SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) October 27, 1997
THE TALBOTS, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-12552 41-1111318
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
175 Beal Street, Hingham, Massachusetts 02043
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (781)749-7600
N/A
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(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 7. Exhibits.
The following exhibit is filed as part of this Report:
Exhibit
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10.50 Employment Agreement dated as of October 27, 1997 (M. Shulman)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: December 12, 1997
THE TALBOTS, INC.
By: /S/ EDWARD L. LARSEN
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Edward L. Larsen
Senior Vice President, Finance, and
Chief Financial Officer and Treasurer
<PAGE>
EXHIBIT INDEX
(10) Material Contracts
10.50 Employment Agreement dated as of October 27, 1997 (M. Shulman)
EXHIBIT 10.50
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of October 27, 1997,
between MARK SHULMAN (the "Executive") and THE TALBOTS, INC., a Delaware
corporation (the "Company").
W I T N E S S E T H
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to be employed by the Company on the terms, provisions and conditions
hereinafter provided;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and undertakings herein set forth, the parties hereto
agree as follows:
1. Engagement. The Company hereby agrees to employ the Executive, and
the Executive hereby accepts such employment, as Executive Vice President, Chief
Operating Officer and Chief Merchandising Officer of the Company, on the terms
and conditions set forth herein, unless and until such employment hereunder
shall have been terminated as provided in this Agreement.
2. Title and Duties. During his employment by the Company, the
Executive shall render his services as Executive Vice President, Chief Operating
Officer and Chief Merchandising Officer of the Company, shall perform duties
consistent with his title as the President of the Company shall reasonably
request, shall serve as a director on the Board of Directors of the Company (the
"Board"), so long as the Executive is duly elected by the stockholders of the
Company, and shall devote his full business time and best efforts to his duties
hereunder and the business and affairs of the Company (except during vacation
periods and reasonable periods of illness or other incapacity); provided,
however, that the Executive may from time to time engage in such other pursuits,
including, without limitation personal legal and personal financial affairs as
shall not interfere with the proper performance of his duties and obligations
hereunder.
3. Compensation. As compensation for his services to the Company
hereunder, the Company shall pay to the Executive the following:
(A) Base Salary
(i) The Executive shall receive base salary at the
rate of not less than $570,000.00 per annum (the "Base Salary
Rate"), payable in substantially equal installments, in
accordance with the normal payroll practices of the Company.
(ii) The Board, or a duly appointed committee
thereof, shall consider, on an annual basis, the nature,
extent and advisability, if any, of an increase in the
Executive's annual base salary; provided, however, that in no
event shall Executive's base salary during the term hereof be
less than the Base Salary Rate.
(B) Annual Incentive Bonus. The Executive shall be eligible to
receive an annual incentive bonus pursuant to the Company's Management Incentive
Program, as same may be amended or superseded from time to time (the Management
Incentive Program, as same may be amended or superseded from time to time, is
hereinafter referred to as the "MIP"). Notwithstanding the foregoing, the
Company shall pay the Executive the following minimum guaranteed bonuses: (1)
the sum of $40,000 (payable on or before February 28, 1998) for the period
November 1, 1997 through February 1, 1998; and (2) the sum of $230,000 ($180,000
of which shall be payable on or before February 28, 1998 and $50,000 of which
shall be payable on or before February 28, 1999) for the Company's Fiscal Year
1998. The Executive agrees that his right to receive the guaranteed bonuses
provided for in this paragraph is contingent only upon his employment not having
been terminated prior to the date payment of the bonus is due, or the closing
date of the period in respect of which the bonus is earned, whichever shall
first occur, because of his resignation, unless such resignation is with Good
Reason (as that term is defined in paragraph 6(H) below), or under paragraphs
6(C) or 6(D) below. The Executive further agrees that if after his receipt of
the $180,000 referred to above and before January 31, 1999 he shall resign his
employment without Good Reason (as such term is defined in paragraph 6(H) below)
or if his employment shall be terminated under paragraphs 6 (C) or 6 (D) (ii)
through (ix) below, the Executive shall, within 30 days of such resignation or
termination, repay the Company an amount which shall be determined by
multiplying $180,000 by a fraction, the numerator of which shall be 365 less the
number of days between February 2, 1998 and the date his employment shall
terminate and the denominator of which shall be 365.
(C) Executive Stock Based Incentive Plan.
