the senior
executive level, including, but not limited to, disability insurance and
business travel accident insurance. The Executive shall also be entitled to
participate in benefit programs provided by the Company, including, but not
limited to, the retirement program, the supplemental retirement program,
the R.S.V.P. 401-K Savings Program and the supplemental R.S.V.P. 401-K
Savings Program. In addition, nothing herein shall preclude the Executive
from receiving any additional compensation in the form of salary, bonuses
or otherwise or from participating in any future benefit plan for employees
of the Company, in each case as and to the extent approved and determined
by the Board.
(B) Other Insurance and Welfare Benefits. The
Executive shall also be entitled to participate in the following benefits
programs: (i) the Company's medical insurance program; (ii) the Company's
dental insurance program; and (iii) the Company's Paid Life Insurance
Program (the "Program"), pursuant to which the Company shall pay all
premiums on behalf of the Executive for a term life insurance policy on the
life of the Executive with coverage in an amount equal to the lesser of (X)
the Executive's annual base salary for one (1) year or (Y) the maximum
amount of coverage that the Company is able to provide a participant under
the Program, at the rate then in effect during the coverage of such policy.
The Company hereby represents to the Executive that the current maximum
amount of coverage under the Program is $750,000.
(C) Automobile Program. The Executive shall be
entitled to participate in the Company's Executive Automobile Program,
pursuant to which the Company, at the Executive's election, shall either:
(i) provide the Executive with an automobile (which automobile shall be
replaced every (2) years) for his use with a value, when new, of up to
$33,000 and shall reimburse the Executive for all costs and expenses
associated with such automobile (including, but not limited to, automobile
insurance, repairs, and gas), or (ii) provide the Executive with a monthly
automobile allowance, which allowance shall be based upon the annualized
imputed value of the automobile to which the Executive is entitled under
such program. The value of the automobile to which the Executive is
entitled shall be subject to an annual review and may be increased at the
discretion of the Board, in accordance with the terms of the Company's
Executive Automobile Program; provided, however, the Executive shall be
entitled to receive any benefit to which participants in the Company's
Executive Automobile Program may from time to time hereafter generally
become entitled thereunder that is broader or greater than the benefits to
which participants are currently generally entitled (e.g., an
across-the-board increase in the value of automobiles received under such
Program).
(D) Financial Counseling Program. The Executive shall
be entitled to participate in the Company's Key Management Financial
Counseling Program. The Executive's initial annual allowance shall be
$2,500 per calendar year, which allowance shall be subject to periodic
review by the Board and may be increased at the discretion of the Board, in
accordance with the terms of the Key Management Financial Counseling
Program.
(E) Vacation. The Executive shall be entitled to an
aggregate of not less than four (4) weeks of paid vacation in each full
calendar-year during the Executive's employment hereunder.
(F) Employee Discount. The Executive shall be entitled
to receive the benefit of any Company Discount which may be in effect from
time to time and is generally available to the employees of the Company.
The Company Discount is currently 40%.
(G) Relocation. The Executive shall be entitled to
reimbursement for reasonable expenses attributable to the relocation of the
Executive's principal residence from Fairfield, Connecticut to the Boston,
Massachusetts metropolitan area (1) including temporary living (for the
Executive until July 31, 1999 and for the Executive and his immediate
family from August 1, 1999 through December 31, 1999), house hunting trips
for the Executive and his immediate family, a full household goods move,
broker's fee up to 7% on the sale of the Executive's current residence,
closing costs on the purchase of the Executive's new residence in
Massachusetts up to a maximum of two (2) percent, and legal and other fees
associated with closing; and (2) excluding taxes and insurance. The
Executive agrees that if after his receipt of any payments or benefits
under the Relocation Policy and within the initial two (2) years of the
term hereof, he shall resign his employment without Good Reason (as such
term is defined in paragraph 6(H) below) or his employment shall be
terminated under paragraph 6(D)(ii) through (ix) below, the Executive
shall, within 30 days of his resignation or termination, repay the Company
an amount which shall be determined by multiplying the amount of such
payments and benefits by a fraction, the numerator of which shall be 730
less the number of days between the commencement of the Executive's
employment and the date his employment shall terminate and the denominator
of which shall be 730.
