Exhibit 99.1
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EMPLOYMENT AGREEMENT
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THIS AGREEMENT, is made as of the 24th day of December, 2004, between
FACTORY CARD OUTLET OF AMERICA LTD, an Illinois corporation (hereinafter,
together with any successor thereof, referred to as the "Corporation"), and
Xxxxxxx Xxxxx (the "Executive").
W I T N E S S E T H:
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WHEREAS, the Corporation and the Executive entered into an Employment
Agreement (the "Prior Agreement") dated as of April 8, 2002 which expires on
April 8, 2005; and
WHEREAS, the Corporation desires to continue to employ the Executive
after April 8, 2005, and the Executive is willing to render such services, in
accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. Effectiveness of Agreement. Notwithstanding any other provision of
this Agreement, this Agreement shall supersede any prior employment agreement
with the Executive, including the Prior Agreement.
2. Term. Unless earlier terminated pursuant to Sections 8, 9 and 10
below, the employment term shall begin on the on the date hereof, and shall
continue until April 8, 2006 (the "Initial Term"); provided that such term shall
be automatically extended for subsequent one-year terms terminating on the next
succeeding anniversary date of this Agreement (each such term an "Additional
Term," and all such terms, collectively with the Initial Term, the "Employment
Term" or "Term") unless either the Executive or the Corporation shall have given
written notice to the other party that such party does not desire to extend the
term of this Agreement, such notice to be given at least sixty (60) days prior
to the end of the Initial Term or an Additional Term, as applicable (such notice
to be referred to herein as a "Notice of Non-Renewal"). Notwithstanding anything
else herein and without implication for any other provisions hereof, the
provisions of Sections 10 and 14 hereof shall survive and remain in effect
notwithstanding the termination of the Employment Term for any reason or a
breach or repudiation or alleged breach or repudiation by the Corporation of
this Agreement or any one or more of its terms.
3. Duties and Extent of Services. (a) During the Term, the Executive
shall serve as the Vice President and General Merchandise Manager of the
Corporation faithfully and to the best of his ability under the direction of the
Chief Executive Officer of the Corporation and the Board of Directors of the
Corporation (the "Board"), and shall devote substantially all of his business
time, energy and skill to such employment. The Executive shall perform the
duties commensurate with the position of the Vice President and General
Merchandise Manager, including specific duties and services of a senior officer
nature as the Board or the Chief Executive Officer of the Corporation, if any,
shall reasonably request. The Executive's title(s) shall not be changed and his
functions and responsibilities shall not be materially diminished without his
written consent.
4. Salary. During the Term, the Corporation agrees to pay the Executive
an annual salary in the amount of Two Hundred and Ten Thousand Dollars
($210,000), subject to review and increases at the discretion of the Board. The
Executive's salary shall be paid in accordance with the Corporation's payroll
practices for its officers.
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5. Annual Bonus. With respect to the Corporation's fiscal year ending
on January 29, 2005, the Executive shall be entitled to a bonus in accordance
with the terms of the Corporation's Management Incentive Program for such year
in effect on the date hereof ("Current Incentive Program"), such bonus shall be
the Target Bonus (as defined below) for such fiscal year. With respect to
subsequent fiscal years, the Executive shall have a reasonable opportunity to
earn a bonus of forty percent (40%) of his annual salary (the "Target Bonus")
with respect to each fiscal year of the Corporation during which the Executive
is employed by the Corporation or any affiliate thereof, subject to the
achievement of Corporation and/or individual performance objectives reasonably
established by the Board and subject to increase or decrease based on actual
performance compared to target objectives in a similar manner as the Current
Incentive Program. Such bonus, if any, shall be paid in respect of any fiscal
year within ninety (90) days after the end of such fiscal year of the
Corporation or, if earlier, as soon as practicable following the Corporation's
receipt of its audited financial statement for such fiscal year.
