EXHIBIT 10.9
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of June 27, 1996, between ▇▇▇▇▇▇▇ ▇. Silver
("Executive") and THE CHILDREN'S PLACE RETAIL STORES, INC., a Delaware
corporation ("Employer").
SECTION 1
EMPLOYMENT OF EXECUTIVE
1.01. Employer hereby agrees to employ Executive and Executive hereby
agrees to be and remain in the employ of Employer upon the terms and conditions
hereinafter set forth.
SECTION 2
EMPLOYMENT PERIOD
2.01. The terms of Executive's employment under this Agreement (the
"Employment Period") shall commence on the date of this Agreement and shall
continue unless terminated in accordance with the provisions of Section 5.
SECTION 3
3.01. Generally. During the Employment Period, Executive (i) shall be
employed as President and Chief Operating Officer, (ii) shall serve as a member
of the executive management committee of Employer, and (iii) shall devote his
full attention and expend his efforts, energies and skills on a full-time basis
to the business of Employer and other enterprises controlled by , or under
common control with Employer (collectively, the "Company"). Without limiting the
generality of the foregoing, Executive shall have all such duties and
responsibilities customarily undertaken and performed by persons in his position
in similar businesses to that of Employer. Executive's employment by Employer
shall constitute his exclusive employment during the Employment period. In no
event shall Executive serve as a director of any other business corporation or
as a general partner of any partnership except with the prior approval of the
Chief Executive Officer of Employer.
3.02. Reporting. Executive shall report directly to the Chief Executive
Officer of Employer. During the Employment Period, Executive will be subject to
all of the policies, rules and regulations of which Executive is given notice
applicable to senior executives of Employer and will comply with all directions
and instructions of the Chairman of the Board and the Chief Executive Officer.
SECTION 4
COMPENSATION
4.01 Compensation, Generally. For all services rendered and required to be
rendered by covenants of, and restrictions imposed on, Executive under this
Agreement, Employer shall pay to Executive during and with respect to the
Employment Period, and Executive agrees to accept (in full payment) Base Salary
and Performance Bonus, all as more fully described on Exhibit A (collectively,
the "Compensation").
4.02 Other Benefits. During the Employment Period, Executive shall be
entitled to receive such benefits as are at least as favorable as those provided
by the Employer to Employer's other senior executives (other than those benefits
provided under or pursuant to separately negotiated individual employment
agreements or arrangements) under any pension or retirement plan, stock
purchase, stock option or stock ownership plan, disability plan or insurance,
group life insurance, medical insurance, or other similar plan or program of
Employer. Employer shall provide Executive with life insurance in such amount so
that the annual premium relating to such life insurance shall not exceed
$20,000. Executive's Base Salary shall constitute the compensation on the basis
of which the amount of Executive's benefits under any such plan or program shall
be fixed and determined.
4.03 Expense Reimbursement. Employer shall reimburse Executive for all
business expenses (other than expenses of the type for which an allowance is
provided pursuant to the following sentence) reasonably incurred by him in the
performance of his duties under this Agreement upon his presentation, not less
frequently than monthly, of signed, itemized accounts of such expenditures all
in accordance with Employer's procedures and policies as adopted and in effect
from time to time and applicable to its employees of comparable status. Employer
shall also provide Executive with an allowance of $833.33 each month during the
Employment Period to cover expenses associated with Executive's ownership and
operation of an automobile in connection with the business conducted by him.
4.04. Vacations. Executive shall be entitled to four weeks vacation each
year, which shall be taken at such time or times as shall not unreasonably
interfere with Executive's performance of his duties under this Agreement.
SECTION 5
TERMINATION OF EMPLOYMENT PERIOD
5.01. Termination Without Cause. At any time during the Employment Period,
by notice to the other, Employer or Executive may terminate Executive's
employment under this Agreement without cause. Such notice shall specify the
effective date of termination which in the case of termination by Executive
shall not be less than 60 days after the date of such notice.
