EXHIBIT 10.20
EXECUTIVE AGREEMENT
Too, Inc. - Xxxxxx Xxxxx
This is an Agreement between Too, Inc., a Delaware corporation (the
"Corporation"), with its principal office located at 0000 Xxxxx Xxxx, Xxxxxxxx,
Xxxx 00000, and Xxxxxx Xxxxx (the "Executive"), effective as of October 30,
2000.
RECITALS:
The Corporation considers the establishment and maintenance of a sound and
vital management to be part of its overall corporate strategy and essential in
protecting and enhancing the interests of the Corporation and its shareholders.
As part of this corporate strategy, the Corporation wishes to act to retain its
well-qualified executive officers notwithstanding any actual or threatened
change in control of the Corporation.
The Executive is a key executive officer of the Corporation and the
Executive's services, experience and knowledge of the affairs of the
Corporation, and reputation and contacts in the industry are extremely valuable
to the Corporation. The Executive's continued dedication, availability, advice,
and counsel to the Corporation are deemed important to the Corporation, its
Board of Directors (the "Board"), and its shareholders. It is, therefore, in the
best interests of the Corporation to secure the continued services of the
Executive notwithstanding any actual or threatened change in control of the
Corporation. Accordingly, the Board has approved this Agreement with the
Executive and authorized its execution and delivery on behalf of the
Corporation.
AGREEMENT:
1. Term of Agreement. This Agreement will begin on the date first entered
above and will irrevocably continue in effect through October 30, 2003. On
October 30, 2001, and on the anniversary date of each year thereafter (a
"Renewal Date"), the term of this Agreement will be extended automatically for a
period of one (1) year unless, not later than thirty (30) days prior to such
Renewal Date, the Corporation gives written notice to the Executive that it has
elected not to extend this Agreement, in which situation this Agreement shall
terminate at the end of the three-year term then in progress. Notwithstanding
the above, if a "Change in Control" (as defined herein) of the Corporation
occurs during the term of this Agreement, the term of this Agreement will be for
twenty-four (24) months beyond the end of the month in which any such Change in
Control occurs.
2. Definitions. The following defined terms shall have the meanings set
forth below, for purposes of this Agreement:
(a) Annual Award. "Annual Award" means the cash payment paid or
payable to the Executive with respect to a fiscal year under the
Corporation's Incentive Compensation Performance Plan.
(b) Base Annual Salary. "Base Annual Salary" means the greater of (1)
the highest annual rate of base salary in effect for the Executive during
the twelve (12) month period immediately prior to a Change in Control, or
(2) the annual rate of base salary in effect at the time a Notice of
Termination is given (or on the date employment is terminated if no Notice
of Termination is required).
(c) Cause. "Cause" means any of the following:
(1) The Executive shall have (a) been convicted of a felony, or
(b) committed an act of intentional gross misconduct, fraud, or gross
neglect in connection with the Executive's duties or in the course of
the Executive's employment with the Corporation or any Subsidiary, and
the Board shall have determined that such act is materially harmful to
the Corporation; or
(2) The Executive shall have materially breached Section 12 of
the Executive's Employment Agreement with the Corporation.
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For purposes of this Agreement, no act or failure to act on the
part of the Executive shall be deemed "intentional" if it was due primarily
to an error in judgment or negligence, but shall be deemed "intentional"
only if 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 interest of the Corporation. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for "Cause" under
this Agreement unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters (3/4) of the Board at a meeting called and
held for such purposes, after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's counsel (if
the Executive chooses to have counsel present at such meeting), to be heard
before the Board, finding that, in the good faith opinion of the Board, the
Executive had committed an act constituting "Cause" as defined in this
Agreement and specifying the particulars of the act constituting "Cause" in
detail. Nothing in this Agreement will limit the right of the Executive or
the Executive's beneficiaries to contest the validity or propriety of any
such determination.