(i) General. The Executive shall be eligible to
receive such incentive compensation as may be awarded from
time to time pursuant to the Company's Executive Stock Based
Incentive Plan as same may be amended or superseded from time
to time (the Executive Stock Based Incentive Plan, as same may
be amended or superseded from time to time, is hereinafter
referred to as the "Plan"). All awards to the Executive
(including those under subparagraph 3(C)(ii) below) shall be
subject to the terms of the Plan. The Company agrees that (i)
the terms of any grant of stock options the Compensation
Committee of the Board (the "Committee") makes to the
Executive under the Plan shall provide that upon the
termination of the Executive's employment hereunder pursuant
to paragraph 6(F) hereof, the Executive's right to exercise
any then unexercised, vested stock options shall be a period
of not less than three (3) years from the date of such
termination, and (ii) the terms of any grant of restricted
stock the Committee makes to the Executive under the Plan
shall provide for the acceleration of such stock's vesting
requirements upon the termination of the Executive's
employment hereunder pursuant to paragraph 6(H) hereof.
(ii) Current Restricted Stock and Stock Option
Awards. Upon commencement of the Executive's employment
hereunder, the Company shall make the following awards to the
Executive pursuant to the Plan: (a) 6,000 shares of Common
Stock of the Company, $0.01 par value per share, at a purchase
price to the Executive of $0.01 per share, which shares shall
be fully vested and free of any repurchase option; (b) 6,000
shares of Common Stock of the Company, $0.01 par value per
share, at a purchase price to the Executive of $0.01 per
share, which shares shall be nontransferable until they are
fully vested on February 2, 1999 in accordance with the terms
of the Restricted Stock Agreement to be executed by the
Company and the Executive, and shall be subject to a
repurchase option held by the Company and exercisable in
certain events specified in the Restricted Stock Agreement;
and (c) options to purchase 130,000 (80,000 plus 50,000)
shares of Common Stock of the Company, $0.01 par value per
share, pursuant to and subject to the terms and conditions of
a Nonqualified Stock Option Agreement to be executed by the
Company and the Executive, provided the Executive has
commenced services hereunder on or before November 17, 1997,
the options to purchase the 130,000 shares referred to above
shall be granted as of October 27, 1997 with an exercise price
equal to the closing price of the Company's common stock on
the New York Stock Exchange as of such grant date. If the
Executive's services hereunder commence after November 17,
1997, such options shall be granted as of the date such
services commence and the exercise price shall be equal to the
closing price of the Company's stock on the New York Stock
Exchange as of the grant date. The Executive's entitlement to
exercise such options shall vest as follows: (i) 33 1/3% of
the total shares subject to the option on a date one (1) year
following the date used to determine the exercise price as
described above; (ii) 33 1/3% of the total shares subject to
the option on a date two (2) years following the date used to
determine the purchase price as described above; and (iii) 33
1/3% of the total shares subject to the option on a date three
(3) years following the date used to determine the exercise
price as described above. The Executive agrees that if after
his receipt of the restricted stock shares referred to above
and within the initial two (2) years of the term hereof he
shall resign his employment without Good Reason (as such term
is defined in paragraph 6(H) below) or if his employment shall
be terminated by the Company under paragraph 6(D) (ii) through
(ix) below, the Executive shall, within 30 days of such
resignation or termination, repay the Company an amount which
shall be determined by multiplying the market value of the
vested restricted shares at the close of trading on the New
York Stock Exchange on the date of vesting (less the amount
paid by the Executive therefor) by a fraction the numerator of
which shall be 730 less the number of days between the
commencement of the Executive's employment hereunder and the
date his employment shall terminate and the denominator of
which shall be 730, provided, however, that the Executive
shall have the option of fulfilling his obligation hereunder
by returning to the Company the number of shares of the
Company's common stock determined by multiplying the number of
shares provided to the Executive hereunder by a fraction the
numerator of which shall be 730 less the number of days
between the commencement of the Executive's employment
hereunder and the date his employment shall terminate and the
denominator of which shall be 730.
(D) Profitt's Employment Agreement. The Executive has informed
the Company that he has entered into an employment agreement with his current
employer, Proffitt's, Inc., ("Proffitt's"), dated June 16, 1997, and has
furnished the Company with a true and complete copy thereof (the "Proffitt's
Employment Agreement"). In addition to the Company's agreement under Paragraph
7A below to indemnify Executive against any and all claims (not including the
Executive's obligation to repay Proffitt's for a $95,000 loan extended by
Proffitt's to the Executive) under the Proffitt's Employment Agreement, the
Company agrees to pay to the Executive all compensation provided for under
article 3 of this Agreement during the period (the "Sidelines Period") during
which he is prevented from performing this Agreement by reason of any provision
of the Proffitt's Employment Agreement, including without limitation Article 9
thereof, and the Executive and the Company agree that the term of this Agreement
shall be extended for the duration of the Sidelines Period. The Executive also
has informed the Company that he has entered into an Agreement and Release with
Proffitt's and has furnished the Company with a true and complete copy thereof
(the "Proffitt's Release"). The Executive and the Company agree that the Company
shall pay the sum of $312,500 to the Executive's attorneys, Hofheimer, Gartlir &
Gross, to be held in escrow by them until the execution of this Agreement and
then to be paid by them to Proffitt's in exchange for a release of the Company
and the Executive by Proffitt's of any claims Proffitt's might have against the
Company and the Executive arising out of the Executive's employment with
Proffitt's, his acceptance of employment with the Company and the Company's
employment of the Executive. The Executive further agrees that if within the
initial two (2) years of the term hereof, he shall resign his employment without
Good Reason (as such term is defined in paragraph 6(H) below) or if his
employment shall be terminated by the Company under paragraph 6 (D) (ii) through
(ix) below, the Executive shall, within 30 days of his resignation or
termination, repay the Company an amount which shall be determined by
multiplying $312,500 by a fraction, the numerator of which shall be 730 less the
number of days between the commencement of the Executive's employment hereunder
and the date his employment shall terminate and the denominator of which shall
be 730.
