Exhibit 10.2
SEVERANCE AGREEMENT
     This Severance Agreement (the “Agreement”) is made as of April 30, 2009,
between The Talbots, Inc., a Delaware corporation (together with its
subsidiaries, the “Company”) and Richard T. O’Connell, Jr. (the “Executive”).
This Agreement sets forth the agreement of the parties relating to the severance
arrangements for the Executive under certain circumstances. Capitalized terms
used in this Agreement are defined in Section 7 hereof.
     1. Severance Pay and Associated Benefits Upon a Qualified Termination.
          (a) Severance Benefits. In the event of a Qualified Termination, and
subject to the terms of this Agreement, the Company will provide to the
Executive the payments and benefits described in this Section 1 (collectively,
the “Severance Benefits”).
          (b) Severance Pay. Subject to the terms of this Agreement, in the
event of a Qualified Termination, the Company will pay to the Executive
severance pay in the gross amount equal to 1.5 times the Executive’s annual base
salary in effect immediately prior to such termination (the “Severance
Payment”), payable in equal installments in accordance with normal Company
payroll practices over a 18 month period beginning immediately following the
Termination Date (the “Severance Period”).
          (c) Benefits Continuation. Subject to the terms of this Agreement,
upon any such Qualified Termination, the Company will also arrange for the
Executive to continue to participate (through COBRA or otherwise), on
substantially the same terms and conditions as in effect for the Executive
(including any required employee contribution) on the date hereof, in the
medical and dental programs provided to the Executive on the date hereof until
the earlier of (i) the end of the Severance Period, or (ii) such time as the
Executive is eligible to be covered by comparable benefits of a subsequent
employer. The Executive agrees to notify the Company promptly if and when the
Executive begins employment with another employer and if and when the Executive
becomes eligible to participate in any benefit or other welfare plans, programs
or arrangements of another employer. Executive agrees that any
automobile/housing allowance or other personal benefits provided by the Company
to the Executive immediately prior to such termination will cease as of the
Termination Date. The Company, however, may choose to make any separate
arrangements with the Executive to assist with the transfer of any such
benefits. Nothing herein is intended to reduce or affect the benefits set forth
in Section 1(d) below.
          (d) Retirement and Certain Other Benefits. Nothing in this Agreement
will modify or otherwise limit any of the Executive’s rights and benefits as may
exist under the terms of any qualified, nonqualified or supplemental retirement,
401(k), savings or deferred compensation plans of the Company, excluding any
severance or severance compensation plans (“Retirement Plans”) and no benefits
or amounts payable under any such Retirement Plans shall reduce or offset any
Severance Benefits afforded to the Executive under this Agreement. Further,
nothing in this Agreement is intended to modify or otherwise limit the
Executive’s existing vested material right and entitlement to benefits for
himself and his eligible dependents during his employment under the Executive’s
separate Talbots Executive Medical/Dental Plan and, following the Executive’s
separation from employment for any reason, Executive’s existing vested material
right and entitlement to benefits for himself and his spouse under the
Executive’s separate Retiree Executive Medical/Dental Plan, each as currently in
effect for Executive, and which are hereby confirmed by the Company.

 

