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EXHIBIT 10.1
E MPLOYMENT
AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this “ Agreement
”) is made as of June 26, 2008, by and between
Burlington Coat Factory Warehouse Corporation, a Delaware
corporation, with offices in New Jersey (the “
Company
”), and Marc Katz (“ Executive
”), a resident of New Jersey.
WHEREAS,
the Company desires to employ Executive during the Employment
Period, and Executive is willing to accept employment with the
Company, on the terms and conditions set forth herein;
and
WHEREAS,
the agreements of Executive in Sections
5 ,
6 and
7 are
material inducements to enter into this
Agreement,
In
consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1.
Definitions . In this Agreement:
“
Base
Salary ” has the meaning given to that term in
Section
3(a)
.
“
Board
” means the Board of Directors of the
Company.
“
Cause
” means Executive (i) is convicted of a felony or other
crime involving either dishonesty towards the Company or any
of its Subsidiaries or material misuse of property of the
Company or any of its Subsidiaries; (ii) engages in willful
misconduct or fraud with respect to the Company or any of its
Subsidiaries or any of their customers or suppliers or an
intentional act of dishonesty or disloyalty in the course of
Executive’s employment; (iii) refuses to perform
Executive’s material obligations under this Agreement
(except in connection with a Disability) as reasonably
directed by the Board or the Company’s chief executive
officer, which failure is not cured within 15 days after
written notice thereof to Executive; (iv) misappropriates one
or more of the Company’s or any of its Subsidiaries
material assets or business opportunities; or (v) breaches
Sections
5 ,
6 or
7
hereof which breach, if capable of being cured, is not cured
within 10 days after written notice thereof has been delivered
to Executive. The Company may allow Executive an
extension of time to cure a breach if the Board, in its sole
discretion, determines that such extension is appropriate
under the circumstances.
“
Company
” has the meaning set forth in the preamble above;
together with its Subsidiaries and affiliates and includes all
predecessor entities.
“
Confidential
Information ” has the meaning given to that term
in Section 5(a) .
“
Court
” has the meaning given to that term in Section 7(b) .
“
Disability
” means Executive’s inability to perform the
essential duties, responsibilities and functions of
Executive’s position with the Company and its
Subsidiaries for a continuous period of 180 days as a result
of any mental or physical disability or incapacity, as
determined under the definition of disability in the
Company’s long-term disability plan so as to qualify
Executive for benefits under the terms of that plan or as
determined by an independent physician to the extent no such
plan is then in effect. Executive shall reasonably
cooperate in all respects with the Company if a question
arises as to whether Executive has become disabled (including,
without limitation, submitting to an examination by a medical
doctor or other health care specialists selected by the
Company and authorizing such medical doctor or such other
health care specialist to discuss Executive’s condition
with the Company).
“
Employment
Period ” means the period commencing on July 9,
2008 (the “Commencement Date”) and ending on the
Expiration Date or such earlier date as contemplated in the
proviso to Section
4(a)
.
“
Expiration
Date ” means the first anniversary of the
Commencement Date; provided
, that if a written notice is not given by the Company at
least ninety (90) days prior to such anniversary (or any
subsequent anniversary if this Agreement is extended) stating
that such party is electing not to extend the Employment
Period, then the Expiration Date will automatically be
extended to the next anniversary of the date
hereof.
“
Expiration
Year ” means the calendar year in which the
Employment Period expires.
“
Good
Reason ” means the occurrence of any of the
following events without the written consent of Executive: (i)
a material diminution of Executive’s duties or the
assignment to Executive of duties that are inconsistent in any
substantial respect with the position, authority or
responsibilities associated with Executive’s position as
set forth pursuant to Section
2(b)
, other than any such authorities, duties or responsibilities
assigned at any time which are by their nature, or which are
identified at the time of assignment, as being temporary or
short-term; (ii) the Company’s requiring Executive to be
based at a location which is fifty (50) or more miles from
Executive’s principal office location on the
Commencement Date; or (iii) a material breach by the Company
of its obligations pursuant to this Agreement (including,
without limitation, its obligations pursuant to Section
3 )
(which such breach goes uncured after notice and a reasonable
opportunity to cure) ; provided, however, no condition
enumerated in the preceding shall be deemed to be “Good
Reason” unless within thirty (30) days of the initial
existence of such condition, Executive shall have given the
Company written notice thereof specifically describing the
condition giving rise to “Good Reason” and
allowing the Company a period of at least thirty (30) days
from the date of receipt of the notice to remedy such
condition. Notwithstanding the foregoing, in no
event will a condition give rise to “Good Reason”
hereunder unless within ten (10) days after the expiration of
the period provided in the Executive’s notice for the
Company to remedy said condition but in no event later than
one hundred and twenty (120) days initial existence of said
condition, Executive shall have actually terminated his
employment with the Company by giving written notice of
resignation for failure of the Company to remedy such
condition.