6. Employee Benefits. During the Term, the Executive shall receive
coverage and benefits under all medical, dental, retirement, life insurance,
long-term disability insurance and other employee benefit plans and programs of
the Corporation that are provided to officers of the Corporation generally and
on a basis that is no less favorable than the terms and conditions generally
applicable to officers of the Corporation, including but not limited to
merchandise discounts and other allowances generally made available to senior
officers or employees of the Corporation.
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(a) During the Term, the Executive shall be entitled to
participate in any profit-sharing, bonus or other incentive compensation or
deferred compensation plans generally applicable to officers of the Corporation.
(b) During the Term, the Executive shall be entitled to four
weeks of vacation with pay for each fiscal year of the Corporation.
(c) During the Term, the Executive shall be entitled to an
automobile allowance of $600 per month.
(d) During the Term, the Corporation shall reimburse the
Executive for all reasonable, ordinary and necessary expenses incurred by the
Executive in the performance of the Executive's duties hereunder in accordance
with its practices generally applicable to its senior officers.
7. Equity Based Incentive Plans.
(a) The Executive shall be eligible to participate in the
Corporation's stock or equity based incentive plans or arrangements in
accordance with the terms and conditions of such plans or arrangements, with the
amount and timing of grants, if any, subject to the discretion of the Board or
the Compensation Committee of the Board.
(b) Notwithstanding anything contained herein to the contrary,
immediately following: (i) a Change in Control (defined below), (ii) a
termination of the Executive's employment without Cause (defined below), or
(iii) a voluntary termination of employment by the Executive with Good Reason
(defined below) all amounts, entitlements or benefits under any stock or equity
based incentive plan or arrangement in which the Executive participates shall
become fully vested and nonforfeitable.
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8. Death or Disability.
(a) In the event of the death of the Executive during the
Term, the Corporation shall pay to any one or more beneficiaries designated by
the Executive pursuant to notice to the Corporation or, failing such
designation, to the Executive's estate, then salary (including accrued and
unused vacation) and prorated Target Bonus for the fiscal year in which the
Executive's death occurs (or, if the Target Bonus for such fiscal year has not
yet been established, the Target Bonus for the immediately preceding fiscal
year) through the conclusion of the month in which the Executive's death occurs.
(b) In the event that the Executive is unable by reason of any
physical or mental condition to substantially perform his duties and
responsibilities under this Agreement for a period of six (6) consecutive months
or a period of six (6) months during any twelve month period for the same or
related condition, the Corporation shall have the right to terminate the
Executive's employment hereunder by giving him not less than thirty (30) days'
prior written notice of such termination and, upon the expiration of such notice
period, the Executive's employment hereunder shall terminate. Notwithstanding
the foregoing, the Executive's employment shall not be terminated pursuant to
this Section 8(b) unless a majority of the members of the Board, or a majority
of the members of any committee designated by the Board for such purpose,
expressly finds that the Executive failed to substantially perform his duties
and responsibilities for the period of time prescribed herein. In the event of
such termination, the Corporation shall continue to pay to the Executive the
salary and prorated Target Bonus for the fiscal year in which the Executive's
disability occurs (or, if the Target Bonus for such fiscal year has not yet been
established, the Target Bonus for the immediately preceding fiscal year) until
his termination date.
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9. Termination for Cause by Corporation.
(a) The Executive's employment hereunder may be terminated by
the Corporation for Cause (as hereinafter defined). In the event that the
Executive's employment hereunder shall validly be terminated by the Corporation
for Cause pursuant to this Section 9, all non-vested restricted stock and other
non-vested equity compensation held by the Executive shall be cancelled, the
Corporation shall pay to the Executive all of his accrued but unpaid salary
under Section 4 through the effective date of such termination (including
accrued and unused vacation) and all accrued and unpaid bonuses in respect of
prior fiscal years and, notwithstanding anything in this Agreement to the
contrary, thereafter shall have no further obligations under this Agreement. The
Executive shall have the obligations provided for in Section 12 hereof, to the
extent applicable pursuant to its terms.