5. Expenses. The Executive is authorized to incur and the Company shall either
pay directly or reimburse the Executive for ordinary and reasonable
expenses in connection with the performance of his duties hereunder,
including, without limitation, expenses for (A) transportation, (B)
business meals, (C) travel and lodging, and (D) similar items. The
Executive agrees to comply with the Company's policies with respect to
record keeping in connection with such expenses.
6. Termination of Employment. The following provisions set forth the terms and
conditions pursuant to which the employment of the Executive hereunder may
be terminated:
(A) The employment of the Executive hereunder may be
terminated by the Company or the Executive at any time, subject to the
Company's providing all of the compensation and benefits herein specified
in accordance with the terms hereof.
(B) The employment of the Executive hereunder may be
terminated by the Company or the Executive on or after the normal
retirement date of the Executive under the Company's Pension Plan and
Supplemental Retirement Plan or any successor or substitute plan.
(C) The employment of the Executive hereunder shall be
terminated upon the death of the Executive.
(D) The employment of the Executive hereunder may be
terminated by the Company in the event of the occurrence of any of the
following conditions or events:
(i) the failure of the Executive
substantially to perform his duties hereunder as a result of physical
incapacity for a continuous period of at least six (6) months after he has
become eligible for the Company's long-term disability benefits (any
dispute as to the Executive's incapacitation shall be resolved by an
independent physician, reasonably acceptable to the Executive and the
Board, whose determination shall be final and binding upon both the
Executive and the Company);
(ii) continual failure of the Executive
substantially to perform his material duties hereunder, other than as a
result of incapacity due to physical or mental illness, which failure
continues uncured for fifteen (15) days after a written demand for
substantial performance is delivered to the Executive by the President and
Chief Executive Officer which states the dates and instances of prior
non-performance by the Executive;
(iii) habitual drunkenness in circumstances
that are either during working hours or reflect negatively on the business
or reputation of the Company;
(iv) the unlawful use or possession of
controlled substances;
(v) the commission by the Executive of
misconduct in the discharge of his duties. For purposes of this section,
"misconduct" is intended to mean "doing something bad, and not merely doing
the job badly." By way of illustration, "misconduct" is not intended to
include where the Company has a bad financial year, or the Executive makes
business judgments in good faith that turn out to be erroneous , such as
ordering a line of clothing that turns out to be unsuccessful;
(vi) the conviction of the Executive of a
felony;
(vii) dishonesty in material respects in
matters relating to the Company;
(viii) continuous conflicts of interest
after notice in writing to the Executive from the Board, which notice
states the dates and instances of prior conflicts of interest by the
Executive; or (ix) any other material breach of this Agreement by the
Executive.
Upon or after the date of occurrence of any of the events or conditions
described above, the Company may deliver written notice to the Executive of
its election to terminate his employment hereunder.
(E) In the event that the Executive's employment
hereunder is terminated pursuant to paragraphs (B), (C) or (D) above or by
the Executive without Good Reason (as such term is defined in paragraph (H)
below), the Company shall be under no further obligation to the Executive
pursuant to the terms of this Agreement except to pay the Executive, within
ten (10) business days of the effective date of such termination (or, in
the event of a termination pursuant to paragraph (C) above, to pay the
Executive's estate or legal representative, as soon as reasonably
practicable after the Executive's death) (i) salary for services rendered
up to and including the date of termination, (ii) reimbursement for
expenses incurred by the Executive pursuant to paragraph 5 hereof up to and
including the date on which his employment is terminated, and (iii) any and
all compensation to which the Executive may be entitled as of the date of
termination pursuant to the Plan or any other compensation or benefit plan
to the extent permitted by such plans.
