Exhibit 10.34
EMPLOYMENT AGREEMENT (this "Agreement") between XXXXX*S CORP., a Delaware
corporation (the "Company', and XXXXXXX X. XXXX, an individual resident in the
State of New York (the "Executive") dated as of April 24, 2001.
WITNESSETH:
WHEREAS, the Executive has been employed by the Company, since its inception, as
its Chairman, CEO and President, pursuant to an employment agreement dated as of
April 5, 1999 (the "ITURF AGREEMENT); and
WHEREAS, the Executive has also been employed as Chairman and President of
xXXxX* Group Inc., a wholly owned subsidiary of the Company (and, prior to its
merger with and into a wholly owned subsidiary of the Company, the parent of the
Company, known as xXXxX*s Inc. ("Old XXXXX*S')), pursuant to an employment
agreement dated as of December 18, 1996 (the "XXXXX*S AGREEMENT"); and
WHEREAS, the Company recognizes that the Executive's contribution to the growth
and success of its businesses has been substantial, and the Company desires to
assure itself of the Executive continued employment in its businesses in a
senior executive capacity; and
WHEREAS, the Executive desires to commit himself to serve the Company on the
terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
contained herein, the Executive and the Company hereby agree as follows:
1. EMPLOYMENT AND DUTIES.
a. The Company hereby agrees to employ the Executive, and the Executive
hereby agrees to be employed by the Company, on the terms and
conditions set forth in this Agreement. The Executive will be the
Company's Chief Executive Officer and the executive chairman of its
board of directors (the "Board") for the Employment Period (as
defined below) and shall have the duties, authorities,
responsibilities and perquisites generally commensurate with such
positions, including the authority to manage all aspects of the
operations of the Company and its Affiliates (as defined below). The
Company shall continue to nominate the Executive as a director of
the Company during the Employment Period consistent with the
Company's By-Laws. During the Employment Period, the Company will
not, without the Executive's prior written consent, (i) appoint any
other person to hold the office or to possess or exercise the powers
of the Chief Executive Officer of the Company or (ii) permit the
Company's bylaws pertaining to such office to be amended in any
respect.
b. The Executive shall devote substantially his full business time to
the performance of his duties for the Company and its Affiliates,
but it shall not be a violation of this Agreement for the Executive,
during or after the Employment Period, to (i) serve on corporate,
civic or charitable boards or committees, (ii) deliver lectures,
fulfill speaking
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engagements or teach at educational institutions or (iii) manage
personal investments, so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with
this Agreement.
c. For purposes of this Agreement, the term "AFFILIATE" shall mean any
corporation, entity or firm of which the Company (or any
corporation, entity or firm controlling, controlled i by or under
common control with, the Company) has at least a 49% equity or
voting interest.
2. COMPENSATION. As compensation for all services to be rendered by the
Executive during his, employment under this Agreement, the Executive shall
be entitled to receive:
a. A base salary (the "Base Salary") at the initial annual rate of
$270,000, which Base Salary shall be payable in equal installments
at least twice a month, and shall be subject to increase, but not
decrease, as provided below. The Base Salary shall be increased by
no less than 5% each January 1 during the Employment Period,
commencing on January 1, 2002. In addition and without limiting
any such 5% increase, the Company may, in the sole and absolute
discretion of the Board, from time to time increase, but not
decrease, the Base Salary; and
b. Such bonuses as the Board may, from time to time, consider
appropriate; and
c. The benefits and perquisites otherwise provided hereunder or
otherwise customarily provided by the Company to its Chairman and
Chief Executive Officer.
3. Term.
a. The "EMPLOYMENT PERIOD" shall, for purposes of this Agreement,
commence on the date hereof and continue until December 31, 2006;
PROVIDED, that the initial Employment Period shall automatically be
extended, subject to earlier termination as provided in this Section
3, for additional one-year periods unless the Company or the
Executive gives written notice to the other, at least 90 days prior
to the scheduled expiration of the initial Employment Period or the
then additional one-year period, of the termination of the
Executive's employment hereunder at the end of such Employment
Period. Notwithstanding the foregoing, the Employment Period shall
terminate on the earliest of: (i) Executive's death or permanent
disability or incapacity (if in the good faith determination of the
Board, such disability or incapacity has prevented the Executive
from performing his material duties and obligations under this
Agreement during any period of 270 consecutive days and the Company
gives notice to the Executive not earlier than 30 days and not later
than 90 days after the expiration of such period (in which case the
Executive's employment under this Agreement shall terminate when
that notice is given)) ("Disability"); (ii) the Executive's
resignation with or without Good Reason (as defined below); or (iii)
the Company's termination of the Executive's employment at any time
for Cause (as defined below) pursuant to written notice to the
Executive.