(d) Change in Control. "Change in Control" means the occurrence of
any of the following:
(1) Any "Person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) is or becomes the "Beneficial Owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing twenty-five percent (25%)
or more of the combined voting power of the Corporation's then
outstanding securities (a "25% Shareholder") provided however, that
the term 25% Shareholder shall not include any Person if such Person
would not otherwise be a 25% Shareholder but for a reduction in the
number of outstanding voting shares resulting from a stock repurchase
program or other similar plan of the Corporation or from a self-tender
offer of the Corporation, which plan or tender offer commenced on or
after the date hereof, provided, however, that the term "25%
Shareholder" shall include such Person from and after the first date
upon which (A) such Person, since the date of the commencement of such
plan or tender offer, shall have acquired Beneficial Ownership of, in
the aggregate, a number of voting shares of the Corporation equal to
one percent (1%) or more of the voting shares of the Corporation then
outstanding, and (B) such Person, together with all affiliates and
associates of such Person, shall Beneficially Own twenty-five percent
(25%) or more of the voting shares of the Corporation then
outstanding. In calculating the percentage of the outstanding voting
shares that are Beneficially Owned by a Person for purposes of this
subsection (d)(1), voting shares that are Beneficially Owned by such
Person shall be deemed outstanding, and voting shares that are not
Beneficially Owned by such Person and that are subject to issuance
upon the exercise or conversion of outstanding conversion rights,
exchange rights, rights, warrants or options shall not be deemed
outstanding. Notwithstanding the foregoing, if the Board of Directors
of the Corporation determines in good faith that a Person that would
otherwise be a 25% Shareholder pursuant to the foregoing provisions of
this subsection (d)(1) has become such inadvertently, and such Person
(a) promptly notifies the Board of Directors of such status and (b) as
promptly as practicable thereafter, either divests of a sufficient
number of voting shares so that such Person would no longer be a 25%
Shareholder, or causes any other circumstance, such as the existence
of an agreement respecting voting shares, to be eliminated such that
such Person would no longer be a 25% Shareholder as defined pursuant
to this subsection (d)(1), then such Person shall not be deemed to be
a 25% Shareholder for any purposes of this Agreement. Any
determination made by the Board of Directors of the Corporation as to
whether any Person is or is not a 25% Shareholder shall be conclusive
and binding; or
(2) A change in composition of the Board of Directors of the
Corporation occurring any time during a consecutive two-year period as
a result of which fewer than a majority of the Board of Directors are
Continuing Directors (for purposes of this section, the term
"Continuing Director" means a director who was either (A) first
elected or appointed as a Director prior to the date of this
Agreement; or (B) subsequently elected or appointed as a director if
such director was nominated or appointed by at least a majority of the
then Continuing Directors); or
(3) Any of the following occurs:
(A) a merger or consolidation of the Corporation, other
than a merger or consolidation in which the voting securities of
the Corporation immediately prior to the merger or consolidation
continue to represent (either by remaining outstanding or being
converted into securities of the surviving entity) sixty percent
(60%) or more of the combined voting power of the Corporation or
surviving entity immediately after the merger or consolidation
with another entity;
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(B) a sale, exchange, or other disposition (in a single
transaction or a series of related transactions) of all or
substantially all of the assets of the Corporation which shall
include, without limitation, the sale of assets aggregating more
than fifty percent (50%) of the assets of the Corporation on a
consolidated basis;
(C) a liquidation or dissolution of the Corporation;
(D) a reorganization, reverse stock split, or
recapitalization of the Corporation which would result in any of
the foregoing; or
(E) a transaction or series of related transactions having,
directly or indirectly, the same effect as any of the foregoing.
(e) Change Year. "Change Year" means the fiscal year in which a
Change in Control occurs.
(f) Disability. "Disability" means "Total Disability" as defined in
the Too, Inc. Long-Term Disability Program (effective October 1, 1999), or
any amended or successor plan.
