Document:

Exhibit 10.2

 

 

EXECUTIVE SEVERANCE AGREEMENT

By this Executive Severance Agreement dated January 25, 2018 (“Agreement”), Pier 1 Imports, Inc. and its affiliates and subsidiaries (herein “Pier 1 Imports” and/or “Company”), and Nancy A. Walsh (“Executive”), intending to be legally bound, and for good and valuable consideration, agree as follows:

 

1.             Effect of Severance.

 

(a)        Severance Benefits. If Executive is involuntarily terminated without “Cause” or Executive voluntarily terminates Executive’s employment for “Good Reason” (as such terms are defined in Section 2 below), Executive shall be entitled to the benefits described in subsection (i) and (ii) below (collectively referred to herein as “Severance Benefits”). Executive shall not be entitled to the Severance Benefits if Executive’s employment terminates for any other reason, including due to death or “Disability” (as defined in Section 2 below). Executive shall also not be entitled to Severance Benefits if Executive does not meet all of the other requirements under this Agreement, including under subsection 1(c). The date Executive’s employment terminates for any reason under this Agreement is referred to as the “Date of Termination.”

(i)          Continuation of Salary.

(1)                Pier 1 Imports shall pay Executive cash severance equal to one times Executive’s annual base salary rate in effect as of the Date of Termination. Subject to subsection (a)(i)(2) below, payment of such amount (“Salary Continuation”) shall commence on Executive’s “Separation from Service” (as defined in Section 2 below) and shall be paid in substantially equal installments on each regular salary payroll date for a period of twelve (12) months following the Date of Termination (“Salary Continuation Period”), except as otherwise provided in this Agreement.

Notwithstanding the foregoing, the Pier 1 Imports obligations under this subsection (a)(i)(1) shall be reduced on a dollar-for-dollar basis (but not below zero), by the amount, if any, of fees, salary or wages that Executive earns from a subsequent employer (including those arising from self-employment) during the Salary Continuation Period. For avoidance of doubt, Executive shall not be obligated to seek affirmatively or accept an employment, contractor, consulting or other arrangement in order to mitigate Salary Continuation. Further, to the extent Executive does not execute and timely submit the General Release and Waiver (in accordance with subsection 1(c) below) by the deadline specified therein, Salary Continuation payments shall terminate and forever lapse, and Executive shall be required to reimburse Pier 1 Imports for any portion of the Salary Continuation paid during the Salary Continuation Period.

(2)                Notwithstanding anything in this subsection (a)(i) to the contrary, if the Salary Continuation payable to Executive in accordance with subsection (a)(i)(1) above during the first six (6) months after Executive’s Separation from Service would exceed the “Section 409A Threshold” and if as of the date of the Separation from Service Executive is a “Specified Employee” (as such terms are defined in Section 2 below), then, payment shall be made to Executive on each regular salary payroll date during the first six (6) months of the Salary Continuation Period until the aggregate amount received equals the Section 409A Threshold. Any portion of the Salary Continuation in excess of the Section 409A Threshold that would otherwise be paid during such first six (6) months, or any portion of the Salary Continuation that is otherwise subject to Section 409A, shall instead be paid to Executive in a lump sum payment on the date that is six (6) months and one (1) day after the date of Executive’s Separation from Service.

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(3)                All Salary Continuation payments (described under this subsection (a)(i)) will terminate and forever lapse in the event of Executive’s breach of this Agreement (in accordance with Section 12 below), and Executive shall be required to reimburse Pier 1 Imports for any portion of the Salary Continuation paid during the Salary Continuation Period.

 

(ii)       Outplacement.

  

As of Executive’s Separation from Service, Executive will be immediately eligible for reasonable outplacement services at the expense of Pier 1 Imports. Pier 1 Imports and Executive will mutually agree on which outplacement firm, among current vendors used by Pier 1, will provide these services. Such services will be provided for up to twelve (12) months from the Separation from Service or until employment is obtained, whichever occurs first. Outplacement benefits described in this subsection (a)(ii) will terminate and forever lapse in the event of Executive’s breach of this Agreement (in accordance with Section 12 below).

 

(iii)      Other.

 

(1)                In addition to the foregoing Severance Benefits, a lump sum payment will be made to Executive within ten (10) business days following the Date of Termination in an amount equal to the sum of any base salary and any unused vacation benefits that have accrued through the Date of Termination to the extent allowable pursuant to the Company’s policies and which have not already been paid. No vacation benefits will accrue during the Salary Continuation Period.

 

(2)                Notwithstanding the foregoing and anything herein to the contrary, in the event of Executive’s death during the Salary Continuation Period, any unpaid portion of the Salary Continuation payable in accordance with subsection (a)(i) above shall be paid in a lump sum, within sixty (60) days of death (and no later than such amounts would have been paid absent death), to Executive’s estate.

 

(b)        Impact of Termination on Certain Other Plans/Programs.

 

(i)      Annual Incentive Plan.

 

Upon Executive’s Date of Termination, Executive’s entitlement to any award under any applicable short-term cash incentive program (“STI”) sponsored by Pier 1 Imports shall be determined in accordance with the terms and conditions of the applicable STI award letter and governing plan document regarding termination of employment.

 

(ii)     Long-Term Equity Incentive Program(s).

 

Upon Executive’s Date of Termination, Executive’s entitlement to any award granted to Executive under a long-term equity incentive program (“LTI”) sponsored by Pier 1 Imports, including any unvested options, restricted stock or other equity award granted to Executive, shall be determined in accordance with the terms and conditions of the applicable award agreement and governing plan document regarding termination of employment.

(c)            Upon Executive's Date of Termination (whether initiated by Pier 1 Imports or Executive) potentially entitling Executive to Severance Benefits, Executive will execute a binding general release and waiver of claims ("General Release and Waiver") in a form substantially similar to the attached sample. If the General Release and Waiver is not signed within the time specified in the General Release and Waiver or is signed but subsequently revoked, Executive will not continue to receive any Severance Benefits otherwise payable under subsection 1(a) above. Further, Executive shall be obligated to reimburse Pier 1 Imports for any portion of (i) the Salary Continuation paid during the Salary Continuation Period under subsection (1)(a)(i) herein. A sample of this General Release and Waiver is provided as Exhibit A to this Agreement.

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(d)            Post-Termination Forfeiture of Severance Benefits. If Pier 1 Imports determines after Executive’s Date of Termination that Executive engaged in activity during employment with Pier 1 Imports that constituted Cause, Executive shall immediately cease to be eligible for Severance Benefits and shall be required to reimburse Pier 1 Imports for any portion of the Salary Continuation paid to Executive and for the cost of other Severance Benefits received by Executive during the Salary Continuation Period.

 

2.             Definitions. For purposes of this Agreement, each capitalized term in this Agreement is either defined in the section, exhibit or appendix in which it first appears or in this Section 2. The following capitalized terms shall have the definitions as set forth below:

 

(a)        “Cause” shall mean a good faith determination by the Board of Directors of Pier 1 Imports, Inc. (“Board”) that any of the following has occurred: (i) the Executive’s material or habitual failure to follow the reasonable and lawful directions of any superior officer of the Company, provided the direction(s) is not materially inconsistent with the duties or responsibilities of the Executive’s position, or to perform her duties with the Company (other than any such failure resulting from the Executive’s Disability) which failure is not cured within ten (10) days after a written demand for performance is delivered to the Executive by the Company which specifically identifies the manner in which the Company believes that the Executive has materially or habitually failed to perform the Executive’s duties; (ii) the Executive’s charge with, indictment for, conviction of, or entry of a plea of guilty or nolo contendere or no contest with respect to: (a) any felony, or any misdemeanor involving dishonesty or moral turpitude (including pleading guilty or nolo contendere to a felony or lesser charge which results from plea bargaining), whether or not such felony, crime or lesser offense is connected with the business of the Company, or (b) any crime connected with the business of the Company; (iii) the Executive’s engaging in any gross negligence or gross misconduct in connection with the performance of her duties hereunder, which is, or is likely to be, materially injurious to the Company, its financial condition, or its reputation; (iv) the Executive’s commission of or engagement in any act of fraud, misappropriation, material dishonesty, or embezzlement, whether or not such act was committed in connection with the business of the Company; (v) the Executive’s breach of fiduciary duty, breach of any of the covenants set forth in Section 6 of this Agreement, or material breach of any other provisions of this Agreement; or (vi) the Executive’s violation of the Company’s policy against harassment, its equal employment opportunity policy, or the Company’s code of business conduct, or a material violation of any other policy or procedure of the Company.