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b. For purposes of this Agreement, the term "CAUSE" shall mean (i) a
material breach of this Agreement by the Executive that, if capable
of being remedied, the Executive fails to remedy within 30 days
after written notice, (ii) Executive's conviction of a felony (other
than a traffic infraction) causing material harm to the Company's
business, or (iii) willful misconduct or gross negligence in the
performance of the Executive's duties to the Company, which conduct
is material and demonstrably injurious to the Company and, if
capable of being remedied, is not remedied within 30 days. No act,
or failure to act, on the Executive's part shall be considered
willful for purposes of determining whether Cause exists unless done
or omitted to be done, by the Executive not in good faith and
without reasonable belief that the Executive's action or omission
was in the best interests of the Company or its Affiliates.
Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause pursuant to this Agreement unless
notice thereof is given within 90 days after a Board member (other
than the Executive) has knowledge of the acts or omissions
constituting Cause and until the Executive shall have had a
reasonable opportunity to meet, together with his legal ' counsel,
with the Board, and there shall thereafter have been delivered to
the Executive: (A) a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire
membership of the Board at a meeting of the Board duly called, and
held for the specific purpose of making a determination of whether
Cause for termination exists, which resolution states that, in
the good faith opinion of the entire Board, the Executive was guilty
of misconduct as set forth above and (B) a specification of the
particulars of such misconduct, which specification may be from the
Company or its outside counsel. Any dispute as to the existence of
Cause may be submitted to arbitration as provided below, and Cause
shall not be deemed to exist during the pendency of any such
arbitration proceeding. Notwithstanding anything in this Agreement
to the contrary, a notice by the Company of a non-renewal of the
Employment Period pursuant to Section 3.a. hereof shall be deemed an
involuntary termination of Executive by the Company without Cause as
of the end of the then Employment Period.
c. The Executive may, at any time during the Employment Period by
written notice to the Company, terminate the Employment Period
for Good Reason effective upon such notice. The term "GOOD
REASON" means: (i) any material diminution of the Executive's
positions, duties, perquisites or responsibilities hereunder
(except in connection with the termination of the Executive's
employment for Cause, for Disability or as a result of the
Executive's death), failure to be continued in the position of
either Chief Executive Officer or executive chairman of the
Board, the assignment to Executive of duties or responsibilities
that are inconsistent with Executive's positions as Chief
Executive Officer and executive chairman of the Board, or any
violation by the Company of the last sentence of Section 1.a.
above; (ii) a material breach by the Company of any material
provision of this Agreement that the Company fails to remedy or
cease within 30 days after written notice thereof to the Company;
(iii) a relocation by the Company of the Executive's offices to a
geographic location outside the metropolitan New York area; or
(iv) failure of the Company to deliver to the Executive within 30
days time after assignment of this Agreement by the Company, a
written agreement from the assignee
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to assume and agree to perform this Agreement. Notwithstanding the
foregoing, the Executive's voluntary relinquishment of his position
or title as Chief Executive Officer of the Company while he
continues as executive chairman of the Board (as evidenced by his
express written agreement to do so specifically referring to this
provision) shall not be considered Good Reason hereunder.
4. SEPARATION PAYMENTS.
a. DEATH OR DISABILITY. In the event of termination of the Executive's
employment upon his death or Disability, the Company shall (i)
pay to Executive any compensation earned but not yet paid,
including, without limitation, any bonus if declared or earned
but not yet paid for a completed fiscal year, any amount of Base
Salary earned but unpaid, any accrued unpaid vacation pay and any
unreimbursed expenses or other amounts payable - pursuant to
Section 5 hereof (collectively "Accrued Amounts"), which Accrued
Amounts shall promptly be paid in a lump sum to the Executive or,
in the case of the Executive's death, his estate; (ii) pay the
Executive a prorated bonus for the fiscal year of termination
(based on the ratio of the number of days in such fiscal year
that the Executive was employed with Company to the actual total
number of days in such full fiscal year) based upon actual
results for the full fiscal year, payable at the time the bonus
for such year would otherwise have been paid (the "PRO RATA
BONUS"); (iii) pay any other amounts or benefits owing to the
Executive or his dependents under the then applicable employee
benefit plans, long-term incentive plans or equity plans and
programs of the Company in accordance with the terms of such
plans and programs (the "PLAN BENEFITS"); and (iv) pay 100% of the
COBRA premiums for the remainder of the then Employment Period
(as if such period had not been terminated), but in no event less
than one year for the health benefts of the Executive and his
dependents at the benefit level elected by the Executive and his
dependents (the "COBRA BENEFIT"). Except as otherwise provided in
this Agreement, the Executive shall not be entitled to receive
his Base Salary, any severance pay or any fringe benefits for
periods after such termination of the Employment Period upon
death or Disability.