5.02. By Employer: Cause. At any time during the Employment Period, by
notice to Executive, Employer may terminate Executive's employment under this
Agreement "for cause," effective immediately. Such notice shall specify the
cause for termination. For the purposes of this Section 5.02, "for cause" means:
(i) a breach by Executive of any of the material provisions of this
Agreement that Executive fails to remedy or cease within 10 days after notice
thereof to Executive;
(ii) any conduct, action or behavior by Executive that has or may
reasonably by expected to have a material adverse effect on the reputation of
the Company or on Executive's reputation or that is not befitting of a senior
executive of the Company; or
(iii) the commission by Executive of an act involving moral turpitude or
dishonesty, whether or not in connection with Executive's employment hereunder;
or
(iv) Executive shall have committed any act of fraud against the Employer
or engaged in any other willful misconduct in connection with his duties
hereunder; or
(v) Executive shall have been convicted of a felony (other than a felony
relating to motor vehicle laws); provided, however, that, in each case, an event
giving rise to "Cause" shall not be finally determined to have occurred unless
admitted to in writing by the Executive or set forth in a final determination of
an arbitrator as provided in Section 10.04 hereof. Notwithstanding the
foregoing, no Cause for termination shall be deemed to exist with respect to the
Executive's acts described in clause (ii) above unless the Chief Executive
Officer shall have given prior written notice to the Executive specifying the
Cause with reasonable particularity and, within thirty (30) days after such
notice, the Executive shall not have cured or eliminated the problem or thing
giving rise to such Cause.
SECTION 6
TERMINATION COMPENSATION
6.01 Entitlement to Payment. (a) Subject to the provisions of Section 9.04,
if Executive's employment hereunder is terminated pursuant to Section 5.01, at
any time hereafter by the Employer, then Employer will pay to Executive an
amount equal to the Base Salary for two years following such termination. (The
amount to be paid pursuant to this Section 6.01 is referred to as the
"Termination Compensation" and the period for which such compensation is to be
paid is referred to as the ARelevant Period"). Such Termination Compensation
shall be paid to Executive in equal consecutive monthly installments during the
Relevant Period, with the first such installment paid on the first day of the
month next following the effective date of termination of Executive's employment
hereunder. Upon such termination, Executive shall also be entitled to any
accrued but unpaid bonus compensation. In addition, during the Relevant Period,
Executive shall be entitled to life insurance and medical benefits and all other
benefits, referred to in Section 4.02.
6.02. No Other Termination Compensation. Executive shall not be entitled to
any benefit or compensation following termination of his employment hereunder,
except as set forth in Section 6.01 and Section 8.01, if applicable.
Notwithstanding anything to the contrary herein, upon Executive's death,
permanent disability or termination by the Company without cause, the Company
will comply with the applicable terms of the Stockholder's Agreement dated June
27, 1996.
SECTION 7
LOCATION OF EXECUTIVE'S ACTIVITIES
7.01. Principal Place of Business. Executives's principal place of business
in the performance of his duties and obligations under this Agreement shall be
in the New York metropolitan area, which includes West ▇▇▇▇▇▇▇▇, New Jersey. For
so long as Employer's headquarters are located in the New York City metropolitan
area, Executive's principal place of business shall be located at such
headquarters. Notwithstanding anything to the contrary contained herein, if
after a change of control or ownership of Employer as defined in Section 8,
Executive is required to perform his duties from a location other than the New
York City Metropolitan area, Executive may terminate his employment hereunder
and such termination shall be deemed to be a termination by Employer without
cause.
7.02. Travel. Notwithstanding the provisions of Section 7.01, Executive
will engage in such travel and spend time in other places as may be necessary or
appropriate in furtherance of his duties hereunder.
SECTION 8
CHANGE IN CONTROL
8.01. Effect of Change in Control. If a Change in Control (as hereinafter
defined) shall occur and Executive is terminated without cause, in addition to
the payments in Section 6.01, all outstanding stock options under the stock
option plan shall immediately vest.
