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Exhibit
10.1
EXECUTION
COPY
SEPARATION
AGREEMENT
AND GENERAL RELEASE OF ALL
CLAIMS
This Separation Agreement and
General Release of all Claims (this “ Agreement
”) entered into by and between The Wet Seal, Inc., a Delaware
corporation (the “ Company ”), and Joel N.
Waller (“ Executive ”) is dated as of
October 2, 2007.
In consideration of the
promises set forth in this Agreement, Executive and the Company
(the “ Parties ”) hereby agree as
follows:
1. Entire Agreement.
This Agreement is the entire
agreement between the Parties with respect to the subject matter
hereof and contains all agreements, whether written, oral, express
or implied, between the Parties relating thereto and supersedes and
extinguishes any other agreement relating thereto, whether written,
oral, express or implied, between the Parties, including, without
limitation, the Employment Agreement between the Parties, dated as
of December 16, 2004 (the “ Employment Agreement
”); provided , that , no rights or obligations
established under any such superseded agreement and specifically
preserved by this Agreement are extinguished. Other than this
Agreement, the Performance Shares Award Agreement dated as of
February 1, 2005 between the Parties (the “
Performance Shares Award Agreement ”) and the Stock
Option Agreement dated as of March 10, 2005 between the
Parties (the “ Stock Option Agreement ”), and as
otherwise explicitly stated herein, there are no agreements of any
nature whatsoever between Executive and the Company that survive
the execution and delivery of this Agreement by the Parties. This
Agreement may not be modified or amended, nor may any rights under
it be waived, except in a writing signed and agreed to by the
Parties.
2. Termination of
Employment.
The Parties hereby agree that
Executive’s employment and any and all appointments he holds
with the Company and any of its affiliates or subsidiaries
(collectively, the “ Company Group ”), whether
as officer, director, employee, consultant, agent or otherwise
(including, without limitation, as President and Chief Executive
Officer of the Company) shall cease as of October 8, 2007 (the
“ Termination Date ”). Effective as of the
Termination Date, Executive shall have no authority to act on
behalf of the Company or any other member of the Company Group, and
shall not hold himself out as having such authority or otherwise
act in an executive or other decision making capacity.
3. Payments and
Benefits.
Executive shall be entitled
to the following payments and benefits:
A. Payment of an amount equal
to Executive’s current base compensation for the period from
and including the Termination Date through February 1, 2008,
which amount equals $208,355.94;
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B. Payment of an amount equal
to 100% of Executive’s Target Bonus for the Fall 2007
incentive period, which amount equals $390,000; and
C. Payment of an amount equal
to the product of (i) and (ii), where (i) is that portion
of the monthly COBRA premium equal to the difference between the
COBRA premium and Executive’s monthly contribution towards
healthcare benefits that was in effect as of the Termination Date
and (ii) is 18, which amount equals $7,548.84.
D. Payment of (i) any
accrued, but unpaid base compensation earned through the
Termination Date, (ii) the cash value of any accrued but
unused vacation, through the Termination Date, which amount equals
$71,812.50, (iii) reimbursement for any unreimbursed business
expenses incurred prior to the Termination Date to which Executive
would otherwise be entitled and (iv) any amounts due under any
Company benefit plan or arrangement in accordance with the terms of
said plan or arrangement due for the period prior to the
Termination Date.
E. Provided that Executive
does not revoke this Agreement, continued vesting of
Executive’s 800,000 unvested performance shares until 4:00
p.m. (local time in New York) on February 1, 2008, subject to
the terms and conditions of the Performance Shares Award
Agreement.
F. Pursuant to the terms and
conditions of the Company’s 1996 Long Term Incentive Plan,
continued exercisability of Executive’s 333,334 vested stock
options for three (3) months after the Termination Date, at an
exercise price of $3.12 per share.
4. Forfeiture of Benefits;
Termination of Rights.
A. Notwithstanding any other
provision contained herein, if Executive knowingly breaches any of
his obligations under Sections 6 through 9 and 13 of the Employment
Agreement which, pursuant to Section 5 hereof, shall survive
the Termination Date, Executive shall forfeit the benefit set forth
in Sections 3E and F.