(b)            “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(c)            “Disability” shall mean disability as defined under the Pier 1 Imports long-term disability plan (regardless of whether the Executive is a participant under such plan).

  

(d)        “Good Reason” shall mean, without Executive’s written consent, (i) a reduction of more than ten percent (10%) in the sum of Executive’s annual base salary and target STI award as a percentage of base salary from those in effect as of the date of this Agreement; (ii) a material diminution in Executive’s authority, duties or responsibilities; (iii) Executive’s mandatory relocation to an office more than fifty (50) miles from the primary location at which Executive is required to perform Executive’s duties as of the date of this Agreement; or (iv) any other action or inaction that constitutes a material breach of the terms of this Agreement by Company, including failure of a successor company to assume or fulfill the obligations under this Agreement.  Notwithstanding the foregoing or anything to the contrary contained herein, the Company’s compliance with the “Employment Term Sheet” for Executive under cover of the offer letter dated December 29, 2017 shall not result in any reduction under this paragraph. In each case, Executive must provide Pier 1 Imports with written notice of the facts giving rise to a claim that “Good Reason” exists for purposes of this Agreement, within thirty (30) days of the initial existence of such Good Reason event, and Pier 1 Imports shall have the right to remedy such event within sixty (60) days after receipt of Executive’s written notice (“the sixty (60) day period”). If Pier 1 Imports remedies the Good Reason event within the sixty (60) day period, the Good Reason event (and Executive's right to receive any benefit under this Agreement on account of termination of employment for Good Reason) shall cease to exist. If Pier 1 Imports does not remedy the Good Reason event within the sixty (60) day period, and Executive does not incur a termination of employment within thirty (30) days following the earlier of: (y) the date Pier 1 Imports notifies Executive that it does not intend to remedy the Good Reason or does not agree that there has been a Good Reason event, or (z) the expiration of the sixty (60) day period, the Good Reason event (and Executive's right to receive any benefit under this Agreement on account of termination of employment for Good Reason) shall cease to exist.  Notwithstanding the foregoing, if Executive fails to provide written notice to Pier 1 Imports of the facts giving rise to a claim of Good Reason within thirty (30) days of the initial existence of such Good Reason event, the Good Reason event (and Executive's right to receive any benefit under this Agreement on account of termination of employment for Good Reason) shall cease to exist as of the thirty-first (31st) day following the later of its occurrence or Executive’s knowledge thereof.

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(e)          “Section 409A Threshold” shall mean an amount equal to two times the lesser of (i) Executive's base salary for services provided to Pier 1 Imports as an employee for the calendar year preceding the calendar year in which Executive has a Separation from Service; or (ii) the maximum amount that may be taken into account under a qualified plan in accordance with Code Section 401(a)(17) for the calendar year in which the Executive has a Separation from Service. In all events, this amount shall be limited to the amount specified under Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) or any successor thereto.

 

(f)            “Separation from Service” shall mean a “separation from service” with Pier 1 Imports within the meaning of Code Section 409A (and regulations issued thereunder). Notwithstanding anything herein to the contrary, the fact that Executive is treated as having incurred a Separation from Service under Code Section 409A and the terms of this Agreement shall not be determinative, or in any way affect the analysis, of whether Executive has retired, terminated employment, separated from service, incurred a severance from employment or become entitled to a distribution, under the terms of any retirement plan (including pension plans and 401(k) savings plans) maintained by Pier 1 Imports and to which Executive is a participant.

  

(g)            “Specified Employee” shall mean a “specified employee” under Code Section 409A (and regulations issued thereunder).

3.             Intellectual Property Rights. Executive acknowledges that Executive’s development, work or research on any and all inventions or expressions of ideas, that may or may not be eligible for patent, copyright, trademark or trade secret protection, hereafter made or conceived solely or jointly within the scope of employment at Pier 1 Imports, provided such invention or expression of an idea relates to the business of Pier 1 Imports, or relates to actual or demonstrably anticipated research or development of Pier 1 Imports, or results from any work performed by Executive for or on behalf of Pier 1 Imports, are hereby assigned to Pier 1 Imports, including Executive’s entire rights, title and interest. Executive will promptly disclose such invention or expression of an idea to Executive’s management and will, upon request, promptly execute a specific written assignment of title to Pier 1 Imports. If Executive currently holds any inventions or expressions of an idea, regardless of whether they were published or filed with the U.S. Patent and Trademark Office or the U.S. Copyright Office, or is under contract to not so assign, Executive will list them on the last page of this Agreement.

4.            Protective Covenants. Executive acknowledges that this Agreement provides for additional consideration beyond employment itself and beyond what Pier 1 Imports is otherwise obligated to provide.  In consideration of the opportunity for the Severance Benefits, and other good and valuable consideration, including such consideration as is set forth in the offer letter presented to Executive (and executed by Executive and Pier 1 Imports), Executive agrees to the following:

(a)            Non-Disclosure of Confidential Information and Return of Property.  Executive acknowledges and agrees to be bound by the following, whether or not Executive receives any Severance Benefits under this Agreement:

 

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(i)         Non-Disclosure of Confidential Information.

  

Pier 1 Imports agrees that during Executive’s employment with Pier 1 Imports, Pier 1 Imports shall give Executive access to Confidential Information.  Executive agrees that she shall not, directly or indirectly, use any Confidential Information on her own behalf or on behalf of any person or entity other than Pier 1 Imports, or reveal, divulge, or disclose any Confidential Information to any person or entity not expressly authorized by Pier 1 Imports to receive such Confidential Information.  This obligation shall remain in effect for as long as the information or materials in question retain their status as Confidential Information.  Executive further agrees that she shall fully cooperate with Pier 1 Imports in maintaining the Confidential Information to the extent permitted by law. The parties acknowledge and agree that this Agreement is not intended to, and does not, alter either Pier 1 Imports’ rights or Executive’s obligations under any state or federal statutory or common law regarding trade secrets and unfair trade practices.  Anything herein to the contrary notwithstanding, Executive shall not be restricted from: (A) disclosing information that is required to be disclosed by law, court order or other valid and appropriate legal process; provided, however, that in the event such disclosure is required by law, Executive shall provide Pier 1 Imports with prompt notice of such requirement so that Pier 1 Imports may seek an appropriate protective order prior to any such required disclosure by Executive; (B) reporting possible violations of federal, state, or local law or regulation to any governmental agency or entity, or from making other disclosures that are protected under the whistleblower provisions of federal, state, or local law or regulation, and Executive shall not need the prior authorization of Pier 1 Imports to make any such reports or disclosures and shall not be required to notify Pier 1 Imports  that Executive has made such reports or disclosures; (C) disclosing a trade secret (as defined by 18 U.S.C. § 1839) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, in either event solely for the purpose of reporting or investigating a suspected violation of law; or (D) disclosing a trade secret (as defined by 18 U.S.C. § 1839) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

(ii)         Definition of Confidential Information.

