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EXHIBIT 10.27
THE GYMBOREE CORPORATION
MANAGEMENT SEVERANCE PLAN
ARTICLE I
PURPOSE, ESTABLISHMENT AND APPLICABILITY OF PLAN
1. Purpose. The purpose of this Plan is to provide for the payment of
severance benefits to Participants whose employment with the Company terminates
in an Involuntary Termination other than in connection with a Change of Control.
The Company believes that severance benefits of this kind will aid the Company
in attracting and retaining the highly qualified individuals that are essential
to its success.
2. Establishment of Plan. As of the Effective Date, the Company hereby
establishes the Plan, as set forth in this document.
3. Applicability of Plan. Subject to the terms of this Plan, the
benefits provided by this Plan shall be available to those Employees who, on or
after the Effective Date, receive a Notice of Participation.
4. Contractual Right to Benefits. This Plan and the Notice of
Participation establish and vest in each Participant a contractual right to the
benefits to which he or she is entitled pursuant to the terms thereof,
enforceable by the Participant against the Company.
ARTICLE II
DEFINITIONS AND CONSTRUCTION
Whenever used in the Plan, the following terms shall have the meanings
set forth below.
1. Base Compensation. "Base Compensation" shall mean the gross annual
cash compensation paid to each Participant, exclusive of bonuses, commissions
and other incentive pay, together with any increases in such compensation that
may occur from time to time. Base Compensation of a Participant shall be
computed with reference to the greatest Base Compensation received by that
Participant in any full payroll period during the twelve (12) months preceding
the Participant's termination.
2. Board. "Board" shall mean the Board of Directors of the Company.
3. Cause. "Cause" shall mean (i) any act of personal dishonesty taken by
the Participant in connection with his or her responsibilities as an Employee
and intended to result in substantial
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personal enrichment of the Participant, (ii) the Participant's conviction of a
felony that is injurious to the Company, (iii) a willful act by the Participant
which constitutes gross misconduct and which is injurious to the Company, or
(iv) continued substantial violations by the Participant of the Participant's
employment duties which are demonstrably willful and deliberate on the
Participant's part after there has been delivered to the Participant a written
demand for performance from the Company which specifically sets forth the
factual basis for the Company's belief that the Participant has not
substantially performed his duties.
4. Change of Control. "Change of Control" shall mean the occurrence of
any of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company's then outstanding
voting securities; or
(ii) A change in the composition of the Board occurring within a
two-year period, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" shall mean directors who either (A)
are directors of the Company as of the date hereof, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination
(but shall not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors to the Company); or
(iii) The consummation of a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation; or
(iv) the consummation of the sale or disposition by the Company
of all or substantially all of the Company's assets.
5. Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
6. Company. "Company" shall mean The Gymboree Corporation, any
subsidiary corporations, any successor entities as provided in Article VII
hereof, and any parent or subsidiaries of such successor entities.
7. Disability. "Disability" shall mean that the Participant has been
unable to perform his or her duties as an Employee as the result of incapacity
due to physical or mental illness, and such inability, at least 26 weeks after
its commencement, is determined to be total and permanent by a
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physician selected by the Company or its insurers and acceptable to the
Participant or the Participant's legal representative (such agreement as to
acceptability not to be unreasonably withheld). Termination resulting from
Disability may only be effected after at least 30 days' written notice by the
Company of its intention to terminate the Participant's employment. In the event
that the Participant resumes the performance of substantially all of his or her
duties hereunder before the termination of his or her employment becomes
effective, the notice of intent to terminate shall automatically be deemed to
have been revoked.
8. Effective Date. "Effective Date" shall mean the date this Plan is
approved by the Board.
9. Employee. "Employee" shall mean an employee of the Company.
10. ERISA. "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
11. Involuntary Termination. "Involuntary Termination" shall mean any
termination of the Participant by the Company which is not effective for
Disability, Cause or the failure of the Company to obtain the assumption of this
agreement by any successors contemplated in Article VII below; provided,
however, that the term Involuntary Termination shall not include an acceptance
or rejection of an offer of continued employment with the Company that results
in (i) a reduction of the Participant's title, duties or responsibilities
relative to the Participant's title, duties or responsibilities in effect
immediately prior to such reduction; (ii) a reduction by the Company in the
annual base salary or in the maximum dollar amount of potential annual cash
bonuses relative to the annual base salary and maximum dollar amount of
potential annual cash bonuses as in effect immediately prior to such reduction;
or (iii) a reduction by the Company in the kind or level of employee benefits to
which the Participant is entitled immediately prior to such reduction with the
result that the Participant's overall benefits package is reduced.