(b) The Corporation shall give the Executive not less than
thirty (30) days' prior written notice of the Corporation's intent to terminate
the Executive's employment for Cause. Such notice shall (i) indicate the
specific termination provision of this Agreement relied upon, (ii) set forth in
reasonable detail the facts and circumstances claimed to provide a basis for the
termination of the Executive's employment under the provision so indicated,
(iii) state specifically whether the Corporation believes that the basis for
asserting Cause is or is not curable, and (iv) specify a specific termination
date. The Executive shall have the right, if the basis for such Cause is
curable, to cure the same within a reasonable period of time, provided that the
Executive shall have cured such Cause within thirty (30) days of the date of
such written notice and diligently prosecutes such effort thereafter.
Notwithstanding the foregoing, (i) the Executive shall only be entitled to a
three (3) business day cure period with respect to the acts or omissions set
forth in clauses (iv) and (v) of the definition of "Cause" in Section 9(c)
below, and (ii) the Executive shall not be entitled to a cure period in cases of
repeated acts or omissions (provided that notice with respect to such act or
omission shall have been given at least once). The Executive's employment may
not be terminated for Cause unless a majority of the members of the Board of
Directors of the Corporation, or a majority of the members of any committee
designated by the Board of Directors of the Corporation for such purpose, finds,
after affording the Executive and the Executive's counsel a reasonable
opportunity to be heard, that termination for Cause is justified and that either
the basis for the Cause is not curable or there is no reasonable prospect that
the Executive will promptly cure the basis for Cause. Notwithstanding anything
contained in this Agreement to the contrary, in lieu of the thirty (30) days
notice under this Section 9(b), the Corporation may, at its sole discretion,
elect to place the Executive on unpaid leave for such period, or for such period
during which the Executive has failed to cure an alleged event of Cause during
the applicable thirty (30) day period; provided, however, that if the Executive
shall have cured the event of Cause, as determined in the sole discretion of the
Board, or if the Board shall have determined no Cause to have existed, the
Executive shall be reinstated to his position and shall receive all salary and
other compensation due hereunder which remained unpaid during the period in
which the Executive was placed on leave.
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(c) For the purposes of this Agreement, "Cause" means, as a
basis for termination of employment, any act or any failure to act on the part
of the Executive which constitutes:
(i) fraud, embezzlement, theft or dishonesty against the
Corporation or any of its affiliates, or the Board of Directors of the
Corporation or any of its affiliates;
(ii) a willful or grossly negligent material violation of
law in connection with or in the course of the Executive's duties or employment
with the Corporation or any of its affiliates;
(iii) a felony for which the Executive is convicted or
pleads guilty or nolo contendere;
(iv) willful or grossly negligent engagement in any
Competing Business (as defined in Section 12(a) of this Agreement) activity
competitive with the business of the Corporation as to which the Corporation has
notified the Executive in writing and the Executive has not ceased (other than
for reasons beyond the control of the Executive) within three (3) business days
following such notice of his participation in such activity;
(v) a willful failure to follow reasonable directions or
instructions of the Chief Executive Officer of the Corporation (or, the Board)
which are consistent with the Executive's position and responsibilities as of
the date of this Agreement (as such position and responsibilities may be changed
from time to time with the prior consent of the Executive), and such failure
shall have continued (other than for reasons beyond the control of the
Executive) for a period of three (3) business days after receipt of written
notice thereof from the Corporation;
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(vi) willful or grossly negligent breach of any express,
material employment policy of the Corporation, which policy was communicated to
the Executive; or
(vii) willful and wrongful damage to material property of
the Corporation or any of its affiliates;
provided, however, no act or failure on the part of the Executive shall
be deemed to be "willful" if it was due primarily to an error in judgment or
negligence.