“Confidential Information” means any and all data and information relating to Pier 1 Imports, its activities, business, or customers that (i) is disclosed to Executive or of which Executive becomes aware as a consequence of her employment with Pier 1 Imports; (ii) has value to Pier 1 Imports; and (iii) is not generally known outside of Pier 1 Imports.  “Confidential Information” shall include, but is not limited to the following types of information regarding, related to, or concerning Pier 1 Imports: trade secrets (as defined by applicable law); financial plans and data; management planning information; business plans; operational methods; market studies; marketing plans or strategies; pricing information; product development techniques or plans; listings of customers, buying agents, vendors and manufacturers; customer, buying agent, vendor and manufacturer files, data and financial information; details of customer, buying agent, vendor and manufacturer contracts; current and anticipated customer, buying agent, vendor and manufacturer requirements; identifying and other information pertaining to business referral sources; past, current and planned research and development; computer aided systems, software, strategies and programs; business acquisition plans; management organization and related information (including, without limitation, data and other information concerning the compensation and benefits paid to officers, directors, employees and management); personnel and compensation policies; new personnel acquisition plans; and other similar information.  “Confidential Information” also includes combinations of information or materials which individually may be generally known outside of Pier 1 Imports, but for which the nature, method, or procedure for combining such information or materials is not generally known outside of Pier 1 Imports.  In addition to data and information relating to Pier 1 Imports, “Confidential Information” also includes any and all data and information relating to or concerning a third party that otherwise meets the definition set forth above, that was provided or made available to Pier 1 Imports by such third party, and that Pier 1 Imports has a duty or obligation to keep confidential.  This definition shall not limit any definition of “confidential information” or any equivalent term under state or federal law.  “Confidential Information” shall not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of Pier 1 Imports.

 

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(iii)            Return of Materials.

  

Executive agrees that she will not retain or destroy (except as set forth below), and will immediately return to Pier 1 Imports on or prior to the Date of Termination, or at any other time Pier 1 Imports requests such return, any and all property of Pier 1 Imports that is in her possession or subject to her control, including, but not limited to, customer, buying agent, vendor and manufacturer files and information, papers, drawings, notes, manuals, specifications, designs, devices, code, email, documents, diskettes, CDs, tapes, keys, access cards, credit cards, identification cards, equipment, computers, mobile devices, other electronic media, all other files and documents relating to Pier 1 Imports and its business (regardless of form, but specifically including all electronic files and data of Pier 1 Imports), together with all Confidential Information belonging to Pier 1 Imports or that Executive received from or through her employment with Pier 1 Imports.  Executive will not make, distribute, or retain copies of any such information or property.  To the extent that Executive has electronic files or information in her possession or control that belong to Pier 1 Imports or contain Confidential Information (specifically including but not limited to electronic files or information stored on personal computers, mobile devices, electronic media, or in cloud storage), on or prior to the Date of Termination, or at any other time Pier 1 Imports requests, Executive shall (A) provide Pier 1 Imports with an electronic copy of all of such files or information (in an electronic format that readily accessible by Pier 1 Imports); (B) after doing so, delete all such files and information, including all copies and derivatives thereof, from all non-Pier 1 Imports owned computers, mobile devices, electronic media, cloud storage, and other media, devices, and equipment, such that such files and information are permanently deleted and irretrievable; and (C) provide a written certification to Pier 1 Imports that the required deletions have been completed and specifying the files and information deleted and the media source from which they were deleted.

 

(b)            Non-Recruitment of Employees and Independent Contractors.  During Executive’s employment with Pier 1 Imports and for twelve (12) months following the Date of Termination, whether or not Executive receives any Severance Benefits under this Agreement, Executive will not, directly or indirectly, whether on her own behalf or as a principal or representative of any other person or entity, recruit, solicit, or induce or attempt to recruit, solicit or induce any employee or independent contractor of Pier 1 Imports to terminate his/her employment or other relationship with Pier 1 Imports or to enter into employment or any other kind of business relationship with Executive or any other person or entity.

 

(c)            Non-Competition.  During Executive’s employment with Pier 1 Imports and for twelve (12) months following the Date of Termination, whether or not Executive receives any Severance Benefits under this Agreement, Executive will not, within the United States, directly or indirectly, engage, either as a principal, management employee, partner, consultant, officer, director or investor (other than a less-than-1% stock interest in a corporation), in a business which is a competitor of the Company. For purposes of this subsection 4(c), a business shall be deemed a “competitor” of the Company if it engages in the commerce of a Specialty Home Fashions or Furniture Business or of an Off-Price Home Fashions or Furniture Business, whether through stores (retail or wholesale), on-line e-commerce or any combination thereof.

 

The term “Specialty Home Fashions or Furniture Business” shall mean a business (however organized or conducted, including any on-line e-commerce operations) that operates retailing of conventional or full-markup predominantly of its own branded merchandise consisting of furniture, decorative accessories, housewares, bed and bath, and seasonal goods, or any other category of merchandise sold by the Company during the Executive’s employment, that is manufactured specifically for the business, requires a significant degree of handcraftsmanship and is mostly imported from foreign suppliers.  By way of illustration, a “Specialty Home Fashions or Furniture Business” shall include such businesses as the Company, Restoration Hardware, Inc., Kirkland’s, Inc., Williams-Sonoma, Inc., Pottery Barn, Inc. and Bed, Bath & Beyond, Inc. and stores under the names “World Market,” “Cost Plus,” “Cost Plus World Market,” “Crate & Barrel,” “Home Goods,” “IKEA,” “Wayfair,” “Hayneedle,” and “At Home.”

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The term “Off-Price Home Fashions or Furniture Business” shall mean a business (however organized or conducted, including any on-line e-commerce operations) that operates retailing of predominantly branded and/or designer merchandise of third parties consisting of home fashions and/or furnishings at prices significantly less than or discounted from those of specialty stores and/or department stores.  By way of illustration, an “Off-Price Home Fashions or Furniture Business” shall include such businesses as The TJX Companies, Inc. and Ross Stores, Inc.

 

The Company may from time to time prior to, and during the thirty (30) days following, any Date of Termination, by written notice to the Executive, for purposes of clarification, add to the list of illustrative examples of a Specialty Home Fashions or Furniture Business and an Off-Price Home Fashions or Furniture Business set forth in this subsection 4(c) the names of other companies or businesses meeting the definitions of such terms.

5.            Enforcement of Protective Covenants.

 

(a)            Rights and Remedies Upon Breach.  The parties specifically acknowledge and agree that the remedy at law for any breach of the restrictions in Section 4 of this Agreement (the “Protective Covenants”) will be inadequate, and that in the event Executive breaches, or threatens to breach, any of the Protective Covenants, Pier 1 Imports shall have the right and remedy, without the necessity of proving actual damage or posting any bond, to enjoin, preliminarily and permanently, Executive from violating or threatening to violate the Protective Covenants and to have the Protective Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Protective Covenants would cause irreparable injury to Pier 1 Imports and that money damages would not provide an adequate remedy to Pier 1 Imports.  Executive understands and agrees that if she violates any of the obligations set forth in the Protective Covenants, the period of restriction applicable to each obligation violated shall cease to run during the pendency of any litigation over such violation, provided that such litigation was initiated during the period of effectiveness of the Protective Covenants.  Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to Pier 1 Imports at law or in equity.  Pier 1 Imports’ ability to enforce its rights under the Protective Covenants or applicable law against Executive shall not be impaired in any way by the existence of a claim or cause of action on the part of Executive based on, or arising out of, this Agreement or any other event or transaction.