12. Notice of Participation. "Notice of Participation" shall mean an
individualized written notice of participation in the Plan from an authorized
officer of the Company.
13. Participant. "Participant" shall mean an individual who meets the
eligibility requirements of Article III.
14. Plan. "Plan" shall mean this Gymboree Corporation Management
Severance Plan.
15. Plan Administrator. "Plan Administrator" shall mean the Board of
Directors of the Company, or its committee or designate, as shall be
administering the Plan.
16. Severance Payment. "Severance Payment" shall mean the payment of
severance compensation as provided in Article IV hereof.
17. Severance Payment Percentage. "Severance Payment Percentage" shall
mean, for
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each Participant, the Severance Payment Percentage set forth in such
Participant's Notice of Participation.
ARTICLE III
ELIGIBILITY
1. Waiver. As a condition of receiving benefits under the Plan, an
Employee must sign a general waiver and release on a form provided by the
Company.
2. Participation in Plan. Each Employee who is designated by the Board
and who signs and timely returns to the Company a Notice of Participation shall
be a Participant in the Plan. A Participant shall cease to be a Participant in
the Plan (i) upon ceasing to be an Employee, or (ii) upon receiving written
notice from the Plan Administrator that the Participant is no longer eligible to
participate in the Plan, unless in either case such Participant is entitled to
benefits hereunder. A Participant entitled to benefits hereunder shall remain a
Participant in the Plan until the full amount of the benefits have been
delivered to the Participant.
ARTICLE IV
SEVERANCE BENEFITS
1. Severance Pay Upon an Involuntary Termination. If the Participant's
employment with the Company terminates as a result of Involuntary Termination,
the Participant shall be entitled to receive a Severance Payment equal to the
sum of (i) the product obtained by multiplying the Participant's Severance
Payment Percentage times the Participant's Base Compensation. Any such Severance
Payment shall be paid in cash by the Company to the Participant in a single lump
sum payment, less applicable tax withholding, within ten (10) business days of
the Participant's termination date, and shall be in lieu of any other severance
or severance-type benefits to which the Participant may be entitled under any
other Company-sponsored plan, practice or arrangement.
EXAMPLE: Participant is Involuntarily Terminated as of July 1, 1998.
Participant's Base Compensation is $150,000. The Severance Payment
Percentage set forth in the Participant's Notice of Participation is
50%. The Participant is entitled to a Severance Payment equal to 50% x
$150,000 = $75,000.
2. Voluntary Resignation; Termination For Cause. If the Participant's
employment terminates by reason of the Participant's voluntary resignation (and
is not an Involuntary Termination), or if the Company terminates the Participant
for Cause, then the Participant shall not be entitled to receive severance or
other benefits under this Plan and shall be entitled only to those benefits (if
any) as may be available under the Company's then existing benefit plans and
policies at the time of such termination.
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3. Disability; Death. If the Participant's employment terminates by
reason of the Participant's death, or in the event the Company terminates the
Participant's employment for Disability, then the Participant shall not be
entitled to receive severance or other benefits under this Plan and shall be
entitled only to those benefits (if any) as may be available under the Company's
then existing benefit plans and policies at the time of such death or
Disability.
4. Termination Following a Change of Control. Notwithstanding anything
to the contrary herein, in the event that a Participant's employment terminates
for any reason within the eighteen (18)-month period following a Change of
Control, then the Participant shall not be entitled to receive severance or
other benefits under this Plan and shall be entitled only to those benefits (if
any) as may be available under the Company's then existing benefit plans and
policies at the time of such termination.
ARTICLE V
EMPLOYMENT STATUS; WITHHOLDING
1. Employment Status. This Plan does not constitute a contract of
employment or impose on the Participant or the Company any obligation to retain
the Participant as an Employee, to change the status of the Participant's
employment, or to change the Company's policies regarding termination of
employment. The Participant's employment is and shall continue to be at-will, as
defined under applicable law. If the Participant's employment with the Company
or a successor entity terminates for any reason, the Participant shall not be
entitled to any payments, benefits, damages, awards or compensation other than
as provided by this Plan, or as may otherwise be available in accordance with
the Company's established employee plans and practices or other agreements with
the Company at the time of termination.
2. Taxation of Plan Payments. All amounts paid pursuant to this Plan
shall be subject to regular payroll and withholding taxes.
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ARTICLE VI
SUCCESSORS TO COMPANY AND PARTICIPANTS
1. Company's Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company's business and/or assets
shall assume the obligations under this Plan and agree expressly to perform the
obligations under this Plan by executing a written agreement. For all purposes
under this Plan, the term "Company" shall include any successor to the Company's
business and/or assets which executes and delivers the assumption agreement
described in this subsection or which becomes bound by the terms of this Plan by
operation of law.