(g) Employee Benefits. "Employee Benefits" means the perquisites,
benefits, and service credit for benefits as provided under any and all
employee retirement income and welfare benefit policies, plans, programs,
or arrangements in which the Executive is entitled to participate,
including without limitation any stock option, stock purchase, stock
appreciation, savings, pension, supplemental executive retirement, or other
retirement income or welfare benefit, deferred compensation, incentive
compensation, group or other life, health, medical/hospital, or other
insurance (whether funded by actual insurance or self-insured by the
Corporation), disability, salary continuation, expense reimbursement, and
other employee benefit policies, plans, programs, or arrangements that may
now exist or any equivalent successor policies, plans, programs, or
arrangements that may be adopted hereafter, providing perquisites,
benefits, and service credit for benefits at least as great in a monetary
equivalent as are payable thereunder prior to a Change in Control.
(h) Employment Agreement. "Employment Agreement" means an executed
employment agreement between the Corporation and the Executive.
(i) Good Reason. "Good Reason" means the occurrence of any one or
more of the following:
(1) The assignment to the Executive after a Change in Control of
the Corporation of duties which are a significant reduction in the
duties, authority, responsibilities, and status of the Executive's
position at any time during the twelve (12) month period prior to such
Change in Control;
(2) A reduction by the Corporation in the Executive's Base
Annual Salary in effect immediately prior to a Change in Control of
the Corporation, or the failure to grant salary increases and bonus
payments on a basis comparable to those granted to other executives of
the Corporation, or a reduction of the Executive's most recent highest
incentive bonus potential prior to such Change in Control under the
Corporation's Incentive Compensation Performance Plan, Long-Term
Incentive Compensation Performance Plan, or similar plans;
(3) A demand by the Corporation that the Executive relocate to a
location in excess of fifty (50) miles from the location where the
Executive is currently based, or in the event of any such relocation
with the Executive's express written consent, the failure of the
Corporation or a Subsidiary to pay (or reimburse the Executive for)
all reasonable moving expenses incurred by the Executive relating to a
change of principal residence in connection with such relocation and
to indemnify the Executive against any loss in the sale of the
Executive's principal residence in connection with any such change of
residence, all to the effect that the Executive shall incur no loss on
an after tax basis;
(4) The failure of the Corporation to abide by this Agreement or
to obtain a satisfactory agreement from any successor to the
Corporation to assume and agree to perform this Agreement, as
contemplated in Section 14 of this Agreement;
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(5) The failure of the Corporation to provide the Executive with
substantially the same Employee Benefits that were provided to him
immediately prior to the Change in Control, or with a package of
Employee Benefits that, though one or more of such benefits may vary
from those in effect immediately prior to such Change in Control, is
substantially comparable in all material respects to such Employee
Benefits taken as a whole; or
(6) Any significant reduction in the Executive's compensation or
benefits or adverse change in the Executive's location or duties, if
such significant reduction or adverse change occurs at any time after
the commencement of any discussion with a third party relating to a
possible Change in Control of the Corporation involving such third
party, if such reduction or adverse change is in contemplation of such
possible Change in Control and such Change in Control is actually
consummated within twelve (12) months after the date of such
significant reduction or adverse change.
The existence of Good Reason shall not be affected by the
Executive's incapacity due to physical or mental illness. The Executive's
continued employment shall not constitute a waiver of the Executive's
rights with respect to any circumstance constituting Good Reason under this
Agreement. The Executive's determination of Good Reason shall be
conclusive and binding upon the parties to this Agreement provided such
determination has been made in good faith.
(j) Highest Incentive Compensation. "Highest Incentive Compensation"
means the greater of the Executive's Potential Annual Award for the
Executive's Incentive Group for (a) the Termination Year or (b) the average
of the actual Annual Awards for the three years prior to the Termination
Year.
(k) Incentive Compensation Performance Plan. "Incentive Compensation
Performance Plan" means the Corporation's 1999 Incentive Compensation
Performance Plan in effect as of the effective date of this Agreement, as
well as any amended, successor or similar plan or plans.
