THE GYMBOREE CORPORATION

 

MANAGEMENT SEVERANCE PLAN

 

Amended and Restated
Effective January 8, 2013

 

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. The Company believes that severance benefits of this
kind will aid the Company in attracting and retaining the highly qualified
individuals who 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 and conditions thereof,
enforceable by the Participant against the Company.

 

ARTICLE II

DEFINITIONS AND CONSTRUCTION

 

Whenever used in this 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 in the form of base salary, exclusive of
bonuses, other incentive pay, commissions, and all other pay and expense types.
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 Involuntary
Termination.

 

2. Board. “Board” shall mean the Board of Directors of The Gymboree Corporation.

 

3. Cause. “Cause” shall mean (i) the conviction of (or plea of nolo contendere
by) the Participant for a felony or a crime involving moral turpitude; (ii) the
commission by the Participant of theft, fraud, embezzlement, material breach of
trust or any material act of dishonesty involving the Company; (iii) a material
breach by the Participant in the performance of his or her duties and
responsibilities, following written notice to the Participant and a 30 day
opportunity to cure; (iv) a significant violation by the Participant of the code
of conduct of the Company or of any statutory or common law duty of loyalty to
the Company; or (v) any act that would constitute a material violation of the
standards set forth in this Plan, including, without limitation, the standards
of Article V or a material breach of any agreement with the Company.

 

 

 

 

 

4. COBRA Premiums Continuation Period. “COBRA Premiums Continuation Period”
shall mean the period set forth in a Participant’s Notice of Participation,
which period immediately follows the Participant’s Involuntary Termination.

 

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 affiliates, any successor entities as provided in Article VII
hereof, and any parent, subsidiaries or affiliate 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 the Participant is found to be disabled within
the meaning of the Company’s long-term disability plan.

 

8. Effective Date. “Effective Date” for purposes of this most recent amendment
and restatement of this Plan shall mean January 8, 2013.

 

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. Good Reason. “Good Reason” means the occurrence of any of the following
without the Participant’s express written consent: (i) the material reduction of
the Participant’s authority, duties or responsibilities relative to the
Participant’s authority, duties or responsibilities in effect immediately prior
to such reduction; provided, however, that a significant reduction in title,
duties or responsibilities solely by virtue of the Company being acquired and
made part of a larger entity (as example, when the Chief Financial Officer of
The Gymboree Corporation remains as such following a change of control and is
not made the Chief Financial Officer of the acquiring corporation) shall not
constitute Good Reason, (ii) a material reduction by the Company in the annual
base salary relative to the annual base salary in effect immediately prior to
such reduction; or (iii) the required relocation of Participant’s primary
geographic work location by more than 50 miles; provided that no event described
herein shall constitute Good Reason unless (A) the Participant has given the
Company written notice of termination setting forth the conduct that is alleged
to constitute Good Reason within 90 days of the first date on which the
Participant has knowledge of such event or conduct, and (B) the Participant has
provided the Company at least 30 days following the date on which such notice is
provided to cure such conduct and the Company has failed to do so.

 

 

 

 

 

12. Involuntary Termination. “Involuntary Termination” shall mean (i) a
termination of a Participant’s employment by the Company other than for Cause or
(ii) by the Participant for Good Reason; provided, however, that an Involuntary
Termination shall not occur for purposes of this Plan if the Participant is
offered comparable employment with the Company. A position will not be
considered comparable under the foregoing sentence if, at the time the
Participant is offered the position: (a) the annual base salary for the new
position would result in a material reduction from the annual base salary of the
Participant’s then current position, or (b) the new position involves a material
change in geographic location from the location of the Participant’s then
current position.

 

13. Notice of Participation. “Notice of Participation” shall mean an
individualized written notice of participation in this Plan from an authorized
officer of the Company.

 

14. Participant. “Participant” shall mean an individual who meets the
eligibility requirements of Article III.

 

15. Plan. “Plan” shall mean this The Gymboree Corporation Management Severance
Plan.

 

16. Plan Administrator. “Plan Administrator” shall mean the Board of Directors
of the Company, or its committee or designee, as shall be responsible for
administering this Plan.

 

17. Release. “Release” shall mean the waiver and release referenced in Paragraph
2 of Article III.

 

18. Severance Payment. “Severance Payment” shall mean the payment of severance
compensation as provided in Article IV hereof.

