EMPLOYMENT AGREEMENT (Kenneth T. Stevens)
Exhibit 10.3
EMPLOYMENT AGREEMENT
(Xxxxxxx X. Xxxxxxx)
(Xxxxxxx X. Xxxxxxx)
THIS AGREEMENT is effective as of January 29, 2007 by and between Tween Brands, Inc.,
a Delaware corporation (the “Company”), and Xxxxxxx X. Xxxxxxx (the “Executive”) (hereinafter
collectively referred to as “the parties”).
WHEREAS, the Executive will serve as a key executive of the Company and possess an intimate
knowledge of the business and affairs of the Company and its policies, procedures, methods and
personnel; and
WHEREAS, the Company has determined that it is essential and in its best interests to retain
the services of key management personnel and to ensure their continued dedication and efforts; and
WHEREAS, the Compensation Committee of the Board of Directors of the Company (the “Board”) has
determined that it is in the best interest of the Company to secure the services and employment of
the Executive and the Executive is willing to render such services on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and the respective agreements of the parties
contained herein, the parties hereby agree as follows:
1. TERM. The initial term of employment under this Agreement shall be for the period
commencing on the effective date of this Agreement (the “Commencement Date”) and ending on the
third anniversary of the Commencement Date (the “Initial Term”); provided, however, that upon the
expiration of the first anniversary of the Commencement Date and on the anniversary date of each
year thereafter (the “Renewal Date”), the term of this Agreement shall be automatically extended
for a period of one year, unless either the Company or the Executive shall have given written
notice to the other at least ninety (90) days prior to the Renewal Date that the term of this
Agreement shall not be so extended. Notwithstanding the above, if a Change in Control (as defined
below) of the Company occurs during the term of this Agreement, the term of this Agreement will be
extended for two (2) years from the date of the Change in Control.
2. EMPLOYMENT.
(a) POSITION. The Executive shall be employed as the President and Chief Operating Officer of
the Company, or such other position of reasonably comparable or greater status and responsibilities
as may be determined by the Board. The Executive shall perform the duties, undertake the
responsibilities and exercise the authority customarily performed, undertaken and exercised by
persons employed in a similar executive capacity.
(b) OBLIGATIONS. The Executive agrees (1) to devote the Executive’s best efforts and full
business time and attention to the business and affairs of the Company; (2) to
exercise the highest
degree of loyalty and care with respect to the affairs of the Company; and (3) not to commit any
willful or intentional act with an objective to harm the Company’s
business or reputation. The foregoing, however, shall not preclude the Executive from serving on
corporate, civic or charitable boards or committees or managing personal investments, so long as
such activities do not interfere with the performance of the Executive’s responsibilities
hereunder.
3. BASE SALARY. Effective as of January 29, 2007, the Company agrees to pay or cause
to be paid to the Executive a minimum annual Base Salary of $800,000 (hereinafter referred to as
the “Base Salary”). This Base Salary will be subject to annual review and may be increased from
time to time by the Board considering factors such as the Executive’s responsibilities,
compensation of executives in other companies, performance of the Executive and other pertinent
factors. Such Base Salary shall be payable in accordance with the Company’s customary practices
applicable to similarly situated executives of the Company.
4. EQUITY COMPENSATION. The Company shall grant to the Executive rights to receive
shares of the Company’s common stock and options to acquire shares of the Company’s common stock as
the Board or Compensation Committee of the Board determines.
5. EMPLOYEE BENEFITS. The Executive shall be entitled to participate in tax-qualified
and nonqualified deferred compensation and retirement plans, group term life insurance plans,
short-term and long-term disability plans, employee benefit plans, practices, and programs
maintained by the Company and made available to similarly situated executives generally, and as may
be in effect from time to time. Further, in lieu of other salary payments, in the event of the
Executive’s Disability, the Executive shall be entitled to the payments specified in Section
11(c)(5) hereof during the Executive’s Disability, even though the Executive’s employment is not
terminated as a result of such Disability.