(l) Incentive Group. "Incentive Group" means the group or category,
if any, into which an Executive is placed pursuant to the Corporation's
Incentive Compensation Performance Plan.
(m) Long-Term Incentive Compensation Performance Plans "Long-Term
Incentive Compensation Performance Plans" means the Corporation's 1999
Stock Option and Performance Incentive Plan in effect as of the effective
date of this Agreement, as well as any amended, similar or successor, plan
or plans.
(n) Notice of Termination. "Notice of Termination" means a written
notice indicating the specific termination provision in this Agreement
relied upon and setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the employment
under the provision so indicated.
(o) Potential Annual Award. "Potential Annual Award" means the Annual
Award the Executive could receive according to his or her Incentive Group
pursuant to the Corporation's Incentive Compensation Performance Plan
assuming that (1) the Corporation met the par target (100%) criteria for
the Corporation's Incentive Compensation Performance Plan for a particular
fiscal period or year (whether or not such target performance criteria was
or could be met); (2) there are no adjustments for business unit or
individual performance; and (3) the Executive's Base Annual Salary is used
to determine the Potential Annual Award.
(p) Pro-Rated Bonus Amount. "Pro-Rated Bonus Amount" means any
accrued but unpaid bonus for a completed bonus period, plus a pro-rated
portion of the greater of (i) the average of the Executive's semi-annual
bonus for the previous two similar seasons or (ii) the Executive's par
target (100%) criteria semi-annual bonus for the current semi-annual season
calculated as of the Change in Control date. In the case of a semi-annual
bonus, the portion shall be the amount of semi-annual bonus paid or payable
to the Executive with respect to the bonus period in which the Change in
Control occurs, assuming the greater of criteria (i) or (ii) applied, pro-
rated by multiplying such amount by a fraction, the numerator of which is
the number of days during the bonus period in which the Change in Control
occurs prior to the occurrence of the Change in Control, and the
denominator of which shall be one hundred eighty-two and one-half (182-
1/2).
(q) Performance Criteria. "Performance Criteria" means the
performance-based criteria as referenced in the Corporation's Incentive
Compensation Performance Plan.
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(r) Severance Benefits. "Severance Benefits" means the benefits
described in Section 4 of this Agreement, as adjusted by the applicable
provisions of Section 5 of this Agreement.
(s) Subsidiary. "Subsidiary" means any corporation or other entity, a
majority of the voting control of which is directly or indirectly owned or
controlled at the time by the Corporation.
(t) Termination Year. "Termination Year" means the year of
termination of the Executive.
3. Eligibility for Severance Benefits. The Corporation or its successor
shall pay or provide to the Executive the Severance Benefits if the Executive's
employment is terminated during the term of this Agreement, either:
(a) by the Corporation (1) at any time six (6) months prior to a
Change in Control if such termination was in contemplation of such Change
in Control and was done to avoid the effects of this Agreement or, (2)
within twenty-four (24) months after a Change in Control of the
Corporation, unless in either (1) or (2) the termination is on account of
the Executive's death or Disability or for Cause, provided that, in the
case of a termination on account of the Executive's Disability or for
Cause, the Corporation shall give Notice of Termination to the Executive
with respect thereto; or
(b) by the Executive for Good Reason at any time within twenty-four
(24) months after a Change in Control of the Corporation provided that the
Executive shall give Notice of Termination to the Corporation with respect
thereto.
4. Severance Benefits. The Executive, if eligible under Section 3, shall
receive the following Severance Benefits, adjusted by the applicable provisions
of Section 5 (in addition to accrued compensation, bonuses, and vested benefits
and stock options):
(a) Base Annual Salary. A lump sum cash payment equal to the sum of:
(1) any accrued base salary and vacation time payable as of the Executive's
termination of employment (either by reason of an Employment Agreement or
otherwise); and (2 the Executive's Base Annual Salary multiplied by three
(3).
