CHANGE IN CONTROL
AGREEMENT
(For Senior Vice Presidents [1.5
x])
AGREEMENT
dated as of January 1, 2009 , between HANCOCK FABRICS,
INC., a Delaware corporation (“Corporation”), and
. (“Executive”), whose address is
.
A.
Corporation wishes to attract and retain well qualified executive
and key personnel and, in the event of any Change in Control (as
defined in Section 2) of Corporation, to assure both itself
and Executive of continuity of management; and
B.
Corporation, wishes to enter into this Agreement until
March 31, 2010 (“the Expiration Date”), though
This Agreement may be renewed for additional one year periods as of
the Expiration Date and each subsequent expiration, by mutual
written consent of the parties hereto; and
C.
No benefits shall be payable under this Agreement unless the
Effective Date shall occur and thereafter Executive’s
employment is terminated; and
D.
The employment of Executive is “at will” and may be
terminated by Corporation without payment of any benefits hereunder
until the occurrence of a Change in Control;
NOW,
THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between Corporation
and Executive as follows:
1.
Operation of Agreement . No benefits shall be payable
hereunder unless a Change in Control (as defined in Section 2)
occurs during the Change in Control Period (as defined in
Section 3). For the purposes of this Agreement the date on
which such a Change in Control occurs is referred to herein as the
“Effective Date.”
2.
Change in Control . For the purposes of this Agreement, the
term “Change in Control” means the happening of any of
the following: (i) any person or entity, including a
“group” as defined in Section
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13(d)(3) of the
1934 Act, other than the Company, a subsidiary of the Company, or
any employee benefit plan of the Company or its subsidiaries,
becomes the beneficial owner of the Company’s securities
having 51 percent or more of the combined voting power of the
then outstanding securities of the Company that may be cast for the
election for directors of the Company (other than as a result of an
issuance of securities initiated by the Company in the ordinary
course of business); or (ii) as the result of, or in
connection with, any cash tender or exchange offer, merger or other
business combination, sale of assets or contested election, or any
combination of the foregoing transactions, less than a majority of
the combined voting power of the then outstanding securities of the
Company or any successor corporation or entity entitled to vote
generally in the election of directors of the Company or such other
corporation or entity after such transaction, are held in the
aggregate by holders of the Company’s securities entitled to
vote generally in the election of directors of the Company
immediately prior to such transactions.
3.
Change in Control Period . The “Change in Control
Period” is the period commencing on the date of this
Agreement and ending on the earlier to occur of (i) the
Expiration Date, or (ii) the first day of the month coinciding
with or next following Executive’s 65th birthday. The
expiration of the Change in Control Period shall not limit
Corporation’s obligation to provide, or Executive’s
right to collect, payments and benefits pursuant to Section 5
and Section 10 hereof.
(a)
Death or Disability . Executive’s employment shall
terminate automatically upon Executive’s death
(“Death”). Corporation will be considered to have
terminated Executive’s employment for Disability, if after
having established Executive’s Disability (as defined below),
Executive receives written notice given in accordance with
Section 9(b) of Corporation’s intention to terminate his
employment. Executive’s employment will terminate for
Disability effective on the 90th day after receipt of such notice
(the “Disability Effective Date”) if within such 90-day
period after such receipt Executive shall fail to return to
full-time performance of his duties. For purposes of this
Agreement, “Disability” means a disability that, after
the expiration of more than 180 days after its commencement,
is determined to be total and permanent by a
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physician
selected by Corporation or its insurers and acceptable to Executive
or his legal representative (such agreement as to acceptability not
to be withheld unreasonably).
Consistent
with, and not in limitation of, the provisions of Section 6 of
this Agreement, neither a termination for, nor a determination of,
Disability pursuant to this Section 4(a) shall be deemed in
and of itself a termination for or determination of disability with
respect to Executive’s eligibility to receive long-term
disability benefits, continued medical, dental, or life insurance
coverage, retirement benefits, or benefits under any other plan or
program provided by Corporation or one of its affiliated companies
and for which Executive may qualify.
(b)
Cause . Executive’s employment will be terminated for
Cause if the majority of the Incumbent Board determines that Cause
(as defined in this Agreement) exists. For purposes of this
Agreement, “Cause” means (i) an act or acts of
fraud or misappropriation on Executive’s part that result in
or are intended to result in his personal enrichment or the
enrichment of a competitor of Corporation at the expense of
Corporation or one of its affiliated companies, (ii) moral
turpitude, or (iii) conviction of a felony or misdemeanor. For
purposes of this Agreement, “moral turpitude” is
defined for the purposes of this Severance Agreement as the
following:
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(1)
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That element and personal misconduct
in the private and social duties which a person owes to his fellow
human beings or to society in general, which characterizes the act
done as an act of baseness, vileness or depravity, and contrary to
the accepted and customary rule of right and duty between two human
beings.
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(2)
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Conduct done knowingly contrary to
justice, honesty or good morals.
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(3)
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Intentional, knowing or reckless
conduct causing bodily injury to another or intentional, knowing or
reckless conduct which, by physical menace, put another in fear of
imminent serious bodily injury.
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(c)
Good Reason . For purposes of this Agreement, “Good
Reason” means
(i) without
the express written consent of Executive, (A) the assignment
to Executive of any duties inconsistent in any substantial respect
with Executive’s position, authority or
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responsibilities as in effect during the 90-day
period immediately preceding the Effective Date, or (B) any
other substantial adverse change in such position (including titles
and reporting requirements), authority or
responsibilities;
(ii) any
failure by Corporation to furnish Executive and/or, where
applicable, his family with compensation (including annual bonus)
and benefits at a level equal to or exceeding those received (on an
annual basis) by Executive from Corporation during the 90-day
period preceding the Effective Date, including a failure by
Corporation to maintain Corporation’s incentive compensation
plans or any subsequent plans (including the right to defer the
receipt of payments thereunder), other than an insubstantial and
inadvertent failure remedied by Corporation promptly after receipt
of notice thereof given by Executive;
(iii) Corporation’s
requiring Executive to be based or to perform services at any
office or location other than that at which Executive is primarily
based during the 90-day period preceding the Effective Date, except
for travel reasonably required in the performance of
Executive’s responsibilities; or
(iv) any
failure by Corporation to obtain the assumption and agreement to
perform this Agreement by a successor as contemplated by
Section 8(b).
For
the purposes of this Section 4(c), any good faith
determination of “Good Reason” made by Executive shall
be conclusive.
(d)
Notice of Termination . Any termination by Corporation for
Cause or by Executive for Good Reason shall be communicated by
Notice of Termination to the other party hereto given in accordance
with Section 9(b). Any notice of termination by Corporation
for Disability shall be given in accordance with Section 4(a).
For purposes of this Agreement, a “Notice of
Termination” means a written notice that (i) indicates
the specific termination provision in this Agreement relied upon,
(ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated and
(iii) if the termination date is other than the date of
receipt
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of such notice,
specifies the termination date (which date shall not be more than
15 days after the giving of such notice).
(e)
Date of Termination . Date of Termination means the date of
receipt of
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