10. Severance.
(a) In the event that the Executive's employment hereunder is
terminated during the Term (i) by the Corporation other than for Cause, or (ii)
by the Executive for Good Reason (as hereinafter defined) pursuant to a Notice
of Termination (as hereinafter defined), then the Corporation shall continue the
Executive's participation (including participation by his spouse and other
dependents) on the same basis as other senior officers in its medical and dental
plans or arrangements, which plans and arrangements shall not include any life
insurance or disability plans or arrangements ("Medical and Dental Plans"), and
the Corporation will continue to pay the costs of coverage of the Executive and
his spouse and other dependents under the Medical and Dental Plans on the same
basis as other active officers of the Corporation covered under such Medical and
Dental Plans, for the greater of twelve (12) months or the remainder of the Term
(the "Severance Period"; provided that if the Executive's employment hereunder
is terminated during the Term (i) by the Corporation other than for Cause, or
(ii) by the Executive for Good Reason pursuant to a Notice of Termination and,
in the case of clause (i) or (ii), such termination occurs after a Change of
Control, then the "Severance Period" shall be eighteen (18) months); provided,
however, that if such continued participation in the Medical and Dental Plans is
not possible under the terms thereof, the Corporation will provide the Executive
with substantially identical benefits for the remainder of such period or an
amount in cash equal to the cost to the Corporation for providing such benefits,
paid in accordance with Section 10(e) of this Agreement. Notwithstanding the
foregoing, the Corporation's obligations pursuant to the first sentence of this
Section 10(a) shall cease and terminate in the event that the Executive is, or
becomes, eligible for coverage under a medical plan of a successor employer or a
spouse's employer. The Corporation shall also pay to the Executive severance
payments in cash equal to the sum of (x) the amount of the Executive's then
current base annual salary and (y) the Target Bonus for the fiscal year in which
the termination occurs (or, if the Target Bonus for such fiscal year has not yet
been established, the Target Bonus for the immediately preceding fiscal year),
multiplied by the quotient obtained by dividing the number of days during the
Severance Period, by three hundred sixty-five (365). In addition, the Executive
shall be entitled to the payment of any accrued and unpaid salary (including
accrued and unused vacation) through the date of termination, any accrued and
unpaid bonuses in respect of prior fiscal years, any bonus, determined under
Section 5, in respect of the fiscal year in which the termination occurs,
prorated through the date of termination. Further, the Executive shall be
provided with outplacement assistance commensurate with the Executive's position
with the Corporation during the Severance Period following the Executive's
termination of employment. Except as set forth in Sections 2, 7(b), 8 and
Section 10(a), 10(b)(iv) and 10(f) hereof, the Corporation shall have no further
obligations under this Agreement in the event of the Executive's termination of
employment under this Section 10. The Executive shall have the obligations
provided under Section 12 hereof, to the extent applicable pursuant to its
terms.
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(b) For the purpose of this Agreement, "Good Reason" shall
mean the occurrence, without the Executive's express written consent, of any of
the following circumstances unless, in the case of paragraphs (i), (v), (vi) or
(vii) below, such circumstances are fully corrected prior to the Date of
Termination (as defined below) specified in the Notice of Termination (as
defined below) given in respect thereof:
(i) Executive is assigned to any duties materially
inconsistent with the Executive's status as the Vice President and General
Merchandise Manager of the Corporation, removal from such position, or a
material diminution in the nature or status of the Executive's responsibilities;
(ii) any person shall be elected to any other office or
position with the Corporation having substantially similar duties and
responsibilities with the Executive and, not more than sixty (60) days
thereafter, the Executive, in his sole discretion, shall elect to terminate his
employment pursuant to a Notice of Termination (as hereinafter defined);
(iii) a reduction by the Corporation in the Executive's
salary payable pursuant to Section 4 hereof;
(iv) (A) the relocation of the Executive's principal work
location to a location more than fifty (50) miles from its location as of the
date hereof; (B) the Corporation requiring the Executive to be based anywhere
other than the executive office in which the Executive is currently located
except for required travel on the Corporation's business to an extent
substantially consistent with the Executive's present business travel
obligations; or (C) the Corporation requiring any relocation that would
materially adversely affect the Executive's maintenance of his current residence
in connection with his duties hereunder;
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(v) the failure of the Corporation to obtain an agreement
in form and substance reasonably satisfactory to the Executive from any
successor to assume and agree to perform this Agreement, or such other agreement
reasonably satisfactory to the Executive;
(vi) solely in the event of a "Change in Control" (as
defined in Section 11(a) hereof), the failure by the Corporation to continue in
effect any material employee benefit plan, program or arrangement in which the
Executive participates, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) reasonably acceptable to the Executive has been
made in such plan, or the failure by the Corporation to continue the Executive's
participation therein on the same basis, both in terms of the amount of benefits
provided and the level of the Executive's participation relative to other
participants, as existed at the date of this Agreement; or
(vii) any material breach of this Agreement by the
Corporation.