(F) In the event that the Executive's employment
hereunder is terminated and such termination is not a result of an event or
condition referred to in paragraph (E) above, the following shall occur:
(i) the Company shall pay to the Executive, within ten (10) business days
of the effective date of such termination (a) salary for services rendered
up to and including the date of termination, (b) reimbursement for expenses
incurred by the Executive pursuant to paragraph 5 hereof up to and
including the date on which his employment is terminated, and (c) any and
all compensation to which the Executive may be entitled as of the date of
termination pursuant to the Plan or any other compensation or benefit plan
to the extent permitted by such plans; and (ii) the Company shall pay to
the Executive, in a single lump payment within thirty (30) days from the
effective date of such termination, a separation allowance equal to the
product of two (2) multiplied by the sum of:
(x) the Executive's annual base salary, at the rate
in effect at the time of such termination, and
(y) the annual bonus paid or payable to the
Executive pursuant to paragraph 3(B) hereof for
the last full fiscal year of the Company
immediately prior to the effective date of such
termination.
The Company's obligation to pay the separation allowance referred to in
this subparagraph shall be contingent upon the Executive having delivered
to the Company a fully executed release (that is not subject to revocation)
of claims against the Company, its parents, subsidiaries, affiliates,
employees, agents and representatives satisfactory in form and content to
the Company's counsel.
(G) In the event that the Executive's employment
hereunder is terminated and such termination is not a result of an event or
condition referred to in paragraph (E) above, the Executive also shall
continue to participate, on the same terms and conditions as in effect
immediately prior to such termination, in the disability insurance benefit
program provided to the Executive pursuant to paragraph 4(A) hereof and the
medical insurance program, the dental insurance program and the Company's
Paid Life Insurance Program provided to the Executive pursuant to paragraph
4(B) hereof from the time of such termination until the earlier of (i) the
end of the two (2) year period beginning from the effective date of the
termination of the Executive's employment hereunder (the "Two-Year
Post-Termination Period") or (ii) such time as the Executive is eligible to
be covered by a comparable program of a subsequent employer. The Executive
agrees to notify the Company promptly if and when he begins employment with
another employer and if and when he becomes eligible to participate in any
pension or other benefit plans, programs or arrangements of another
employer. The Company's obligation to provide the benefits referred to in
this subparagraph shall be contingent upon the Executive having delivered
to the Company a fully executed release (that is not subject to revocation)
of claims against the Company, its parents, subsidiaries, affiliates,
employees, agents and representatives satisfactory in form and content to
the Company's counsel.
(H) In the event that there is a Change in Control (as
hereinafter defined), and, within twenty-four (24) months after the
occurrence of such Change in Control, the Executive's employment hereunder
is terminated either (i) by the Company, and such termination is not a
result of an event or condition referred to in paragraph (E) above, or (ii)
by the Executive for Good Reason (as hereinafter defined), provided that
the Executive shall provide thirty (30) days written notice of such
termination, then the following shall occur:
(a) the Company shall pay to the Executive on the
effective date of such termination
(I) salary for services rendered up to and including
the date of
termination, (II) reimbursement for expenses incurred by the Executive
pursuant to paragraph 5 hereof up to and including the date on which his
employment is terminated, and (III) from the Benefits Trust (as such term
is defined in paragraph 6(I)(a) hereof) and other sources, as applicable,
any and all compensation to which the Executive may be entitled as of the
date of termination pursuant to the Plan or any other compensation or
benefit plan to the extent permitted by such plans; and
(b) the Company shall pay to the Executive from
the Severance Trust (as such term is defined in paragraph 6(I)(b) hereof)
and other sources if the monies paid into the Severance Trust at the time
of the Change in Control pursuant to paragraph 6(I)(b) hereof are not
sufficient, within thirty (30) days from the effective date of such
termination,
(I) an amount equal to the product of two (2)
multiplied by the sum of:
(x) the Executive's annual base salary, at a rate
(the "Severance Rate") equal to the greater of
(A) the annual rate in effect on the date
one hundred eighty (180) days prior to
such termination or
(B) the annual rate in effect at the time
of such termination, and
(y) the maximum bonus payable to the Executive
(assuming application of the maximum rates and
ratings thereunder) under the MIP in effect as
of the last full fiscal year of the Company
immediately prior to the effective date of such
termination;
(II) an amount equal to the maximum bonus payable to
the Executive (assuming application of the maximum rates and ratings
thereunder) under the MIP for the year in which the Executive's employment
was terminated, pro rated for that portion of the year in which the
Executive was employed;
(III) an amount equal to three (3) times the present