 

(b)            Severability and Modification of Covenants.  Executive acknowledges and agrees that each of the Protective Covenants is reasonable and valid in time and scope and in all other respects.  The parties agree that it is their intention that the Protective Covenants be enforced in accordance with their terms to the maximum extent permitted by law.  Each of the Protective Covenants shall be considered and construed as a separate and independent covenant.  Should any part or provision of any of the Protective Covenants be held invalid, void, or unenforceable, such invalidity, voidness, or unenforceability shall not render invalid, void, or unenforceable any other part or provision of this Agreement or such Protective Covenant.  If any of the provisions of the Protective Covenants should ever be held by a court of competent jurisdiction to exceed the scope permitted by the applicable law, such provision or provisions shall be automatically modified to such lesser scope as such court may deem just and proper for the reasonable protection of Pier 1 Imports’ legitimate business interests and may be enforced by Pier 1 Imports to that extent in the manner described above and all other provisions of this Agreement shall be valid and enforceable.

 

6.            Non-Disparagement.  Executive shall not (i) in any way publicly disparage Pier 1 Imports or its equity holders, officers, directors, employees or agents, (ii) cause embarrassment or public humiliation to such entities or persons, or (iii) make any public statement that is adverse, inimical or otherwise detrimental to the interests of any such entities or persons.  This Section 6 shall not in any way limit any of Executive’s rights that are expressly reserved in the final sentence of Section 4(a)(i), or in any way limit Executive’s ability to provide truthful testimony or information in response to a subpoena, court or arbitral order, or valid request by a government entity, or as otherwise required by law.

 

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7.            Cooperation.  Executive agrees, without receiving additional compensation, to fully and completely cooperate with Pier 1 Imports, both during and after her period of employment with Pier 1 Imports (including any Salary Continuation Period), with respect to matters that relate to Executive’s period of employment, in all investigations, potential litigation or litigation in which Pier 1 Imports is involved or may become involved, other than any such investigations, potential litigation or litigation between Pier 1 Imports and Executive.  Pier 1 Imports will reimburse Executive for reasonable travel and out-of-pocket expenses incurred in connection with any such investigations, potential litigation or litigation.

 

8.            Existing Covenants.  Executive represents and warrants that her employment with Pier 1 Imports does not and will not breach any agreement that Executive has with any former employer to keep in confidence proprietary or confidential information or not to compete with any such former employer.  Executive will not disclose to Pier 1 Imports or use on its behalf any proprietary or confidential information of any other party required to be kept confidential by Executive.

 

9.            Disclosure of Agreement.  Executive acknowledges and agrees that, during the twelve (12) months following the Date of Termination, she will disclose the existence and terms of this Agreement to any prospective employer, business partner, investor or lender prior to entering into an employment, partnership or other business relationship with such prospective employer, business partner, investor or lender.  Executive further agrees that Pier 1 Imports shall have the right to make any such prospective employer, business partner, investor or lender of Executive aware of the existence and terms of this Agreement.

 

10.          Employment Status.  Nothing in this Agreement shall be construed as a commitment, guarantee, agreement, or understanding of any kind or nature that Pier 1 Imports will continue to employ Executive, nor will this Agreement affect in any way the right of Pier 1 Imports or Executive to terminate Executive’s employment at any time and for any reason, with or without Cause (unless otherwise agreed to by the parties separately in writing).  Executive acknowledges and agrees that she is an “at will” employee.

 

11.          Future Enforcement or Remedy. Any waiver, or failure to seek enforcement or remedy for any breach or suspected breach, of any provision of this Agreement by Pier 1 Imports or Executive in any instance shall not be deemed a waiver of any breach or suspected breach of such provision in the future.

 

12.          Breach by Executive. In the event of a breach by Executive of any of the provisions of this Agreement, including without limitation the Protective Covenants (Section 4) and the non-disparagement provision (Section 6) of this Agreement, the obligation of Pier 1 Imports to pay Salary Continuation or to provide other Severance Benefits under this Agreement will immediately cease and any Salary Continuation payments already received and the value of any other Severance Benefits already received will be returned by Executive to Pier 1 Imports. The parties agree that if they become involved in legal action regarding an alleged breach of this Agreement by Executive or the enforcement of the Protective Covenants, the prevailing party in such legal action will be entitled, in addition to any other remedy, to recover from the non-prevailing party its or her reasonable costs and attorneys’ fees incurred in connection with such legal action.

 

13.          Severability. If any provision(s) of this Agreement shall be found invalid, illegal, or unenforceable, in whole or in part, then such provision(s) shall be modified or restricted so as to effectuate as nearly as possible in a valid and enforceable way the provisions hereof, or shall be deemed excised from this Agreement, as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law, as if such provision(s) had been originally incorporated herein as so modified or restricted or as if such provision(s) had not been originally incorporated herein, as the case may be.

 

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14.          Governing Law. This Agreement will be governed under the internal laws of the state of Texas without regard to principles of conflicts of laws. Executive agrees that the state and federal courts located in the state of Texas shall have exclusive jurisdiction in any action, lawsuit or proceeding based on or arising out of this Agreement, and Executive hereby: (a) submits to the personal jurisdiction of such courts; (b) consents to the service of process in connection with any action, suit, or proceeding against Executive; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction, venue or service of process.

 

15.          Right to Jury. Executive agrees to waive any right to a jury trial on any claim contending that this Agreement or the General Release and Waiver is illegal or unenforceable in whole or in part, and Executive agrees to try any claims brought in a court or tribunal without use of a jury or advisory jury. Further, should any claim arising out of Executive’s employment, termination of employment or Salary Continuation Period (if any) be found by a court or tribunal of competent jurisdiction to not be released by the General Release and Waiver, Executive agrees to try such claim to the court or tribunal without use of a jury or advisory jury.

 

16.          Other Plans, Programs, Policies and Practices. If any provision of this Agreement conflicts with any other plan, programs, policy, practice or other Pier 1 Imports’ document, then the provisions of this Agreement will control, except as otherwise precluded by law.

 

17.          Entire Agreement. This Agreement, including any exhibits or appendices hereto along with the offer letter to which this Agreement is attached, contains and comprises the entire understanding and agreement between Executive and Pier 1 Imports and fully supersedes any and all prior agreements or understandings between Executive and Pier 1 Imports with respect to the subject matter contained herein, and may be amended only by a writing signed by both parties.

 

18.          Tax Withholding. Any compensation paid or provided to Executive under this Agreement shall be subject to any applicable federal, state or local income and employment tax withholding requirements.

 

19.          Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:                  At the most recent address on file at Pier 1 Imports

If to Pier 1 Imports:                  Pier 1 Imports, Inc.

   100 Pier 1 Place

   Fort Worth, Texas 76102

   Attention: General Counsel

20.            Employing Subsidiary.  Executive may serve as an executive officer of Pier 1 Imports, Inc. and will serve as an executive officer and employee of the Company’s wholly owned subsidiary, Pier 1 Services Company, a Delaware statutory trust (“Pier 1 Services”).  All payments of cash compensation to Executive in connection with her employment and any other cash payments called for under this Agreement or owing to Executive in connection with her employment will be paid by Pier 1 Services.

 

21.            Assignment. Pier 1 Imports may assign its rights under this Agreement to any successor in interest, whether by merger, consolidation, sale of assets, or otherwise. This Agreement shall be binding whether it is between Pier 1 Imports and Executive or between any successor or assignee of Pier 1 Imports or affiliate thereof and Executive.

 

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22.            Code Section 280G.  Notwithstanding any other provision of this Agreement to the contrary, to the extent that any payment or distribution of any type to or for Executive by the Company (or any person or entity who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company’s assets (within the meaning of Section 280G of the Code and the regulations thereunder)), or any affiliate of such person or entity, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Total Payments”), is or will be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), then the Total Payments shall be reduced (but not below zero) if and to the extent that a reduction in the Total Payments would result in Executive retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if Executive received the entire amount of such Total Payments.  The determination of whether the Total Payments shall be reduced and the amount of such reduction shall be determined by an accounting firm selected by Executive and the Company, such accounting firm’s expenses shall be paid for by Pier 1 Services, and such accounting firm’s determination shall be final and binding upon Executive and the Company.