(c) The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason hereunder. Any purported termination of the Executive's employment
for Good Reason by the Executive shall be pursuant to a written Notice of
Termination to the Corporation. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall (i) indicate the specific
termination provision in this Agreement relied upon, (ii) set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(iii) specify a Date of Termination. "Date of Termination" shall mean the date
specified in the Notice of Termination (which shall not be less than thirty (30)
days nor more than sixty (60) days from the date such Notice of Termination is
given).
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(d) The Executive may request confirmation that an event
constituting Good Reason has occurred by providing a proposed Notice of
Termination (as described above) to the Board, and such proposed Notice of
Termination shall not be effective unless the Board confirms that Good Reason
exists. The Board shall render its decision in writing within twenty-one (21)
days following receipt of any such proposed Notice of Termination. Any
confirmation of Good Reason by the Board shall be binding on the Corporation,
but the Board's determination that Good Reason does not exist shall not be
binding on the Executive who may nonetheless elect in writing to proceed with
the Notice of Termination.
(e) Any severance payment hereunder shall be payable by the
Corporation to the Executive (or, in the event of the Executive's death or
incapacity, the Executive's legal representative) in cash (less such amounts as
shall be required to be withheld by the Corporation pursuant to applicable laws
and regulations) in equal installments over the Severance Period in accordance
with the Corporation's payroll practices for its officers commencing with the
first such payroll date following the date of the termination of the Executive's
employment with the Corporation and its subsidiaries; provided that, upon a
Change of Control, any remaining severance payments due hereunder shall be
payable in a single lump sum payment immediately prior to the consummation of
such Change of Control.
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(f) In the event that the benefits provided for in this
Section 10, or otherwise payable to the Executive constitute "excess parachute
payments" within the meaning of Section 280G of the Code (or any successor
section), and the Executive will be subject to the excise tax imposed by Section
4999 of the Code (or any successor section), then the Executive shall receive,
in addition to any other amounts payable under this Agreement: (i) a lump sum
payment from Corporation sufficient to pay such excise tax plus (ii) an
additional lump sum payment from the Corporation sufficient to pay the excise
tax and federal and state income and employment taxes arising from the payments
made by Corporation pursuant to this sentence (such payments, the "Gross-Up
Payment"). Unless Corporation and the Executive otherwise agree in writing, the
determination of the Executive's excise tax liability and the amount required to
be paid under this Section 10(f) shall be made in writing by Corporation's
independent auditors who are primarily used by the Corporation immediately prior
to the termination of employment, or, if earlier, immediately preceding a Change
in Control (the "Accountants"). For purposes of making the calculations required
by this Section 10(f), the Executive shall be deemed to pay federal income taxes
at the highest marginal rates of federal income taxation applicable to
individuals in the calendar year in which the Gross-Up Payment is to be made and
state and local income taxes at the highest marginal rates of taxation
applicable to individuals as are in effect in the state and locality of the
Executive's residence in the calendar year in which the Gross-Up Payment is to
be made, net of the maximum reduction in federal income taxes that can be
obtained from deduction of such state and local taxes, taking into account any
limitations applicable to individuals subject to federal income tax at the
highest marginal rates. The Corporation and the Executive shall furnish the
Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section 10. The Corporation
shall bear all fees and costs incurred in connection with the Accountant's
determination. Notwithstanding anything contained in this paragraph to the
contrary, the Executive shall not be entitled to any additional Gross-Up
Payments for taxes incurred in connection with the Gross-Up Payment provided
hereunder.