(a) As used in this Agreement, "Change in Control" means the occurrence
during the Term of any of the following events:
(i) The sale to any purchaser of (a) all or substantially all of the assets
of the Employer or (B) capital stock representing more than 50% of the stock of
the Employer entitled to vote generally in the election of directors of the
Employer; or
(ii) The merger of consolidation of the Employer with another corporation
if, immediately after such merger or consolidation, less than a majority of the
combined voting power of the then-outstanding securities entitled to vote
generally in the election of directors of the surviving or resulting corporation
in such merger or consolidation is held, directly ir indirectly, in the
aggregate by the holders immediately prior to such transaction of the
outstanding securities of the Employer; or
(iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form, or report or item therein), each promulgated pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
disclosing that any person (as the term "person" is used in Section 13(d)(3) or
Section 14(d) (2) of the Exchange Act) has become the beneficial owner (as the
term "beneficial owner" is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities representing 50% or
more of the combined voting power of the voting stock of Employer; or
( iv ) Employer files a report or proxy statement with the Securities and
Exchange Commission pursuant to the Exchange Act disclosing in response to Form
8-K or Schedule 14A (or any successor schedule, form, or report or item therein)
that a change in control of Employer has occurred or will occur in the future
pursuant to any then existing contract or transaction.
SECTION 9
EXCLUSIVITY OF SERVICES, CONFIDENTIAL
INFORMATION AND RESTRICTIVE COVENANTS
9.01. Exclusivity of Services. During the Employment Period and continuing
through the second anniversary of the date in which Executive ceases to be an
employee of the Company (the "Covenant Period"), Executive will not:
(i) Promote, participate or engage in any business on behalf of any Direct
Competitor of the Company, whether Executive is acting as owner, partner,
stockholder, employee, broker, agent, principal, trustee, corporate officer,
director, consultant or in any other capacity whatsoever; provided, however,
that this will not prevent Executive from holding for investment up to 1% of any
class of stock or other securities quoted or dealt in on a recognized stock
exchange or on Nasdaq. For purposes of this Section, a "Direct Competitor of the
Company" means (a) The Gap, Inc. or any Person under common control with The
Gap, Inc., (B) The Limited, Inc. or any Person under common control with The
Limited, Inc., (c) Gymboree or Baby Superstore or any Person under common
control with Gymboree or Baby Superstore, as the case may be, or (D) any Person
engaged in the sale of children's apparel and who derives more than fifty
percent of its gross revenues from the retail sales of children's apparel.
(ii) Directly or indirectly employ (other than on behalf of the Company),
solicit or entice away any director, officer or employee of the Company or any
of its subsidiaries; or
(iii) Take any action to interfere, directly or indirectly, with the
goodwill of the Company or any of its subsidiaries, or induce or attempt to
induce any Person doing business with the Company to cease doing business with
the Company.
9.02 Confidential Information During the Covenant Period Executive will not
(except in furthernace of the Company's business or as required by law) furnish
confidential information relating to the business or affairs of the Company, its
subsidiaries or any Person having dealings therewith, or permit or encourage the
use of such confidential information by another. During the Covenant Period,
Executive will not use the name of the Company or its subsidiaries in the
conduct of any business activities (except in furtherance of -the Company's
business) or for Executive's personal use without the prior written consent of
the Company.
9.03. Mutually Non-Disparagement. Neither Executive nor Employer will make
or authorize any public statement disparaging the other in its or his business
interests and affairs. Notwithstanding the foregoing, neither party shall be ( i
) required to make any statement that it or he believes to be false or
inaccurate, or (ii) restricted in connection with any litigation, arbitration or
similar proceeding or with respect to its response to any legal process.
9.04. Breaches of Provisions. If Executive breaches any of the provisions
of this Section 9 then, and in any such event, in addition to other remedies
available to Employer, Executive shall not be entitled to any Termination
Compensation, if any, made to him hereunder prior to Employer's discovery of
such breach.