6. BONUS AND LONG-TERM INCENTIVES. The Executive shall be entitled to participate in
such Company bonus and long-term incentive compensation programs which include similarly situated
executives of the Company as may exist from time to time (the “Incentive Plans”). The Executive’s
participation in such Incentive Plans, practices and programs shall be on the same general basis
and terms as are applicable to similarly situated executives of the Company, although bonuses,
target levels and criteria may differ among such executives as determined by the Board or
Compensation Committee of the Board.
7. OFFICE AND FACILITIES. The Executive shall be provided with appropriate offices
and with such secretarial and other support facilities as are commensurate with the Executive’s
status with the Company and adequate for the performance of the Executive’s duties hereunder.
8. EXPENSES. Subject to applicable Company policies, the Executive shall be entitled
to receive prompt reimbursement of all expenses reasonably incurred by the Executive in connection
with the performance of the Executive’s duties hereunder or for promoting, pursuing or otherwise
furthering the business or interests of the Company including, without limitation, travel,
automobile, and meal and entertainment expenses.
9. VACATION. The Executive shall be entitled to four weeks of annual vacation or, if
greater, in accordance with the policies as periodically established by the Board for similarly
situated executives of the Company.
10. DEFINITIONS, TERMS AND CONDITIONS. The Executive’s employment hereunder is
subject to the following terms and conditions:
(a) CAUSE. “Cause” means that the Executive:
(1) was grossly negligent in the performance of Executive’s duties with the Company (other
than a failure resulting from the Executive’s incapacity due to physical or mental illness) causing
material harm to the Company; or
(2) has pled “guilty” or “no contest” to or has been convicted of an act which is defined as a
felony under federal or state law; or
(3) engaged in intentional misconduct or fraud which caused, or could reasonably be expected
to cause, material harm to the Company’s business or its reputation; or
(4) committed a material breach of this Agreement (including a violation of the noncompete and
nondisclosure provisions) which is materially and demonstrably injurious to the Company.
(b) CHANGE IN CONTROL. “Change in Control” means a Change in Control as defined in the
Executive’s Executive Agreement.
(c) DISABILITY. “Disability” means “Total Disability” as defined in the Too, Inc. Long-Term
Disability Program (effective October 1, 1999) or any amended or successor plan (the “Disability
Plan”).
(d) DISABILITY DATE. “Disability Date” means the date the Executive’s Disability began.
(e) EXECUTIVE AGREEMENT. “Executive Agreement” means the Executive Agreement between the
Company and the Executive dated as of January 29, 2007, as well as any such amended, successor, or
substituted agreement.
(f) GOOD REASON. “Good Reason” means:
(1) a significant reduction in the Executive’s position, duties, authority,
responsibilities and reporting requirements as set forth in section 2 hereof;
(2) a reduction in or material delay in payment of the Executive’s total cash
compensation, incentives and benefits from those required to be provided
with the provisions of this Agreement;
(3) the Company, the Board or any person controlling the Company relocates the
Executive to a location in excess of fifty (50) miles from the location where
Executive is currently based;
(4) the failure of the Company to abide by this Agreement or to obtain a
satisfactory agreement from any successor to the Company to assume and agree to
perform this Agreement, as contemplated in Section 15 of this Agreement; or
(5) the failure of the Company to obtain the assumption in writing of its
obligations to perform this Agreement by any successor to all or substantially all
of the assets of the Company withing fiftenn (15) days after a merger,
consolidation, sale or similar transaction.
Nothwithstanding the above, Good Reason shall not include (A) acts not taken in bad
faith which are cured by the Company in all respects not later than thirty (30) days from
the receipt by the Company of a written notice from the Executive identifying in reasonable
detail the act or acts constituting Good Reason (a “Preliminary Notice of Good Reason”) or
(B) acts taken by the Company by reason of the Executive’s physical or mental infirmity
which impairs the Executive’s ability to substantially perform the duties under this
Agreement. A Preliminary Notice of Good Reason shall not, by itself, constitute a Notice of
Termination.
(g) NOTICE OF TERMINATION. “Notice of Termination” means a written notice indicating the
specific termination provision in this Agreement relied upon and, to the extent applicable, setting
forth in reasonable detail the facts and circumstances claimed to provide a basis for termination
of the employment under the provision so indicated. Except for a termination for Cause or
Disability, any termination of employment by the Company or by the Executive shall be communicated
by a Notice of Termination to the other party thirty (30) days prior to the Termination Date.