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11. Change in Control.
(a) A "Change in Control" shall be deemed to have occurred if
(1) any "Person" (as such term is used in Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), is or becomes the
"beneficial owner" (as determined pursuant to Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation that are entitled
to vote generally in the election of directors of the Company ("Voting
Securities") representing thirty percent (30%) or more of the combined voting
power of the Corporation's then outstanding Voting Securities; or (2) during any
period of two (2) consecutive years (not including any period prior to the
execution of this Agreement), individuals who at the beginning of such period
constitute the members of the Board (the "Incumbent Directors") and any new
director, whose election to the Board or nomination for election to the Board by
the Corporation's stockholders was approved by a vote of at least two-thirds
(2/3) of the Incumbent Directors or whose election or nomination for election
was previously so approved, cease for any reason to constitute a majority of the
Board; or (3) the Corporation shall merge with or consolidate into any other
corporation, other than a merger or consolidation which would result in the
holders of the Voting Securities of the Corporation outstanding immediately
prior thereto holding immediately thereafter securities representing at least
seventy-five percent (75%) of the combined voting power of the Voting Securities
of the Corporation or such surviving entity outstanding immediately after such
merger or consolidation; except that a merger or consolidation effected to
implement recapitalization of the Corporation (or similar transaction) in which
no Person (other than Corporation or an employee benefit plan sponsored by the
Corporation) acquires more than thirty percent (30%) of the combined voting
power of the Corporation's then outstanding Voting Securities shall not
constitute a Change in Control; or (4) the stockholders of the Corporation
approve a plan of complete liquidation of the Corporation or such a plan is
commenced; or (5) the Corporation enters into or the stockholders of the
Corporation approve an agreement for the sale and disposition of all or
substantially all of the Corporation or of all or substantially all of the
Corporation's assets.
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(b) Upon a Change in Control, the Executive may elect, at any
time during the immediately following ninety (90) days, to sell all or any
portion designated by the Executive of the shares of common stock of the
Corporation owned by the Executive, including any such shares acquired upon the
exercise of any warrants or stock options, to the Corporation for the highest
value per share as of the date of the Change in Control received by any other
Person directly or indirectly in respect of its shares of common stock of the
Corporation, including, but not limited to, by reason of a sale or other
disposition of shares of the Corporation. The purchase price shall be paid in
the same property received by other stockholders of the Corporation.
(c) In the event shares of common stock of the Corporation
owned by the Executive or any securities issued in exchange therefor are not
publicly traded on the date of the Executive's termination of employment for any
reason other than Cause on or after a Change in Control, the Executive shall be
entitled to sell such shares or other securities to the Corporation for cash
equal to their aggregate fair market value, without any minority or
marketability discount, (as determined in the reasonable, good faith discretion
of the Board of Directors of the Corporation or, if the Executive does not
accept such fair market value, by an independent valuation from an accounting
firm or other valuation expert mutually selected by the Corporation and the
Executive). The cost of the independent valuation shall be paid by the
Corporation, except such cost shall be shared equally by the Corporation and the
Executive in the event the aggregate fair market value of the shares or other
securities determined by the independent valuation exceeds the aggregate fair
market value determined by the Board of Directors by less than five percent (5%)
of the Board's determination.
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12. Confidential Information, Non solicitation, Non-compete.