(E) Deferred compensation. The Executive shall be eligible to
participate in any deferred compensation program of the Company as may be in
effect from time to time.
4. Benefits. Subject to the provisions of this Agreement, the Company
shall provide the following benefits to the Executive for services rendered
during the term of his employment hereunder:
(A) Insurance and Retirement Benefits. The Executive shall be
entitled to such insurance benefits of the Company as may be in effect from time
to time and generally available to employees at the senior executive level,
including, but not limited to, disability insurance and business travel accident
insurance. The Executive shall also be entitled to participate in benefit
programs provided by the Company, including, but not limited to, the retirement
program, the supplemental retirement program, the R.S.V.P. 401-K Savings Program
and the supplemental R.S.V.P. 401-K Savings Program. In addition, nothing herein
shall preclude the Executive from receiving any additional compensation in the
form of salary, bonuses or otherwise or from participating in any future benefit
plan for employees of the Company, in each case as and to the extent approved
and determined by the Board.
(B) Other Insurance and Welfare Benefits. The Executive shall
also be entitled to participate in the following benefits programs: (i) the
Company's medical insurance program; (ii) the Company's dental insurance
program; and (iii) the Company's Paid Life Insurance Program, pursuant to which
the Company shall pay all premiums on behalf of the Executive for a term life
insurance policy on the life of the Executive with coverage in an amount equal
to the Executive's annual base salary for one (1) year, at the rate then in
effect during the coverage of such policy.
(C) Automobile Program, The Executive shall be entitled to
participate in the Company's Executive Automobile Program, pursuant to which the
Company, at the Executive's election, shall either: (i) provide the Executive
with an automobile (which automobile shall be replaced every (2) years) for his
use with a value, when new, of up to $31,700 and shall reimburse the Executive
for all such costs and expenses associated with such automobile (including, but
not limited to, automobile insurance, repairs, and gas), or (ii) provide the
Executive with a monthly automobile allowance, which allowance shall be based
upon the annualized imputed value of the automobile to which the Executive is
entitled under such program. The value of the automobile to which the Executive
is entitled shall be subject to an annual review and may be increased at the
discretion of the Board, in accordance with the terms of the Company's Executive
Automobile Program; provided, however, the Executive shall be entitled to
receive any benefit to which participants in the Company's Executive Automobile
Program may from time to time hereafter generally become entitled thereunder
that is broader or greater than the benefits to which participants are currently
generally entitled (e.g., an across-the-board increase in the value of
automobiles received under such Program).
(D) Financial Counseling Program. The Executive shall be
entitled to participate in the Company's Key Management Financial Counseling
Program. The Executive's initial annual allowance shall be $2,500 per calendar
year, which allowance shall be subject to periodic review by the Board and may
be increased at the discretion of the Board, in accordance with the terms of the
Key Management Financial Counseling Program.
(E) Vacation. The Executive shall be entitled to an aggregate
of not less than four (4) weeks of paid vacation in each full calendar year
during the Executive's employment hereunder.
(F) Employee Discount. The Executive shall be entitled to
receive the benefit of any Company Discount which may be in effect from time to
time and is generally available to the employees of the Company. The Company
Discount is currently 40%.
(G) Relocation. The Executive shall be entitled to
reimbursement for expenses attributable to the relocation of the Executive's
principal residence from Houston, Texas to the Boston, Massachusetts
metropolitan area in accordance with the terms of the Company's Executive
Relocation Policy (the "Relocation Policy"). The Executive agrees that if after
his receipt of any payments or benefits under the Relocation Policy and within
the initial two (2) years of the term hereof, he shall resign his employment
without Good Reason (as such term is defined in paragraph 6(H) below) or his
employment shall be terminated under paragraph 6(D)(ii) through (ix) below, the
Executive shall, within 30 days of his resignation or termination, repay the
Company an amount which shall be determined by multiplying the amount of such
payments and benefits by a fraction, the numerator of which shall be 730 less
the number of days between the commencement of the Executive's employment and
the date his employment shall terminate and the denominator of which shall be
730.