b. TERMINATION BY THE COMPANY FOR CAUSE OR BY THE EXECUTIVE WITHOUT
GOOD REASON. In the event of termination of the Executive's
employment by the Company for Cause or by the Executive other than
for Good Reason, the Company shall promptly pay to the Executive, in
a lump sum, his Accrued Amounts through the date of termination and
his Plan Benefits. Except as otherwise provided in this Agreement,
Executive shall not be entitled to receive his Base Salary, any
severance pay or any fringe benefits for periods after such
termination of his employment or any bonus not previously paid.
c. TERMINATION BY THE COMPANY WITHOUT CAUSE OR BY THE EXECUTIVE FOR
GOOD REASON. If THE EXECUTIVE'S EMPLOYMENT IS TERMINATED by the
Company without Cause or by the Executive for Good Reason, then
Executive shall be entitled to: (i) continued payment of the
Executive's Base Salary at the highest rate in effect during the
12-month period immediately preceding his termination for the
remainder of the then Employment Period (as if such period had not
been terminated), but in no event less than one year; (ii) payment
to within ten days of termination of all Accrued Amounts; (iii)
payment of the
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Pro Rata Bonus; (iv) his Plan Benefits; (v) the COBRA Benefit and
(vi) continued use of the automobiles described in Section 5.b.
hereof for the remainder of their respective lease terms at no
after-tax cost to the Executive. The provisions of this Section
shall constitute Executive's sole and exclusive remedy in connection
with termination of his employment hereunder by the Company without
Cause or by the Executive for Good s Reason.
d. Change of Control. In the event of a "Change of Control" (as defined
in the Amended and Restated iTurf 1999 Stock Incentive Plan (the
"1999 Plan's in the Company, if the Executive's employment
terminates other than for Cause, Disability or death then the
Company shall pay to the Executive within 10 days thereof (i) all
Accrued Amounts, (ii) a lump sum equal to the amount of Base Salary
to which the Executive would have been entitled between the date
of the Change of Control and the remainder of the then Employment
Period if he had remained in the employment of the Company through
that period, but in no event less than two years' Base Salary, (iii)
Executive's full bonus for the year of termination calculated as if
all target goals had been met, (iv) his Plan Benefits, (v) the COBRA
Benefit for a period of up to two years and (vi) continued use of
the automobiles described in Section 5.b. hereof for the remainder
of their respective lease terms at no after-tax cost to Executive.
e. TREATMENT OF RESTRICTED STOCK AND OPTIONS. Any provisions of the
1999 Plan, the xXXxX*s Inc. 1998 Stock Incentive Plan and the
xXXxX*s 1996 Stock Incentive Plan (together, the "Plans") or any
agreements with the Executive governing any Restricted Stock or
Options to the contrary notwithstanding, all of the Restricted Stock
and Options currently held by the Executive or hereafter issued to
the Executive shall fully vest immediately upon (i) a Change in
Control of the Company, (ii) Executive's death or termination for
Disability (iii) a termination of employment by the Company without
Cause or (iv) a termination of employment by the Executive for Good
Reason. Capitalized terms used, but not otherwise defined, in this
Section 4.e. shall have the definitions ascribed to such terms in
the 1999 Plan.