 

19. Severance Payment Percentage. “Severance Payment Percentage” shall mean, for
each Participant, the Severance Payment Percentage set forth in such
Participant’s Notice of Participation.

ARTICLE III

ELIGIBILITY

 

1. Participation in Plan. Each Employee who is designated by the Plan
Administrator and who signs and timely returns to the Company a Notice of
Participation within the time set forth in such Notice shall be a Participant in
this Plan. A Participant shall cease to be a Participant in this Plan (i) upon
ceasing to be an Employee, or (ii) upon receiving written notice from this Plan
Administrator that the Participant is no longer eligible to participate in this
Plan, unless, in either case, such Participant is then entitled to benefits
hereunder by virtue of having already incurred an Involuntary Termination. A
Participant entitled to benefits hereunder shall remain a Participant in this
Plan until the full amount of the benefits have been delivered to the
Participant.

 

2. Waiver and Release. As a condition of receiving benefits under this Plan, an
Employee must sign (and not revoke) an effective general waiver and release on a
form provided by the Company not later than 60 days following the Employee’s
Involuntary Termination.

 

 

 

 

 

ARTICLE IV

SEVERANCE BENEFITS

 

1. Benefits Upon an Involuntary Termination. If the Participant’s employment
with the Company terminates as a result of Involuntary Termination, then,
subject to Articles V and VI hereof, the Participant shall be entitled to
receive severance benefits as follows:

 

(a) Severance Pay Upon an Involuntary Termination. The Participant shall be
entitled to receive a Severance Payment equal to the product obtained by
multiplying the Participant’s Severance Payment Percentage times the
Participant’s Base Compensation. Unless otherwise determined by the Plan
Administrator, any such Severance Payment shall be paid in cash by the Company
to the Participant as salary continuation in accordance with the Company’s
regular payroll schedule over the period that it would have taken the
Participant to earn the Severance Payment as Base Compensation had the
Involuntary Termination not occurred, less applicable withholding and subject to
the Release becoming effective, 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. The first installment of the
Severance Payment paid following the date on which the Release becomes effective
shall be payable in arrears and, to the extent any portion of the Severance
Payment is subject to Section 409A of the Code and the timing of the execution
of the Release could result in such installment becoming payable in either of
two taxable years of the Participant, such installment shall be paid in the
later of the two taxable years.

 

EXAMPLE: Participant experiences an Involuntary Termination on July 1, 2013.
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.

 

(b) Employee Benefits Following an Involuntary Termination. The Company shall
continue to provide the Participant with medical, dental and vision insurance
coverage to the extent provided in the respective governing documents for each
such employee benefit, including but not limited to continuation coverage
pursuant to Title X of the Consolidated Omnibus Budget Reconciliation Act of
1985 (“COBRA”). To the extent the Participant properly elects COBRA continuation
coverage, beginning on the Company’s next regular payroll date following the
Release becoming effective, the Company shall, to the extent permitted under
applicable law, reimburse the Participant for the full cost of the premiums due
for such coverage for a period that ends on the earliest to occur of (i)
expiration or early termination of COBRA continuation coverage in accordance
with the requirements of COBRA, and (ii) the Participant’s COBRA Premiums
Continuation Period. In the event the Company’s payment obligations end based on
clause (ii) of the foregoing sentence, the Participant shall be responsible for
properly paying the full cost of the premiums due for any future COBRA
continuation coverage to which he or she is then entitled.

 

2. Voluntary Resignation; Termination For Cause. If the Participant’s employment
terminates by reason of the Participant’s voluntary resignation (other than for
Good Reason), 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.

 

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 following his or her Disability, 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 benefits plans and policies at the time of such
termination.

 

 

 

 

 

ARTICLE V

FORFEITURE OF SEVERANCE BENEFITS

 

1. Future Services with the Company. If a Participant provides services to the
Company (as an employee, independent contractor, consultant or otherwise) during
the 12-month period following his or her Involuntary Termination and does so
without the prior written approval of the Company’s General Counsel or his or
her delegate, the Participant shall repay a pro rata amount of such benefits
previously paid by the Company equal to the fraction derived from the number of
days remaining in such 12-month period divided by 365.