However, the Company may elect to pay the Executive thirty (30) days of Base Salary in lieu of
thirty (30) days written notice. If the Company notifies the Executive that it will pay the
Executive in lieu of thirty (30) days written notice, the Company may deny the Executive further
access to the Company’s offices subject to the Executive’s right to recover any personal effects at
an agreed upon time. For purposes of this Agreement, no such purported termination of employment
shall be effective without a Notice of Termination.
(h) PRO-RATED BONUS AMOUNT. “Pro-Rated Bonus Amount” means any accrued but unpaid bonus for a
completed bonus period, plus a pro-rated portion of the Executive’s semi-annual bonus calculated as
of the Termination Date. The portion of the semi-annual bonus payment shall be the amount of
semi-annual bonus payable to the Executive with respect to the bonus period in which the
Termination Date occurs, based on the actual financial performance of the Company for such bonus
period, pro-rated by multiplying such amount by a fraction, the numerator of which is the number of
days during the bonus period which occur prior to the Termination Date, and the denominator of
which is one hundred eighty-two and one-half (182-1/2).
(i) RETIREMENT. “Retirement” means the voluntary resigning of
employment by the Executive for
the purpose of retiring which resignation occurs after the last day in the month in which the
Executive turns age sixty-five (65).
(j) TERMINATION DATE. “Termination Date” means in the case of the
Executive’s death, the date of death, or in all other cases, the date specified in the Notice of
Termination; provided, however, that if the Executive’s employment is terminated by the Company due
to Disability, the date specified in the Notice of Termination shall be subject to Section 11(c) of
this Agreement.
11. TERMINATION OF EMPLOYMENT; COMPENSATION UPON TERMINATION.
(a) TERMINATION BY COMPANY WITH CAUSE, OR VOLUNTARY TERMINATION BY EXECUTIVE WITHOUT GOOD
REASON. The Company shall be entitled to immediately terminate the Executive’s employment for
Cause after giving a Notice of Termination. Such Notice of Termination shall state in detail the
particular act or acts or failure or failure to act that constitute the grounds on which the
proposed termination for Cause is based. The Executive may voluntarily terminate employment for any
reason after giving a Notice of Termination. If during the term of this Agreement (including any
extensions thereof), the Executive’s employment is terminated by the Company for Cause, or if the
Executive voluntarily terminates employment without Good Reason, subject to the execution by the
Executive and the Company of a mutual release in favor of each of the Parties, the Company’s sole
obligation hereunder shall be to pay or reimburse the Executive (or facilitate a tax qualified
rollover of) the following amounts:
(1) the Executive’s accrued Base Salary and accrued vacation not paid as of the Termination
Date;
(2) the Executive’s vested benefits as of the Termination Date pursuant to the Company’s
benefit, retirement, incentive and other plans; and
(3) any and all monies advanced to or expenses incurred by the Executive pursuant to Section 8
through the Termination Date.
(b) TERMINATION BY COMPANY WITHOUT CAUSE OR TERMINATION BY EXECUTIVE WITH GOOD REASON. The
Company may terminate the Executive without Cause after giving a Notice of Termination or the
Executive may terminate employment for Good Reason after giving the Company a Notice of
Termination. If the Executive’s employment is terminated by the Company without Cause or by the
Executive for Good Reason, subject to the execution by the Executive and the Company of a mutual
release in favor of each of the Parties, the Company’s sole obligation hereunder shall be to pay,
maintain or reimburse the Executive (or facilitate a tax qualified rollover of) the following
items:
(1) the Executive’s accrued Base Salary and accrued vacation not paid as of the Termination
Date;
(2) the Executive’s Pro-Rated Bonus Amount;
(3) the Executive’s vested benefits as of the Termination Date pursuant to the Company’s
benefit, retirement, incentive and other plans;
(4) a lump sum equal to one and one-half (1.5) times the Executive’s Base Salary;
(5) any and all monies advanced to the Company by the Executive or expenses incurred by the
Executive pursuant to Section 8 through the Termination Date;
(6) the Company shall maintain in full force and effect for the continued benefit of the
Executive, for an eighteen (18) month period after the Termination Date, all medical coverage,
programs or arrangements in which the Executive was participating immediately prior to the
Termination Date, provided that Executive’s continued participation is possible under the general
terms and provisions of such medical plans and programs. In the event that the Executive’s
participation in any such plan or program is barred, the Company shall arrange to provide the
Executive, on an after-tax basis, with benefits substantially similar to those which the Executive
was otherwise entitle to receive pursuant to this section 11(b)(6);
(7) the Company shall accelerate the vesting, by twelve (12) additional months, of all
unvested stock options, restricted stock, stock appreciation rights, deferred compensation, and
similar plan benefits and all such benefits shall thereafter be treated as vested benefits pursuant
to the respective benefit plan; provided, however, that notwithstanding the foregoing, the
acceleration of vesting under this provision shall not apply to any stock options, restricted
stock, stock appreciation rights, deferred compensation, and similar plan benefits where such
options, stock, rights, compensation or similar plan benefits were by the terms of grant thereof or
their respective benefit plans subject to one time cliff vesting two or more years from the grant
or issuance thereof; and
(8) expenses for outplacement services up to a maximum amount of twenty thousand dollars
($20,000).