5. EXPENSES; FRINGE BENEFITS. During the Employment Period:
a. The Company shall reimburse the Executive for all expenses incurred
by him in the course of performing his duties under this Agreement
in accordance with the Company's policies in effect from time to
time with respect to reimbursement of expenses, including the
Company's requirements with respect to reporting and documentation
of such expenses.
b. The Executive shall be entitled to six weeks' paid vacation each
fiscal year, which vacation time may be carried over from year to
year if unused.
c. The Company shall provide the Executive with medical insurance,
disability insurance and life insurance under policies no less
favorable to the Executive than the ones (i) currently in effect and
(ii) offered from time to time to the Company's other senior
executive officers. In addition, the Company may obtain key-man term
life insurance on
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the life of the Executive, and the Company shall be the beneficiary
under such policy. During the Employment Period, the Company shall
maintain term life insurance coverage on the life of the Executive
in the amount of $5,000,000, the proceeds of which shall be payable
to the beneficiary or beneficiaries designated by the Executive. The
Executive agrees to undergo any reasonable physical examination and
other procedures as may be necessary to maintain such policy. If the
Company is not able to obtain such policy due to Executive's
physical examination results, an AD&D (accidental death and
dismemberment) policy of an equivalent amount will be obtained in
lieu of the term life insurance coverage.
d. The Company shall provide the Executive with the use of two
automobiles of at least the same quality as the two he currently
uses, and shall pay all expenses reasonably incurred in connection
with his use of those automobiles.
e. The Company shall provide the Executive with an annual allowance of
$40,000 ("ANNUAL ALLOWANCE") to be applied, in the Executive's
discretion, in any combination to one or more of the following: tax
return preparation, financial consulting, estate planning and/or
life/disability insurance premiums or similar professional services.
The Company shall also make annual tax gross-up payments to
Executive in an amount equal to the federal, state and local income
taxes and payroll taxes Executive incurs on the sum of (i) the
Annual Allowance and (ii) the tax gross-up payment made under this
Section 5.e.
f. The Company shall provide the Executive with an office and
secretarial support commensurate with the Executive's position as
Chief Executive Officer and Chairman of the Company.
6. NON-COMPETITION.
a. The Executive agrees that during the Employment Period and for a
period of one year from the termination thereof (the
"NON-COMPETITION PERIOD"), he will not directly, either for his
own account or for the benefit of any person, firm or
corporation, engage in any business activity, whether as a
consultant, representative, employee, executive, officer,
director or manager, directly competitive with a business of the
Company (a "COMPETING BUSINESS ACTIVITY") in the geographical
areas in which the Company does such business at the time the
determination as to the Executive's activity is being made under
this Section, but in no event later than the date of termination
of the Employment Period; PROVIDED, HOWEVER, that a business
activity shall not be deemed to be a Competing Business Activity
if the Executive does not have direct involvement in the
particular competing activity engaged in by the Company.
b. During the Non-Competition Period, the Executive shall not directly
or indirectly own or be a stockholder, partner of, or otherwise have
an ownership interest in any company that is engaged in a Competing
Business Activity; provided, however, that this provision shall not
restrict the Executive from: (i) holding not more than a 5% interest
in any publicly held or traded company; (ii) investing in any mutual
fund which is publicly traded or managed by a major financial
institution; or (iii) so long as his interest is not
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more than 5% of total invested capital, investing in any hedge fund,
private equity fund, venture capital fund or other investment
vehicle managed by a third party.
c. During the Non-Competition Period, the Executive shall not directly
or indirectly through another person or entity (i) induce or attempt
to induce any non-clerical employee of the Company or any Affiliate
to leave the employ of the Company or such Affiliate, or in any way
interfere with the relationship between the Company or any Affiliate
and any non-clerical employee thereof, (ii) hire any person who
was a non-clerical employee of a the Company or any Affiliate at the
time of the termination of the Employment Period or (iii) induce or
attempt to induce any material customer, supplier, licensee,
licensor, franchisee or consultant of the Company or Affiliate to
cease doing business with the Company or such Affiliate, or in any
way interfere with the relationship between any such customer,
supplier, licensee, consultant or and the Company or any Affiliate.
Notwithstanding anything to the contrary contained herein, the
Executive's obligation under clause (ii) of the preceding sentence
shall terminate six months after an acquisition of the Company by an
unrelated third party.
d. In the event any covenant made in this Agreement shall be more
restrictive than permitted by applicable law, such covenant shall
be limited to the extent so permitted. Nothing in this Agreement
shall be construed as to prevent the Company from pursuing any
and all remedies available to it for the breach or threatened
breach of covenants made in this Agreement, including recovery of
money damages or temporary or permanent injunctive relief.