(b) Annual Incentive Compensation. A lump sum cash payment equal to
the sum of: (1) the Pro-Rated Bonus Amount; and (2) the Executive's Highest
Incentive Compensation multiplied by three (3).
(c) Long-Term Incentive Compensation. Such compensation as shall be
payable according to the terms of the Corporation's Long-Term Incentive
Compensation Performance Plans.
(d) Insurance Benefits. For a three (3) year period after the date
the Executive's employment is terminated, the Corporation will arrange to
provide to the Executive, at the Corporation's expense:
(1) Health Care. Health care coverage comparable to that in
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effect for the Executive immediately prior to the termination (or, if
more favorable to the Executive, that furnished generally to salaried
employees of the Corporation), including, but not limited to,
hospital, surgical, medical, dental, prescription, and dependent
coverage. Upon the expiration of the health care benefits required to
be provided pursuant to this subsection 4(d), the Executive shall be
entitled to the continuation of such benefits under the provisions of
the Consolidated Omnibus Budget Reconciliation Act. Health care
benefits otherwise receivable by the Executive pursuant to this
subsection 4(d) shall be reduced to the extent comparable benefits are
actually received by the Executive from a subsequent employer during
the three-year period following the date the employment is terminated
and any such benefits actually received by the Executive shall be
reported by the Executive to the Corporation.
(2) Life Insurance. Life insurance coverage (including any
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supplemental coverage, purchase opportunity, and double indemnity for
accidental death that was available to the Executive) equal (including
policy terms) to that in effect at the time Notice of Termination is
given (or on the date the employment is terminated if no Notice of
Termination is required) or, if more favorable to the Executive, equal
to that in effect at the date the Change in Control occurs.
In the event the Executive's participation in any such plan or
program is not permitted, or is taxable to the Executive, the Corporation
will directly provide, at no after-tax cost to the Executive, the benefits
to which the Executive would be entitled under such plans and programs.
The Corporation may elect to pay such benefits in a lump sum.
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(e) Retirement and Nonqualified Plan Benefits. The Executive will be
entitled to all benefits provided under (1) the Corporation's Alternative
Savings Plan and the Corporation's Supplemental Retirement and Deferred
Compensation Plan, as well as any amended, similar or successor plans and
(2) the Corporation's tax-qualified plans and nonqualified plans, as well
as any amended, similar, or successor plans. All qualified and nonqualified
plan benefits or deferred compensation agreements or accounts shall become
immediately vested with respect to such plan benefits as of a Change in
Control.
(f) Stock Options. If upon the date of termination of the Executive's
employment, the Executive holds any options with respect to stock of
Corporation, all such options will immediately become exercisable upon such
date and will be exercisable for one hundred eighty (180) days thereafter.
To the extent such acceleration of exercise of such options is not
permissible under the terms of any plan pursuant to which the options were
granted, the Corporation will pay to Executive, in a lump sum, within one
hundred eighty (180) days after termination of employment, an amount in
cash equal to the excess, if any, of the aggregate fair market value of all
stock of the Corporation subject to such options, determined on the date of
termination of employment, over the aggregate option price of such stock,
and the Executive will surrender all such options unexercised.
(g) Outplacement. The Corporation shall pay or reimburse the
Executive all fees for outplacement services and related travel costs up to
a maximum of ten thousand dollars ($10,000).
In computing and determining Severance Benefits under subsections 4(a),
(b), (c), (d), (e), (f), and (g), above, a decrease in the Executive's salary,
incentive bonus potential, or insurance benefits shall be disregarded if such
decrease occurs within six (6) months before a Change in Control, is in
contemplation of such Change in Control, and is taken to avoid the effect of
this Agreement should such action be taken after such Change in Control. In
such event, the salary, incentive bonus potential, and/or insurance benefits
used to determine Severance Benefits shall be that in effect immediately before
the decrease that is disregarded pursuant to this Section 4.