5. Expenses. The Executive is authorized to incur and the Company shall
either pay directly or reimburse the Executive for ordinary and reasonable
expenses in connection with the performance of his duties hereunder, including,
without limitation, expenses for (A) transportation, (B) business meals, (C)
travel and lodging, and (D) similar items. The Executive agrees to comply with
the Company policies with respect to record keeping in connection with such
expenses.
6. Termination of Employment. The following provisions set forth the
terms and conditions pursuant to which the employment of the Executive hereunder
may be terminated:
(A) The employment of the Executive hereunder may be
terminated by the Company or the Executive at any time, subject to the Company's
providing all of the compensation and benefits herein specified in accordance
with the terms hereof.
(B) The employment of the Executive hereunder may be
terminated by the Company or the Executive on or after the normal retirement
date of the Executive under the Company's Pension Plan and Supplemental
Retirement Plan or any successor or substitute plan.
(C) The employment of the Executive hereunder shall be
terminated upon the death of the Executive.
(D) The employment of the Executive hereunder may be
terminated by the Company in the event of the occurrence of any of the following
conditions or events provided the President and CEO shall have given the
Executive at least 10 business days prior notice of the claimed occurrence:
(i) the failure of the Executive substantially to
perform his duties hereunder as a result of physical
incapacity for a continuous period of at least six (6) months
after he has become eligible for the Company's long-term
disability benefits (any dispute as to the Executive's
incapacitation shall be resolved by an independent physician,
reasonably acceptable to the Executive and the Board, whose
determination shall be final and binding upon both the
Executive and the Company);
(ii) continual failure of the Executive substantially
to perform his material duties hereunder, other than as a
result of incapacity due to physical or mental illness, which
failure continues uncured after a written demand for
substantial performance is delivered to the Executive by the
President and Chief Executive Officer which states the dates
and instances of prior non-performance by the Executive;
(iii) habitual drunkenness;
(iv) the unlawful use or possession of controlled
substances;
(v) the commission by the Executive of repeated acts
of material misconduct including excessive absenteeism not
related to illness or vacations, which acts have a materially
adverse effect on the Company but only after notice to the
Executive from the President and Chief Executive Officer
followed by a repetition of such misconduct;
(vi) the conviction of the Executive of a felony;
(vii) dishonesty in material respects in matters
relating to the Company;
(viii) continuous conflicts of interest after notice
in writing to the Executive from the Board; or
(ix) any other material breach of this Agreement by
the Executive, but only after notice to the Executive from the
President and Chief Executive Officer and the Executive's
failure to cure the breach within thirty (30) days of the
notice or repetition of a previously committed breach. Upon or
after the date of occurrence of any of the events or
conditions described above, the Company may deliver written
notice to the Executive of its election to terminate his
employment hereunder.
(E) In the event that the Executive's employment hereunder is
terminated pursuant to paragraphs (B), (C) or (D) above or by the Executive
without Good Reason (as such term is defined in paragraph (H) below), the
Company shall be under no further obligation to the Executive pursuant to the
terms of this Agreement except to pay the Executive, on the effective date of
such termination (or, in the event of a termination pursuant to paragraph (C)
above, to pay the Executive's estate or legal representative, as soon as
reasonably practicable after the Executive's death) (i) salary for services
rendered up to and including the date of termination, (ii) reimbursement for
expenses incurred by the Executive pursuant to paragraph 5 hereof up to and
including the date on which his employment is terminated, and (iii) any and all
compensation to which the Executive may be entitled as of the date of
termination pursuant to the Plan or any other compensation or benefit plan to
the extent permitted by such plans.
(F) In the event that the Executive's employment hereunder is
terminated and such termination is not a result of an event or condition
referred to in paragraph (E) above, the following shall occur: (i) the Company
shall pay to the Executive on the effective date of such termination (a) salary
for services rendered up to and including the date of termination, (b)
reimbursement for expenses incurred by the Executive pursuant to paragraph 5
hereof up to and including the date on which his employment is terminated, and
(c) any and all compensation to which the Executive may be entitled as of the
date of termination pursuant to the Plan or any other compensation or benefit
plan to the extent permitted by such plans; and (ii) the Company shall pay to
the Executive, in a single lump payment within thirty (30) days from the
effective date of such termination, a separation allowance equal to the product
of two (2) multiplied by the sum of: (x) the Executive's annual base salary, at
the rate in effect at the time of such termination, and (y) the annual bonus
paid or payable to the Executive pursuant to paragraph 3(B) hereof for the last
full fiscal year of the Company immediately prior to the effective date of such
termination.