(a) The Corporation owns and has developed, and will develop,
certain proprietary techniques and confidential information which have great
value to its business (referred to in this Agreement, collectively, as
"Confidential Information"). Confidential Information includes not only
information disclosed by the Corporation to the Executive, but also information
developed or learned by the Executive during the course or as a result of
employment with the Corporation, which information shall be the property of the
Corporation. Confidential Information includes all information that has or could
have commercial value or other utility in the business in which the Corporation
is engaged or in any business in which the Executive is aware the Corporation is
contemplating engaging, and all information of which the unauthorized disclosure
could be detrimental to the interests of the Corporation, whether or not such
information is specifically labeled as Confidential Information by the
Corporation. By way of example and without limitation, Confidential Information
includes any and all information developed, obtained or owned by the Corporation
concerning trade secrets, techniques, know-how, business plans, strategies,
forecasts, unpublished financial information, orders, agreements and other forms
of documents, price and cost information, merchandising opportunities, expansion
plans, store plans, budgets, projections, customer, supplier and subcontractor
identities, characteristics and agreements, and salary, staffing and employment
information. Notwithstanding the foregoing, Confidential Information shall not
include any information which (i) was in the public domain at the time of
receipt by the Executive or thereafter without breach or violation of this
Agreement, (ii) was furnished to the Executive by a third party lawfully
entitled to do so and not known to the Executive to be bound by a
confidentiality agreement to Corporation, or (iii) is required to be disclosed
by any governmental authority or in any legal proceeding.
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(b) The Executive acknowledges and agrees that in the
performance of duties hereunder the Corporation discloses to and entrusts the
Executive with Confidential Information which is the exclusive property of the
Corporation and which the Executive may possess or use only in the performance
of duties for the Corporation. The Executive also acknowledges that the
Executive is aware that the unauthorized disclosure of Confidential Information,
among other things, may be prejudicial to the Corporation's interests, and an
improper disclosure of trade secrets. The Executive shall not, directly or
indirectly, use, make available, sell, disclose or otherwise communicate to any
corporation, partnership, individual or other third party, other than in the
course of the Executive's assigned duties and for the benefit of the
Corporation, any Confidential Information, either during the Term or thereafter.
(c) In the event the Executive's employment with the
Corporation ceases for any reason, the Executive will not remove from the
Corporation's premises without its prior written consent any records, files,
drawings, documents, equipment, materials and writings received from, created
for or belonging to the Corporation, including those which relate to or contain
Confidential Information, or any copies thereof. Upon request or when employment
with the Corporation terminates, the Executive will immediately deliver the same
to the Corporation to the extent that any of the foregoing are not at the
Corporation's premises.
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(d) The Executive and Corporation agree that the Executive
shall not disclose to Corporation or use for the Corporation's benefit, any
information which may constitute trade secrets and confidential information of
third parties, to the extent they exist.
(e) During the Employment Term and for twelve (12) thereafter
(the "Prohibited Period"), the Executive will not engage in any Competing
Business or engage in Solicitation.
(f) The prohibitions on engaging in a Competing Business set
forth in Section 12(e) above shall mean participating, directly or indirectly,
in any manner whatsoever including, without limitation, either individually, or
in partnership, jointly or in conjunction with any other person, firm or
corporation, or as employee, principal, agent, director, officer, investor,
lender, consultant or shareholder (other than by way of less than five percent
(5%) ownership of stock in a publicly traded company or limited partnership);
provided, however, that such participation shall not include any activity
engaged in with the prior written approval of the Board. For purposes of this
Agreement, "Competing Business" shall mean (i) any entity or business listed on
Exhibit A hereto and (ii) any other entity or business: (x) engaged in the
operation of retail stores for the primary purpose of selling greeting cards,
gift wrap and party supplies and which operates such retail stores in any market
in which the Corporation is operating a retail store at the time of the
Executive's termination of employment, or a market into which the Executive
knows the Corporation is intending to enter; or (y) is engaged in the primary
business of the manufacture and distribution of greeting cards, gift wrap and
party supplies. For purposes of this Agreement, "Solicitation" shall mean
recruiting, soliciting or inducing, directly or indirectly, any non-clerical
employee or employees of the Corporation or any advisor or consultant to the
Corporation to terminate their employment, or otherwise cease their relationship
with the Corporation or hiring, retaining or assisting another person or entity
to hire or retain any employee of the Corporation or any advisor or consultant
to the Corporation or any person who within six (6) months before had been a
non-clerical employee, advisor or consultant of the Corporation or any of its
Affiliates.
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(g) If any restriction set forth herein is found by any court
of competent jurisdiction, or an arbitrator, to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
over too broad a geographic area (as applicable), it shall be interpreted to
extend over a maximum period of time, range of activities or geographic area as
to which it may be enforceable.