23.            Code Section 409A Compliance. To the extent that a payment or benefit under this Agreement is subject to Code Section 409A, it is intended that this Agreement as applied to that payment or benefit comply with the requirements of Code Section 409A, and the Agreement shall be administered and interpreted consistent with this intent.

 

24.            Counterparts. This Agreement may be executed in one or more counterparts, which together shall constitute a valid and binding agreement.

 

IN WITNESS WHEREOF, Executive and Pier 1 Imports, by its duly authorized representative, have executed this Agreement on the dates stated below, effective as of the latest date set forth below. The effective date shall be inserted in the preamble paragraph of the beginning of this Agreement.

 

COMPANY                                                                                                                                                                EXECUTIVE

 

By:   /s/ Alasdair James                                                                                                                                              /s/ Nancy A. Walsh                                                                                     

Alasdair James                                                                                                                                                          Nancy A. Walsh

President and Chief Executive Officer

Pier 1 Imports, Inc.

Date: January 25, 2018                                                                                                                                             Date: January 25, 2018

  

Listing, if any, pursuant to Section 3 of this Agreement:

 

NONE

 

 

 

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EXHIBIT A

NOTICE: YOU MAY CONSIDER THIS GENERAL RELEASE AND WAIVER FOR UP TO TWENTY-ONE (21) DAYS. YOU MAY NOT SIGN IT UNTIL ON OR AFTER YOUR LAST DAY OF WORK. IF YOU DECIDE TO SIGN IT, YOU MAY REVOKE THE GENERAL RELEASE AND WAIVER WITHIN SEVEN (7) DAYS AFTER SIGNING. ANY REVOCATION WITHIN THIS PERIOD MUST BE IMMEDIATELY SUBMITTED IN WRITING TO GENERAL COUNSEL, PIER 1 IMPORTS, INC., 100 PIER 1 PLACE, FORT WORTH, TEXAS, 76102. YOU MAY WISH TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS DOCUMENT.

 

GENERAL RELEASE AND WAIVER

  

In consideration of the severance benefits that are described in the attached Executive Severance Agreement, I, for myself, my heirs, administrators, representatives, executors, successors and assigns, do hereby release Pier 1 Imports, Inc., its subsidiaries and affiliates and its and their respective current and former agents, subsidiaries, affiliates, related organizations, employees, officers, directors, shareholders, attorneys, successors, and assigns (collectively, “Pier 1 Imports”) from any and all claims of any kind whatsoever, whether known or unknown, including but not limited to those claims arising out of, or connected with, my employment with Pier 1 Imports and the termination of my employment. This General Release and Waiver includes, but is not limited to, all claims under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 (42 U.S.C. § 1981), the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the Employee Retirement Income Security Act (“ERISA”), the Americans with Disabilities Act, the Rehabilitation Act of 1973, the Worker Adjustment and Retraining Notification Act, the Family and Medical Leave Act, the Equal Pay Act, and any other federal, state or local constitution, statute, regulation or ordinance, all common law claims including, but not limited to, claims for wrongful or retaliatory discharge, intentional infliction of emotional distress, negligence, defamation, invasion of privacy and breach of contract, and all claims under any Pier 1 Imports policy, handbook or practice, to the fullest extent permitted under the law.

 

This General Release and Waiver does not apply to any claims that may arise after the date I sign this General Release and Waiver. Also excluded from this General Release and Waiver are any claims that cannot be waived by law and any rights or claims I may have to benefits accrued under benefit plans maintained by Pier 1 Imports and governed by ERISA.

 

I understand that nothing contained in this General Release and Waiver limits my ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”).  I further understand that this General Release and Waiver does not limit my ability to communicate or share information with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agencies.  However, based on my release of claims set forth in this General Release and Waiver, I understand that I am releasing all claims and causes of action that I might personally pursue or that might be pursued in my name and, to the extent permitted by applicable law, my right to recover monetary damages or obtain injunctive relief that is personal to me in connection with such claims and causes of action.

 

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I also waive any right to become, and promise not to consent to become, a participant, member, or named representative of any class in any case in which claims are asserted against Pier 1 Imports that are related in any way to my employment or termination of employment at Pier 1 Imports, and that involve events that have occurred as of the date I sign this General Release and Waiver. If I, without my knowledge, am made a member of a class in any proceeding, I will opt out of the class at the first opportunity afforded to me after learning of my inclusion. In this regard, I agree that I will execute, without objection or delay, an “opt-out” form presented to me either by the court in which such proceeding is pending, by class counsel or by counsel for Pier 1 Imports.

 

I have read this General Release and Waiver and understand all of its terms.

 

I have signed it voluntarily with full knowledge of its legal significance.

  

I have had the opportunity to seek, and I have been advised in writing of my right to seek, legal counsel prior to signing this General Release and Waiver.

 

I was given at least twenty-one (21) days to consider signing this General Release and Waiver. I agree that any modification of this General Release and Waiver Agreement will not restart the twenty-one (21) day consideration period.

I understand that if I sign the General Release and Waiver, I can change my mind and revoke it within seven (7) days after signing it by notifying the General Counsel of Pier 1 Imports in writing at 100 Pier 1 Place, Fort Worth, Texas 76102. I understand the General Release and Waiver will not be effective until after the seven (7) day revocation period has expired.

I understand that the delivery of the consideration herein stated does not constitute an admission of liability by Pier 1 Imports and that Pier 1 Imports expressly denies any wrongdoing or liability.

 

 

	
Date:

	SAMPLE ONLY - DO NOT DATE	
 

	
Signed by:

	
SAMPLE ONLY - DO NOT SIGN

	
 

	 	
 

	
Witness by:

	
SAMPLE ONLY - DO NOT SIGN

2Exhibit

EMPLOYMENT AGREEMENT

[EMPLOYEE NAME], as [TITLE], you are a valuable Agilysys employee, and we expect you to make a significant contribution to Agilysys’ success. As a result, Agilysys, Inc. (“Agilysys” or the “Company”) wishes to employ you under the terms of this Agreement. 

1.    Employment Period. Subject to termination pursuant to Section 5 hereof, the term of the Executive’s employment by Agilysys pursuant to this Agreement shall commence on January 22, 2018 (the “Effective Date”), and continue for a period of two years (the “Employment Period”). However, if a Change in Control occurs during the Employment Period, the Employment Period shall expire no earlier than the second anniversary of the date on which such Change in Control occurs. 

2.    Position. You shall initially be employed in the position set forth above, with the duties and responsibilities customarily associated with that position. From time to time, Agilysys may determine that it is in Agilysys’ best interest to add to, subtract from, or otherwise change your duties and responsibilities, or change or eliminate your title.

3.    Best Efforts. You shall devote all of your business time and attention to your duties as an employee of Agilysys. You shall use your best efforts, energies, and skills to advance the business of Agilysys, to further and improve its relations with suppliers, customers and others, and to keep available to Agilysys the services of its employees. You will keep the Company apprised of any activities that reasonably could impact your ability to devote sufficient time to your duties as an employee of Agilysys, including service on any outside boards of directors, work on behalf of any other business entity, and significant charitable activities. You shall perform your duties in compliance with all laws and Agilysys’ published policies, including the ethical standards set forth in Agilysys’ Code of Business Conduct.

4.    Compensation. Your compensation will be pursuant to Agilysys’ standard programs in effect from time to time. Agilysys reserves the right, however, in its sole discretion, to impose salary reduction, and/or other cost reduction programs, which may reduce your targeted cash compensation (provided that any such program is not discriminatory and treats you the same as other Agilysys employees holding similar positions). You shall be eligible to participate in any and all employee benefit plans made available from time to time to Agilysys employees generally.