Except as otherwise provided, the Severance Benefits provided in
subsections 4(a), (b), (c), (e), (f), and (g) above shall be paid not later than
forty-five (45) business days following the date the Executive's employment
terminates.
5. Tax Gross-Up. If any Severance Benefit or other benefit paid or
provided under Section 4, or the acceleration of stock option vesting, or the
payment or distribution of any Employee Benefits or similar benefits are subject
to excise tax pursuant to Section 4999 of the Internal Revenue Code of 1986, as
amended (or any similar federal or state excise tax), the Corporation shall pay
to the Executive such additional compensation as is necessary (after taking into
account all federal, state, and local income taxes payable by the Executive as a
result of the receipt of such additional compensation) to place the Executive in
the same after-tax position the Executive would have been in had no such excise
tax (or any interest or penalties thereon) been paid or incurred with respect to
any of such amounts (the "Tax Gross-Up"). The Corporation shall pay such
additional compensation at the time when the Corporation withholds such excise
tax from any payments to the Executive. The calculation of the Tax Gross-Up
shall be approved by the Corporation's independent certified public accounting
firm engaged by the Corporation immediately prior to the Change in Control and
the calculation shall be provided to the Executive in writing. The Executive
shall then be given fifteen (15) days, or such longer period as the Executive
reasonably requests, to accept or reject the calculation of the Tax Gross-Up.
If the Executive rejects the Tax Gross-Up calculation and the parties are
thereafter unable to agree within an additional forty-five (45) days, the
arbitration provisions of Section 10 shall control. The Corporation shall
reimburse the Executive for all reasonable legal and accounting fees incurred
with respect to the calculation of the Tax Gross-Up and any disputes related
thereto.
For purposes of determining the amount of the Tax Gross-Up, the
Executive shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Tax Gross-Up
is to be made and state and local income taxes at the highest marginal rates of
taxation in the state and locality of the Executive's residence on the date of
termination.
If the excise tax is subsequently determined to be less than the
amount taken into account hereunder at the time of termination of employment,
the Executive shall repay to the Corporation at the time the reduction in excise
tax is finally determined, the portion of the Tax Gross-Up attributable to such
reduction. Notwithstanding the Executive's acceptance or rejection of the Tax
Gross-Up calculation, if the excise tax is determined to exceed the amount taken
into account hereunder at the time of termination of employment, the Corporation
shall make an additional Tax Gross-Up payment to the Executive in respect of
such excess at the time the amount of such excess is finally determined.
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6. Withholding of Taxes. The Corporation may withhold from any amounts
payable under this Agreement all federal, state, city, or other taxes as
required by law.
7. Acknowledgement; No Duty to Mitigate. The Corporation hereby
acknowledges that it will be difficult and may be impossible for the Executive
to find reasonably comparable employment, or to measure the amount of damages
which the Executive may suffer as a result of termination of employment
hereunder. Accordingly, the payment of the Severance Benefits by the
Corporation to the Executive in accordance with the terms of this Agreement is
hereby acknowledged by the Corporation to be reasonable and will be liquidated
damages, and the Executive will not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
nor will any profits, income, earnings, or other benefits from any source
whatsoever create any mitigation, offset, reduction, or any other obligation on
the part of the Executive hereunder or otherwise, except for a reduction in
health insurance coverage as provided in subsection 4(d)(1). The Corporation
shall not be entitled to set off or counterclaim against amounts payable
hereunder with respect to any claim, debt, or obligation of the Executive.