 

2. Violation of the Company’s Code of Conduct, Code of Ethics or the
Participant’s Restrictive Covenants. Notwithstanding any other provision of this
Plan to the contrary, if it is determined by the Company that a Participant has
violated the Company’s code of conduct or code of ethics or violated any
restrictive covenants contained in the Participant’s general waiver and release
or any other restrictive covenants contained in any other Company plan or
program or agreement between the Company and the Participant, the Participant
shall be required to repay to the Company an amount equal to the economic value
of all severance and other benefits already paid or provided to the Participant
under this Plan and the Participant shall forfeit all other entitlements under
this Plan. Additional forfeiture provisions may apply under other agreements
between the Participant and the Company, and any such forfeiture provisions
shall remain in full force and effect.

 

ARTICLE VI

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.

 

 

 

 

 

ARTICLE VII

AMENDMENT AND TERMINATION

 

The Board (or a designated committee thereof) shall have the discretionary
authority to amend this Plan at any time in any respect, including as to the
removal or addition of Participants, or to terminate this Plan, in either case
by resolution adopted by a majority of the Board (or such designated committee).
A termination of this Plan pursuant to the preceding sentence 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 by virtue of
having already incurred an Involuntary Termination prior to the termination of
this Plan.

 

ARTICLE VIII

administration

 

1. Power and Authority. The Plan Administrator has all power and discretionary
authority necessary or convenient to administer this Plan, including, but not
limited to, the exclusive authority and discretion: (a) to construe and
interpret this Plan; (b) to decide all questions of eligibility for and the
amount of benefits under this Plan; (c) to prescribe procedures to be followed
and the forms to be used by the Participants pursuant to this Plan; and (d) to
request and receive from all Participants such information as the Plan
Administrator determines is necessary for the proper administration of this
Plan. All determinations under, and interpretations of, the Plan by the Plan
Administor shall be final and shall be conclusive and binding on all parties.

 

2. Section 409A. The Company intends that this Plan not contain nonqualified
deferred compensation subject to the requirements of Section 409A of the Code.
Accordingly, this Plan will be interpreted, operated, and administered by the
Company to the extent the Company deems necessary to carry out such intention
and to avoid the imposition of any additional tax or income recognition pursuant
to Section 409A, including any temporary or final Treasury regulations and
guidance promulgated thereunder.

 

 

 

 

 

ARTICLE IX

CLAIMS PROCESS

 

1. Claim for Benefits. A Participant (or any individual authorized by such
Participant) has the right under ERISA and this Plan to file a written claim for
benefits. To file a claim, the Participant must send the written claim to the
Company’s Vice President, HR & Total Rewards. If such claim is denied in whole
or in part, the Participant shall receive written notice of the decision of the
Company’s Vice President, HR & Total Rewards, within 90 days after the claim is
received. Such written notice shall include the following information:
(i) specific reasons for the denial; (ii) specific reference to pertinent Plan
provisions on which the denial is based; (iii) a description of any additional
material or information necessary for the perfection of the claim and an
explanation of why it is needed; and (iv) steps to be taken if the Participant
wishes to appeal the denial of the claim, including a statement of the
Participant’s right to bring a civil action under Section 502(a) of ERISA upon
an adverse decision on appeal. If the Company’s Vice President, HR & Total
Rewards, needs more than 90 days to make a decision, he or she shall notify the
Participant in writing within the initial 90 days and explain why more time is
required, and how long is needed. If a Participant (or any individual authorized
by such Participant) submits a claim according to the procedures above and does
not hear from the Company’s Vice President, HR & Total Rewards, within the
appropriate time, the Participant may consider the claim denied.

 

2. Appeals. The following appeal procedures give the rules for appealing a
denied claim. If a claim for benefits is denied, in whole or in part, or if the
Participant believes benefits under this Plan have not been properly provided,
the Participant (or any individual authorized by such Participant) may appeal
this denial in writing within 60 days after the denial is received. The Plan
Administrator shall conduct a review and make a final decision within 60 days
after receiving the Participant’s written request for review. If the Plan
Administrator needs more than 60 days to make a decision, it shall notify the
Participant in writing within the initial 60 days and explain why more time is
required. The Plan Administrator may then take 60 more days to make a decision.
If such appeal is denied in whole or in part, the decision shall be in writing
and shall include the following information: (i) specific reasons for the
denial; (ii) specific reference to pertinent Plan provisions on which the denial
is based; (iii) a statement of the Participant’s right to access and receive
copies, upon request and free of charge, of all documents and other information
relevant to such claim for benefits; and (iv) a statement of the Participant’s
(or representative’s) right to bring a civil action under Section 502(a) of
ERISA. If the Plan Administrator does not respond within the applicable time
frame, the Participant may consider the appeal denied. If a Participant (or any
individual authorized by such Participant) submits a written request to appeal a
denied claim, the Participant has the right to review pertinent Plan documents
and to send a written statement of the issues and any other documents to support
the claim.