B. As of and after the
Termination Date, Executive shall no longer participate in, accrue
service credit or have contributions made, either by Executive or
on his behalf, under any employee benefit plan sponsored by the
Company in respect of periods commencing on and following the
Termination Date, including without limitation, any plan which is
intended to qualify under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the “ Code ”)
and Executive shall have no further right to receive compensation
or other consideration from the Company.
C. Subject to Section 4A
and provided that Executive does not revoke this Agreement, the
payments and benefits described in Sections 3A, 3B, and 3C shall be
paid in one lump sum to Executive immediately following the
expiration of the seven-day revocation period described in
Section 8F below.
5. Survival of
Covenants.
The covenants contained in
Sections 6 through 9 and 13 of the Employment Agreement and related
provisions, including, without limitation, any provisions
describing the Company’s
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remedies upon a breach of any such
covenants shall survive the Termination Date and be effective for
such respective periods contemplated by the Employment
Agreement.
6. Return of Company
Property.
Notwithstanding the
provisions of Section 13 of the Employment Agreement (which
are incorporated into this Agreement pursuant to Section 4),
the Parties agree that Executive may (i) retain copies of any
employment, compensation or benefits agreements between Executive
and the Company, this Agreement and any employee benefit plan
materials distributed generally to participants in any such plan by
the Company and (ii) retain copies of his personal diaries and
Rolodex (including, but not limited to, the information contained
in Executive’s current Microsoft “Contacts” and
“Calendar” software files). On the Termination Date,
all telephone and other accounts being paid by the Company on
Executive’s behalf, shall be terminated and all company
credit cards shall be returned to the Company and canceled. To the
extent any charges are made by Executive using company accounts or
credit cards after the Termination Date, such charges will be
solely Executive’s responsibility.
7. Non-Disparagement; Communication;
Continuing Cooperation.
A. Executive hereby agrees
not to defame, or make any disparaging statements that are intended
to cause harm to, any member of the Company Group or any of their
products, services, finances, financial condition, capabilities or
other aspect of or any of their business, or any former or existing
shareholders, employees, managers, directors, officers or agents
of, or contracting parties with, any member of the Company Group in
any medium to any person or entity without limitation in time. The
Company hereby agrees that the members of the Company’s Board
of Directors and the executive officers of the Company shall not
defame, or make any disparaging statements that are intended to
cause harm to, Executive in any medium to any person or entity
without limitation in time. Notwithstanding this provision, the
Parties (including, in the case of the Company, the members of its
Board of Directors and its executive officers) may confer in
confidence with their legal representatives and make truthful
statements as required by law. The Company and Executive shall
mutually agree as to the timing, content and any and all aspect of
any internal, external and media communication concerning the
termination of Executive’s employment with the
Company.
B. Executive shall continue
to make himself reasonably available at such times and places, as
do not unreasonably interfere with his ongoing business and
personal activities, to the Company Group and to advise the Company
Group at reasonable times, at the Company Group’s reasonable
request, about disputes with third parties as to which Executive
has knowledge, and Executive agrees to cooperate fully with the
Company Group in connection with litigation, arbitration and
similar proceedings (collectively “ Dispute
Proceedings ”) and to provide testimony with respect to
Executive’s knowledge in any such Dispute Proceedings
involving the Company Group. In the event that Executive is
requested by the Company or the Company Group to cooperate as
required by this Section 7B, the Company shall reimburse
Executive for his reasonable, documented out-of-pocket
expenses.
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8. Acknowledgment and
Release.
A. In consideration of the
Company’s execution of this Agreement, and except with
respect to the Company’s obligations arising under this
Agreement, Executive, for and on behalf of himself and his heirs
and assigns, hereby waives and releases any common law, statutory
or other complaints, claims, charges or causes of action arising
out of or relating to Executive’s employment or termination
of employment with, his serving in any capacity in respect of, or
his status at any time as a holder of a
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