“
Termination
Year ” means the calendar year in which the
Employment Period is terminated.
2
“
Subsidiaries
” means any corporation or other entity of which the
securities or other ownership interests having the voting
power to elect a majority of the board of directors or other
governing body are, at the time of determination, owned by the
Company, directly or through one of more
Subsidiaries.
“
Work
Product ” has the meaning given to that term in
Section
6
.
2.
Employment, Position and Duties .
(a)
The
Company shall employ Executive and Executive hereby accepts
employment with the Company, upon the terms and conditions set
forth in this Agreement for the Employment Period.
(b)
During
the Employment Period, Executive shall serve as Executive Vice
President – Chief Accounting Officer of the Company, working
at the Company’s offices in Burlington, New Jersey, and shall
perform the normal duties, responsibilities and functions of an
executive officer of a company of a similar size and type and shall
have such power and authority as shall reasonably be required to
enable Executive to perform Executive’s duties hereunder,
subject to the power and authority of the Board to expand or limit
such duties, responsibilities, functions, power and authority and
to overrule actions of officers of the Company in a manner
consistent with the traditional responsibilities of such
office.
(c)
During
the Employment Period, Executive shall (i) render such
administrative, financial and other executive and managerial
services to the Company and its Subsidiaries which are consistent
with Executive’s position as the Board may from time to time
direct, (ii) report to the Board or the Company’s chief
executive officer and shall devote Executive’s best efforts
and Executive’s full business time and attention (except for
permitted vacation periods and reasonable periods of illness or
other incapacity) to the business and affairs of the Company and
its Subsidiaries and (iii) submit to the Board all business,
commercial and investment opportunities presented to Executive or
of which Executive becomes aware which relate to the business of
the Company and its Subsidiaries, and unless approved by the Board
in writing, Executive shall not pursue, directly or indirectly, any
such opportunities on Executive’s own
behalf. Executive shall perform Executive’s
duties, responsibilities and functions to the Company and its
Subsidiaries hereunder to the best of Executive’s abilities
in a diligent, trustworthy and professional manner.
3.
Compensation and Benefits .
(a)
During
the Employment Period, Executive’s base salary shall be a
minimum of Four Hundred Thousand Dollars ($400,000.00) per annum
(as increased or decreased in accordance with this Agreement from
time to time, the “ Base Salary
”), which salary shall be payable by the Company in regular
installments in accordance with the Company’s general payroll
practices (in effect from time to
time). Executive’s Base Salary will be subject to
annual review and increase or decrease (but shall not be decreased
below the Base Salary in effect on the date of this Agreement) by
the Board during the Employment Period.
(b)
Executive
shall be entitled to participate in the Company’s Senior
Management Bonus Plan approved by the Board or a committee thereof,
as in effect from time to time, with a target annual bonus of Fifty
percent (50%) of Executive’s Base Salary (“Target
Bonus”) Notwithstanding the preceding, provided
Executive remains continuously in the employment of the Corporation
through the date of payment thereof, for the Company’s fiscal
year ending May 30, 2009 (“Fiscal 2009”), the Company
shall pay Executive a bonus equal to Two Hundred Thousand Dollars
($200,000.00); provided, however, that if the Commencement Date of
Executive’s employment with the Company is after July
15,
2008, such bonus for Fiscal 2009 shall be pro-rated for actual
number of days from the Commencement Date until May 30, 2009
divided by 365. Such bonus payment shall be in
lieu of
direct participation in the Senior Management Bonus Plan for any
fiscal year of the Company prior to the Company’s fiscal year
beginning May 31, 2009 and, except as otherwise provided in Section
4(b)(i)(3) below, will be earned by the Executive and payable to
Executive at the same time as bonus payments are made to other
participants in the Company’s Senior Management Bonus Plan
but not later than August 31, 2009 with respect to Fiscal
2009. Thereafter, Executive will participate in the
Senior Management Bonus Plan to the same extent as other members of
senior management at a comparable level of the Company and with the
Target Bonus previously defined; provided, further, that so long as
Executive remains continuously in the employ of the Company through
the payment date thereof, Executive’s bonus under such bonus
plan for the Company’s fiscal year ending May 29, 2010 shall
not be less than Eighty Thousand Dollars ($80,000.00).
3
(c)
The
Board, or a committee or appointee thereof, during the term of this
Agreement, shall review annually, or at more frequent intervals
which the Board determines is appropriate, Executive’s
compensation and may award Executive compensation as the Board
deems appropriate in its sole discretion; provided ,
however , that
Executive’s base salary shall not be reduced pursuant to any
such review or otherwise.