(h) The Executive acknowledges and agrees that the remedy at
law available to the Corporation for breach of any provision of this Section 12
would be inadequate, and that damages flowing from such a breach may not readily
be susceptible to being measured in monetary terms. Accordingly, the Executive
acknowledges, consents and agrees that, in addition to any other rights or
remedies which the Corporation may have at law, in equity or under this
Agreement, upon adequate proof of violation of any provision of Section 12, the
Company shall be entitled to immediate injunctive relief and may obtain a
temporary order restraining any threatened or further breach, without the
necessity of proof of actual damage.
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13. Prior Agreements; Amendments; Taxes. This Agreement contains the
entire understanding between the parties hereto with respect to the subject
matter hereof and from and after the date hereof supersedes all prior agreements
and understandings between the Corporation and the Executive. This Agreement may
only be modified by an instrument, in writing, signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought. All payments under this Agreement shall be subject to applicable
withholding and other employment taxes, to the extent required by law.
14. Survival of Provisions. The provisions of Sections 12 through 21
hereof shall survive the termination or expiration of this Agreement,
irrespective of the reason therefor.
15. Assignability and Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon the Corporation and its successors and
permitted assigns and upon the Executive and his heirs, executors, legal
representatives successors and permitted assigns. However, neither party may
assign, transfer, pledge, encumber, hypothecate or otherwise dispose of this
Agreement or any of its or his rights hereunder without the prior written
consent of the other party, and any such attempted assignment, transfer, pledge,
encumbrance, hypothecation or other disposition without such consent shall be
null and void and without effect.
16. Headings. The paragraph headings contained herein are included
solely for convenience of reference and shall not control or affect the meaning
or interpretation of any of the provisions of this Agreement.
17. Legal Expenses. The Corporation shall pay the Executive's
reasonable legal fees and expenses incurred in connection with any enforcement
or defense by the Executive of his rights hereunder, except with respect to any
claim made by the Executive which is frivolous or has no material likelihood of
success.
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18. Notices. Any notices or other communications hereunder by either
party shall be in writing and shall be deemed to have been duly given if
delivered personally to the other party or sent by registered or certified mail,
return receipt requested, to the other party at the address set forth below or
at such other address as such other party may designate in conformity with the
foregoing: Factory Card Outlet of America Ltd., 0000 Xxxxx Xxxx, Xxxxxxxxxx, XX,
00000-0000, and Xxxxxxx Xxxxx, 0000 Xxxxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
19. Severability. Each provision hereof is severable from this
Agreement and if one or more provisions hereof are declared invalid, the
remaining provisions shall nevertheless remain in full force and effect.
20. Indemnification. The Corporation hereby agrees to indemnify the
Executive (and the Executive's legal representatives or other successors),
against all liabilities, costs, charges and expenses whatsoever incurred or
sustained by the Executive (or the Executive's legal representatives or other
successors) in connection with any threatened, pending or completed action, suit
or proceeding to which the Executive (or the Executive's legal representatives
or other successors) may be made a party or may be threatened to be made a party
by reason of the Executive's being or having been a director, officer, employee,
or agent of the Corporation or serving or having served at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise to the fullest extent
permitted under the Corporation's by-laws as in effect on the date hereof.
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21. No Duty to Mitigate. The Executive shall not be required to
mitigate the amount of any damages that the Executive may incur or other
payments to be made to the Executive hereunder as a result of any termination or
expiration of this Agreement, nor shall any payments to the Executive be reduced
by any other payments the Executive may receive.
22. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Illinois applicable to
contracts made and to be performed herein, without giving effect to the
principles thereof relating to the conflict of laws.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
FACTORY CARD OUTLET OF AMERICA LTD.
/s/ Xxxx X. Xxxxxx
-----------------------------------
Vice President of Human Resources
EXECUTIVE
/s/ Xxxxxxx Xxxxx
-----------------------------------
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EXHIBIT A
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Party City Corp and its affiliates
Party America and its affiliates