5.    Termination. Your employment may be terminated for Cause by Agilysys, without Cause by Agilysys, by you for Good Reason, or voluntarily by you. The last date of your employment as a result of termination for any of these reasons is the “Termination Date.”

(a)    Termination for Cause and Voluntary Termination. If your employment terminates for any of the following reasons: (i) your death, disability, or legal incompetence; (ii) the issuance by Agilysys of a notice terminating your employment for Cause; or (iii) you voluntarily resign your employment, then your salary will end on the Termination Date. For purposes of this Agreement “for Cause” means: 

		
	(A)
	breach of any term of this Agreement or any other material duty to Agilysys; 

		
	(B)
	dishonesty, fraud, or failure to abide by the published ethical standards, conflict of interest, or other policies of Agilysys; 

		
	(C)
	your conviction for any felony crime, or for any other crime involving misappropriation of money or other property of Agilysys; 

		
	(D)
	 your conduct that constitutes gross insubordination or neglect of your duties; provided in the case of neglect of duty that the Company gives you written notice and a reasonable opportunity to cure.

(b)    Termination Without Cause. If your employment is terminated by Agilysys for any reason other than for Cause, or is terminated by you for Good Reason, subject to your compliance with Sections 6, 7 and 8 of this Agreement and your execution of a release of claims in favor of Agilysys, its affiliates and their respective officers and directors (the “Release”) and such Release becoming effective, you will be entitled to receive the following:

(i)    six months’ regular base salary at the rate applicable to you at the time your employment terminates (or, in the event of a termination by you for Good Reason due to a decrease in base salary by more than 10%, then at the rate applicable prior to such decrease), payable during regular pay intervals during the six months’ following the effective date of the Release, beginning with the first pay date following the effective date of the Release; provided that Agilysys may at its option pay any amount due hereunder as a lump sum; 

(ii)    if you have been employed for at least three months of the fiscal year in which such termination of employment occurs, then you will be eligible to receive a prorated annual incentive for the fiscal year in which such termination of employment occurs based on actual performance for such fiscal year, payable when the annual incentives for such fiscal year are payable to executive officers of the Company generally; and

(iii)    if you timely and properly elect health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), reimbursement for the monthly COBRA premium paid by you for yourself and your dependents. Such reimbursement shall be paid to you no later than the 15th day of the month immediately following the month in which you timely remit the premium payment. You shall be eligible to receive such reimbursement until the earliest of: (A) the six-month anniversary of the Termination Date; (B) the date you are no longer eligible to receive COBRA continuation coverage; and (C) the date on which you become eligible to receive substantially similar coverage from another employer or other source. 

You will not otherwise be eligible for severance under any Agilysys severance plan.

(c)    Termination for Good Reason. You may terminate your employment for Good Reason if 
(i)    Agilysys reduces your base salary or target bonus eligibility by more than 10% from its then current level, other than a general reduction in base salary or target bonus eligibility that affects all similarly situated executives in substantially the same proportions, or 

(ii) at any time prior to a Change in Control of the Company, you are no longer reporting to the Chief Executive Officer of the Company (meaning that the situation described in this Section 5(c) shall not constitute Good Reason at any time following a Change in Control of the Company).

In order to terminate your employment for Good Reason under this Section 5(c) you must provide notice to Agilysys within 30 days of the condition giving rise to the Good Reason. If Agilysys fails to materially cure such condition within 30 days following its receipt of such notice, your employment shall immediately terminate for Good Reason. Upon any such termination for Good Reason you shall be entitled to the Severance Payments to the extent described in Section 5(b) or 5(d), as applicable.

(d)    Change in Control.  Notwithstanding any other provision contained herein, if within the 24 months following a Change in Control of the Company, your employment hereunder is terminated by Agilysys (or its successor or assigns) without Cause or by you for the Good Reason described in Section 5(c)(i) above (i.e., reduction in your base salary or target bonus eligibility by more than 10% from its then current level, other than a general reduction in base salary or target bonus eligibility that affects all similarly situated executives in substantially the same proportions), then, in addition to payment of any accrued but unpaid base salary and the balance of any earned and unused vacation pay as of the Termination Date, you will be entitled to receive:

(i)    subject to your execution of the Release, an amount equal to the sum of (A) your annual base salary and (B) a pro rata portion of your target annual incentive based on the number of days you were employed by the Company during the fiscal year of the Termination Date, in each case determined by the greater of the rate applicable immediately prior to the Change in Control or the rate applicable at your Termination Date, payable during regular pay intervals during the twelve months’ following the effective date of the Release, beginning with the first pay date following the effective date of the Release; provided that the Company may at its option pay any amount due hereunder as a lump sum; and

(ii)    if you timely and properly elect health continuation coverage under COBRA, reimbursement for the monthly COBRA premium paid by you for yourself and your dependents. Such reimbursement shall be paid to you no later than the 15th day of the month immediately following the month in which you timely remit the premium payment. You shall be eligible to receive such reimbursement until the earliest of: (A) the one year anniversary of the Termination Date; (B) the date you are no longer eligible to receive COBRA continuation coverage; and (C) the date on which you become eligible to receive substantially similar coverage from another employer or other source.

You will not otherwise be eligible for severance under any Agilysys severance plan or any other provision of this Agreement. 

(e)    Definition of Change in Control.  For purposes of this Agreement, “Change in Control” shall mean the occurrence of any of one of the following during your employment: 

(i)    Any one person (or more than one person acting as a group) acquires ownership of stock of Agilysys that, together with the stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of Agilysys; provided that, a Change in Control shall not occur if any person (or more than one person acting as a group) owns more than 50% of the total fair market value or total voting power of the Company’s stock and acquires additional stock;

(ii)    A majority of the members of the board of directors of Agilysys is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the board before the date of their appointment or election; or

(iii)    The sale of all or substantially all of Agilysys’ assets.

Notwithstanding the foregoing, for purposes of this Agreement a Change in Control shall not occur unless such transaction constitutes a change in the ownership of Agilysys, a change in effective control of Agilysys, or a change in the ownership of a substantial portion of Agilysys’ assets under Section 409A.

6.    Confidential Information. 

(a)    You acknowledge that in exchange for accepting the terms of this Agreement and during the course of your employment, you will be made privy to Confidential Information for the advancement of the business interests of the Company.  Except as required in the performance of services for the Company, you will not directly or indirectly disclose or use for your own benefit or the benefit of any other entity or person, and will keep secret, confidential and inviolate during and after your employment by the Company, all Confidential Information. Your obligations with respect to Confidential Information shall continue for so long as such Confidential Information remains confidential as defined by this Agreement; provided, however, your obligations with respect to Confidential Information that constitutes a trade secret shall continue for so long as such Confidential Information is deemed a trade secret under applicable law. For the purposes of this Agreement, “Confidential Information” means information relating to (i) the business or activities of the Company or any of Company’s predecessor, parent, subsidiary or affiliated entities, or any of their respective equity holders, customers, vendors, consultants or licensees, (including without limitation financial information, customer lists and pricing data, vendor lists and pricing data, operational forms and procedures, marketing information and strategies, sales training techniques and programs, product development and design, acquisition and divestiture opportunities and discussions, and data processing and management information systems, programs, and practices); (ii) any materials, apparatus, processes, methods, ways of business, software code, programs, formulae, technology, research, development, customer requirements or trade secrets used in the development, manufacture, sales or marketing of the Company’s products or services; or (iii) the existence or betterment of, or possible new uses or applications for, any such products or services.  You agree that all Confidential Information is the Company’s property.