Accordingly, the Executive acknowledges that the remedy at law
for breach of the provisions of this Agreement may be inadequate
and that, in addition to any other remedy the Company may have,
it shall be entitled to an injunction restraining any breach or
threatened breach, without any bond or other security being
required and without the necessity of showing actual damages.
e. Notwithstanding anything to the contrary contained in this Section
6, (i) nothing contained in this Section 6 shall be construed so as
to prohibit the Executive from being employed by a company or entity
that engages in a Competing Business Activity so long as the
Executive is not responsible for, does not report to or have any
involvement, whether direct or indirect, with any division or unit
of such company or entity engaged in such Competing Business
Activity, and (ii) this Section 6 shall be of no force or effect in
the event the Executive's employment is terminated by the Company
without Cause or by the Executive for Good Reason.
7. CONFIDENTIALITY. The Executive acknowledges that the information, trade
secrets, observations, confidential knowledge and data obtained by him while
employed by the Company concerning the business, new, planned or existing
products and services, or affairs of the Company, its customers or any Affiliate
of the Company ("CONFIDENTIAL INFORMATION") are the property of the Company or
such Affiliate. Therefore, the Executive agrees that he shall not, at any time
during or after his employment under this Agreement, disclose to any third party
except in the performance of his duties hereunder or as may be required by law
or judicial or administrative process, any Confidential Information, except for
such information which is or has become publicly available other than through
the Executive's violation of this Section 7.
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The Executive shall deliver to the Company (or destroy) at the termination of
the Employment Period, or at any other time the Company may request, all
memoranda, notes, plans, records, reports, computer files, printouts and
software and other documents and data (and all copies thereof) relating to the
Confidential Information, work product or the business of the Company or any
Affiliate which he may then possess or have under his control.
8. THE EXECUTIVE'S REPRESENTATIONS. The Executive hereby represents and warrants
to the Company that (i) the execution, delivery and performance of this
Agreement by the Executive do not and shall not conflict with, breach, violate
or cause a default under any contract, agreement, instrument, order, judgment or
decree to which the Executive is a party or by which the Executive is bound, and
(ii) upon the execution and delivery of this Agreement by the Company, this
Agreement shall be the valid and binding obligation of the Executive,
enforceable in accordance with its terms. The Executive hereby acknowledges and
represents that he has been given the opportunity to consult with independent
legal counsel regarding his rights and obligations under this Agreement and that
he fully understands the terms and conditions contained herein.
9. SECTION 280(G) GROSS UP.
a. In the event that the Executive shall become entitled to payments
and/or benefits provided by this Agreement or any other amounts in
the "nature of compensation" (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the
Company, any person whose actions result in a change of ownership or
effective control covered by Section 280G(b)(2) of the Internal
Revenue Code of 1986, as amended (the "Code") or any person
affiliated with the Company or such person) as a result of such
change in ownership or effective control (collectively the "COMPANY
PAYMENTS"), and such Company Payments will be subject to the tax
(the "EXCISE TAX") imposed by Section 4999 of the Code (and any
similar tax that may hereafter be imposed) the Company shall pay to
the Executive at the time specified in subsection (d) below an
additional amount (the "GROSS-UP PAYMENT") such that the net amount
retained by the Executive after deduction of any Excise Tax on the
Company Payments and any U.S. federal, state, and local income or
payroll tax upon the Gross-up Payment provided for by this paragraph
(a), but before deduction for any U.S. federal, state, and local
income or payroll tax on the Company Payments, shall be equal to the
Company Payments.
b. For purposes of determining whether any of the Company Payments and
Gross-up Payments (collectively the "TOTAL PAYMENTS") will be
subject to the Excise Tax and the amount of such Excise Tax, (x) the
Total Payments shall be treated as "parachute payments" within the
meaning of Section 280(G)(b)(2) of the Code, and all "parachute
payments" in excess of the "base amount" (as defined under Code
Section 280(G)(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless and except to the extent that, in the opinion of
the Company's independent certified public accountants appointed
prior to any change in ownership (as defined under Code Section
280(G)(b)(2)) or tax counsel selected by such accountants (the
"ACCOUNTANTS") such Total Payments (in whole or in part) either do
not constitute "parachute payments,"
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represent reasonable compensation for services actually rendered
within the meaning of Section 280(G)(b)(4) of the Code in excess of
the "base amount" or are otherwise not subject to the Excise Tax,
and (y) the value of any non-cash benefits or any deferred payment
or benefit shall be determined by the Accountants in accordance with
the principles of Section 280(G) of the Code.
