Exhibit 10.2
TRANSITION
AGREEMENT
THIS TRANSITION AGREEMENT (this
“ Agreement ”) is made by and between DAN W.
MATTHIAS (“ Executive ”) and MOTHERS WORK, INC.
(the “ Company ”). This Agreement is entered
into on September 26, 2008.
WHEREAS, Executive has been employed
by the Company in the capacity of Chief Executive Officer under the
Second Amended and Restated Employment Agreement by and between the
Company and Executive dated March 2, 2007 (the “
Employment Agreement ”); and
WHEREAS, Executive has served on the
Company’s Board of Directors (the “ Board
”); and
WHEREAS, Executive has announced his
intention to retire from employment with the Company;
and
WHEREAS, the Company desires to
provide for a smooth transition of the position of Chief Executive
Officer and for Executive to continue to serve as a Board member,
with the title of Non-Executive Chairman; and
WHEREAS, the Company believes it is
in the best interests of the Company and its stockholders to enter
into this Agreement.
NOW THEREFORE, in consideration of
these premises and the mutual promises contained herein, and
intending to be legally bound hereby, the parties agree as
follows:
1.
Resignation and
Transition .
1.1.
Effective on September 30, 2008
(the “ Resignation Date ”), Executive hereby
resigns (i) as an employee of the Company and as its Chief
Executive Officer, and (ii) from all other positions Executive
currently holds as an employee and officer of the Company or any of
its subsidiaries.
1.2.
For the period commencing on the
Resignation Date and ending on September 30, 2012 (the “
Transition Period ”), Executive will remain available
to the Company, when and as reasonably requested by the Board or
the Company’s Chief Executive Officer, to assist in the
transition of Executive’s duties to his successor, and will
make himself available to the executive management of the Company
with respect to strategic planning, corporate development and other
matters as reasonably requested by the Board or the Company’s
Chief Executive Officer. The Company will exercise reasonable
efforts to schedule the time and place for the performance of such
advisory services pursuant to this Section 1.2 so as to
not unduly interfere with the Executive’s personal and other
professional and employment obligations.
1.3.
Following the Resignation Date,
Executive will continue to serve as a Board member and will have
the title of Non-Executive Chairman. The Company will
exercise
reasonable best efforts to cause Executive to be
nominated and re-elected to the Board for the period ending on the
earlier of the occurrence of a Change in Control (as defined in
Section 2.2 ) or the expiration of the Transition
Period.
2.
Payments and Benefits
. In connection with the resignation
from his position, and in consideration of the Executive’s
entering into this Agreement and providing the services described
in Section 1 , Executive will be entitled to the
following:
2.1.
Consideration for Board and
Advisory Service . In
consideration of Executive’s providing advisory services to
the Company pursuant to Section 1.2 , and the
Executive’s service on the Board pursuant to
Section 1.3 during the Transition Period, Executive
will be paid an annual retainer of $200,000, payable in bi-weekly
installments (the “ Retainer ”). The Retainer
will be the only consideration payable to the Executive for his
service on the Board and his performance of advisory services and,
therefore, Executive will not receive any meeting fees, equity
awards, committee service fees or any other compensation that may
be payable to other Board members. If Executive resigns from the
Board, declines to stand for re-election to the Board or is removed
from the Board for cause (as such term is used in the
Company’s By-Laws), Executive’s entitlement to payment
pursuant to this Section 2.1 will immediately cease. If
the Executive’s service to the Board ceases because Executive
is not re-elected or is removed from the Board (other than for
cause), the Executive will continue to provide advisory services to
the Company pursuant to Section 1.2 and will be
entitled to receive the Retainer for the remainder of the
Transition Period. In the event of a Change in Control (as defined
below in Section 2.2 ) while Executive remains in
service to the Company (whether as a Board member or advisor), the
unpaid portion of the Retainer that would otherwise be payable
during the remainder of the Transition Period will be accelerated
and paid in a single lump sum within 5 business days of such Change
in Control. In the event of the Executive’s death while he is
in service to the Company (whether as a Board member or advisor),
the unpaid portion of the Retainer that would otherwise be payable
during the remainder of the Transition Period will be accelerated
and paid in a single lump sum to Executive’s designated
beneficiary (or, in the absence of a designated beneficiary,
Executive’s spouse, or if Executive is unmarried at the time
of his death, his estate) within 30 business days of his
death.
2.2.
Supplemental Retirement
Agreement . The Company
and Executive acknowledge and agree that the Supplemental
Retirement Agreement by and between the Company and Executive dated
March 2, 2007 (the “ SERP ”) is
hereby amended to provide for the payment in the amounts and on the
dates indicated below:
|
Payment Date
|
|
Payment Amount
|
|
|
April 1, 2009
|
|
$
|
960,000
|
|
|
July 1, 2009
|
|
$
|
600,000
|
|
|
January 1, 2010
|
|
$
|
300,000
|
|
|
April 1, 2010
|
|
$
|
300,000
|
|
|
July 1, 2010
|
|
$
|
300,000
|
|
|
October 1, 2010
|
|
$
|
300,000
|
|
|
January 1, 2011
|
|
$
|
150,000
|
|
|
April 1, 2011
|
|
$
|
150,000
|
|
|
July 1, 2011
|
|
$
|
150,000
|
|
|
October 1, 2011
|
|
$
|
150,000
|
|
|
January 1, 2012
|
|
$
|
150,000
|
|
|
April 1, 2012
|
|
$
|
150,000
|
|
|
July 1, 2012
|
|
$
|
150,000
|
|
|
October 1, 2012
|
|
$
|
150,000
|
|
2
(i)
Executive is fully vested in his
right to the payments specified in the foregoing schedule. In the
event of Executive’s death prior to the payment of all such
amounts, any unpaid installments will be paid, at the same
time(s) specified in the foregoing schedule, to
Executive’s designated beneficiary (or, in the absence of a
designated beneficiary, Executive’s spouse, or if Executive
is unmarried at the time of his death, his estate). In the event of
a Change in Control (as defined below) prior to the payment of all
such amounts, any unpaid installments will be accelerated and paid
in a single lump sum, within 5 business days following such Change
in Control. The parties acknowledge that this amendment is intended
to be a transition election permitted under Section 409A of
the Internal Revenue Code of 1986, as amended, on or before
December 31, 2008.
(ii)
The Trust Agreement for Supplemental
Retirement Agreements dated April 27, 2007 (the “
Trust ”) between the Company and Wachovia Bank (the
“ Trustee ”) will remain in full force and
effect, and the Trustee will continue to hold the letter(s) of
credit contemplated by the letter dated May 20, 2008 by and
among the Executive, Rebecca C. Matthias and the Trustee, while any
amounts payable under the SERP remain unpaid. As soon as reasonably
practicable, but in any event within 30 days following the
Resignation Date, the aggregate amount of such letter(s) of
credit attributable to Executive’s SERP accrual will be
increased to an amount equal to the sum of the installments listed
on the foregoing schedule. Thereafter, such letter(s) of
credit will be maintained in an aggregate amount not less than the
sum of any then remaining unpaid installments.
(iii)
Executive acknowledges and agrees
that the payments described in this Section 2.2
constitute a complete satisfaction of all his rights under the
SERP, that no other benefits will accrue to him and no other
payments will be made to him in respect of the SERP.
(iv)
For purposes of this Agreement,
“Change in Control” will have the meaning given it in
the Employment Agreement, except