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          (e) Equity Awards.
               (i) If in the event of a Qualified Termination the Executive
still holds one or more options to purchase shares of Company stock which have
not expired and have not been fully exercised, the Executive (or his or her
heirs or estate), at any time within 3 years after the Termination Date (but in
no event after the option has expired), may exercise any such options with
respect to any shares as to which the Executive could have exercised the options
on the Termination Date.
               (ii) The Executive agrees that until the expiration of 6 months
from the Termination Date, the Executive will not engage in the purchase or sale
of the Company’s common stock (including without limitation any “cashless
exercise” of any stock options involving the sale of any Company common stock as
part of such option exercise) during any trading window “blackout” or “quiet
period” applicable to management level employees (“Quiet Period”); provided that
in no event shall the Executive be prohibited from making a purchase or sale of
the Company’s stock or exercising stock options for the Company’s stock if such
sale, purchase or exercise is made pursuant to a written plan for trading
securities within the meaning of Rule 10b5-1 under the Securities Exchange Act
of 1934, as amended (a “10b5-1 Trading Plan”), and such 10b5-1 Trading Plan is
consistent with the Company’s insider trading policy and has been approved by
the Company. The Executive acknowledges that the Company reserves the right to
modify the Quiet Period from time to time in its sole and absolute discretion.
The Company will provide the Executive with notice of Quiet Periods and changes
thereto at the time it provides such notice to the Company’s management level
employees. In addition, the Executive agrees to notify the Company’s Chief
Financial Officer prior to exercising any options or trading in the Company’s
common stock within such 6 month period following the Termination Date to
ascertain whether such transaction would violate any Quiet Period covered by
this subsection (e)(ii).
          (f) Withholdings. The Company may deduct from the Executive’s
Severance Payment and any other payments otherwise due to the Executive, such
withholding taxes and similar governmental payments and charges as may be
required.
          (g) Timing for Payment; Section 409A Restrictions. Notwithstanding
anything in this Agreement to the contrary, it is the intention of the parties
that this Agreement comply with Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and any regulations or other guidance issued
thereunder, and this Agreement and the payments of any benefits hereunder will
be operated and administered accordingly. Specifically, but not by limitation,
the Executive agrees that if, at the time of termination of employment, the
Company is considered to be publicly traded and the Executive is considered to
be a specified employee, as defined in Section 409A of the Code (and as
determined as of December 31 preceding the Executive’s termination of
employment, unless the Executive’s termination of employment occurs prior to
April 30, in which case the determination will be made as of the second
preceding December 31), then some or all of such payments to be made under this
Agreement as a result of the Executive’s termination of employment will be
deferred for no more than 6 months following such termination of employment, if
and to the extent the delay in such payments is necessary in order to comply
with the requirements of Section 409A of the Code after utilizing the short-term
deferral and involuntary separation pay plan regulations. Upon expiration of
such 6 month period (or, if earlier, the Executive’s death), any payments so
withheld hereunder from the Executive hereunder will be distributed to the
Executive, with a payment of interest thereon credited at a rate of prime plus
1% (with such prime rate to be determined as of the actual payment date).
Notwithstanding anything contained in this Agreement to the contrary, the
Company acknowledges that, for purposes of Section 409A of the Code, each and
every payment made under this Agreement shall be deemed a separate payment and
not a series of payments.
     2. Release and Waiver.
     The Company’s obligation to make the payments and provide the benefits to
the Executive as set forth in Section 1 above will be conditioned upon and
subject to the Executive having delivered to the Company an executed full and
unconditional release (which will be effective when such release is no longer
subject to revocation) of any and all claims against the Company, its parent
entities, affiliates, employee benefit plans and fiduciaries (to the extent
permissible under ERISA), and their respective officers, employees, directors,
agents and representatives satisfactory in form and content to the Company’s
counsel.

