Xxxxx X. Xxxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
re: Severance Agreement
Dear Xxx:
Trans World Entertainment., a New York Corporation, and its wholly owned
subsidiary, Record Town, Inc. (collectively, the "Company"), considers the
establishment and maintenance of a sound and vital management to be essential
to protecting and enhancing the best interests of the Company and its
shareholders. In order to induce join the Company, this Agreement sets forth
the severance benefits which the Company agrees will be provided to you in the
event your employment with the company is terminated without "Cause", as
further described below.
1. Term of Agreement. This Agreement shall commence on the date hereof and
shall continue in effect until January 31, 1996 (the "Term" provided, however,
that commencing of February 1, 1997 and each February thereafter, the term of
this agreement shall automatically be extended for one additional year unless
at least 90 days prior to such February 1 date either the company or you shall
have given notice, you may, within 30 days thereafter, elect in writing to
treat such notice as a termination without cause. Notwithstanding anything in
this Section 1 to the contrary, this Agreement shall terminate if you
otherwise separate your employment with the company.
2. Separation for Disability or for Cause. (a) You shall be entitled to the
benefits provided in Section 3 if, during the Term of this Agreement, you
employment with the Company is ever terminated for any reason other than Cause
(defined below), unless termination is for Disability (defined below).
(b) Disability. Termination by the Company of your employment based on
"Disability" shall mean termination because of your absence from your duties
with the Company on a full time basis for sixty (60) consecutive days as a
result of your incapacity due to physical or mental illness, unless within
thirty (30) days after notice of termination is given to you following such
absence you shall have returned to the full time performance of your duties.
This provision shall not apply to accidents.
(c) Cause. Termination by the Company of your employment for "Cause" shall
mean termination for any of the following reasons: (i) the willful and
continued failure by you to perform substantially your duties with the Company
(other than any such failure resulting from your incapacity due to physical or
mental illness) after demand for substantial performance is delivered to you
by the Chairman of the Board or the President of the Company, which demand
specifically identifies the manner in which such executives believes that you
have not substantially performed your duties; or (ii) the willful engaging, by
you in illegal conduct that materially and demonstrably damages the Company's
business or reputation.; or (iii) any conduct in the course of your employment
that constitutes, in the Company's reasonable judgment, gross negligence,
fraud, embezzlement or any acts of moral turpitude that result or are intended
to result, directly or indirectly, to your personal enrichment at the
Company's expense. For purpo ses of this Section 2(c), no act or failure to
act on your part shall be considered "willful" unless done, or omitted to be
done, by you in bad faith and without reasonable belief that you action or
omission was in, or not opposed to the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be done, by you in
good faith and in the best interests of the corporation.
(d) Employment at Will. The Company or you may separate your employment at
any time, subject to the Company's covenant to provide the benefits specified
in accordance with the terms of this Agreement.
3. Compensation Upon Termination or During Disability: Other Agreements.
(a) During any period that you fail to perform your duties as a result of
incapacity due to physical or mental illness, you shall continue to receive
your salary at the rate then in effect and any benefits or awards under any
benefit plans shall continue to accrue during such period, which period shall
be at least 90 days, until your employment is terminated without cause.
Thereafter, your benefits shall be determined in accordance with any
applicable benefit plans then in effect. (b) If your employment shall be
terminated, other than for Cause, by the Company, then the Company shall pay
you your base salary for 12 months at the rate in effect just prior to the
time a notice of termination is given, plus any benefits (including health,
disability and 401(k)) or wards (including both the cash, bonus and stock
components) which, pursuant to the terms of any applicable plans, have been
earned or become payable, but with have not yet been paid to you. Thereafter,
the Company shall have no further obligations to you under this Agreement.
(c) To the extent that you shall receive cash compensation that is subject to
federal income taxation in respect of other employment or a consulting
position with another organization that consideration is payable to you solely
in respect of the remainder of the Term of this Agreement as in effect
immediately prior to such termination, or a portion thereof, the payments to
be made by the Company under this Section 3, shall be proportionately reduced.
Notwithstanding the foregoing, you shall not be required to minimize damages
or otherwise reduce severance payments payable under this Agreement by seeking
or accepting other employment for a consulting position.
4. Taxes. All Payments to be made to you under this Agreement will be
subject to required withholding of federal, state and local income and
employment taxes.
5. Survival. The respective obligations of, and benefits afforded to, the
Company or you as provided in this Agreement shall survive any expiration or
termination of this Agreement.
6. Notices. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and hall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid and addressed, in
the case of the Company, to the address set forth on the first page of the
Agreement or in the case of the undersigned employee, to the address set forth
below his signature, provided that all notices to the Company shall be
directed to the attention of the President of the company, with a copy of the
Secretary of the Company, or to such other address as wither party may have
furnished to the other in writing in accordance herewith, except that notice
of change of address hall be effective only upon receipt.
7. Modification: Waiver: Governing Law. No provision of this Agreement may
be modified, waived or discharged unless such modification, waiver or
discharge is agreed to in a writing signed by you and the Chairman of the
Board or President of the Company. No waiver by wither party hereto at any
time of any breach by the other party hereto of ,or of 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 agreements 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. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
New York without reference to its principles of conflict of laws.
8. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Albany, New
York by three arbitrators in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrators' award in any court having jurisdiction. The Company shall bear
all costs and expense arising in connection with any arbitration proceeding
pursuant to this Section 8.
9. Employee's Continuing Covenants. (a) For a period o 12 months after your
employment is separated from the Company for whatever reason, whether or not
it is for Cause, you covenant and agree not to complete with the Company,
whether directly or indirectly, alone or as an employee, independent
contractor of any type, partner, substantial shareholder (5% or greater) or
holder of an option or right to become a substantial shareholder, in any
retail music or video business. If any of the restrictions on post-employment
competitive activity contained in this Section 9 are held by a court of
competent jurisdiction to be excessively broad as to duration, geographical
scope, activity or subject such restrictions shall be construed to be
enforceable to the extent compatible with applicable law as it shall then
exist, it being understood that by the execution of this Agreement the parties
hereto regard such restrictions as reasonable and compatible with their
respective rights and obligations.
(b) In consideration for the Company's agreement hereunder, you agree that
subsequent to your period of employment with the Company, you will not at any
time communicate or disclose to any unauthorized person without the written
consent of the Company, business information, trade secrets, sales data or any
proprietary processes of the Company or any subsidiary or other confidential
information concerning their business affairs, products, suppliers, or
customers, unless otherwise required by law.
10. Effective Date. This Agreement shall not take effect unless and until
you have reported to the Company for full-time employment at its principal
office in Albany, New York on or before May 20, 1996. Time shall be of the
essence.
If this letter correctly sets forth our agreement on the subject matter
hereof, kindly sign and return it to the Company, which will then constitute
our agreement.
Sincerely,
TRANSWORLD ENTERTAINMENT CORP.
RECORD TOWN, INC.
BY. /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, President
ACKNOWLEDGED AND AGREED TO:
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