c. For purposes of determining the amount of the Gross-up Payment, the
Executive shall be deemed to pay U.S. federal income taxes at the
highest marginal rate of U.S. federal income taxation in the
calendar year in which the Gross-up Payment is to be made and state
and local income taxes at the highest marginal rate of taxation in
the state and' locality of the Executive's residence for the
calendar year in which the Company Payment is to be made, net of the
maximum reduction in U.S. federal income taxes which could be
obtained from deduction of such state and local taxes if paid in
such year. In the event that the Excise Tax is subsequently
determined by the Accountants to be less than the amount taken into
account hereunder at the time that the Gross-up Payment is made, the
Executive shall repay to the Company, at the time that the amount of
such reduction in Excise Tax is finally determined, the portion of
the prior Gross-up Payment attributable to such reduction (plus the
portion of the Gross-up Payment attributable to the Excise Tax and
U.S. federal, state and local income tax imposed on the portion of
the Gross-up Payment being repaid by Executive if such repayment
results in a reduction in Excise Tax or a U.S. federal, state and
local income tax deduction), plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code.
Notwithstanding the foregoing, in the event any portion of the
Gross-up Payment to be refunded to the Company has been paid to any
U.S. federal, state and local tax authority, repayment thereof (and
related amounts) shall not be required until actual refund or credit
of such portion has been made to the Executive, and interest payable
to the Company shall not exceed the interest received or credited to
the executive by such tax authority for the period it held such
portion. The Executive and the Company shall mutually agree upon the
course of action to be pursued (and the method of allocating the
expense thereof) if the Executive's claim for refund or credit is
denied. In the event that the Excise Tax is later determined by the
Accountant or the Internal Revenue Service to exceed the amount
taken into account hereunder at the time the Gross-up Payment is
made (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-up Payment), the
Company shall make an additional Gross-up Payment in respect of such
excess (plus any interest or penalties payable with respect to such
excess) at the time that the amount of such excess is finally
determined.
d. The Gross-up Payment or portion thereof provided for in Section
10.c. above shall be paid not later than the 30th day following an
event occurring which subjects the Executive to the Excise Tax;
provided, however, that if the amount of such Gross-up Payment or
portion thereof cannot be finally determined on or before such day,
the Company shall pay to the Executive on such day an estimate as
determined in good faith by the Accountant, of the minimum amount of
such payment and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code), subject to further payments pursuant to Section 10.c.
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hereof as soon as the amount thereof can reasonably be determined,
but in no event later than the 90th day after the occurrence of the
event subjecting the Executive, to the subsequently determined to
have been due, such excess shall constitute a loan by the Company
the Executive, payable on the fifth day after demand by the Company
(together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
e. In the event of any controversy with the Internal Revenue Service
(or other taxing authority) with regard to the Excise Tax, the
Executive shall permit the Company to control issues related to the
Excise Tax (at its expense), provided that such issues do not
potentially materially adversely affect the Executive, but the
Executive shall control any other issues. In the event the issues
are interrelated, the Executive and the' Company shall in good faith
cooperate so as not to jeopardize resolution of either issue, but if
the parties cannot agree, the Executive shall make the final
determination with regard to the issues. In the event of any
conference with any taxing authority as to the, Excise Tax or
associated income taxes, the Executive shall permit the
representative of the Company to accompany the Executive, and the
Executive and his representative shall cooperate with the Company
and its representative.
f. As between the Company and the Executive, the Company shall be
responsible for all charges of the Accountants.
10. INDEMNIFICATION.
a. The Company shall indemnify the Executive in his capacity as an
officer, employee, director, agent or fiduciary of the Company or
any Affiliate to the fullest extent permitted by applicable law in
effect on the date hereof or as such laws may from time to time be
amended. Without diminishing the scope of the indemnification
provided by this Section, the Executive's rights of indemnification
hereunder shall include but shall not be limited to those rights set
forth hereinafter, except to the extent expressly prohibited by
applicable law. The Company also agrees to provide the Executive
with Directors' and Officers' insurance coverage both during and,
with regard to matters occurring during the Employment Period, after
the Employment Period. Such coverage shall be at a level at least
equal to the level being maintained at such time for the then
current officers and directors of the Company or, if then being
maintained at a higher level with regard to any prior period
activities for officers or directors of the Company during such
prior period, such higher amount with regard to Executive's
activities during such prior period.