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     3. Cooperation.
     In connection with a Qualified Termination or any other termination of the
Executive’s employment, the Executive agrees to reasonably cooperate with the
Company prior to and in the 60 day period immediately following the Termination
Date, subject to the Executive’s other commitments, in promptly transitioning
the Executive’s duties and activities within the Company to the person or
persons designated by the Company to receive them. Any out-of-pocket costs
related to these efforts shall be paid by the Company.
     4. Nondisparagement; Non-Solicitation; Confidentiality.
          (a) Nondisparagement. In connection with a Qualified Termination or
any other termination of the Executive’s employment, Executive agrees not to
take action or make any statement, written or oral, in the 1 year period
following the Termination Date which is intended to materially disparage the
Company or its business.
          (b) Non-Solicitation. The Executive agrees that, during the 1 year
period following a Qualified Termination or any other termination of the
Executive’s employment, the Executive will not directly or indirectly solicit,
attempt to hire, or hire any employee of the Company (or any person who may have
been employed by the Company during the last year of the term of the Executive’s
employment with the Company other than any person whose employment was
involuntarily terminated by the Company and who was not concurrently offered a
comparable position of employment with the Company), or actively assist in such
hiring by any other person or business entity or encourage, induce or attempt to
induce any such employee to terminate his or her employment with the Company.
          (c) Confidentiality. The Executive will not in any manner following a
Qualified Termination or any other termination of the Executive’s employment,
directly or indirectly, without the express prior written consent of the
Company, disclose or use any Confidential Information of the Company.
“Confidential Information” will include all information concerning the Company
or any parent, subsidiary, affiliate, employee, customer or supplier or other
business associate of the Company or any affiliate (including but not limited to
any trade secrets or other confidential, proprietary or private matters), which
has been or is received by the Executive from the Company, or from any parent,
subsidiary, affiliate or customer or supplier or other business associate of the
Company, or is otherwise in the possession of the Executive and which is not
known or generally available to the public.
     5. Remedies.
     The Executive acknowledges and affirms that money damages cannot adequately
compensate the Company for any breach by the Executive of Section 4 of this
Agreement and that the Company is entitled to seek equitable relief (without
posting any bond) in any federal or state court in Massachusetts or other court
of competent jurisdiction to prevent or otherwise restrain any actual or
threatened breach of the provisions of said Section and/or compel specific
performance of, or other compliance with, the terms thereof.
     6. Miscellaneous.
          (a) At-Will Employment. This Agreement is not a contract to employ the
Executive for a definite time period, and is not intended to be and does not
constitute a contract or part of a contractual agreement for continued
employment, either express or implied, between the Company and the Executive, it
being acknowledged that the Executive’s employment is “at will” and that either
the Executive or the Company may terminate the employment relationship at any
time, for any or no reason, with or without Cause and with or without prior
notice, but subject to the Executive’s rights to Severance Benefits under the
terms provided hereunder.
          (b) Successors and Assigns. 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, sale or
similar transaction, permitted assigns, executors, administrators, personal
representatives, heirs and distributees). This Agreement is personal in nature
and the rights and obligations of the Executive under this Agreement shall not
be assigned or transferred by the Executive.
          (c) Attorneys Fees. Each party shall bear his or her or its own
attorney’s fees and expenses.

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          (d) Governing Law. This Agreement shall be interpreted in accordance
with the substantive laws of The Commonwealth of Massachusetts and without
regard to any conflict of laws provisions.
          (e) Effect on Other Agreements; Modification. This Agreement
constitutes the entire agreement between the Executive and the Company with
respect to the subject matter of this Agreement and supersedes the severance
agreement between the Executive and the Company dated as of August 6, 2007
(which is hereby terminated and of no further force or effect). This Agreement
may be modified only in a writing signed by both parties. For as long as this
Agreement is in effect, to the degree there is any conflict between the
severance payments and benefit provisions to which the Executive is then
entitled under this Agreement and those of any other written agreement which
continues to be in effect between the Company and the Executive, such conflict
shall be resolved by the Company in good faith by affording the Executive the
more favorable severance payments and benefits contained in any such agreement.
Notwithstanding the foregoing, nothing herein relieves the Executive from the
obligation to comply with the restrictive covenants, if any, of all such
agreements or from the consequences of noncompliance therewith regardless under
which agreement the severance payments and severance benefits may be deemed to
have been made. Furthermore, for purposes of clarification only, if an Executive
receives severance pay and benefits under one agreement, the Executive shall not
be entitled to severance pay or benefits under any other agreement, plan or
arrangement.
          (f) Execution. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
and all such counterparts together shall constitute but one and the same
instrument.
          (g) Term of Agreement. This Agreement shall be effective upon
execution and shall remain in effect at all times during the Executive’s
employment with the Company, unless expressly amended or superseded in writing
and signed by the parties hereto.
          (h) Notices. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or when mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:
To the Company:
The Talbots, Inc.
One Talbots Drive
Hingham, Massachusetts 02043
Attention: Senior Vice President/Human Resources
To the Executive:
Richard T. O’Connell, Jr.
[Home Address]
     7. Definitions.
     For purposes of this Agreement, the following terms shall have the meanings
indicated below:
          (a) “Cause” for termination by the Company of the Executive’s
employment shall mean (i) any material breach by the Executive of this Agreement
or any other agreement to which the Executive and the Company are both parties
(which is not cured within 45 days following written notice from the Company),
(ii) any act or omission to act by the Executive which may have a material and
adverse effect on the Company’s business or on the Executive’s ability to
perform services for the Company, including, without limitation, the conviction
of any