value (as calculated by the independent certified public accountant then
employed by the Company) of the Executive's accrued benefits under the
Company's supplemental retirement plan as of the date on which his
employment is terminated; and
(c) the Executive shall continue to
participate in the Company's benefit programs pursuant to paragraph 6(G)
hereof; provided, however, the Executive's participation in such benefit
programs shall not end on the earlier of the Two-Year Post-Termination
Period or such time as the Executive is eligible to be covered by a
comparable program of a subsequent employer, but rather, the Executive
shall participate in such benefit programs from the effective date of the
termination of his employment under this paragraph 6(H) until the earlier
of (i) the end of the twenty-four (24) month period beginning from the date
of such termination (the "Twenty-Four Month Post-Termination Period") or
(ii) such time as the Executive is eligible to be covered by a comparable
program of a subsequent employer; and
(d) the Executive shall also continue to
participate, on the same terms and conditions as in effect immediately
prior to his termination under this paragraph 6(H), in the Company's
Executive Automobile Program provided to the Executive pursuant to
paragraph 4(C) hereof from the time of such termination until the earlier
of (i) the end of the Twenty-Four Month Post-Termination Period or (ii)
such time as the Executive is eligible to be covered by a comparable
program of a subsequent employer. The Company's obligation to make the
payment described in subparagraph (H)(b) and provide the benefits referred
to in subparagraph (H)(c) and (d) shall be contingent upon the Executive
having delivered to the Company a fully executed release (that is not
subject to revocation) of claims against the Company, its parents,
subsidiaries, affiliates, employees, agents and representatives
satisfactory in form and content to the Company's counsel. As used in this
Agreement, the term "Change in Control" shall mean: (i) the acquisition
(including as a result of a merger) by any "person" (as such term is used
in Sections 3(a)(9), 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or persons "acting in concert"
(which for purposes of this Agreement shall include two (2) or more persons
voting together on a consistent basis pursuant to an agreement or
understanding between them to act in concert and/or as a "group" within the
meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act), other than
the Company or any of its subsidiaries, or JUSCO, (U.S.A.), Inc. or any of
its subsidiaries or "affiliates" (as such term is defined in Rule 12b-2
under the Exchange Act) (collectively, an "Acquiring Person"), of
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing
more than 25 percent of the combined voting power of the then outstanding
securities of the Company entitled to then vote generally in the election
of directors of the Company, and no other stockholder is the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act), directly
or indirectly, of a percentage of such securities higher than that held by
the Acquiring Person; or (ii) individuals, who, as of the date hereof (the
"Effective Date"), constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided that
any individual becoming a director subsequent to the Effective Date, whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least two-thirds of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, as a member of the Incumbent
Board, any such individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A under the Exchange Act) and further excluding any
individual who is an "affiliate", "associate" (as such terms are defined in
Rule 12b-2 under the Exchange Act) or designee of an Acquiring Person
having or proposing to acquire beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing more than 10 percent of the combined voting
power of the then outstanding securities of the Company entitled to then
vote generally in the election of directors of the Company.
As used in this Agreement, the term "Good Reason" shall mean the
occurrence of any of the following events, other than as a result of the
occurrence of any other events or conditions described in paragraph 6(D)
hereof: (i) the deprivation of, or the reduction in, or the assignment of
duties to the Executive which would be inconsistent with, the Executive's
position and responsibilities as indicated in paragraph 2 hereof, or (ii) a
relocation of the Company's principal executive offices following the date
of the Change in Control to a location greater than forty (40) miles from
the location of such offices prior to the Change in Control, or (iii) a
reduction by the Company in the Executive's annual base salary as in effect
on the date of the Change in Control, or (iv) any failure by the Company to
continue in effect any compensation or benefit plan or arrangement
(including, without limitation, any such plan or arrangement described
herein or any alternative plan providing a comparable level of benefits) in
which the Executive is participating at the time of the Change of Control,
or the taking of any action by the Company which would adversely affect the
Executive's participation in or materially reduce his benefits under any
such plan or arrangement, or (v) the placement of the Executive in the
employment of an Affiliate, or (vi) any breach by the Company of any
provision of this Agreement. As used in this paragraph, the term
"Affiliate" shall mean any other person or entity controlling, controlled
by or under common control with, the Company.