2. Participant's Successors. All rights of the Participant hereunder
shall inure to the benefit of, and be enforceable by, the Participant's personal
or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
ARTICLE VII
DURATION, AMENDMENT AND TERMINATION
1. Duration. This Plan shall terminate on the fifth anniversary of the
Effective Date, unless, (a) this Plan is extended by the Board, or (b) the Board
terminates the Plan in accordance with this Article. A termination of this Plan
pursuant to the preceding sentences shall be effective for all purposes, except
that such termination shall not affect the payment or provision of compensation
or benefits earned by a Participant prior to the termination of this Plan.
2. Amendment and Termination. The Board shall have the discretionary
authority to amend the Plan in any respect, including as to the removal or
addition of Participants, or to terminate the Plan, in either case by resolution
adopted by a majority of the Board.
ARTICLE VIII
CLAIMS PROCESS
1. Right to Appeal. A Participant or former Participant who disagrees
with his or her allotment of benefits under this Plan may file a written appeal
with the designated Human Resources representative. Any claim relating to this
Plan shall be subject to this appeal process. The written appeal must be filed
within sixty (60) days of the Participant's termination date.
2. Form of Appeal. The appeal must state the reasons the Participant or
former Participant believes he or she is entitled to different benefits under
the Plan. The designated Human Resources representative shall review the claim.
If the claim is wholly or partially denied, the
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designated Human Resources representative shall provide the Participant or
former Participant a written notice of the denial, specifying the reasons the
claim was denied. Such notice shall be provided within ninety (90) days of
receiving the written appeal.
3. Right to Review. If the claim is denied, in whole or in part, the
Participant may request a review of the denial at any time within ninety (90)
days following the date the Participant received written notice of the denial of
his or her claim. For purposes of this subsection, any action required or
authorized to be taken by the Participant may be taken by a representative
authorized in writing by the Participant to represent him or her. The designated
Human Resources representative shall afford the Participant a full and fair
review of the decision denying the claim and, if so requested, shall:
(a) permit the Participant to review any documents that are
pertinent to the claim; and
(b) permit the Participant to submit to the designated Human
Resources representative issues and comments in writing.
4. Decision on Review. The decision on review by the designated Human
Resources representative shall be in writing and shall be issued within 60 days
following receipt of the request for review. The decision on review shall
include specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision of the designated Human
Resources representative is based.
ARTICLE IX
NOTICE
1. General. Notices and all other communications contemplated by this
Plan shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Participant, mailed
notices shall be addressed to him or her at the home address which he or she
most recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its Senior Vice President,
Human Resources.
2. Notice of Termination by the Company. Any termination by the Company
of the Participant's employment shall be communicated by a notice of termination
to the Participant at least five (5) days prior to the date of such termination
(or at least thirty (30) days prior to the date of a termination by reason of
the Participant's Disability). Such notice shall indicate the specific
termination provision or provisions in this Plan relied upon (if any), shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination under the provision or provisions so indicated, and shall
specify the termination date.
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3. Notice by the Participant of Involuntary Termination by the Company.
In the event that the Participant determines that an Involuntary Termination has
occurred, the Participant shall give written notice to the Company that such
Involuntary Termination has occurred. Such notice shall be delivered by the
Participant to the Company within ninety (90) days following the date on which
such Involuntary Termination occurred, shall indicate the specific provision or
provisions in this Plan upon which the Participant relied to make such
determination and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for such determination. The failure by
the Participant to include in the notice any fact or circumstance which
contributes to a showing of Involuntary Termination shall not waive any right of
the Participant hereunder or preclude the Participant from asserting such fact
or circumstance in enforcing his or her rights hereunder.
ARTICLE X
MISCELLANEOUS PROVISIONS
1. No Duty to Mitigate. The Participant shall not be required to
mitigate the amount of any benefits contemplated by this Plan, nor shall any
such benefits be reduced by any earnings or benefits that the Participant may
receive from any other source.
2. Severability. The invalidity or unenforceability of any provision or
provisions of this Plan shall not affect the validity or enforceability of any
other provision hereof, which shall remain in full force and effect.
3. No Assignment of Benefits. The rights of any person to payments or
benefits under this Plan shall not be made subject to option or assignment,
either by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other creditor's
process, and any action in violation of this subsection shall be void.