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crime involving moral turpitude or any felony, or (iii) any material misconduct
or material neglect of duties by the Executive in connection with the business
or affairs of the Company.
          (b) “Code” shall have the meaning given that term in Section 1(g)
hereof.
          (c) “Disability” shall mean the Executive’s inability, because of
physical or mental illness or injury, substantially to perform his or her duties
of his or her position as a result of physical incapacity for a continuous
period of at least six (6) months. Any dispute at to the Executive’s
incapacitation shall be resolved by an independent physician selected by the
Company’s Board of Directors and reasonably acceptable to the Executive or his
or her legal representative, whose determination shall be final and binding upon
both the Executive and the Company.
          (d) “Executive” shall mean the individual named in the first paragraph
of this Agreement.
          (e) “Good Reason” for termination by the Executive of the Executive’s
employment shall be a termination based on one or more of the following events
occurring without the Executive’s express written consent: (a) a substantial
adverse reduction in the Executive’s overall responsibilities as an executive,
other than during any period of illness or incapacity, such that the Executive
no longer has the title of, or serves as, a principal officer of the Company
overseeing legal and real estate matters and as board secretary; (b) any
reduction by the Company in the Executive’s annual base salary as in effect on
the date hereof or as the same may be increased from time to time; (c) the
Company’s requiring that the Executive’s principal place of business be at an
office located more than 35 miles from the site of the Executive’s current
principal place of business, except for required travel on the Company’s
business, including regular travel to and from the Company’s corporate
headquarters and its other locations; or (d) any other material breach of any of
the Company’s obligations to the Executive; which, with respect to subsections
(a) through (d) above, is not remedied by the Company within 45 days of receipt
of written notice of such event delivered by the Executive to the Company;
provided, that the Executive may only exercise his or her right to terminate
employment for Good Reason within the 120 day period immediately following the
occurrence of any of the events described in subsections (a) through (d) above.
          (f) “Qualified Termination” shall mean the Executive’s employment by
the Company is terminated, (i) by the Executive for Good Reason or (ii) by the
Company for any reason other than for Cause, death, Disability, or retirement at
or after age 65.
          (g) “Quiet Period” shall have the meaning given that term in
Section 1(e)(ii) hereof.
          (h) “Retirement Plans” shall have the meaning given that term in
Section 1(d) hereof.
          (i) “Severance Benefits” shall have the meaning given that term in
Section 1(a) hereof.
          (j) “Severance Payment” shall have the meaning given that term in
Section 1(b) hereof.
          (k) “Severance Period” shall have the meaning given that term in
Section 1(b) hereof.
          (l) “Termination Date” shall mean the date that the Executive’s
employment with the Company terminates for any reason or no reason, written
notice of which shall be given by the Company or the Executive, as the case may
be, not less than thirty (30) days prior to the proposed effective date of such
employment termination.
[signature page follows]

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     IN WITNESS WHEREOF, the parties have executed this Severance Agreement as
of the date first above written.

            THE TALBOTS, INC.
      By:   /s/ Ruthanne Russell         Duly Authorized               
EXECUTIVE
      /s/ Richard T. O’Connell, Jr.       Richard T. O’Connell, Jr.     
Executive Vice President, Real Estate, Legal, Store Planning & Design and
Construction, and Secretary     

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