(I) The Company, on the date of the Change in Control,
shall cause the following to occur:
(a) the Company shall pay into The Talbots,
Inc. Supplemental Benefits Trust (the "Benefits Trust") all monies to which
the Executive is entitled under the Plan, any deferred compensation program
of the Company, the supplemental R.S.V.P. 401-K Savings Program, and the
Company's retirement program (to the extent such monies under such
retirement program are not qualified benefits) and supplemental retirement
program;
(b) the Company shall pay into The Talbots,
Inc. Severance Trust (the "Severance Trust"), (I) an amount equal to the
Company's good faith estimate of the amount which would be payable to the
Executive under paragraphs 6(H)(b)(I) and 6(H)(b)(II) hereof in the event
of a termination of the Executive's employment as described in paragraph
6(H) hereof and assuming the Executive would be employed for a period of
six (6) months during the year in which the Executive's employment is
terminated, (II) an amount equal to the Company's good faith estimate of
the amount which would be payable to the Executive under paragraph 6(H)(c)
hereof in the event of a termination of the Executive's employment as
described in paragraph 6(H) hereof, and (III) an amount equal to three (3)
times the present value (as calculated by the independent certified public
accountant then employed by the Company) of the Executive's accrued
benefits under the Company's supplemental retirement plan as of the date of
the Change in Control. In the event that the Executive's employment
hereunder is not terminated for 24 months after the Change in Control
pursuant to paragraph 6(H) hereof, such monies paid into the Severance
Trust on the date of the Change in Control shall revert to the Company.
(J) The date of termination of the Executive's
employment for purposes of paragraphs (F), (G) and (H)(i) above shall be
the date specified in a written notice of termination to the Executive,
provided that the Company shall provide at least thirty (30) days written
notice of such termination.
(K) The Company shall pay all legal fees and expenses
that the Executive may incur in any contest of the validity, enforceability
or interpretation of, or determinations under, paragraphs 6(H) or 6(I)
hereof, regardless of whether the Executive prevails in any such contest.
(L) In the event of the termination or expiration of
this Agreement for any reason, the Company shall remain forever obligated
to effectuate, directly or indirectly through its transfer agent, transfers
or sales of shares of the Company's Common Stock, or exercises of options
to purchase such shares, to which the Executive is entitled pursuant and
subject to the terms of this Agreement.
7. Indemnification. (A) The Company shall indemnify, defend and hold the
Executive harmless, to the maximum extent permitted by law, against all
judgments, fines, amounts paid in settlement and all reasonable expenses,
including attorneys' fees incurred by the Executive, in connection with the
defense of, or as a result of any action or proceeding (or any appeal from
any action or proceeding) in which the Executive is made or is threatened
to be made a party by reason of the fact that the Executive is or was an
officer or director of the Company, regardless of whether such action or
proceeding is one brought by or in the right of the Company, to procure a
judgment in its favor (or other than by or in the right of the Company).
Each of the parties hereto shall give prompt notice to the other of any
action or proceeding from which the Company is obligated to indemnify,
defend and hold harmless the Executive of which it or he (as the case may
be) gains knowledge.
(B) The Company hereby represents and warrants that
the Executive shall be covered and insured up to the maximum limits
provided by all insurance which the Company maintains to indemnify its
directors and officers (and to indemnify the Company for any obligations
which it incurs as a result of its undertaking to indemnify its officers
and directors).
8. Arbitration. Any dispute, controversy or claim between the parties hereto
arising out of or relating to this Agreement either during or after the
term thereof, shall be settled by arbitration conducted in the Commonwealth
of Massachusetts, in accordance with the Commercial Rules of the American
Arbitration Association then in force. The decision of the arbitrator or
arbitrators conducting any such arbitration proceedings shall be in
writing, shall set forth the basis therefor and such arbitrator's or
arbitrators' decision or award shall be final and binding upon the parties
hereto. The parties hereto shall abide by all awards rendered in such
arbitration proceedings, and all such awards may be enforced and executed
upon in any court having jurisdiction over the party against whom or which
enforcement of such award is sought.
