Exhibit 10.6
AGREEMENT
THIS AGREEMENT (“Agreement”) is made as of the 26th day of September 2022 (the “Effective Date”) between JO-ANN STORES, LLC, an Ohio limited liability company (the “Company”), and Scott Sekella (“Executive”).
The Company is entering into this Agreement in recognition of the importance of Executive’s services to the continuity of management of the Company and based on its determination that it will be in the best interests of the Company to encourage Executive’s continued attention and dedication to Executive’s duties as a general matter and in the potentially disruptive circumstances of a possible Change of Control of the Company. (As used in this Agreement, the term “Change of Control” and certain other capitalized terms have the meanings ascribed to them in Section 16 of this Agreement).
The Company and Executive agree as follows:
(a) Subject to Section 1(e) of this Agreement, Base Salary continuation for a period of eighteen (18) months from the effective date of Executive’s termination from the Company, payable in accordance with the Company’s normal payroll practices in effect at the applicable time, commencing within ten (10) days after Executive’s Release becomes effective and irrevocable in accordance with its terms.
(b) Any short-term incentive that would have been earned (based on actual Company performance during the entire fiscal year and assuming that any individual goals applicable to Executive were satisfied at the “target” level) will be payable on a pro-rata basis based on the number of weeks that Executive worked in the current fiscal year. This amount will be payable at the same time as the short-term incentive is paid to similarly situated active employees of the Company.
(c) All long-term incentives (including, without limitation, stock options) will be governed by the terms of the Amended & Restated Stockholder’s Agreement between the Company and Executive dated March 16, 2021 (the “Stockholder’s Agreement”). Any unvested restricted stock units will be governed by the terms of the applicable Restricted Stock Unit Grant Agreement.
(d) Subject to Section 1(e) of this Agreement, the Company will provide six (6) months of outplacement service with a reputable outplacement consultant chosen by the Company.
(e) Executive agrees immediately to advise Company when Executive commences employment, self-employment, a consulting arrangement or other compensated work (the “New Arrangement”) during the period of Base Salary continuation pursuant to this Section 1, and to provide Company with sufficient information concerning the New Arrangement so that the Company can determine the equivalency of the New Arrangement and the Executive’s prior employment with the Company. Company shall have no obligation to continue payment of the Base Salary if Executive does not provide sufficient information regarding the New Arrangement, and the period of the payment obligation (i) shall not be extended due to Executive’s failure to timely provide notice of the New Arrangement, and (ii) in no event shall such time period extend beyond the date that is 18 months from the effective date of Executive’s termination of employment. If the Company determines in its reasonable discretion that the New Arrangement is at least generally equivalent to Executive’s prior employment with the Company, Base Salary continuation pursuant to Section 1(a) hereof and outplacement service pursuant to Section 1(d) hereof shall cease immediately and the Company shall have no further obligations to Executive pursuant to Sections 1(a) and 1(d). If the Company determines in its reasonable discretion that the New
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Arrangement is less than the Executive’s prior compensation with the Company, the Company’s obligation to pay Base Salary shall be reduced by the amount of the New Arrangement. In making its determination of equivalency pursuant to this Section 1(e), the Company may consider the total compensation package associated with the New Arrangement including base compensation, short-term and long-term incentive compensation, equity grants and fringe benefits. If there is any overpayment of Base Salary due to a New Arrangement, the Company will be entitled to recoup any such overpayment from the Executive.
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9.1 Acknowledgement. The Company and Executive acknowledge that, following a Change of Control, one or more payments or distributions to be made by the Company to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, under some other plan, agreement, or arrangement, or otherwise, and including, without limitation, any income recognized by Executive upon exercise of an option granted by the Company to acquire Common Shares issued by the Company) (a “Payment”) may be determined to be an Excess Parachute Payment that is not deductible by the Company for federal income tax purposes and with respect to which Executive will be subject to an excise tax because of Sections 280G and 4999, respectively, of the Code (hereinafter referred to respectively as “Section 280G” and “Section 4999”).
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10.1 Change of Control Severance Benefit Payment Obligation Absolute. Except as otherwise provided in Section 9, the Company’s obligation to make the payments and provide the benefits provided for in Section 2 herein shall be absolute and unconditional, and shall not be affected by any circumstances, including, without limitation, any offset, counterclaim, recoupment, defense, or other right which the Company may have against Executive or anyone else. All payments by the Company pursuant to Section 2 herein shall be paid without notice or demand. Each and every payment made by the Company pursuant to Section 2 herein shall be final, and the Company shall not seek to recover all or any part of such payment from Executive or from whomsoever may be entitled thereto, for any reasons whatsoever. This Section 10.1 shall not be applicable to Severance Benefits made pursuant to Section 1 hereof.