(G) In the event that the Executive's employment hereunder is
terminated including, without limitation, pursuant to paragraph 14 below, and
such termination is not a result of an event or condition referred to in
paragraph (E) above, the Executive also shall continue to participate, on the
same terms and conditions as in effect immediately prior to such termination, in
the disability insurance benefit program provided to the Executive pursuant to
paragraph 4 (A) hereof and the medical insurance program, the dental insurance
program and the Company's Paid Life Insurance Program provided to the Executive
pursuant to paragraph 4 (B) hereof from the time of such termination until the
earlier of (i) the end of the two (2) year period beginning from the effective
date of the termination of the Executive's employment hereunder (the "Two Year
Post-Termination Period") or (ii) such time as the Executive is eligible to be
covered by a comparable program of a subsequent employer. The Executive agrees
to notify the Company promptly if and when he begins employment with another
employer and if and when he becomes eligible to participate in any pension or
other benefit plans, programs or arrangements of another employer.
(H) In the event that there is a Change in Control (as
hereinafter defined) , and, within twenty-four (24) months after the occurrence
of such Change in Control, the Executive's employment hereunder is terminated
either (i) by the Company, and such termination is not a result of an event or
condition referred to in paragraph (E) above, or (ii) by the Executive for Good
Reason (as hereinafter defined), provided that the Executive shall provide
thirty (30) days written notice of such termination, then the following shall
occur:
(a) the Company shall pay to the Executive on the effective
date of such termination (I) salary for services rendered up to and including
the date of termination, (II) reimbursement for expenses incurred by the
Executive pursuant to paragraph 5 hereof up to and including the date on which
his employment is terminated, and (III) from the Benefits Trust (as such term is
defined in paragraph 6(I)(a) hereof) and other sources, as applicable, any and
all compensation to which the Executive may be entitled as of the date of
termination pursuant to the Plan or any other compensation or benefit plan to
the extent permitted by such plans; and
(b) the Company shall pay to the Executive from the Severance
Trust (as such term is defined in paragraph 6(I)(b) hereof) and other sources if
the monies paid into the Severance Trust at the time of the Change in Control
pursuant to paragraph 6(I)(b) hereof are not sufficient, within thirty (30) days
from the effective date of such termination,
(I) an amount equal to the product of two (2) multiplied by
the sum of:
(x) the Executive's annual base salary, at a rate
(the "Severance Rate") equal to the greater of
(A) the annual rate in effect on the date one hundred
eighty (180) days prior to such termination or
(B) the annual rate in effect at the time of such
termination, and
(y) the maximum bonus payable to the Executive
(assuming application of the maximum rates and ratings
thereunder) under the MIP in effect as of the last full fiscal
year of the Company immediately prior to the effective date of
such termination;
(II) an amount equal to the maximum bonus payable to the
Executive (assuming application of the maximum rates and
ratings thereunder) under the MIP for the year in which the
Executive's employment was terminated, pro rated for that
portion of the year in which the Executive was employed;
(III) an amount equal to three (3) times the present value (as
calculated by the independent certified public accountant then
employed by the Company) of the Executive's accrued benefits
under the Company's supplemental retirement plan as of the
date on which his employment is terminated; and
(c) the Executive shall continue to participate in the
programs pursuant to paragraph 6(G) hereof; provided, however, the Executive's
participation in such programs shall not end on the earlier of the Two-Year
Termination Period or such time as the Executive is eligible to be covered by a
comparable program of a subsequent employer, but rather, the Executive shall
participate in such benefit programs from the effective date of the termination
of his employment under this paragraph 6(H) until the earlier of (i) the end of
the twenty-four (24) month period beginning from the date of such termination
(the "Twenty-Four Month Post-Termination Period") or (ii) such time as the
Executive is eligible to be covered by a comparable program of a subsequent
employer; and
(d) the Executive shall also continue to participate, on the
same terms and conditions as in effect immediately prior to his termination
under this paragraph 6(H), in the Company's Executive Automobile Program
provided to the Executive pursuant to paragraph 4(C) hereof from the time of
such termination until the earlier of (i) the end of the Twenty-Four Month
Post-Termination Period or (ii) such time as the Executive is eligible to be
covered by a comparable program of a subsequent employer. As used in this
Agreement, the term "Change in Control" shall mean: (i) the acquisition
(including as a result of a merger) by any "person" (as such term is used in
Sections 3 (a) (9) , 13 (d) and 14 (d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or persons "acting in concert" (which for
purposes of this Agreement shall include two (2) or more persons voting together
on a consistent basis pursuant to an agreement or understanding between them to
act in concert and/or as a "group" within the meaning of Sections 13 (d) (3) and
14 (d) (2) of the Exchange Act) , other than the Company or any of its
subsidiaries, or JUSCO, (U.S.A.), Inc. or any of its subsidiaries or