9. Enforceability. It is the intention of the parties that the provisions of
this Agreement shall be enforced to the fullest extent permissible under
the laws and public policies of each state and jurisdiction in which such
enforcement is sought, but that the unenforceability (or the modification
to conform with such laws or public policies) of any provisions hereof,
shall not render unenforceable or impair the remainder of this Agreement.
Accordingly, if any provision of this Agreement shall be determined to be
invalid or unenforceable, either in whole or in part, this Agreement shall
be deemed amended to delete or modify, as necessary, the offending
provisions and to alter the balance of this Agreement in order to render
the same valid and enforceable to the fullest extent permissible.
10. Assignment. This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder. This Agreement and all of
the provisions hereof shall be binding upon, and inure to the benefit of,
the parties hereto, and their successors (including successors by merger,
consolidation or similar transactions), permitted assigns, executors,
administrators, personal representatives, heirs and distributees.
11. Non-Disclosure. The Executive shall not, at any time during or following
the period of employment, disclose, use, transfer or sell, except in the
course of such employment, any confidential information or proprietary data
of the Company and its subsidiaries so long as such information or data
remains confidential and has not been disclosed or is not otherwise in the
public domain, except as required by law or pursuant to legal process or in
connection with an administrative proceeding before a governmental agency.
The Company and the Executive agree that the Executive's obligations under
this paragraph shall not apply if (1) any disclosure by the Executive is
made with the express written permission of the Company; and/or (2) if the
Executive can show by documentary evidence that he had knowledge of the
confidential information, or it was in his possession, prior to disclosure
by the Company, or that it was lawfully received by the Executive from a
third party who is not or was not bound, at the time the information was
conveyed, by any confidential relationship or obligation to the Company.
12. Non-Competition Agreement. In the event the Executive terminates his
employment hereunder without "Good Reason" as that term is defined in
paragraph 6(H) hereof, or the Company terminates the Executive's employment
pursuant to an event or condition described in paragraph 6(B) or 6(D)
hereof, the Executive will not for a period of two years thereafter engage
in or carry on, directly or indirectly, either for himself or as a member
of a partnership, or as a stockholder, investor (except that ownership of
5% or less of any class of debt or equity securities which are publicly
traded shall not be a violation of this paragraph 12), officer or director
of a corporation or as an employee, agent, associate or consultant of any
person, partnership, or corporation, or any business in competition with
the principal businesses carried on by the Company and its subsidiaries and
affiliates in any jurisdiction in which the Company or its subsidiaries or
affiliates actively conduct business; provided, however, that if the
Company elects to enforce the provisions of this paragraph and the
Executive's employment shall have been terminated either by the Executive
without "Good Reason" or by the Company pursuant to paragraph 6(D) hereof,
the Company shall pay to the Executive (in accordance with its then current
payroll practices) at the rate of his base salary as of the date of his
termination. If the Company, at its sole option, decides not to continue
the Executive's base salary at any time during the two year period, this
non-competition provision shall not thereafter be enforceable. Nothing in
this paragraph 12 or in this Agreement shall be deemed to require the
Company to continue to pay the Executive any portion of his base salary in
the event the Executive terminates his employment without Good Reason or
the Company terminates the Executive's employment pursuant to an event or
condition described in paragraph 6(D) hereof.
13. Taxes.
(A) All payments to be made to and on behalf of the
Executive under this Agreement will be subject to required withholding of
federal, state and local income and employment taxes, and to related
reporting requirements.
(B) Notwithstanding any other provision of this
Agreement, if any of the payments provided for in this Agreement, together
with any other payments which the Executive has the right to receive from
the Company or any corporation which is a member of an "affiliated group"
(as defined in Section 1504(a) of the Internal Revenue Code of 1986, as
amended (the "Code") without regard to Section 1504(b) of the Code) of
which the Company is a member, would constitute a "parachute payment" (as
defined in Section 280G(b)(2) of the Code), payments pursuant to this
Agreement shall be reduced to the largest amount as will result in no
portion of such payments being subject to the excise tax imposed by Section
4999 of the Code.