(c) TERMINATION UPON DISABILITY. The Company or Executive shall be entitled to terminate the
Executive’s employment after having established the Executive’s Disability and giving a Notice of
Termination which shall indicate the Disability Date. If the Executive’s employment is terminated
by the Company or Executive by reason of the Executive’s Disability, the Company’s sole obligation
hereunder shall be to pay or reimburse the Executive (or facilitate a tax qualified rollover of)
the following amounts:
(1) the Executive’s accrued Base Salary and accrued vacation not paid as of the Disability
Date;
(2) the Executive’s Pro-Rated Bonus Amount;
(3) the Executive’s vested benefits as of the Termination Date pursuant to the Company’s
benefit, retirement, incentive and other plans;
(4) any and all monies advanced to or expenses incurred by the Executive pursuant to Section 8
through the Disability Date;
(5) the Company shall continue to pay the Executive one hundred percent (100%) of the Base
Salary for the first twelve (12) months following the Disability Date, eighty percent (80%) of the
Base Salary for the second twelve (12) months following the
Disability Date, and sixty percent
(60%) of the Base Salary for the third twelve (12) months following the Disability Date; provided,
however, that such Base Salary shall be reduced by the amount of any benefits the Executive
receives by reason of the Executive’s Disability under the Company’s relevant disability plan or
plans;
(6) if the Executive is disabled beyond thirty-six (36) months from the Disability Date, the
Company shall continue to pay the Executive the lesser of (a) sixty (60%) of Base Salary or (b) the
maximum benefit under the Disability Plan per year, for the period of the
Executive’s Disability, provided, however, that such payments shall be reduced by the amount of any
benefits the Executive receives by reason of the Executive’s Disability under the Company’s
relevant disability plan or plans; and
(7) during the period the Executive is receiving salary continuation pursuant to this Section
11(c), the Company shall, at its expense, provide to the Executive and the Executive’s
beneficiaries medical and dental benefits substantially similar in the aggregate to those provided
to the Executive immediately prior to the Executive’s Disability.
Notwithstanding the above, the salary continuation payments will cease at the earlier of (a)
the Disability ceasing to exist or (b) Retirement. Further, at the end of the first twelve (12)
months of the disability salary continuation period, the Executive shall be removed as an active
employee of the Company.
(d) TERMINATION UPON DEATH. If the Executive’s employment is terminated by reason of the
Executive’s death, the Company’s sole obligation hereunder shall be to pay or reimburse (or
facilitate a tax qualified rollover of) to the Executive’s spouse, estate or designated
beneficiary, as the case may be, the following amounts:
(1) the Executive’s accrued Base Salary and accrued vacation not paid as of the Termination
Date;
(2) the Executive’s Pro-Rated Bonus Amount;
(3) the Executive’s vested benefits as of the Termination Date pursuant to the Company’s
benefit, retirement, incentive and other plans; and
(4) any and all monies advanced to or expenses incurred by the Executive pursuant to Section 8
through the Termination Date.
