OTHER MATTERS
Martin Eisenberg, a son of Warren Eisenberg, the Companys
Co-Chairman
Emeritus, is the Companys
Regional Vice President for the Northeast Region, with responsibilities in areas that include store operations, merchandising, store design and product sourcing. For fiscal 2018, his salary was $556,991 and he received other benefits consistent with
his position and tenure, including a restricted stock award valued at $37,500, cash awards valued at $112,500, a car allowance and employer 401(k) match aggregating approximately $9,375. In fiscal 2018, he received dividends of $3,261 that were paid
on previously unvested stock awards that vested in fiscal 2018. These dividends were not factored into the grant date fair value of such stock awards under ASC 718. In addition, these dividends do not vest and are not paid until, and only then to
the extent, the associated stock awards vest and the underlying shares are paid. He has been employed by the Company since 1977.
Ronald Eisenberg, a
son of Warren Eisenberg, the Companys
Co-Chairman
Emeritus, was the founder and owner of Chef Central, Inc., a retailer of kitchenware, cookware and homeware items catering to cooking and baking
enthusiasts, and certain assets of which the Company acquired on January 27, 2017 (the Acquisition). The Acquisition was for a cash purchase price of $1,000,000, and incremental earnout payments potentially aggregating up to
$1,250,000. The incremental earnout payments are dependent on the opening and continuing in operation, which opening and operation are at the Companys discretion, of up to 50 free-standing stores (or specialty departments within the
Companys stores) operating under the Chef Central or other agreed upon branding. Following the Acquisition, he joined the Company as an employee to build Chef Central branded stores or departments. For fiscal 2018, his salary was $254,808, and
he received other benefits consistent with his position and tenure, including a restricted stock award valued at $15,000 and cash awards valued at $45,000. In fiscal 2018, he received dividends of $174 that were paid on previously unvested stock
awards that vested in fiscal 2018. These dividends were not factored into the grant date fair value of such stock awards under ASC 718. In addition, these dividends do not vest and are not paid until, and only then to the extent, the associated
stock awards vest and the underlying shares are paid. In addition, in fiscal 2018, he received an earnout payment of $50,000 related to the Acquisition.
Mr. Eisenberg ceased to be an officer of the Company effective April 21, 2019.
A
brother-in-law
of Arthur Stark, the Companys Former President and
Chief Merchandising Officer, earned in his capacity as a sales representative employed by Blue Ridge Home Fashions commissions aggregating approximately $85,000 on sales of merchandise in fiscal 2018 by Blue Ridge Home Fashions to the Company in the
amount of approximately $8.5 million. Additionally, a
son-in-law
of Mr. Stark is a managing member and has a minority equity interest in Colordrift LLC which
had aggregate sales of merchandise to the Company of approximately $4.3 million in fiscal 2018. Colordrift LLC had a
pre-existing
sales relationship with the Company at the time such managing member
became Mr. Starks
son-in-law,
which was during the Companys fiscal 2012 year. Mr. Stark departed from the Company effective as of May 17,
2018.
Resolution of Potential Contested Solicitation
On March 26, 2019, the Company received
notice from Legion Partners Holdings, LLC (together with its affiliates, Legion Partners), Macellum Advisors GP, LLC (together with its affiliates, Macellum) and Ancora Advisors, LLC (together with its affiliates, and
together with Legion Partners and Macellum, collectively the Investor Group) announcing its nomination of 16 candidates for election to the Board at the 2019 Annual Meeting.
On May 28, 2019, the Company entered into a cooperation and support agreement (the Cooperation and Support Agreement) with the Investor
Group pursuant to which, among other things, the Company agreed to appoint the following four new independent directors: John E. Fleming; Sue E. Gove; Jeffrey A. Kirwan; and Joshua E. Schechter, and the Investor Group terminated its proxy contest
against the Company for the 2019 Annual Meeting and withdrew its nominations.
The terms of the Cooperation and Support Agreement has been publicly
filed as Exhibit 99.2 to the Companys Current Report on Form
8-K
filed with the SEC on June 3, 2019. Under the Cooperation and Support Agreement, the Company agreed to reimburse the Investor Group
for up to $1,050,000 of its reasonable, documented,
out-of-pocket
third-party expenses, including attorneys fees and expenses, as actually incurred by the Investor
Group in connection with the 2019 Annual Meeting, the Investor Groups involvement with the Company prior to the execution of the Cooperation and Support Agreement and the negotiation and execution of the Cooperation and Support Agreement.
The foregoing summary of the Cooperation and Support Agreement does not purport to be complete and is qualified in its entirety by reference to the
Cooperation and Support Agreement.
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