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11.1 Payment of Legal Fees. In the event of litigation or arbitration with respect to the Severance Benefits or Change of Control Severance Benefits provided for under this Agreement, the prevailing party shall be entitled to recover its legal fees, costs of arbitration and/or litigation, prejudgment interest, and other reasonable expenses.
13.1 Obligation to Maintain Confidentiality. Executive agrees not to divulge to third parties or use in a manner not authorized by the Company, any confidential or Company proprietary information gathered or learned by Executive during his or her employment with the Company or a subsidiary or affiliate of the Company. “Confidential Information” includes, but is not limited to, information in oral, written or recorded form regarding business plans, trade or business secrets, Company financial records, supplier contracts or relationships, or any other information that the Company does not regularly disclose to the public. To the extent that Executive has any doubt as to whether information constitutes Confidential Information, Executive agrees to obtain advice from the Company’s General Counsel prior to divulging or using such information. Executive understands and agrees that divulging such information to third parties, or using such information in an unauthorized manner, would cause serious competitive harm to the Company. Confidential Information shall exclude: (a) information that is generally known by or available for use by the public, (b) information that was known by Executive prior to his or her employment with the Company (including its predecessor in interest, affiliates and subsidiaries) and was obtained, to the best of Executive’s knowledge, without violation of any obligation of confidentiality to the Company, or (c) information that is required to be disclosed pursuant to applicable law or a court order. If information is required to be disclosed because of a court order, Executive must notify the Company’s General Counsel immediately. Nothing in this section 13.1 shall be interpreted to preclude Executive from communicating to a governmental agency about terms or conditions of employment or legal compliance issues, or from cooperating with an investigation being conducted by a governmental agency.
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14.1 Successors to the Company. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) of all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform the Company’s obligations under this Agreement in the same manner and to the same extent that the Company would be required to perform them if no such succession had taken place.
15.1 Employment Status. Except as may be provided under any other agreement between Executive and the Company, the employment of Executive by the Company is “at will” and, prior to the effective date of a Change of Control, may be terminated by either Executive or the Company at any time, subject to applicable law.
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16.1 “Accounting Firm” means the independent auditors of the Company for the Fiscal Year preceding the year in which the Change of Control occurred and such firm’s successor or successors; provided, however, if such firm is unable or unwilling to serve and perform in the capacity contemplated by this Agreement, the Company shall select another national accounting firm of recognized standing to serve and perform in that capacity under this Agreement, except that such other accounting firm shall not be the then independent auditors for the Company or any of its affiliates (as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended).
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[signature page to follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
JO-ANN STORES, LLC | ||
By: | /s/ Janet Duliga | |
|
| Janet Duliga |
|
| Chief Administrative Officer |
EXECUTIVE | ||
| /s/ Scott Sekella | |
|
| Scott Sekella |
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Exhibit 10.6
EXHIBIT A
GENERAL RELEASE
This General Release (this “Release”) is entered into by and between ______________ (“Executive”) and JO-ANN STORES, LLC (the “Company”) (collectively, the “Parties”) as of the _____ day of __________, 20__.
NOW, THEREFORE, and in consideration of the mutual promises contained herein, and for other good and valuable consideration, the adequacy and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Employment Status. Executive’s employment with the Company terminated effective as of ________________, 20__.
2. Payments and Benefits. Following the effectiveness of the terms set forth herein, the Company shall provide Executive with certain benefits as provided in Section of that certain Agreement between the Company and Executive dated as of ______________, 20_ (the “Agreement”). Such benefits shall be provided in accordance with the terms, and subject to the conditions, of the Agreement, including, but not limited to, the condition that this Release must become effective and irrevocable in accordance with its terms within twenty-eight (28) days after Executive’s Separation from Service (as defined in the Agreement). Executive agrees that the consideration set forth above is more than Executive is legally entitled to and reflects adequate consideration for the release of any potential claims that Executive may have arising from Executive’s employment and separation from employment with the Company.