"affiliates" (as such term is defined in Rule 12b-2 under the Exchange Act)
(collectively, an "Acquiring Person"), of beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing more than 25 percent of the combined
voting power of the then outstanding securities of the Company entitled to then
vote generally in the election of directors of the Company, and no other
stockholder is the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act), directly or indirectly, of a percentage of such securities higher
than that held by the Acquiring Person; or (ii) individuals, who, as of the date
hereof (the "Effective Date"), constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board; provided
that any individual becoming a director subsequent to the Effective Date, whose
election, or nomination for election by the Company's stockholders, was approved
by a vote of at least two-thirds of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of the
Incumbent Board but, excluding, as a member of the Incumbent Board, any such
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors of the
Company (as such terms are used in Rule 14a-11 of Regulation 14A under the
Exchange Act) and further excluding any individual who is an "affiliate",
"associate" (as such terms are defined in Rule 12b-2 under the Exchange Act) or
designee of an Acquiring Person having or proposing to acquire beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more than 10 percent of
the combined voting power of the then outstanding securities of the Company
entitled to then vote generally in the election of directors of the Company. As
used in this Agreement, the term "Good Reason" shall mean the occurrence of any
of the following events, other than as a result of the occurrence of any other
events or conditions described in paragraph 6(D) hereof: (i) the deprivation of,
or the reduction in, or the assignment of duties to the Executive which would be
inconsistent with, the Executive's position and responsibilities as indicated in
paragraph 2 hereof, or (ii) a relocation of the Company's principal executive
offices following the date of the Change in Control to a location greater than
forty (40) miles from the location of such offices prior to the Change in
Control, or (iii) a reduction by the Company in the Executive's annual base
salary as in effect on the date of the Change in Control, or (iv) any failure by
the Company to continue in effect any compensation or benefit plan or
arrangement (including, without limitation, any such plan or arrangement
described herein or any alternative plan providing a comparable level of
benefits) in which the Executive is participating at the time of the Change of
Control, or the taking of any action by the Company which would adversely affect
the Executive's participation in or materially reduce his benefits under any
such plan or arrangement, or (v) the placement of the Executive in the
employment of an Affiliate, or (vi) any breach by the Company of any provision
of this Agreement. As used in this paragraph, the term "Affiliate" shall mean
any other person or entity controlling, controlled by or under common control
with, the Company.
(I) The Company, on the date of the Change in Control, shall
cause the following to occur:
(a) the Company shall pay into The Talbots, Inc. Supplemental
Benefits Trust (the "Benefits Trust") all monies to which the Executive is
entitled under the Plan, any deferred compensation program of the Company, the
supplemental R.S.V.P. 401-K Savings Program, and the Company's retirement
program (to the extent such monies under such retirement program are not
qualified benefits) and supplemental retirement program;
(b) the Company shall pay into The Talbots, Inc. Severance
Trust (the "Severance Trust"), (I) an amount equal to the Company's good faith
estimate of the amount which would be payable to the Executive under paragraphs
6(H)(b)(I) and 6(H)(b)(II) hereof in the event of a termination of the
Executive's employment as described in paragraph 6(H) hereof and assuming the
Executive would be employed for a period of six (6) months during the year in
which the Executive's employment is terminated, (II) an amount equal to the
Company's good faith estimate of the amount which would be payable to the
Executive under paragraph 6(H)(c) hereof in the event of a termination of the
Executive's employment as described in paragraph 6(H) hereof, and (III) an
amount equal to three (3) times the present value (as calculated by the
independent certified public accountant then employed by the Company) of the
Executive's accrued benefits under the Company's supplemental retirement plan as
of the date of the Change in Control. In the event that the Executive's
employment hereunder is not terminated for 24 months after the Change in Control
pursuant to paragraph 6(H) hereof, such monies paid into the Severance Trust on
the date of the Change in Control shall revert to the Company.
(J) The date of termination of the Executive's employment for
purposes of paragraphs (F), (G) and (H)(i) above shall be the date specified in
a written notice of termination to the Executive, provided that the Company
shall provide at least thirty (30) days written notice of such termination.
(K) The Company shall pay all legal fees and expenses that the
Executive may incur in any contest of the validity, enforceability or
interpretation of, or determinations under, paragraphs 6(H) or 6(I) hereof,
regardless of whether the Executive prevails in any such contest.
(L) In the event of the termination or expiration of this
Agreement for any reason, the Company shall remain forever obligated to
effectuate, directly or indirectly through its transfer agent, transfers or
sales of shares of the Company's Common Stock, or exercises of options to
purchase such shares, to which Executive is entitled pursuant and subject to the
terms of this Agreement.
7. Indemnification.
(A) The Company shall indemnify, defend and hold the Executive
harmless, to the maximum extent permitted by law, against all judgments, fines,
amounts paid in settlement and all reasonable expenses, including attorneys'
fees incurred by the Executive, in connection with the defense of, or as a
result of any action or proceeding (or any appeal from any action or proceeding)
in which the Executive is made or is threatened to be made a party by reason of
the fact that (1) the Executive terminated his employment with Proffitt's, and
(2) the Executive is or was an officer or director of the Company, regardless of
whether such action or proceeding is one brought by or in the right of the
Company, to procure a judgment in its favor (or other than by or in the right of
the Company). All such expenses shall be paid by the Company within 30 days
after its receipt of the invoice therefor. In connection with the Company's
defense of the Executive pursuant to this paragraph 7(A) , the Company hereby
covenants that it shall not agree to any compromise or settlement without the
prior written consent of the Executive, that any counsel retained or employed by
the Company shall be reasonably acceptable to the Executive, and that the
Executive shall have the right to participate in any such defense. Each of the
parties hereto shall give prompt notice to the other of any action or proceeding
from which the Company is obligated to indemnify, defend and hold harmless the
Executive of which it or he (as the case may be) gains knowledge.
(B) The Company hereby represents and warrants that the
Executive shall be covered and insured up to the maximum limits provided by all
insurance which the Company maintains to indemnify its directors and officers
(and to indemnify the Company for any obligations which it incurs as a result of
its undertaking to indemnify its officers and directors).
8. Arbitration. Any dispute, controversy or claim between the parties
hereto arising out of or relating to this Agreement either during or after the
term thereof, may be settled by arbitration conducted in the Commonwealth of
Massachusetts, in accordance with the Commercial Rules of the American
Arbitration Association then in force. The decision of the arbitrator or
arbitrators conducting any such arbitration proceedings shall be in writing,
shall set forth the basis therefor and such arbitrator's or arbitrators'
decision or award shall be final and binding upon the parties hereto. The
parties hereto shall abide by all awards rendered in such arbitration
proceedings, and all such awards may be enforced and executed upon in any court
having jurisdiction over the party against whom or which enforcement of such
award is sought.
9. Enforceability. It is the intention of the parties that the
provisions of this Agreement shall be enforced to the fullest extent permissible
under the laws and public policies of each state and jurisdiction in which such
enforcement is sought, but that the unenforceability (or the modification to
conform with such laws or public policies) of any provisions hereof, shall not
render unenforceable or impair the remainder of this Agreement. Accordingly, if
any provision of this Agreement shall be determined to be invalid or
unenforceable, either in whole or in part, this Agreement shall be deemed
amended to delete or modify, as necessary, the offending provisions and to alter
the balance of this Agreement in order to render the same valid and enforceable
to the fullest extent permissible.
10. Assignment. This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder. This Agreement and all of the
provisions hereof shall be binding upon, and inure to the benefit of, the
parties hereto, and their successors (including successors by merger,
consolidation or similar transactions), permitted assigns, executors,
administrators, personal representatives, heirs and distributees.
11. Non-Disclosure. The Executive shall not, at any time during or
following the period of employment, disclose, use, transfer or sell, except in
the course of such employment, any confidential information or proprietary data
of the Company and its subsidiaries so long as such information or data remains
confidential and has not been disclosed or is not otherwise in the public
domain, except as required by law or pursuant to legal process or in connection
with an administrative proceeding before a governmental agency.
12. Non-Competition Agreement. In the event the Executive's employment
hereunder is terminated by the Executive without Good Reason or by the Company
pursuant to an event or condition described in paragraph 6 (B) or 6 (D) hereof,
the Executive will not for a period of two years thereafter engage in or carry
on, directly or indirectly, either for himself or as a member of a partnership
or as a stockholder, investor, officer or director of a corporation or as an
employee, agent, associate or consultant of any person, partnership or
corporation, or any business in competition with the principal businesses
carried on by the Company and its subsidiaries taken as a whole in the United
States or within any foreign country; provided, however, that ownership of 5% or
less of any class of debt or equity securities which are publicly traded shall
not be a violation of this paragraph 12.
13. Taxes.
(A) All payments to be made to and on behalf of the Executive
under this Agreement will be subject to required withholding of federal, state
and local income and employment taxes, and to related reporting requirements.