4. Assignment by Company. The Company may assign its rights under this
Plan to an affiliate, and an affiliate may assign its rights under this Plan to
another affiliate of the Company or to the Company; provided, however, that no
assignment shall be made if the net worth of the assignee is less than the net
worth of the Company at the time of assignment; provided, further, that the
Company shall guarantee all benefits payable hereunder. In the case of any such
assignment, the term "Company" when used in this Plan shall mean the corporation
that actually employs the Participant.
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ARTICLE XI
ERISA REQUIRED INFORMATION
1. Plan Sponsor. The Plan sponsor and administrator is:
The Gymboree Corporation
700 Airport Boulevard
Suite 200
Burlingame, California 94010
2. Designated Agent. Designated agent for service of process:
Ken Meyers, Senior Vice President
Human Resources
The Gymboree Corporation
700 Airport Boulevard
Suite 200
Burlingame, California 94010
3. Plan Records. Plan records are kept on a fiscal year basis.
4. Plan Funding. The Plan is funded from the Company's general assets.
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THE GYMBOREE CORPORATION MANAGEMENT SEVERANCE PLAN
NOTICE OF PARTICIPATION
[CEO]
TO: [PARTICIPANT'S NAME]
DATE:
The Board has designated you as a Participant in the Plan, a copy of
which is attached hereto. The terms and conditions of your participation in the
Plan are as set forth in the Plan and herein. The terms defined in the Plan
shall have the same defined meanings in this Notice of Participation. As a
condition to receiving benefits under the Plan you agree to sign a general
waiver and release in the form provided by the Company.
In the event that you are entitled to a Severance Payment under the
Plan, you will receive a single, lump-sum payment, less applicable tax
withholding, equal to 200% of your Base Compensation.
If you agree to participate in the Plan on these terms and conditions,
please acknowledge your acceptance by signing below. Please return the signed
copy of this Notice of Participation within ten (10) days of the date set forth
above to:
Ken Meyers, Senior Vice President
Human Resources
The Gymboree Corporation
700 Airport Boulevard
Suite 200
Burlingame, California 94010
Your failure to timely remit this signed Notice of Participation will result in
your removal from the Plan. Please retain a copy of this Notice of
Participation, along with the Plan, for your records.
Date: Signature:
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THE GYMBOREE CORPORATION MANAGEMENT SEVERANCE PLAN
NOTICE OF PARTICIPATION
[SR. VP]
TO: [PARTICIPANT'S NAME]
DATE:
The Board has designated you as a Participant in the Plan, a copy of
which is attached hereto. The terms and conditions of your participation in the
Plan are as set forth in the Plan and herein. The terms defined in the Plan
shall have the same defined meanings in this Notice of Participation. As a
condition to receiving benefits under the Plan you agree to sign a general
waiver and release in the form provided by the Company.
In the event that you are entitled to a Severance Payment under the
Plan, you will receive a single, lump-sum payment, less applicable tax
withholding, equal to 100% of your Base Compensation.
If you agree to participate in the Plan on these terms and conditions,
please acknowledge your acceptance by signing below. Please return the signed
copy of this Notice of Participation within ten (10) days of the date set forth
above to:
Ken Meyers, Senior Vice President
Human Resources
The Gymboree Corporation
700 Airport Boulevard
Suite 200
Burlingame, California 94010
Your failure to timely remit this signed Notice of Participation will result in
your removal from the Plan. Please retain a copy of this Notice of
Participation, along with the Plan, for your records.
Date: Signature:
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THE GYMBOREE CORPORATION MANAGEMENT SEVERANCE PLAN
NOTICE OF PARTICIPATION
[VP]
TO: [PARTICIPANT'S NAME]
DATE:
The Board has designated you as a Participant in the Plan, a copy of
which is attached hereto. The terms and conditions of your participation in the
Plan are as set forth in the Plan and herein. The terms defined in the Plan
shall have the same defined meanings in this Notice of Participation. As a
condition to receiving benefits under the Plan you agree to sign a general
waiver and release in the form provided by the Company.
In the event that you are entitled to a Severance Payment under the
Plan, you will receive a single, lump-sum payment, less applicable tax
withholding, equal to 50% of your Base Compensation.
If you agree to participate in the Plan on these terms and conditions,
please acknowledge your acceptance by signing below. Please return the signed
copy of this Notice of Participation within ten (10) days of the date set forth
above to:
Ken Meyers, Senior Vice President
Human Resources
The Gymboree Corporation
700 Airport Boulevard
Suite 200
Burlingame, California 94010
Your failure to timely remit this signed Notice of Participation will result in
your removal from the Plan. Please retain a copy of this Notice of
Participation, along with the Plan, for your records.
Date: Signature:
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