(e) RETIREMENT. If the Executive’s employment is terminated as a result of Retirement, the
Company’s sole obligation hereunder shall be to pay or reimburse the Executive (or facilitate a tax
qualified rollover of) the following amounts:
(1) the Executive’s accrued Base Salary and accrued vacation not paid as of the Termination
Date;
(2) the Executive’s Pro-Rated Bonus Amount;
(3) the Executive’s vested benefits as of the Termination Date pursuant to the Company’s
benefit, retirement, incentive and other plans; and
(4) any and all monies advanced to or expenses incurred by the Executive pursuant to Section 8
through the Termination Date.
(f) TERMINATION UPON CHANGE IN CONTROL. In the event of a Change in Control and subsequent
termination of employment without Cause by the Company, or any successor, or with Good Reason by
the Executive, the Executive shall be solely entitled to the benefits described in the Executive
Agreement and shall not be entitled to any benefits under this Agreement.
(g) RESTRICTED STOCK, STOCK OPTIONS. Except as provided for in
Section 11(b)(7), for purposes of this Agreement, restricted stock and stock options shall vest and
be exercisable according to the terms of the applicable plan.
(h) NO DUTY TO MITIGATE. The Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise and no payment
hereunder shall be offset or reduced by the amount of any compensation or benefits provided to the
Executive in any subsequent employment.
(i) PAYMENT DATE. Except as otherwise provided, all amounts to be paid by the Company under
this Section 11 shall be paid by the Company within thirty (30) days of the Termination Date.
(i) EXECUTIVE ADVANCES. Upon the termination of the Executive’s employment pursuant to
Sections 11(a), (b), (c), (d), or (e) hereunder, the Executive agrees that all monies that are
advanced to the Executive prior to such termination shall be repaid to the Company or the Company
shall be entitled to offset such amount against any payments to the Executive as provided for in
this Agreement.
(j) SECTION 409A COMPLIANCE. The Executive and the Company desire to comply with Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”), in accordance with the transition
rules applicable under IRS Notice 2005-1 and Proposed Regulations issued under Section 409A of the
Code. Therefore, notwithstanding any provision of this Agreement to the contrary, if the Company
determines that Executive is a “specified employee” as defined in Section 409A of the Code or any
guidance promulgated thereunder (“Code Section 409A”), Executive shall not be entitled to any
payments under Sections 11(b) or 11(c) of this Agreement after the Termination Date that otherwise
would cause Executive to incur any additional tax or interest under Code Section 409A, until the
earlier of (i) the date which is six months after the Termination Date, or (ii) the date of
Executive’s death. If any provision of this Agreement (or of any award of compensation, including
equity compensation or benefits) would cause Executive to incur any additional tax or interest
under Code Section 409A, the Company shall, after consulting with Executive and receiving
Executive’s approval (which shall not be unreasonably withheld), reform such provision in such a
manner as shall not cause Executive to incur any such tax or interest.
12. EXECUTIVE COVENANTS.
(a) UNAUTHORIZED DISCLOSURE, NONDISPARAGEMENT. The Executive shall not, during the term of
this Agreement and thereafter, make any disparaging comments which may be harmful to the Company’s
reputation or any Unauthorized Disclosure. For purposes of this Agreement, “Unauthorized
Disclosure” shall mean disclosure by the
Executive without the prior written consent of the Board
to any person other than a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of duties as an executive of the Company or as may
be legally required, of any information relating to the business or prospects of the Company
(including, but not limited to, any confidential information with respect to any of the Company’s
customers, products, methods of distribution, strategies, business and marketing plans and business
policies and practices); provided, however, that such term shall not include the use or disclosure
by the Executive, without consent, of any information known generally to the public (other than as
a result of disclosure by the Executive in violation of this Section 12(a)). This confidentiality
covenant has no temporal, geographical or territorial restriction.
(b) NON-COMPETITION. During the Non-Competition Period defined
below, the Executive shall not, directly or indirectly, without the prior written consent of the
Company, own, manage, operate, join, control, be employed by, consult with or participate in the
ownership, management, operation or control of, or be connected with (as a stockholder, partner, or
otherwise), any business, individual, partner, firm, corporation, or other entity that competes or
plans to compete, directly or indirectly, with the Company, its products, or any division,
subsidiary or affiliate of the Company; provided, however, that the “beneficial ownership” by the
Executive after termination of employment with the Company, either individually or as a member of a
“group,” as such terms are used in Rule 13d of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended,(the “Exchange Act”), of not more than two percent (2%)
of the voting stock of any publicly held corporation shall not be a violation of Section 12 of this
Agreement.
The “Non-Competition Period” means the period the Executive is employed by the Company plus
two (2) years from the Termination Date if the Executive’s employment is terminated (i) by the
Company for any reason, (ii) by the Executive for any reason, or (iii) by reason of either the
Company’s or the Executive’s decision not to extend the term of this Agreement as contemplated by
Section 1 hereof. Notwithstanding anything in this Agreement to the contrary, after a Change in
Control, the Non-Competition Period shall terminate upon a termination without Cause by the Company
or by the Executive for Good Reason.
(c) NON-SOLICITATION. During the No-Raid Period defined below, the Executive shall not,
either directly or indirectly, alone or in conjunction with another party, attempt to recruit or
hire, interfere with or harm, or attempt to interfere with or harm, the relationship of the
Company, its subsidiaries and/or affiliates, with any person who at any time was an employee,
customer or supplier of the Company, its subsidiaries and/or affiliates or otherwise had a business
relationship with the Company, its subsidiaries and/or affiliates.
The “No-Raid Period” means the period the Executive is employed by the Company plus two (2)
years from the Termination Date if the Executive’s employment is terminated (i) by the Company for
any reason, (ii) by the Executive for any reason, or (iii) by reason of either the Company’s or the
Executive’s decision not to extend the term of this Agreement as contemplated by Section 1 hereof.
(d) DELIVERY OF DOCUMENTS UPON TERMINATION. The Executive shall deliver to the Company or its
designee at the termination of the Executive’s employment all correspondence, memoranda, notes,
records, drawings, sketches, plans, customer lists, product compositions, and other documents and
all copies thereof, made, composed or received by the Executive, solely or jointly with others,
that are in the Executive’s possession,
custody, or control at termination and that are related in
any manner to the past, present, or anticipated business of the Company, its subsidiaries and/or
affiliates. In this regard, the Executive hereby grants and conveys to the Company all right,
title and interest in and to, including without limitation, the right to possess, print, copy, and
sell or otherwise dispose of, any reports, records, papers, summaries, photographs, drawings or
other documents, and writings, and copies, abstracts or summaries thereof, that may be prepared by
the Executive or under the Executive’s direction or that may come into the Executive’s possession
in any way during the term of the Executive’s employment, with the Company that relate in any
manner to the past, present or anticipated business of the Company.
(e) INTELLECTUAL PROPERTY. The Executive shall hold in trust for the benefit of the Company,
and shall disclose promptly and fully to the Company in writing, and hereby assigns, and binds the
Executive’s heirs, executors, and administrators to assign, to the Company any and all inventions,
discoveries, ideas, concepts, improvements, copyrightable
works, and other developments (the “Developments”) conceived, made, discovered or developed by the
Executive, solely or jointly with others, during the term of the Executive’s employment by the
Company, whether during or outside of usual working hours and whether on the Company’s premises or
not, that relate in any manner to the past, present or anticipated business of the Company, its
subsidiaries and/or affiliates. All works of authorship created by the Executive, solely or
jointly with others, shall be considered works made for hire under the Copyright Act of 1976, as
amended, and shall be owned entirely by the Company. Any and all such Developments shall be the
sole and exclusive property of the Company, whether patentable, copyrightable, or neither, and the
Executive shall assist and fully cooperate in every way, at the Company’s expense, in securing,
maintaining, and enforcing, for the benefit of the Company or its designee, patents, copyrights or
other types of proprietary or intellectual property protection for such Developments in any and all
countries. Within one (1) year following the end of the term of this Agreement and without
limiting the generality of the foregoing, any Development of the Executive relating to any subject
matter on which the Executive worked or was informed during the Executive’s employment by the
Company shall be conclusively presumed to have been conceived and made prior to the termination of
the Executive’s employment (unless the Executive clearly proves that such Development was conceived
and made following the termination of the Executive’s employment), and shall accordingly belong and
be assigned to the Company and shall be subject to this Agreement.
(f) REMEDIES. The Executive agrees that any breach of the terms of this Section 12 would
result in irreparable injury and damage to the Company for which the Company would have no adequate
remedy at law; the Executive therefore also agrees that in the event of said breach or any threat
of breach, the Company shall be entitled to an immediate injunction and restraining order to
prevent such breach and/or threatened breach and/or continued breach by the Executive and/or any
and all persons and/or entities acting for and/or with the Executive, without having to prove
damages, and to all costs and expenses, including reasonable attorneys’ fees and costs, in addition
to any other remedies to which the Company may be entitled under this Agreement, at law or in
equity. The terms of this paragraph shall not prevent the Company from pursuing any other
available remedies for any breach or threatened breach hereof, including but not limited to the
recovery of damages from the Executive. The Executive and the Company further agree that the
provisions of the covenants not to compete and solicit are reasonable and that the Company would
not have entered into this Agreement but for the inclusion of such covenants herein. Should a
court determine, however, that any provision of the covenants is unreasonable, either in period of
time, geographical area, or otherwise, the parties hereto agree that the covenant should be
interpreted and enforced to the maximum extent which such court or arbitrator deems reasonable.
The provisions of this Section 12 shall survive any termination of this Agreement, and the
existence of any claim or cause of action by the Executive against the Company, whether predicated
on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of
the covenants and agreements of this Section 12; provided, however, that this paragraph shall not,
in and of itself, preclude the Executive from defending against the enforceability of the covenants
and agreements of this Section 12.
13. LIMITATION OF PAYMENTS.
(a) GROSS-UP PAYMENT. In the event it shall be determined that any payment or distribution of
any type to or for the benefit of the Executive, by the Company, any of its affiliates, any person
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 Internal Revenue Code of 1986, as
amended (the “Code”), and the regulations thereunder
or any affiliate of such person, whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise (the “Total Payments”), would be subject to the excise
tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise
tax (such excise tax, together with any such interest and penalties, are collectively referred to
as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Total Payments (not including any Gross-Up Payment).
(b) All determinations as to whether any of the Total Payments are “parachute payments”
(within the meaning of Section 280G of the Code), whether a Gross-Up Payment is required, the
amount of such Gross-Up Payment and any amounts relevant to the last sentence of Subsection 13(a),
shall be made by an independent accounting firm selected by the Company from among the largest five
accounting firms in the United States (the “Accounting Firm”). The Accounting Firm shall provide
its determination (the “Determination”), together with detailed supporting calculations regarding
the amount of any Gross-Up Payment and any other relevant matter, both to the Company and the
Executive within thirty (30) days of the Termination Date, if applicable, or such earlier time as
is requested by the Company or the Executive (if the Executive reasonably believes that any of the
Total Payments may be subject to the Excise Tax). Any determination by the Accounting Firm shall
be binding upon the Company and the Executive. As a result of uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that the Company should have made Gross-Up Payments (“Underpayment”), or that
Gross-Up Payments will have been made by the Company which should not have been made
(“Overpayments”). In either such event, the Accounting Firm shall determine the amount of the
Underpayment or Overpayment that has occurred. In the case of an Underpayment, the amount of such
Underpayment shall be promptly paid by the Company to or for the benefit of the Executive. In the
case of an Overpayment, the Executive shall, at the direction and expense of the Company, take such
steps as are reasonably necessary (including the filing of returns and claims for refund), follow
reasonable instructions from, and procedures established by, the Company, and otherwise reasonably
cooperate with the Company to correct such Overpayment.
14. EXECUTIVE REPRESENTATION. The Executive expressly represents and warrants to the
Company that the Executive is not a party to any contract or agreement and is not otherwise
obligated in any way, and is not subject to any rules or regulations, whether governmentally
imposed or otherwise, which will or may restrict in any way the Executive’s ability to fully
perform the Executive’s duties and responsibilities under this Agreement.
15. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and shall inure to the benefit of the Company, its
successors and assigns and the Company shall require any successor or assign to expressly assume
and agree to perform this Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession or assignment had taken place. The term “the
Company” as used herein shall include any such successors and assigns to the Company’s business
and/or assets. The term “successors and assigns” as used herein shall mean a corporation or other
entity acquiring or otherwise succeeding to, directly or indirectly, all or substantially all the
assets and business of the Company (including this Agreement) whether by operation of law or
otherwise.
(b) Neither this Agreement nor any right or interest hereunder shall be assignable or
transferable by the Executive, the Executive’s beneficiaries or legal representatives, except by
will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and
be enforceable by the Executive’s legal personal representative.
16. ARBITRATION. Except with respect to the remedies set forth in Section 12(f), as
the method for resolving any dispute arising out of this Agreement, the Executive, in the
Executive’s sole discretion, may select binding arbitration in accordance with this Section.
Except as provided otherwise in this Section, arbitration pursuant to this Section shall be
governed by the Commercial Arbitration Rules of the American Arbitration Association. If the
Executive wishes to arbitrate an issue under this Section 16, the Executive shall deliver written
notice to the Company, including a description of the issue to be arbitrated. Within fifteen (15)
days after the Executive demands arbitration, the Company and the Executive shall each appoint an
arbitrator. Within fifteen (15) additional days, these two arbitrators shall appoint the third
arbitrator by mutual agreement; if they fail to agree within this fifteen (15) day period, then the
third arbitrator shall be selected promptly pursuant to the rules of the American Arbitration
Association for Commercial Arbitration. The arbitration panel shall hold a hearing in Columbus,
Ohio, within ninety (90) days after the appointment of the third arbitrator. The fees and expenses
of the arbitrators, and any American Arbitration Association fees, shall be paid by the Company.
Both the Company and the Executive may be represented by counsel and may present testimony and
other evidence at the hearing. Within ninety (90) days after commencement of the hearing, the
arbitration panel will issue a written decision; the majority vote of two of the three arbitrators
shall control. The majority decision of the arbitrators shall be binding on the parties, and the
parties may not pursue other available legal remedies if the parties are not satisfied with the
majority decision of the arbitrator. The Executive shall be entitled to seek specific performance
of the Executive’s rights under this Agreement during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
17. NOTICE. For the purposes of this Agreement, notices and all other communications
provided for in the Agreement (including the Notice of Termination) shall be in writing and shall
be deemed to have been duly given when personally delivered or sent by registered or certified
mail, return receipt requested, postage prepaid, or upon receipt if overnight
delivery service or
facsimile is used, addressed as follows:
TO THE EXECUTIVE:
Xxxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxx, XX 00000
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxx, XX 00000
TO THE COMPANY:
Tween Brands, Inc.
0000 Xxxxxx Xxxxxxx
Xxx Xxxxxx, Xxxx 00000
Attn: Executive Vice President-Human Resources
0000 Xxxxxx Xxxxxxx
Xxx Xxxxxx, Xxxx 00000
Attn: Executive Vice President-Human Resources
18. SETTLEMENT OF CLAIMS. Except as otherwise provided, the Company’s obligation to
make the payments provided for in this Agreement and otherwise to perform its obligations hereunder
shall not be affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have against the Executive
or others.
19. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by the
Executive and the Company. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreement or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement.
20. GOVERNING LAW. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Ohio without giving effect to conflict of law principles
thereof. The parties hereby consent to the exclusive jurisdiction of the state courts of the
State of Ohio and venue in Franklin County, Ohio.
21. SEVERABILITY. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof.
22. ENTIRE AGREEMENT. This Agreement and the offer letter executed by the Company and
Executive on or about January 8, 2007 constitute the entire agreement between the parties hereto
with respect to the subject matter hereof and supersede all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto with respect to the
subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duty authorized
officer and the Executive has executed this Agreement as of the day and year first above written.
| TWEEN BRANDS, INC. | ||||||
| By: Name: |
/s/ Xxxxxxx Xxxxxx
|
|||||
| Title: | Chairman and Chief Executive Officer | |||||
| EXECUTIVE | ||||||
| /s/ Xxxxxxx X. Xxxxxxx | ||||||
| Xxxxxxx X. Xxxxxxx | ||||||