 

3. Limitations Period. A Participant must pursue the claim and appeal rights
described above before seeking any other legal recourse regarding a claim for
benefits. The Participant may thereafter file an action in a court of competent
jurisdiction, but he or she must do so within 180 days after the date of the
notice of decision on appeal or such action will be forever barred.

 

 

 

 

ARTICLE X

NOTICE AND ASSIGNMENT

 

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 Vice President, HR & Total Rewards.

 

2. Notice by the Participant of Potential Involuntary Termination. In the event
that the Participant (a) determines that circumstances constituting Good Reason
have occurred and (b) desires to terminate his employment with the Company for
such Good Reason, the Participant shall give written notice to the Company of
such circumstances which Participant believes constitute Good Reason and
Participant’s intent to terminate his employment. The notice shall be delivered
by the Participant to the Company within ninety (90) calendar days following the
date on which such circumstances constituting Good Reason 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 Good Reason 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.
Following the notice, the Company shall have thirty (30) calendar days to remedy
the circumstances constituting Good Reason before giving effect to such
Involuntary Termination for purposes of this Plan.

 

3. 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. In the case of any such assignment,
the term “Company” when used in this Plan shall mean the corporation that
actually employs the Participant.

 

4. 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.

 

 

 

 

 

ARTICLE XI

MISCELLANEOUS

 

1. Governing law, Jurisdiction and Venue. This Plan is intended to be, and shall
be interpreted as, an unfunded employee welfare benefit plan (within the meaning
of Section 3(1) of ERISA) for a select group of management or highly compensated
employees (within the meaning of Section 2520.104-24 of Department of Labor
Regulations) and it shall be enforced in accordance with ERISA. Any Participant
or other person filing an action related to this Plan shall be subject to the
jurisdiction and venue of the federal or state courts of the State of
California.

 

2. Severability. In the event any provision of this Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of this Plan, and this Plan shall be construed and enforced as
if the illegal or invalid provision had not been included. Further, the captions
of this Plan are not part of the provisions hereof and shall have no force and
effect.

 

3. WARN Act. Notwithstanding anything herein to the contrary, a Participant’s
Severance Payment hereunder shall be reduced by the amount of any severance or
benefits payable to the Participant pursuant to the Worker Adjustment and
Retraining Notification Act of 1988 or other applicable law.

 

4. Effect of Plan. This Plan, as amended, shall completely replace and supersede
any prior version of this Plan and any other verbal or written document or
communication concerning the Severance Benefits. In addition, Severance Benefits
shall not be counted as “compensation,” or any equivalent term, for purposes of
determining benefits under other plans, programs or practices owing to the
Participant from the Company, except to the extent expressly provided therein.
Except as otherwise specifically provided for in this Plan, the Participant’s
rights under all such agreements, plans, provisions, and practices continue to
be subject to the respective terms and conditions thereof.

 

 

 

 

 

THE GYMBOREE CORPORATION

MANAGEMENT SEVERANCE PLAN

NOTICE OF PARTICIPATION

 

To: Name     Date: ________, 201_

 

The Plan Administrator 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 must sign a general waiver
and release in the form provided by the Company.

 

In the event that you are entitled to a Severance Benefits under the Plan, you
will receive, in accordance with the Plan:

 

1) A Severance Payment equal to [●]% (the “Severance Payment Percentage”) of
your Base Compensation payable as salary continuation, less applicable
withholding. Notwithstanding the foregoing sentence, the Company will not pay
any unpaid portion of the Severance Payment, and you will be required to repay
any portion of the Severance Payment that has already been paid, in the event
you compete against the Company or violate the Company’s Code of Conduct, Code
of Ethics or applicable restrictive covenants, as further described in Article V
of the Plan.

 

2) Reimbursement of premium payments for COBRA continuation coverage for a COBRA
Premiums Continuation Period of [●] months.

 

Please return the signed copy of this Notice of Participation within ten (10)
days of the date set forth above to:

 

Vice President, HR & Total Rewards

The Gymboree Corporation

500 Howard Street

San Francisco, California 94105

 

Please retain a copy of this Notice of Participation, along with a copy of the
Plan, for your records.

 

Date:   Signature: