Current Report Filing (8-k)
November 01 2018 - 3:21PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 1, 2018
DESTINATION MATERNITY CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware
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0-21196
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13-3045573
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(State or other jurisdiction of
incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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232 Strawbridge Drive
Moorestown, NJ 08057
(Address of principal Executive Offices)
(856)
291-9700
(Registrants telephone number, including area code)
Check the appropriate box below if the Form
8-K
filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule
14a-12
under the Exchange Act (17
CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule
14d-2(b)
under the Exchange Act (17 CFR
240.14d-2(b))
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☐
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Pre-commencement
communications pursuant to Rule
13e-4(c)
under the Exchange Act (17 CFR
240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule
12b-2
of the Securities Exchange Act of 1934
(§240.12b-2
of this chapter).
Emerging growth company ☐
If an emerging
growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
On November 1, 2018, Destination Maternity Corporation (the
Company
)
entered into a new Executive Employment Agreement (the
Employment Agreement
) with the Companys Chief Executive Officer, Marla A. Ryan (the
Executive
). The Company and Ms. Ryan had previously entered
into a letter agreement concerning compensation, which has been superseded by the Employment Agreement.
The key elements of the Employment Agreement are
as follows:
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(1)
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Role
: As the Companys Chief Executive Officer, Ms. Ryan will render executive and management
services to the Company consistent with such position as may be reasonably assigned to the Executive by the Board of Directors of the Company (the
Board
). During the Term, the Executive shall report to and shall be subject to the
oversight and direction of the Board.
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(2)
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Term
: The term of the Employment Agreement is for three (3) years, commencing on November 1,
2018 (the
Term
). However, the Term will automatically be renewed for successive
one-year
periods upon expiration, unless either party provides notice of
non-renewal
at least ninety (90) days prior to the applicable expiration date.
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(3)
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Base Salary
: Ms. Ryans initial base salary will be $350,000. Ms. Ryans base salary
will be reviewed annually by the Compensation Committee of the Board (the
Committee
).
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(4)
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Incentive Compensation
: During the Term, Ms. Ryan shall be eligible to receive a cash incentive
bonus, calculated as a percentage of the Companys adjusted EBITDA, in each calendar year as follows: (a) if estimated adjusted EBITDA level is less than or equal to the Companys previous years actual adjusted EBITDA, 1.2% of
the difference between estimated adjusted EBITDA and $0; (b) if estimated adjusted EBITDA level is above last years actual adjusted EBITDA and below budgeted adjusted EBITDA, 1.2% of previous calendar years adjusted EBITDA plus 3.5% of
the difference of estimated adjusted EBITDA and last years actual adjusted EBITDA; and (c) if estimated adjusted EBITDA level is above budgeted adjusted EBITDA, 1.2% of previous calendar years adjusted EBITDA plus 3.5% of the
difference of budgeted adjusted EBITDA and the previous calendar years adjusted EBITDA plus 7.0% of the difference of estimated adjusted EBITDA and budgeted adjusted EBITDA (such bonus, the
Incentive Compensation
).
Ms. Ryans fiscal year 2018 bonus opportunity will be based on adjusted EBITDA commencing with the second quarter through the end of the fourth quarter of the Companys 2018 calendar year and
pro-rated
from May 29, 2018. Ms. Ryans annual cash compensation (i.e., base salary plus Incentive Compensation) shall not exceed $2,000,000 during the Term.
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(5)
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Severance Benefits
: Upon a termination without cause or a resignation with good reason, Ms. Ryan
will be entitled to the following severance benefits: (a) payment of all accrued and unpaid base salary through the date of such cessation; (b) payment of any Incentive Compensation not yet paid, but earned for the calendar year in which
Ms. Ryans employment is terminated; (c) payment of (i) six (6) months of base salary, in the event that such termination occurs in the first twelve (12) months of the Term; (ii) nine (9) months of base salary, in the
event that such termination occurs in the second year of the Term; and (iii) twelve (12) months of base salary, in the event that such termination occurs in the third year of the Term or thereafter; and (d) group health continuation
coverage for 12 months. However, if the severance event occurs within two years after a change in control, then the salary continuation referenced in (c) above will be increased to 24 months and will be payable in one lump sum, and the group
health continuation coverage referenced in (d) above will be increased from 12 to 18 months.
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(6)
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Non-Hire
;
Non-Solicit
;
Non-Competition
: The Employment Agreement contains certain
non-competition
and
non-solicitation
provisions which operate during employment. In addition, the restrictive
non-competition
covenants continue to apply following Ms. Ryans employment
with the Company for: (i) 9 months, following a cessation of employment within the first twelve months of the Term; or (ii) 12 months, following a cessation of employment at any time after the first twelve months of the Term. The
restrictive
non-solicitation
covenants continue to apply following Ms. Ryans employment with the Company for twelve months following a cessation of employment at any time. In addition to the
foregoing, Ms. Ryan is subject to perpetual confidentiality and
non-disparagement
covenants.
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(7)
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Indemnification
: The Company will indemnify Ms. Ryan against actual, potential or threatened claims
of investigations arising from her service as an employee and officer of the Company and its subsidiaries and provide her with the benefit of D&O insurance coverage, in each case in the same manner and to the same extent as provided to other
officers and directors of the Company.
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(8)
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Legal Fees
: The Company will reimburse Ms. Ryan for up to $18,750 in legal fees incurred by her in
connection with the negotiation and documentation of these arrangements.
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(9)
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Equity Awards
: Subject to approval by the Committee and the Board, Ms. Ryan shall be entitled to
receive a
one-time
equity grant with a grant date fair value of $600,000 and a
one-time
equity grant for fiscal year 2018 with a grant date fair value of $200,000
(together, the
2018 LTIP
), calculated as of the grant date. The 2018 LTIP shall be collectively allocated as follows: (i) 20% in restricted stock units, vesting in four equal annual increments beginning on the first anniversary of
the effective date of the Employment Agreement, (ii) 50% in restricted stock units that vest based on the attainment of certain performance goals; and (iii) 30% in stock options to purchase common stock in the Company, vesting in four equal annual
increments beginning on the first anniversary of the effective date of the Employment Agreement. The 2018 LTIP will be subject to the terms of the forms of Restricted Stock Unit Agreement, Performance Restricted Stock Unit Agreement and Option
Agreement and the Companys 2005 Equity Incentive Plan, as amended and restated (the
Plan
). For future fiscal years in the Term, Executive will be eligible for grants of equity under the Plan in an amount and on the terms as
decided by the Committee in its sole discretion.
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The foregoing descriptions are qualified in their entireties by
reference to the full text of the Employment Agreement, which is filed with this Current Report on Form
8-K
as Exhibit 10.1, and the forms of Restricted Stock Unit Agreement, Performance Restricted Stock Unit
Agreement, and Option Agreement, filed with this Current Report on Form 8-K as Exhibits 10.2, 10.3, and 10.4, respectively.
Ms. Ryan has served as the Companys Chief Executive Officer since May 29, 2018. Prior to joining the Company, she founded Lola
Advisors LLC, a business consultancy working in the apparel, beauty and wellness sectors. She was previously employed by Lands End, a multi-channel retailer of casual clothing, accessories and footwear, as well as home products, from 2009 to
2017, most recently served as the Senior Vice President of Retail.
Item 7.01 Regulation FD Information.
On November 1, 2018, the Company issued a press release announcing that it had entered into a new Employment Agreement with Marla A. Ryan, the
Companys Chief Executive Officer. A copy of the press release is attached hereto as Exhibit 99.1.
The information contained in Item 7.01
of this Form 8-K and Exhibit 99.1 attached hereto is being furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the
Exchange Act
), nor is it subject
to the liabilities of that section or deemed incorporated by reference in any filing under the Exchange Act unless specifically identified therein as being incorporated by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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Date: November 1, 2018
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DESTINATION MATERNITY CORPORATION
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By:
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/s/ Rodney Schriver
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Name: Rodney Schriver
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Title: Senior Vice President and Chief Accounting Officer
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