14. Term. This Agreement shall commence as of November 23, 1998 and shall
continue in effect until the last day of the Company's fiscal year that
ends in January 2002; provided, however, that commencing at the beginning
of the Company's fiscal year immediately thereafter and at the beginning of
the Company's fiscal year each three years thereafter, the term of this
Agreement shall automatically be extended for three additional years unless
at least 6 months prior to such date, the Company or the Executive shall
have given notice to the other party that this Agreement shall not be
extended. It is acknowledged and agreed by the parties hereto that if this
Agreement is terminated or not extended by the Company pursuant to this
paragraph 14 and not as a result of an event or condition referred to in
paragraph 6(E) hereof, the provisions of paragraphs 6(F) and 6(G) hereof
shall apply.
15. Survival. Anything in paragraph 6 hereof to the contrary notwithstanding,
the provisions of paragraphs 7 through 17 shall survive the expiration or
termination hereof, regardless of the reasons therefor.
16. No Conflict. The Executive and the Company each hereby represents and
warrants to the other that the execution, delivery and performance of this
Agreement by him or it (as the case may be) shall not violate any agreement
or other obligation of any kind, written or oral, to which he or it (as the
case may be) is subject.
17. Miscellaneous.
(A) Notices. All notices hereunder shall be given in
writing, clearly marked "Personal and Confidential," by personal delivery
(which shall include delivery by overnight couriers such as Federal
Express), or prepaid registered or certified mail, return receipt
requested, to the addresses of the proper parties as set forth below:
TO THE EXECUTIVE:
H. XXXXX XXXXXXXX
c/o The Talbots, Inc.
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
TO THE COMPANY:
The Talbots, Inc.
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: President and Chief Executive Officer
Any notice given as aforesaid shall be deemed received upon actual
delivery. Any party hereto (or any person designated to receive a copy of
any notice) may change his or its (as the case may be) designated address
by notice served as herein set forth upon the other party designated to
receive notice.
(B) Law Governing. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of
Massachusetts applicable to contracts made and to be wholly performed in
that state without regard to its conflicts of laws provisions.
(C) Headings. The paragraph headings contained in this
Agreement are for convenience of reference only and are not intended to
determine, limit or describe the scope or intent of any provision of this
Agreement.
(D) Number and Gender. Whenever in this Agreement the
singular is used, it shall include the plural if the context so requires,
and whenever the masculine gender is used in this Agreement, it shall be
construed as if the masculine, feminine or neuter gender, respectively, has
been used where the context so dictates, with the rest of the sentence
being construed as if the grammatical and terminological changes thereby
rendered necessary have been made.
(E) Entire Agreement. This Agreement contains the
entire understanding between and among the parties with respect to the
subject matter hereof and supersedes any prior or contemporaneous
understandings and agreements, written or oral, between and among them
respecting such subject matter.
(F) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but both of which
taken together shall constitute one instrument.
(G) Amendments. This Agreement may not be amended
except by a writing executed by the party against whom or which such
amendment is to be enforced.
(H) Expenses. All reasonable legal fees and expenses
incurred by the Executive in negotiating and entering into this Agreement
will be paid by the Company. In the event a dispute arises regarding the
validity, interpretation or enforcement of this Agreement or the right of
the Executive to receive or retain any benefit or payment contemplated
hereby, all legal fees and expenses incurred by the Executive in seeking to
obtain, enforce or retain any right, benefit or payment provided for in
this Agreement or in otherwise pursuing or settling any claim hereunder
will be paid by the Company, to the extent permitted by applicable law;
provided, however, that, except in the event of a dispute following a
Change in Control as set forth in paragraph 6(K) hereof, if the Executive
does not prevail at least in whole or in part in any proceeding brought by
the Executive to enforce a provision of this Agreement, the Executive shall
be responsible for the legal fees and expenses incurred by him in
connection with such proceeding. All such fees and expenses will be paid by
the Company within 30 days after the Company's receipt of the invoices
therefor.
(I) Termination Without Cause. For purposes of the
Plan, "termination without cause" hereunder shall mean termination of the
Executive's employment hereunder as result of an event or condition that is
not referred to in paragraph 6(E) hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
H. XXXXX XXXXXXXX THE TALBOTS, INC.
/s/ H. Xxxxx Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
------------------------- ------------------------------
H. Xxxxx Xxxxxxxx Name:
Title:
