EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, entered into the 26th day of September, 2005,
effective as of November 1, 2005, between XXX SHOPS, INC., a Pennsylvania
corporation with its principal offices at 0000 Xxxx Xxxxx Xxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000 (the "Company") and XXXX XxXXXXXXX, an individual residing at
00-00 Xxxxxxxxx Xxxxxx, Xxxx Xxxx, XX 00000 (the "Employee").
BACKGROUND
The Company wishes to employ the Employee and the Employee wishes to
enter into the employ of the Company on the terms and conditions set forth with
this Employment Agreement.
NOW, THEREFORE, in consideration of the foregoing and the promises and
covenants hereinafter set forth, the parties, intending to be legally bound,
hereby agree as follows:
1. Employment. The Company hereby employs the employment of the
Employee and the Employee accepts such employment with the Company on the terms
and conditions hereinafter set forth.
2. Term. The term of this Agreement shall commence on November 1, 2005
and shall be an employment at will (the "Term").
3. Duties. The Employee is engaged hereunder as the Company's Vice
President-Real Estate and he agrees to continue to perform the duties and
services incident to that position, or such other or further duties and services
of a similar nature as may be reasonably required of him by the Company. The
Employee shall report to, and be subject to the direction and control of the
President and Executive Vice President the Company consistent with the terms of
this Agreement. The Employee shall perform his duties for the Company primarily
from the Company's facilities at 0000 Xxxx Xxxxx Xxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000, or such other similarly situated locations of the Company to
which the Employee may be assigned to from time to time by the Company.
Notwithstanding the foregoing, Employee acknowledges and agrees that from time
to time, in the ordinary course of the business of the Company that the Employee
will be required to travel, and Employee hereby agrees to undertake such travel.
The Employee shall devote his full business time, attention, energies and best
efforts to the performance of his duties hereunder and to the promotion of the
business and interests of the Company and of any corporate subsidiaries or
affiliated companies. Nothing contained in this Section 3 shall be construed as
preventing Employee from investing his personal assets, provided that no such
investment (a) shall violate the provisions of Section 7 or 8 of this Agreement
or (b) constitute the usurpation of a corporate opportunity of the Company. For
purposes of this Section 3, a corporate opportunity shall be (i) one presented
to or made available to the Company or any affiliate of the Company and known by
the Employee or (ii) an investment or acquisition known by Employee as being
considered by the Company or any affiliate of the Company, but a corporate
opportunity shall not include any investment opportunity presented to or made to
the Company or any affiliate of the Company which neither the Company nor such
affiliate elects to pursue within a reasonable time. In addition, during the
Term or extended term of this Agreement, the Employee may serve on corporate,
civic or charitable boards or committees, except boards or committees of
corporations that compete with the Company.
4. Compensation: Expenses.
(a) Salary. The Employee shall be paid a salary at the rate of
$160,000 per annum. The Employee's performance will be reviewed at the
discretion of, and increases will be determined by the Company's Compensation
Committee.
(b) Stock Options. On November 1, 2005, the Company shall
issue to Employee options to purchase up to 15,000 shares of the Common Stock of
the Company, at a price not less than $23.75 per share, in accordance with the
vesting schedule set forth on Schedule 4(b) attached, and pursuant to the
provisions of the Company's Incentive Stock Option Plan, and subject to
applicable law. A copy of the Company's Incentive Stock Option Plan was
delivered to the Employee. Notwithstanding the above, in the event that the
Employee voluntarily terminates his employment, or in the event that the Company
terminates the Employee for cause as provided in Section 6(a) of this Agreement,
any options which have not vested as of the date of such termination of
employment shall be deemed to have terminated.
(c) Fringe Benefits. The Employee shall be entitled to such
benefits and perquisites as are provided under the Company's standard executive
benefit package to the extent and on the same terms and conditions as are
accorded to other executives of the Company, and as heretofore provided to
Employee (including but not limited to health insurance, 401k, and life
insurance), provided however nothing herein, except as provided in Section 4(b)
above, shall be deemed to require grants or awards to Employee under any benefit
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plans which provide for grants or awards at the discretion of any Board of
Directors or any committee thereof or administrator. Employee shall receive a
car allowance in the amount of $850 per month plus $0.30 per mile for any
business related travel miles. The Employee shall also be entitled to up to two
(2) weeks paid vacation during each of the first three (3) years of his
employment and three (3) weeks paid vacation during each year thereafter.
(d) Business Expenses. The Company will pay, or reimburse the
Employee for, all ordinary and reasonable out-of-pocket business expenses
incurred by Employee in connection with his performance of services hereunder
upon the Employee's submission of a written, itemized account of such business
expenses in accordance with the Company's expense authorization and approval
procedures then in effect. If the Company has a corporate credit card program
for paying expenses, such card will be issued to Employee.
(e) Technology. The Company will provide and pay for the
following: Lap Top Computer, Cell Phone and/or Blackberry (or similar), and the
cost of related calling plans sufficient for Employee to perform his duties
under this Agreement.
(f) Relocation. Company will pay for a first class
residential moving company with full replacement value insurance to move
employee to a new permanent residence. Company will make all arrangements with
such carrier for the movement of Employee's household goods. Charges for the
storage of Employee's household goods at the moving company's warehouse will be
reimbursed for up to a maximum of six (6) months and shall include one
transportation charge to and one transportation charge from such warehouse to
the new permanent residence. Any partial pick-ups or deliveries of household
goods from the warehouse will be at the Employee's expense.
Temporary Residence. During the time that Employee is looking for a new
permanent residence, the Company shall provide and pay for a temporary
furnished residence for Employee and spouse, not to exceed six (6) months.
Such residence will accept pets.
5. Death or Disability of the Employee.
(a) Death. In the event of the death of the Employee during
the Term of this Agreement, this Agreement shall terminate effective as of the
date of the Employee's death, and the Company shall not have any further
obligation or liability hereunder except that the Company shall pay to
Employee's estate, as soon as practicable any accrued and unpaid Base Salary.
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(b) Disability. In the event of the Total Disability (as
hereafter defined) of the Employee, the Company shall have the right to
terminate the Employee's employment hereunder by giving the Employee 90 days
prior written notice thereof and, upon expiration of such 90-day period, the
Company shall not have any further obligation or liability under this Agreement
except that the Company shall pay to the Employee, as soon as practicable any
accrued and unpaid Base Salary, provided, however, that if the Employee, during
any period of disability, receives any periodic payments representing lost
compensation under any disability insurance plan, the premiums for which have
been paid by the Company, the amount of compensation that the Employee would be
entitled to receive from the Company during such period of disability shall be
decreased by the amounts of such payments.
The term "Total Disability", when used herein, shall mean a
mental, emotional or physical condition which has rendered the Employee for a
period of 90 consecutive days, or for a total of 90 days during any period of 12
consecutive months, during the term of this Agreement unable or incompetent to
carry out, on a substantially full time basis, the Employee's normal and
customary job responsibilities he held or tasks that he was assigned at the time
the disability was incurred. The Employee agrees, in the event of any dispute as
to the determination made pursuant to this Paragraph 5, to submit to a physical
or other examination by a licensed physician approved by Company, and such
physician's determination and resolution of the dispute shall be binding and
conclusive. During the period in which the determination of the Employee's Total
Disability shall be under review, the Employee shall continue to be treated for
all purposes of this Agreement as an employee of the Company, enjoying the full
status with full pay to which he would otherwise be entitled under this
Agreement. This clause is subject to any Federal, State, or Local laws, or any
Long Term Disability policy to which Employee is entitled.