(d)
Executive
shall be entitled to twenty work days of paid vacation each
calendar year in accordance with the Company’s policies,
which if not taken in any year may not be carried forward to any
subsequent calendar year and no compensation shall be payable in
lieu thereof. Such vacation will accrue as of January 1
of each year, except that if Executive’s employment commences
after January 31 of any calendar year, Executive shall accrue
twenty days of paid vacation pro rated for the number of full
calendar months remaining in the calendar year in which the
Employment Period commences.
(e)
During
the Employment Period, the Company shall reimburse Executive for
all reasonable business expenses incurred by Executive in the
course of performing Executive’s duties, responsibilities and
functions under this Agreement which are consistent with the
Company’s policies in effect from time to time with respect
to travel, entertainment and other business expenses, subject to
the Company’s requirements with respect to reporting and
documentation of such expenses.
(f)
Executive
shall be entitled to participate, on the same basis as other
executives of comparable level in the Company, in any compensation,
bonus, incentive, award, deferred compensation, pension,
retirement, stock award, stock option or other benefit, plan or
arrangement of the Company (including, without limitation, any plan
sponsored by the entity owning or controlling the Company, or any
affiliate of such entity) now existing or hereafter adopted, all
upon terms at least as favorable as those enjoyed by other salaried
employees of comparable level of the Company; provided ,
however , the
Company may restrict or exclude Executive’s participation in
any such plan, or the benefits thereunder, on such terms and
conditions as the Company shall in its sole discretion determine,
if at any time Executive shall be working fewer than five days a
week or on other part-time basis during regular business
days. Executive also shall be entitled to hospital,
health, disability, medical and life insurance, and any other
benefits enjoyed, from time to time, by other salaried employees of
the Company of comparable level, all upon terms as favorable as
those enjoyed by other salaried employees of comparable level of
the Company. Notwithstanding anything in this
Section
3(f) to
the contrary, if the Company adopts any change in the benefits
provided for other salaried employees of the Company of comparable
level, and such policy is uniformly applied to all such employees
of the Company (and any successor or acquirer of the Company, if
any), then no such change shall be deemed a breach by the Company
of this Section
3(f)
.
4
(g)
The
Company shall provide Executive with the use of an automobile with
an approximate value of Thirty-five Thousand Dollars
($35,000.00). Such automobile shall be replaced with a
new model of comparable make and model from time to time in
accordance with Company policy then in effect. The
Company shall be responsible for all costs and expenses incurred in
operation, maintenance, insurance and repair of such
automobile.
(h)
Executive
will be indemnified and defended for acts performed (or omissions
made) in Executive’s capacity as an officer or director of
the Company to the fullest extent specified in the Company’s
certificate of incorporation and bylaws and as permitted under
Delaware law.
(i)
Provided
Executive remains continuously in the employ of the Company through
the respective payment dates provided below, the Company shall pay
Executive a sum equal to Three Hundred Thousand Dollars
($300,000.00) to recompense Executive for bonuses from his current
employer which are being forfeited by Executive by reason of
separation from such current employment to enter into employment
with the Company (the “Forfeiture Repair
Bonus”). The Forfeiture Repair Bonus shall be
payable in two installments: (i) the first installment of One
Hundred Thousand Dollars ($100,000.00) shall be payable to
Executive within thirty (30) days after the Commencement Date, and
(ii) the second and final installment of Two Hundred Thousand
Dollars ($200,000.00) shall be payable three months after the
Commencement Date. Each installment shall be net of
applicable withholding taxes and payroll deductions.
(j)
For
the period from the Commencement Date to the time Executive shall
become eligible for participation in the Company’s health and
medical plans, the Company shall reimburse Executive for the excess
of the costs paid by Executive to his former employer for the
purchase of continuation of health benefits under the Consolidated
Omnibus Budget Reconciliation Act as administered by such company
over the Executive’s current contributions to such
plans.
(k)
Notwithstanding
anything herein to the contrary, in the event Executive’s
employment with the Company is terminated either voluntarily by
Executive (other than for Good Reason) or for Cause by the Company
within eighteen (18) months after the date on which Executive
receives the respective installment of the Forfeiture Repair Bonus
under Section 3(i) above, Executive shall immediately repay to the
Company such installment of the Forfeiture Repair Bonus paid to
Executive by the Company pursuant to said Section 3(i)
.
5
4.
Termination and Payment Terms .
(a)
The
Employment Period shall end on the Expiration Date; provided ,
that (i) the Employment Period shall terminate prior to such date
immediately upon Executive’s resignation, death or Disability
and (ii) the Employment Period may be terminated by resolution of
the Board, with or without Cause at any time prior to such
date. Except as otherwise provided herein, any
termination of the Employment Period by the Company shall be
effective as specified in a written notice from the Company to
Executive.