3. No Liability. This Release does not constitute an admission by the Company, or its managers, officers, employees, affiliates or agents, or Executive, of any unlawful acts or of any violation of federal, state or local laws.
4. Claims Released by Executive. In consideration of the payments and benefits described in Section 2 of this Release, and by signing this Release, Executive agrees on behalf of Executive and his or her agents, heirs, executors, administrators, and assigns to unconditionally release, acquit, and forever discharge the Company, its parents, subsidiaries, and affiliates, and each of their respective agents, directors, managers, officers, employees, partners, shareholders, members, representatives, successors, insurers, assigns, and all persons acting by, through, under or in concert with any of them (“Releasees”) from any and all actions, complaints, claims, liabilities, obligations, promises, agreements, damages, demands, losses, and expenses of any nature whatsoever, known or unknown, suspected or unsuspected, including, but not limited to, rights under federal, state or local laws prohibiting discrimination (including but not limited to the Federal Age Discrimination in Employment Act) and claims for wrongful discharge, breach of contract, either oral or written, breach of any employment policy or any other claim against Releasees which Executive now has, heretofore had or at any time hereafter may have against Releasees arising prior to the date hereof and arising out of or in connection with Executive’s employment or separation from employment with the Company.
Executive acknowledges and understands that this is a general release which releases the Releasees from any and all claims that Executive may have under federal, state or local laws or common law, including but not limited to claims arising under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq., as amended, the Age Discrimination in Employment Act, 29 U.S.C. §§ 621 et seq., the Older Workers Benefit Protection Act, the Americans with Disabilities Act, 42 U.S.C. § 12101, et seq., the Fair Labor Standards Act, 29 U.S.C. § 201, et seq., the Employee Retirement Income Security Act, and the Consolidated Omnibus Budget Reconciliation Act. This Release does not apply to any claim that as a matter of law cannot be released, or to any rights or claims that may arise after the date Executive executes this Release.
Without limiting the foregoing, Executive represents that he or she understands that this Release specifically releases and waives any claims of age discrimination, known or unknown, that Executive may have against Releasees as of the date Executive signs this Release. This Release specifically includes a waiver of rights and claims under the Age Discrimination in Employment Act of 1967, as amended, and the Older Workers Benefit Protection Act. Executive acknowledges that as of the date he or she signs this Release, Executive may have certain rights or claims under the Age Discrimination in Employment Act, 29 U.S.C. §626, and Executive voluntarily relinquishes any such rights or claims by signing this Release.
Nothing in this Release will prohibit Executive from communicating to and cooperating with any federal, state or local governmental agency in any investigation concerning the Company (including without limitation the Securities and Exchange Commission (“SEC”), the National Labor Relations Board, the Occupational Safety and Health Administration and the Equal Employment Opportunity Commission (“EEOC”)), but Executive acknowledges that this Release will bar Executive from recovering any funds in any future proceeding, including any brought by the EEOC or any similar state and local agencies. Further, Executive specifically waives any right to receive any benefit or remedy as a consequence of filing a charge of
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discrimination with the EEOC or any similar state and local agencies. Notwithstanding the prior two sentences, Executive may receive incentive payments under SEC Rule 21F-17 and similar rules of other governmental agencies.
5. Bar. Executive, on behalf of Executive and his or her agents, heirs, executors, administrators, and assigns, also agrees and covenants not to file a lawsuit or to assert any claim with respect to any claims released or waived under this Release, and Executive agrees that Executive will not institute any actions, causes, suits, debts, liens, claims or demands for released matters, whether known or unknown, against Releasees or attributable to Releasees in any way. Execution of this Release by Executive operates as a complete bar and defense against any and all of the released claims against Releasees. If Executive or any of Executive’s agents, heirs, executors, administrators, and assigns should make any claims against any of the Releasees in any complaint, action, claim, or proceeding (with the exception of claims to enforce the Agreement and claims not released herein), this Release may be raised as and shall constitute a complete bar to any such complaint, action, claim, or proceeding, and Releasees shall be entitled to and shall recover from Executive all costs incurred, including attorneys’ fees, in defending against any such complaint, action, claim, or proceeding to the fullest extent. Executive and the Company agree that this Release may be introduced into evidence by a party in the event either party attempts to or actually commences any legal, equitable or administrative action, arbitration or other proceeding against the other party or any of its affiliated entities or any of the Releasees.
6. Confidentiality/Non-Disparagement/Restrictive Covenants. Except as permitted by the fourth paragraph of Section 4 above, Executive agrees not to divulge to third parties or use any confidential or Company proprietary information gathered or learned by Executive in the scope of his or her employment with the Company. Confidential information includes, but is not limited to, information in oral, written or recorded form regarding business plans, trade or business secrets, Company financial records, supplier contracts or relationships, or any other information that the Company does not regularly disclose to the public. To the extent that Executive has any doubt, either now or in the future, as to whether information Executive possesses is confidential or Company proprietary, Executive should contact the Company’s General Counsel for clarification before divulging or using such information. Executive understands and agrees that divulging such information to third parties or Executive’s unauthorized use of it would cause serious competitive harm to the Company. Confidential information shall exclude: (a) information that is generally known by or available for use by the public, (b) information that was known by Executive prior to his or her employment with the Company (including its predecessor in interest, affiliates and subsidiaries) and was obtained, to the best of Executive’s knowledge, without violation of any obligation of confidentiality to Company, or (c) information that is required to be disclosed pursuant to applicable law or a court order. If information is required to be disclosed because of a court order, Executive must notify the Company’s General Counsel immediately.
Executive agrees that the terms of this Release are confidential and that Executive will not disclose any information concerning this Release to any person other than Executive’s immediate family members and professional advisors who also agree to keep said information confidential, not to disclose it to others and not to use such information for any purpose other than advising Executive with respect to Executive’s rights and obligations under this Release, except as permitted under the fourth paragraph of Section 4 above. Executive also may make such disclosures as are required by law. Any disclosure in violation of the foregoing is a material breach of this Release giving rise to an appropriate remedy as determined by a court of law or equity.
Executive agrees that he or she is prohibited from and will refrain from sharing all Company-related materials in Executive’s possession with those who have not been authorized to receive such information, including but not limited to any competitors or retailers selling crafts, fabrics or other product lines also sold by the Company.
Executive acknowledges that he or she remains subject to the restrictive covenants referenced in Section 13 of the Agreement.
Each Party covenants not to make any disparaging statements or comments about the other party to any person or entity by any medium, whether oral or written.
7. Governing Law. To the extent not preempted by the laws of the United States, the laws of the State of Ohio, applicable to contracts made and to be performed wholly within that state, shall be the controlling law in all matters relating to this Release.
8. Acknowledgment. Executive has read this Release, understands it, and voluntarily accepts its terms, and Executive acknowledges that he or she has been advised by the Company to seek the advice of legal counsel before entering into this Release. Executive acknowledges that he or she was given a period of twenty-one (21) calendar days within which to consider and execute this Release, and to the extent that he or she executes this Release before the expiration of the 21-day period, he or she does so knowingly and voluntarily and only after consulting his or her attorney.
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9. Revocation. Executive understands that he or she has a period of seven (7) calendar days following the execution of this Release during which Executive may revoke this Release by delivering written notice to the Company, and this Release shall not become effective or enforceable until such revocation period has expired. Executive understands that if he or she revokes this Release, it will be null and void in its entirety and Executive will not be entitled to any payments or benefits provided in Section 2.
10. Miscellaneous. This Release is the complete understanding between Executive and the Company in respect of the subject matter of this Release and supersedes all prior agreements relating to Executive’s employment with the Company, except those provisions of the Agreement that survive the termination of Executive’s employment and agreements that Executive has entered into with the Company pertaining to confidentiality or ownership of intellectual property or Company proprietary information. Executive has not relied upon any representations, promises or agreements of any kind except those set forth herein and in the Agreement in signing this Release. In the event that any provision of this Release should be held to be invalid or unenforceable, each and all of the other provisions of this Release shall remain in full force and effect. If any provision of this Release is found to be invalid or unenforceable, such provision shall be modified as necessary to permit this Release to be upheld and enforced to the maximum extent permitted by law. Executive agrees to execute such other documents and take such further actions as reasonably may be required by the Company to carry out the provisions of this Release.
11. Counterparts. This Release may be executed by the parties hereto in counterparts (including by means of facsimile or other electronic transmission), each of which shall be deemed an original, but all of which taken together shall constitute one original instrument.
IN WITNESS WHEREOF, the parties have executed this Release on the date first set forth above.
JO-ANN STORES, LLC
_________________________________
Name:
Title:
EXECUTIVE
________________________________
Name:
Date:
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