6. Separation.
(a) Termination by Company for Cause. Company shall have the
right to terminate Employee's employment "for cause" by giving Employee ten (10)
days advance written notice to that effect. Any such termination of employment
shall be effective on the date specified in such notice. In the event of such
termination for cause, Company shall pay to Employee (i) his accrued and unpaid
Base Salary to the effective date of the termination, and (ii) any business
expenses remaining unpaid on the effective date of the termination for which
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Employee is entitled to be reimbursed under Section 4 of this Agreement. For the
purpose of this Agreement, "for cause" shall mean (i) commission of a willful
act of dishonesty in the course of Employee's duties hereunder which injures
Company, (ii) conviction by a court of competent jurisdiction of a crime
constituting a felony or conviction in respect of any act involving fraud,
dishonesty, or moral turpitude, (iii) Employee's continued, habitual
intoxication or performance under the influence of controlled substances, after
Company shall have provided written notice to Employee and given Employee 30
days within which to commence rehabilitation with respect thereto, and Employee
shall have failed to commence or thereafter complete such rehabilitation, (iv)
frequent or extended absenteeism (not as a result of incapacity or disability)
resulting in a material failure by Employee in the performance of his duties
hereunder and which shall not have been cured within 30 days after Company shall
have advised Employee in writing of its intention to terminate Employee's
employment in accordance with the provisions of this Subsection 6(a), in the
event such condition shall not have been cured, (v) engaging in any act which
has the potential for material injury to Company and which shall not have been
cured within thirty days after Company shall have advised Employee in writing of
its intention to terminate Employee's employment in accordance with the
provisions of this Subsection 6(a), in the event such act shall not have been
cured, (vi) any act constituting a violation of the written firearm and
dangerous weapons policy of Company, a copy of which has been provided to the
Employee.
(b) Termination Without Cause. The Company shall have the
right to terminate Employee's employment without cause. In the event of such
termination, or if the Employee resigns for Good Reason (as hereafter defined)
Company shall pay Employee an amount equal to three (3) months Base Salary and
Health Insurance. Upon such payment, Company shall have no further obligations
with respect to Employee. "Good Reason" shall mean the resignation of the
Employee from employment by the Company as a result of a reduction in his Base
Salary, or a substantial diminution in his duties, responsibilities or reporting
responsibility, without his express prior written consent.
7. Confidential and Proprietary Information. Employee recognizes and
acknowledges that he will have access to certain confidential information of the
Company and its affiliates and that such information constitutes valuable,
special and unique property of the Company and its affiliates. Employee agrees
that he will not, for any reason or purpose whatsoever, during or after the term
of his employment, disclose any of such confidential information to any party
without express authorization of the Company, except as necessary in the
ordinary course of performing his duties hereunder. Employee further
specifically agrees:
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(a) All proprietary business and technical information
(whether written or oral) disclosed in connection with this Agreement or
otherwise known to the Employee regarding the Company shall be received and
retained by the Employee as strictly confidential, and such information shall
only be disseminated internally within the Company and its affiliates and on a
need-to-know basis.
(b) All business or technical information identified by the
Company or reasonably identifiable and of which the Employee became aware in the
conduct of his duties hereunder and which is proprietary to the Company shall be
and remain the exclusive property of the Company at all times and shall be
returned to the Company upon its request or upon termination or cancellation of
this Agreement. In the event that Employee is required by legal process to
disclose any confidential information, Employee shall, provided Employee is not
prohibited by law or has reasonable grounds to believe Employee is not
prohibited by law provide the Company with prompt notice of such requirement so
that the Company may seek a protective order or other appropriate remedy or
waive compliance with the provisions of this Agreement. In the event that a
protective order is obtained, Employee shall use reasonable efforts to assure
that all such information disclosed will be covered by such order or other
remedy. Whether or not such protective order or other remedy is obtained, or
that the Company waives compliance with the provisions of this Agreement,
Employee will disclose only that portion of such information which Employee is
legally required to disclose.
Notwithstanding the foregoing, there shall be no obligation to
retain as confidential information which is in the public domain at the time of
receipt or comes into the public domain without breach of this Agreement.
8. Equitable Relief.
(a) The Employee acknowledges that by reason, among others, of
the uniqueness of the Company's business, that the covenants set forth in
Section 7 are reasonable and necessary for the protection of the Company's
legitimate business interests.
(b) The Employee hereby acknowledges that irreparable harm
will result to the Company in the event of the breach of any of the covenants
contained in Section?. In the event that the Employee breaches any of the
covenants contained in Section 7, the Employee agrees that in addition to all
other remedies or damages which may be available to the Company, the Company
shall be entitled to seek and obtain both temporary and permanent restraining
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orders or injunctions or similar equitable relief issued by a court to prevent
the violation of any of the covenants made by the Employee pursuant to this
Agreement, without any necessity to prove actual damages.