b. The Executive shall be entitled to the indemnification rights
provided in this Section 10.b. if he is a party or is threatened to
be made a party to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative in nature, by reason of the fact that the Executive is
or was, either prior to or after the execution of this Agreement, an
officer, employee, director, agent or fiduciary of the Company or
any of its Affiliates, or any of their respective predecessors
(including without limitation Old xXXxX*s) or is or was serving at
the request of the Company or its Affiliates (or their predecessors)
as an officer, employee, director, agent
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or fiduciary of any other entity (including any Affiliate or
predecessor) or by reason of anything done or not done by the
Executive in any such capacity. Pursuant to this Section 10.b., the
Executive shall be indemnified against all expenses (including
attorneys' fees), costs, judgments, penalties, fines and amounts
paid in settlement actually and reasonably incurred by the Executive
in connection with such action, suit or proceeding (including, but
not limited to, the investigation, defense or appeal thereof), if
the Executive acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Company or any such Affiliate or predecessor and, with respect to
any criminal action or proceeding, he had no reasonable cause to
believe this conduct was unlawful.
c. All reasonable expenses and costs incurred by the Executive
(including his reasonable attorneys' fees, retainers and advances of
disbursements) shall be paid by the Company in advance of the final
disposition of the relevant action, suit or proceeding at the
Executive's request within 20 days after the receipt by the Company
of a statement or statements from him requesting such advance or
advances from time to time.
d. This Section 10 shall continue until and terminate upon the later
of: (i) two years after Executive has ceased to occupy any of the
positions described in Section 10.a. above; or (ii) the final
termination of all pending or threatened actions, suits proceedings
or investigations with respect to or involving the Executive.
11. No Mitigation. In the event of any termination of the Executive's employment
hereunder, the Executive shall be under no obligation to seek other employment
and there shall be no offset against any amounts due the Executive under this
Agreement on account of any remuneration attributable to any subsequent
employment that the Executive may obtain. Any amounts payable hereunder shall be
paid without setoff or counterclaim.
12. Miscellaneous.
a. The failure of a party to this Agreement to insist on any occasion
upon strict adherence to any term of this agreement shall not be
considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this
Agreement. Any waiver must be in writing. No waiver of any term or
condition of this Agreement shall be deemed to be a waiver of any
subsequent breach of that term or condition or any breach of any
other term or condition of this Agreement.
b. All notices and other communications under this Agreement shall be
in writing and shall be deemed given when delivered personally or
mailed by registered mail, return receipt requested, to a party at
his or its address as follows (or at such other address as a party
may DESIGNATE IN ANY NOTICE under this Agreement):
If to the Executive:
Xxxxxxx X. Xxxx
c/o xXXxX*s Corp.
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000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
If to the Company:
xXXxX*s Corp.
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
c. This Agreement shall be assigned to and shall inure to the benefit
of any successor to substantially all the assets and business of the
Company as a going concern, whether by merger, consolidation,
liquidation or sale of substantially all the assets of the Company
or otherwise, and the Company shall cause any such successor to
assume the Company's obligations under this Agreement (but no such
assignment shall relieve the Company of its obligations under this
Agreement),
d. This Agreement constitutes the entire understanding of the parties
with respect to the subject matter of this Agreement, and supersedes
all prior agreements relating thereto, including without limitation
the iTurf Agreement and the xXXxX*s Agreement, all of which are
merged herein. This Agreement cannot be changed or terminated except
by a written agreement executed by the parties and shall be governed
by the laws of the State of New York applicable to agreements made
and to be performed therein.
e. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be
considered one and the same Agreement.
f. At the election of either party, any controversy or claim arising
out of or relating to this contract, or the breach thereof, shall be
settled by arbitration administered by the American Arbitration
Association in New York, New York under its National Rules for the
Resolution of Employment Disputes, and judgment upon the award
rendered by the arbitrator(s) may be entered by any court having
jurisdiction thereof. The Company will reimburse the Executive for
all legal fees and expenses, including without limitation
arbitration fees, incurred by the Executive in connection with a
dispute to the extent that the Executive's claim is not found by the
arbitrator to be frivolous.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
XXXXX*S CORP.
by /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Authorized Signatory
/s/ Xxxxxxx X. Xxxx
-------------------------------
XXXXXXX X. XXXX
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