(b)    Your post-employment obligations not to use Confidential Information shall not apply if and to the extent you demonstrate that: (i) the same information was in your possession prior to your employment by the Company; (ii) the same information is or becomes generally available to the public and such public availability is not the result, directly or indirectly, of any fault of, or improper taking, use, or disclosure by, you or anyone working in concert or participation with you; or (iii) you obtain the information properly, from a source that was free to disclose it, and under circumstances such that you neither knew nor had reason to know that such information had been acquired, used, or disclosed improperly. Nothing in this Agreement, however, shall be construed to prohibit you from making a good-faith report of any violation of the law to any governmental authority or to participate in any governmental investigation or proceeding. Notwithstanding anything to the contrary contained herein, no provision of this Agreement shall be interpreted so as to impede you (or any other individual) from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures under the whistleblower provisions of federal law or regulation. You do not need the prior authorization of the Company to make any such reports or disclosures, and you shall not be required to notify the Company that such reports or disclosures have been made.  Similarly, nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b).  Accordingly, the parties to this Agreement have the right to disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law.  The parties also have the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure.  By way of reference, 18 U.S.C. §1833(b) provides: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” Nothing in this Agreement or any Company policy is intended to conflict with this statutory protection, and no Company director, officer, or member of management has the authority to impose any rule to the contrary. 

(c)    Upon leaving the employ of the Company for any reason or upon the Company’s request at any time, you will promptly return to the Company all Confidential Information and other Company property in your possession, custody or control regardless of the medium in which such information exists or may be stored, including without limitation any tangible or electronic form or medium.

(d)    You shall not access, copy, download, email, reproduce or otherwise duplicate, record, abstract or summarize any Confidential Information, or use any Company computers, computer systems, mobile devices, equipment, tools or other property of the Company, except as expressly permitted or required for the proper performance of your duties for and on behalf of the Company.  You are not authorized to, and shall not, access any Company computer or computer system, or access, copy, download, email, reproduce or otherwise duplicate, record, abstract or summarize any Confidential Information (among other things) to compete or prepare to compete against the Company, or for or on behalf of any competitor. You agree and acknowledge that your technological, physical or other ability to access any particular Confidential Information, Company computer or Company computer system or network shall not constitute or indicate actual authorization to access such Confidential Information, computer or computer system or network in a manner that would violate the terms of this Section 6.

7.    Restrictive Covenants.  You acknowledge that 

(i) the Company has spent substantial resources in developing and solidifying its customer relationships and protecting its Confidential Information and goodwill, (ii) long-term customer relationships often can be difficult to develop and require a significant investment of time, effort, and expense, (iii) the corporate and other business entities that are in competition with the Company and are in the Business of the Company, defined in this Agreement as “Competing Entities,” can and do change over time as such entities enter and exit the Business of the Company and as industry, technologies and business objectives develop, evolve and change and (iv) the Company pays its employees, such as you, to, among other things, develop and preserve customer goodwill, customer loyalty, and customer contacts, as well as Confidential Information, for and on behalf of the Company.  

You agree that during the Restricted Period, within the Territory, you will not for any reason whatsoever, directly or indirectly, on your behalf or for or on behalf of any other person, firm, corporation, or entity: 

(a)    for any of the Competing Entities, undertake to perform duties and responsibilities substantially similar to those you conducted, offered or provided for the Company during the last 12 months of your employment with the Company; 

(b)    employ or retain, have any other person, firm, corporation or entity employ or retain, or otherwise participate in the employment or retention of any person employed or retained by the Company with whom Employee worked at any time during the last 12 months of Employee’s employment with the Company; provided that it shall not be a violation of this Section 7(b) if a firm, corporation or entity with which you are affiliated employs or retains any such person so long you are not directly or indirectly involved in such action; or

(c)    on behalf of any Competing Business, solicit or attempt to solicit any business from any customer of the Company with whom you had Material Contact during your employment with the Company, for purposes of providing products or services that are competitive with those offered by the Company.

“Business of the Company” means the business of developing and/or selling point of sale (POS), property management, inventory and procurement, payment gateway and related mobile and wireless solutions for the hospitality or gaming industries and any other products, technologies and/or solutions that the Company develops for sale or sells during the period of your employment with the Company.

“Competing Business” means any business organization of whatever form engaged, either directly or indirectly, in any business or enterprise which is the same as, or substantially the same as, the Business of the Company. 

“Competing Entities” means the companies on the list to be provided to you by the Company by written notice to you, which notice may be given by email addressed to your Company email address, on or before January 24, 2018, however organized, and their successors and assigns; provided that the Company may from time to time during your employment, on 60 days’ written notice to you, which notice may be given by email addressed to your Company email address, in addition to the other means identified in Section 13(d), change the list of Competing Entities so long as (i) there are no more than 20 such Competing Entities at any time, and (ii) each entity listed among the Competing Entities will be deemed Competing Entities only to the extent each is engaged in a Competing Business.

“Material Contact” means the contact between you and each customer:  (i) with whom or which you dealt on behalf of the Company; (ii) whose dealings with the Company were coordinated or supervised by you; (iii) about whom you obtained confidential information in the ordinary course of business as a result of your employment; or (iv) who receives products or services authorized by the Company, the sale or provision of which results or resulted in compensation, commissions, or earnings for you within two years prior to the date of your termination.

“Restricted Period” shall mean the period of your employment with the Company and continuing for a period of 12 months following the date of termination of employment with the Company for any reason; provided that if following a Change in Control your employment with the Company is terminated by Agilysys (or its successor or assigns) without Cause or by you for the Good Reason and you are entitled to payment under Section 5(d)(i), the Restricted Period shall mean the period of your employment with the Company and continuing for a period of 24 months following the termination of your employment.

For purposes of this Section 7, the transfer of your employment relationship from the Company to a parent, subsidiary or affiliate entity of the Company or from the Company to a successor in interest to the Company’s business or a substantial portion of the Company’s business shall not constitute a “termination of your employment with the Company.” In the event that your employment relationship transfers to a parent, subsidiary or affiliate entity of the Company or to a successor in interest to the Company’s business or a substantial portion of the Company’s business, the entity to which your employment relationship transfers shall be the “Company” for purposes of this Section 7.

“Territory” means the geographic regions for which, or in which, you had executive, managerial, supervisory, sales, marketing, and/or other responsibilities at the time of the termination of your employment with the Company.

8.    Assignment of Inventions.  Agilysys by law is entitled to all rights, ideas, inventions and works of authorship relating to its business that are made by its employees during the scope of their work, whether or not conceived during regular business hours, for Agilysys when using Agilysys resources.  You agree to promptly and fully disclose to Agilysys all ideas, inventions, discoveries, creations, designs, methods, and other technology and rights (and any related improvements or modifications thereof), whether or not protectable under any form of legal protection afforded to intellectual property (collectively, “Innovations”), relating to any activities or proposed activities of Agilysys and its affiliates and subsidiaries, conceived or developed by you (alone or jointly with others) during your employment, whether or not conceived during regular business hours.  Such Innovations shall be the sole property of Agilysys.  To the extent possible, such Innovations shall be considered a Work Made for Hire under the U.S. Copyright Act.  To the extent the Innovations may not be considered such a Work Made for Hire, you agree to automatically assign to Agilysys, at the time of creation of such Innovations, any right, title, or interest that you may have in such Innovations. You further agree that you will execute such written instruments, and perform any other tasks as may be necessary in the opinion of Agilysys to obtain a patent, register a copyright, or otherwise protect or enforce Agilysys’ rights in such Innovations. 