(c) The Employee expressly acknowledges and agrees that the
provisions of Section 7 shall survive the termination of this Agreement.
9. Severability: Governing Law; Jurisdiction.
(a) Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision of Section 7 hereof
is invalid or unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope of the term or provision, to delete specific words or phrases, or to
replace any invalid or unenforceable term or provision with a term or provision
that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
(b) This Agreement shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Pennsylvania without
giving effect to any choice or conflict of law provision or rule (whether of the
Commonwealth of Pennsylvania or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the internal laws of the
Commonwealth of Pennsylvania.
(c) Each of the parties hereto submits to the exclusive
jurisdiction and venue of the appropriate state court in Xxxxxxxxxx County,
Pennsylvania or the federal courts of the Eastern District of Pennsylvania, in
any action or proceeding arising out of or relating to this Agreement, agrees
that all claims in respect of the action or proceeding shall be heard and
determined exclusively in such court, and agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court.
10. Notices. All notices, requests, demands, claims, and other
communications hereunder (each, a "Notice") will be in writing, and sent by
registered or certified mail, return receipt requested, postage prepaid, by
overnight courier service, or by any other means reasonably calculated to
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provide notice (including personal delivery, expedited courier, messenger
service, telecopy, telex, or ordinary mail) and addressed to the intended
recipient as set forth below:
If to the Employee: If to the Company:
------------------ -----------------
Xxxx XxXxxxxxx Xxxxxx Xxxxxxx
00-00 Xxxxxxxxx Xxxxxx Xxx Shops, Inc.
Xxxx Xxxx, XX 00000 0000 Xxxx Xxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
A Notice shall be deemed to have been duly given when it actually is
received or when receipt is refused by the intended recipient. Any party may
change the address to which Notices hereunder are to be delivered by giving the
other party notice in the manner herein set forth.
11. Miscellaneous.
(a) This Agreement constitutes the entire agreement between
the parties hereto relating to the subject matter hereof and supersedes any
prior or contemporaneous understandings, agreements, or representations by or
between the parties hereto, written or oral, to the extent they relate in any
way to the subject matter hereof.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties named herein and their successors and permitted assigns.
The services provided by the Employee under this Agreement are of a personal
nature, and the Employee shall not assign, convey or transfer this Agreement or
any part of his rights under this Agreement without the prior written consent of
the Company. The Company may directly or indirectly assign any or all of its
rights hereunder to any affiliate, or to any successor to substantially all of
the assets or business of the Company. In the event that Company assigns any of
its rights or obligations hereunder to any of its affiliates, the Company will
remain liable for the obligations hereunder. In the event that the Company
assigns this Agreement to a purchaser of all or substantially all of the assets
and business of the Company, the Company's obligations hereunder will cease,
provided the purchaser assumes such obligations, including the obligation to
continued medical coverage as provided above, in writing, and further provided
that such purchaser is not an affiliate of the Company. As used in this
Agreement the term "Company" shall mean both the Company as defined above and
any such successor that assumes this Agreement by operation of law or otherwise.
(c) No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by the parties hereto. No
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waiver by any party of any provision hereof shall be deemed to extend to any
prior or subsequent breach of any such provision or constitute a waiver of any
other provision hereof or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
(d) The headings contained herein are inserted for convenience
only and shall not be deemed to have any substantive meaning.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on the date first above written.
XXX SHOPS, INC.
By: Xxxxxx Xxxxxxx
---------------------------
XXXXXX XXXXXXX,
PRESIDENT
By: Xxxx XxXxxxxxx
---------------------------
XXXX XxXXXXXXX
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SCHEDULE 4(b)
The Employee's entitlement to exercise the options described in Section 4(b) of
the Employment Agreement effective November 1, 2005, between Xxx Shops, Inc. and
the Employee shall vest approximately in accordance with the following schedule:
Number of Shares which may be
Vesting Date Acquired pursuant to Option Exercise
------------ ------------------------------------
One year after Grant 3,000
Two years after Grant 3,000
Three years after Grant 3,000
Four years after Grant 3,000
Five years after Grant 3,000
-----
TOTAL 15,000
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