SECTION 10
MISCELLANEOUS
10.01. Notices. Any notice, consent, or authorization required or permitted
to be given pursuant to this Agreement shall be in writing and sent to the party
for or to whom intended, at the address of such party set forth below, by
certified mail, postage paid, or at such other address as either party shall
designate by notice given to the other in the manner provided herein.
If to Employer: Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President & General Counsel
The Children's Place Retail Stores, Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
With Copies to: ▇▇▇▇ ▇▇▇▇▇
CEO/ Chairman
The Children's Place Retail Stores, Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
If to Executive: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
10.02. Taxes. Employer is authorized to withhold from payments made
hereunder to Executive such amounts for income tax, social security,
unemployment compensation and other judgement of Employer to comply with
applicable laws and regulations.
10.03. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed therein.
10.04. Headings. All descriptive headings in this Agreement are inserted
for convenience only and shall be disregarded in construing or applying any
provision of this Agreement.
10.05. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
10.06. Severability. If any provision of this Agreement or part thereof, is
held to be unenforceable, the remainder of such provisions of this Agreement, as
the case may be, shall nevertheless remain in full force and effect.
10.07. Entire Agreement and Integration. This Agreement contains the entire
agreement and understanding between Employer and Executive with respect to the
subject matter hereof. Such agreement supersedes any prior agreement between the
parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
THE CHILDREN'S PLACE RETAIL STORES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
Asst. Sec.
EXHIBIT A
COMPENSATION
1. BASE SALARY: At the initial rate of $320,000 per year, payable in equal
installments not less frequently than monthly during each year of the Employment
Period. Base Salary shall be subject to annual review on each November, as the
Board may determine.
2. PERFORMANCE BONUS: Following each Bonus Period (as defined below),
Executive shall be entitled to receive a Performance Bonus based upon the
Earnings of Employer during such Bonus Period. The Performance Bonus for each
such Period will be payable within 90 days after the end of such period. The
amount of the Performance Bonus for each Bonus Period will be equal to a product
equal to (a) Employee's semi-annual Base Salary, times (b) 40%, times (c) the
Bonus Percentage (as hereinafter defined). The following provisions shall apply
to determinations relating to Performance Bonus.
"Bonus Percentage" shall mean, for each Bonus Period, a percentage for such
period that is determined based upon Earnings in accordance with a schedule
adopted by the Board for all senior executives prior to commencement of such
period or as soon thereafter as possible, except that the Bonus percentage shall
be (a) not less than 20% nor ( b ) more than 200% for any Bonus Period.
"Bonus Period" shall mean each of the two periods of approximately six
months duration within each fiscal year of the Employer, one beginning on the
first day of the fiscal year and ending on this Saturday on or nearest (whether
following or preceding) July 31, of the calender year in which it commenced, and
the other beginning on the Sunday following such Saturday and ending on the last
day of such fiscal year.
"Earnings" shall mean, for each Bonus Period, the net income before
interest and taxes of Employer for such period, but excluding extraordinary
items, as determined in accordance with generally accepted accounting
principles. The amount of Earnings shall be determined by Employer, with respect
to the Bonus Period ending on approximately July 31st of each year. Such
determination shall be delivered to Employee and shall be final and binding
unless within 20 days after delivery notice is given by Employee of his
objection to any specific aspect of such determination; any item not objected to
shall be final and binding. Employer and Employee shall then discuss any item
objected to and their written determination with respect to that item shall be
final and binding on Employer and Employee. If they are unable to reach a
written determination within 30 days after the notice of objection has been
given, the dispute shall be referred to Employer's independent accountants. The
accountants shall as soon as practicable thereafter determine the disposition of
any disputed item and shall set forth their determination in a written report to
be given to Employer and Employee. The determination by the independent
accountants of any disputed item (as set forth in their written report) shall be
final and binding on the parties. The amount of earnings shall be determined by
the independent accounting firm then retained by Employer as its independent
auditors, with respect to the Bonus Period ending on the last date of Employer's
fiscal year, and the determination of such firm shall be final and binding in
the absence of manifest error.