9.    Acknowledgements Regarding Restrictions.  You acknowledge that the protections of this Agreement are of vital interest to the Company, and hereby agrees that if you breach or threaten a breach of any provision of this Agreement, the Company has the right, without notice to you, without posting a bond or other security and without having to prove the inadequacy of the available remedies at law, to apply to a court for mandatory and/or injunctive relief and to obtain the specific performance of this Agreement. If a court requires the posting of a bond or other form of security as a prerequisite to the entry of injunctive relief to enforce this Agreement, you hereby waive any right to recover under such bond or other security. The Company’s right to the enforcement of this Agreement in equity shall not in any way diminish the Company’s right to recover damages from you for any breach of this Agreement.  You acknowledge that the harm to the Company resulting from your violation of Sections 6, 7 or 8 would be largely irreparable.

10.    At-Will Employment.  You acknowledge that you are an employee-at-will, and nothing in this Agreement shall alter or affect such employee-at-will status.

11.     Section 280G.

(a)    Reduction.  Notwithstanding any other provision of this Agreement or any other plan, arrangement or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or its affiliates to your or for your benefit pursuant to the terms of this Agreement or otherwise (“Covered Payments”) constitute parachute payments (“Parachute Payments”) within the meaning of Section 280G of the Code and would, but for this Section 11, be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “Excise Tax”), then the Covered Payments shall be either:

(i)    reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax (that amount, the “Reduced Amount”); or

(ii)    payable in full if your receipt on an after-tax basis of the full amount of payments and benefits (after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax) would result in your receiving an amount greater than the Reduced Amount.

(b)    Order of Reduction.  The Covered Payments shall be reduced in a manner that maximizes your economic position. In applying this principle, the reduction shall be made in a manner consistent with the requirements of Section 409A of the Code, and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero.

(c)    Determinations.  Any determination required under this Section 11 shall be made in writing in good faith by the accounting firm that was the Company’s independent auditor immediately before the occurrence of the Change in Control (the “Accountants”), which shall provide detailed supporting calculations to you and the Company as requested by your or the Company. You and the Company shall provide the Accountants with such information and documents as the Accountants may reasonably request in order to make a determination under this Section 11. For purposes of making the calculations and determinations required by this Section 11, the Accountants may rely on reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Accountants’ determinations shall be final and binding on you and the Company. The Company shall be responsible for all fees and expenses incurred by the Accountants in connection with the calculations required by this Section 11.

12.    Section 409A.  The intent of the parties is that payments and benefits under this Agreement are exempt from, or to the extent required, comply with Section 409A of the Internal Revenue Code (“Section 409A”), and accordingly, to the maximum extent permitted, this Agreement shall be interpreted and administered to be in compliance with Section 409A.  A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”  To the extent required to avoid an accelerated or additional tax under Section 409A: each payment or benefit amount shall be construed as a separate identified payment; if you are a “specified employee” under Section 409A when you separate from service, amounts of “nonqualified deferred compensation,” if any, otherwise payable during the six-month period immediately following your separation from service shall instead be paid on the first business day after the date that is six months following your separation from service (or, if earlier, your date of your death).  To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Section 409A, (a) all expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive, (b) any right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (c) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

13.    Miscellaneous.

(a)    This Agreement shall inure to the benefit of, and be binding upon and enforceable by the Company, and by its successors and assigns. This Agreement may be assigned by the Company to a third party in connection with the sale or transfer of all or substantially all of the Company’s business, or any division or unit thereof, whether by way of sale of stock, sale of assets, merger or other transaction. In consideration of the promises set forth herein, you hereby consent to such assignment.  Such assignment by the Company will not constitute nor be deemed a termination of your employment by the Company. You shall have no authority to assign this Agreement without express written consent from the Company.  

(b)    No modification or amendment of any of the provisions of this Agreement shall be effective unless made in writing and duly executed by you and the Company. The Section headings or captions appearing in this Agreement are for convenience only, are not part of this Agreement and are not to be considered in interpreting this Agreement.

(c)    In the event of a breach or threatened breach of this Agreement, the non-breaching party shall be entitled to recover such party’s reasonable attorneys’ fees incurred as a result of such breach or threatened breach.

(d)    All notices and other communications required or permitted to be given hereunder or by reason of this Agreement shall be in writing and shall be deemed to have been properly given (i) when delivered in person to the party to whom such notice is directed; (ii)  three days after being deposited in the United States mail, return receipt requested, postage prepaid, addressed, if to the Company, to the address shown below its signature to this Agreement or, if to you, to your address indicated in the Company’s records, or such other address as a party may designate by notice in accordance with this Section; or (iii) as provided in the definition of Competing Entities above.

(e)    The provisions of this Agreement are severable and if a clause(s) shall be found unenforceable, the entire Agreement shall not fail but shall be construed and enforced without any severed clause(s) in accordance with the terms of this document. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law. If any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect under any applicable law or rule in any jurisdiction, (i) the parties agree that such provision(s) will be enforced to the maximum extent permissible under the applicable law, and (ii) any invalidity, illegality, or unenforceability of a particular provision will not affect any other provision of this Agreement. Further, if any provision of Sections 6, 7 or 8 of this Agreement is adjudicated to be invalid, overly broad, or unenforceable, the parties agree that the court making such determination shall have the power to delete, amend, and/or reduce the duration and/or scope of, the provision thus adjudicated to be invalid or unenforceable to the extent necessary for said provision to be adjudicated valid and enforceable, such deletion and/or reduction to apply only with respect to the operation of this Agreement in the particular jurisdiction in which such adjudication is made.

(f)    No delay or failure of either party to exercise any right under this Agreement, and no partial or single exercise of any right, shall constitute a waiver of that or any other right unless expressly so provided in writing, and no such waiver shall operate or be construed as the waiver of the same or of another breach on a prior or subsequent occasion.

(g)    This Agreement may be executed in counterparts, and each counterpart hereof shall be deemed to be an original instrument, but all counterparts hereof taken together shall constitute but a single instrument. Signatures provided by facsimile or in portable document format (a/k/a pdf) shall be as binding as original signatures.

(h)    There are no agreements or understandings, written or oral, which in any way change the terms of this Agreement. This Agreement shall supplement, and not supersede, your obligations under the Company’s rules, policies, and procedures.

(i)    The Company may disclose this Agreement in whole or in part and any personnel information regarding you to any of the Company’s parent, subsidiary and affiliate entities and to any successor or potential successor of all or part of the Company’s business. Furthermore, the Company may disclose this Agreement and your personnel information reasonably necessary to understand the scope of the restrictions set forth in this Agreement to any person or entity that is considering employing or engaging in a business relationship with you.

(j)    At the Company’s request during the Restricted Period, you shall immediately disclose to the Company the identity of any person or entity for whom you are performing services or for whom you have agreed to perform services during the Restricted Period. You agree that such disclosure requirement is necessary to the Company’s reasonable efforts to monitor your compliance with your obligations under this Agreement.

(k)    This Agreement is governed by and is to be construed and enforced in accordance with the internal laws of the State of Georgia, without giving effect to principles of conflicts of law. 

(l)    With respect to any action to enforce or interpret this Agreement, or otherwise arising out of or relating to this Agreement, each party (i) consents and submits to personal jurisdiction and venue in the Superior Court of Fulton County, State of Georgia (referred to as the “Court”); (ii) waives any and all objections to jurisdiction and venue in the Court; and (iii) waives any objection that the Court is an inconvenient forum.  Each party further agrees that jurisdiction and venue concerning any legal or equitable action to enforce or interpret this Agreement, or otherwise arising out of this Agreement, shall rest exclusively in the Superior Court of Fulton County, State of Georgia, so that any such action shall be brought and defended in the Court. The prevailing party in any such action shall be entitled to recover, in addition to its damages, its reasonable legal fees and costs incurred in connection therewith.

In witness whereof the parties have executed this Agreement this 23rd day of January, 2018.

AGILYSYS, INC.           

    
By:   Ramesh Srinivasan         
         President and Chief Executive Officer

    
By:  [EMPLOYEE NAME]

1

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