(b)
If
the Employment Period is terminated on or prior to the Expiration
Date:
(i)
(A)
by resolution of the Board (other than for Cause) or by Executive
resigning for Good Reason or (B) if the Employment Period expires
on the Expiration Date, Executive shall be entitled to receive (1)
all previously earned and accrued but unpaid Base Salary and
vacation and unpaid business expenses up to the date of such
termination or the Expiration Date, as applicable, (2) any unpaid
bonus earned by Executive for the fiscal year prior to the
Termination Year or the Expiration Year, as applicable, but then
unpaid, and any other amounts owed under Section 3(i), (3) the pro
rata portion of Executive’s Target Bonus (pursuant to Section
3(b) hereof) during the Termination Year or the Expiration Year, as
applicable, to the extent targets thereunder are achieved for such
year, after such termination or expiration, pro rated based on the
number of days of the Termination Year or the Expiration Year, as
applicable, prior to the date of termination or the Expiration
Date, as applicable, which payment shall be made when the bonus
payments for such Termination Year or the Expiration Year, as
applicable, are otherwise due; (4) severance pay in the full amount
of Base Salary at the time of termination or expiration from the
date of termination or the Expiration Date, as applicable, through
the period ending on the first anniversary of the date of
termination or the Expiration Date, as applicable and (5) full
continuation of Executive’s hospital, health, disability,
medical and life insurance benefits during the one year severance
period (to the extent any of those benefits cannot be provided by
Company during the one year severance period, the Company will
provide Executive with a sum of money calculated to permit
Executive to obtain the same benefits individually, grossed up for
tax purposes so that Executive remains whole).
(ii)
for
any other reason, including as a result of Executive’s death,
Disability, voluntary resignation for other than Good Reason or by
resolution of the Board for Cause, Executive’s sole
entitlement shall be to receive all previously earned and accrued
but unpaid Base Salary, vacation and unpaid business expenses up to
the date of such termination or expiration and Executive shall not
be entitled to any further Base Salary, bonus payments or benefits
for that year or any future year, except as required by law, or to
any other severance compensation of any kind.
(c)
Executive
agrees that: (i) Executive shall be entitled to the
payments and services provided for in Sections
4(b)(i)
(3) , 4(b)(i)
(4), and
4(b)(i)
(5) , if any,
if and only if Executive has executed and delivered the Release
attached as Exhibit A and
seven (7) days have elapsed since such execution without any
revocation thereof by Executive and Executive has not breached as
of the date of termination of the Employment Period the provisions
of Sections
5 ,
6 and
7 hereof
and does not breach such sections or such covenants at any time
during the period for which such payments or services are to be
made; and (ii) the Company’s obligation to make such payments
and services will terminate upon the occurrence of any such breach
during such period.
6
(d)
Except
as stated above, any payments pursuant to Section
4(b) shall
be paid by the Company in regular installments in accordance with
the Company’s general payroll practices, and following such
payments the Company shall have no further obligation to Executive
pursuant to this Section
4 except
as provided by law. All amounts payable to Executive as
compensation hereunder shall be subject to all customary
withholding, payroll and other taxes. The Company shall
be entitled to deduct or withhold from any amounts payable to
Executive any federal, state, local or foreign withholding taxes,
excise tax, or employment taxes imposed with respect to
Executive’s compensation or other payments or
Executive’s ownership interest in the Company (including,
without limitation, wages, bonuses, dividends, the receipt or
exercise of equity options and/or the receipt or vesting of
restricted equity).
(e)
Executive
hereby agrees that except as expressly provided herein, no
severance compensation of any kind, nature or amount shall be
payable to Executive and except as expressly provided herein,
Executive hereby irrevocably waives any claim for severance
compensation.
(f)
Except
as provided in Sections
4(b)(i)
and 4(b)(ii)
above, all of Executive’s rights pursuant to
Sections 3(c) ,
3(d) ,
3(e) ,
3(f),
3(g),
3(i) and 3(j) shall cease upon the termination of the
Employment Period.
(g) Notwithstanding
anything herein to the contrary, if, at the time any payment
is payable to Executive pursuant to the provisions of Section
4(b)(i) above as a result of Executive’s
“separation from service” (within the meaning of
Section 409A of the Internal revenue Code of 1986, as amended
(the “Code”) and the regulations promulgated
thereunder, the Company or any company in the affiliate group
in which the Company’s financial statements are
consolidated in accordance with generally accepted accounting
principles has a class of equity securities traded on an
established domestic or foreign securities market or otherwise
including, without limitation, trading on an American exchange
only as American Depositary receipts
(“ADR’S”) and Executive is designated a
“specified person” (as such term is defined in
Section 409A of the Code and the regulations promulgated
thereunder) on a list prepared by the Company periodically
pursuant to Section 409A of the Code and the regulations
promulgated thereunder, then during the
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