(B) Notwithstanding any other provision of this Agreement, if
any of the payments provided for in this Agreement, together with any other
payments which the Executive has the right to receive from the Company or any
corporation which is a member of an "affiliated group" (as defined in Section
1504(a) of the Internal Revenue code of 1986, as amended (the "Code") without
regard to Section 1504(b) of the Code) of which the Company is a member, would
constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Code),
payments pursuant to this Agreement shall be reduced to the largest amount as
will result in no portion of such payments being subject to the excise tax
imposed by Section 4999 of the Code.
14. Term. This Agreement shall commence on October 27, 1997 and shall
continue in effect until the last day of the Company's fiscal year that ends in
January 2001; provided, however, that commencing at the beginning of the
Company's fiscal year immediately thereafter and at the beginning of the
Company's fiscal year each three years thereafter, the term of this Agreement
shall automatically be extended for three additional years unless at least 6
months prior to such date, the Company or the Executive shall have given notice
to the other party that this Agreement shall not be extended. It is acknowledged
and agreed by the parties hereto that if this Agreement is terminated or not
extended by the Company pursuant to this paragraph 14 and not as a result of an
event or condition referred to in paragraph 6(E) hereof, the provisions of
paragraphs 6(F) and 6(G) hereof shall apply.
15. Survival. Anything in paragraph 6 hereof to the contrary
notwithstanding, the provisions of paragraphs 7 through 18 shall survive the
expiration or termination hereof, regardless of the reasons therefor.
16. No Conflict. The Executive and the Company each hereby represents
and warrants to the other that the execution, delivery and performance of this
Agreement by him or it (as the case may be) shall not violate any agreement or
other obligation of any kind, written or oral, to which he or it (as the case
may be) is subject.
17. Miscellaneous.
(A) Notices. All notices hereunder shall be given in writing,
clearly marked "Personal and Confidential," by personal delivery (which shall
include delivery by overnight couriers such as Federal Express), or prepaid
registered or certified mail, return receipt requested, to the addresses of the
proper parties as set forth below: TO THE EXECUTIVE: Mark Shulman c/o The
Talbots, Inc. 175 Beal Street Hingham, MA 02043
TO THE COMPANY:
The Talbots, Inc.
175 Beal Street
Hingham, MA 02043
Attn: President and Chief Executive Officer
Any notice given as aforesaid shall be deemed received upon actual delivery. Any
party hereto (or any person designated to receive a copy of any notice) may
change his or its (as the case may be) designated address by notice served as
herein set forth upon the other party designated to receive notice.
(B) Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
applicable to contracts made and to be wholly performed in that state without
regard to its conflicts of laws provisions.
(C) Headings. The paragraph headings contained in this
Agreement are for convenience of reference only and are not intended to
determine, limit or describe the scope or intent of any provision of this
Agreement.
(D) Number and Gender. Whenever in this Agreement the singular
is used, it shall include the plural if the context so requires, and whenever
the masculine gender is used in this Agreement, it shall be construed as if the
masculine, feminine or neuter gender, respectively, has been used where the
context so dictates, with the rest of the sentence being construed as if the
grammatical and terminological changes thereby rendered necessary have been
made.
(E) Entire Agreement. This Agreement contains the entire
understanding between and among the parties with respect to the subject matter
hereof and supersedes any prior or contemporaneous understandings and
agreements, written or oral, between and among them respecting such subject
matter.
(F) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but both of which taken
together shall constitute one instrument.
(G) Amendments. This Agreement may not be amended except by a
writing executed by the party against whom or which such amendment is to be
enforced.
(H) Expenses. All reasonable legal fees and expenses incurred
by the Executive in negotiating and entering into this Agreement will be paid by
the Company. In the event a dispute arises regarding the validity,
interpretation or enforcement of this Agreement or the right of the Executive to
receive or retain any benefit or payment contemplated hereby, all legal fees and
expenses incurred by the Executive in seeking to obtain, enforce or retain any
right, benefit or payment provided for in this Agreement or in otherwise
pursuing or settling any claim hereunder will be paid by the Company, to the
extent permitted by applicable law; provided, however, that, except in the event
of a dispute following a Change in Control as set forth in paragraph 6(K)
hereof, if the Executive does not prevail at least in whole or in part in any
proceeding brought by the Executive to enforce a provision of this Agreement,
the Executive shall be responsible for the legal fees and expenses incurred by
him in connection with such proceeding. All such fees and expenses will be paid
by the Company within 30 days after the Company's receipt of the invoices
therefor.
(I) Termination Without Cause. For purposes of the Plan,
"termination without cause" hereunder shall mean termination of the Executive's
employment hereunder as result of an event or condition that is not referred to
in paragraph 6(E) hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
MARK SHULMAN THE TALBOTS, INC.
/s/ Mark Shulman By: /s/ Arnold B. Zetcher
- ---------------------------- -----------------------
Mark Shulman Name: Arnold B. Zetcher
Title: President & CEO