8. Enforcement Costs; Interest. The Corporation is aware that, upon the
occurrence of a Change in Control, the Board or a stockholder of the Corporation
may then cause or attempt to cause the Corporation to refuse to comply with its
obligations under this Agreement, or may cause or attempt to cause the
Corporation to institute, or may institute, litigation, arbitration, or other
legal action seeking to have this Agreement declared unenforceable, or may take,
or attempt to take, other action to deny the Executive the benefits intended
under this Agreement. In these circumstances, the purpose of this Agreement
could be frustrated. It is the intent of the Corporation that the Executive not
be required to incur the expenses associated with the enforcement of the
Executive's rights under this Agreement by litigation, arbitration, or other
legal action nor be bound to negotiate any settlement of the Executive's rights
hereunder under threat of incurring such expenses because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Executive under this Agreement. Accordingly, if following a Change in
Control it should appear to the Executive that the Corporation has failed to
comply with any of its obligations under this Agreement, including the proper
calculation of the Tax Gross-Up, or in the event that the Corporation or any
other person takes any action to declare this Agreement void or unenforceable,
or institute any litigation or other legal action designed to deny, diminish, or
to recover from the Executive, the benefits intended to be provided to the
Executive hereunder, the Corporation irrevocably authorizes the Executive from
time to time to retain counsel (legal and accounting) of the Executive's choice
at the expense of the Corporation as provided in this Section 8 to represent the
Executive in connection with the calculation of the Tax Gross-Up, or the
initiation or defense of any litigation or other legal action, whether by or
against the Corporation or any director, officer, stockholder, or other person
affiliated with the Corporation. Notwithstanding any existing or prior
attorney-client relationship between the Corporation and such counsel, the
Corporation irrevocably consents to the Executive entering into an attorney-
client relationship with such counsel, and in that connection the Corporation
and the Executive agree that a confidential relationship shall exist between the
Executive and such counsel. The reasonable fees and expenses of counsel
selected from time to time by the Executive as provided in this Section shall be
paid or reimbursed to the Executive by the Corporation on a regular, periodic
basis upon presentation by the Executive of a statement or statements prepared
by such counsel in accordance with its customary practices. In any action
involving this Agreement, the Executive shall be entitled to prejudgment
interest on any amounts found to be due him from the date such amounts would
have been payable to the Executive pursuant to this Agreement at an annual rate
of interest equal to the prime commercial rate in effect at Citibank or its
successor in effect from time to time during the prejudgment period plus 4
percent.
9. Indemnification. From and after the earliest to occur of a Change in
Control or termination of employment, the Corporation shall (a) for a period of
five (5) years after such occurrence, provide the Executive (including the
Executive's heirs, executors, and administrators) with coverage under a standard
directors' and officers' liability insurance policy at the Corporation's
expense, and (b) indemnify and hold harmless the Executive, to the fullest
extent permitted or authorized by the law of the State of Delaware as it may
from time to time be amended, if the Executive is (whether before or after the
Change in Control) made or threatened to be made a party to any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that the Executive is or
was a director, officer, or employee of the Corporation or any Subsidiary, or is
or was serving at the request of the Corporation or any Subsidiary as a
director, trustee, officer, or employee of a corporation, partnership, joint
venture, trust, or other enterprise. The indemnification provided by this
Section 9 shall not be deemed exclusive of any other rights to which the
Executive may be entitled under the charter or bylaws of the Corporation or of
any Subsidiary, or any agreement, vote of shareholders or disinterested
directors, or otherwise, both as to action in the Executive's official capacity
and as to action in another capacity while holding such office, and shall
continue as to the Executive after the Executive has ceased to be a director,
trustee, officer, or employee and shall inure to the benefit of the heirs,
executors, and administrators of the Executive.
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10. Arbitration. As the method for resolving any dispute arising out of
this Agreement, the Executive, in the Executive's sole discretion, may select
binding arbitration in accordance with this Section. Except as provided
otherwise in this Section, arbitration pursuant to this Section shall be
governed by the Commercial Arbitration Rules of the American Arbitration
Association. The Executive shall deliver written notice to the Corporation,
including a description of the issue to be arbitrated. Within fifteen (15) days
after the Executive demands arbitration, the Corporation and the Executive shall
each appoint an arbitrator. Within fifteen (15) additional days, these two
arbitrators shall appoint the third arbitrator by mutual agreement; if they fail
to agree within this fifteen (15) day period, then the third arbitrator shall be
selected promptly pursuant to the rules of the American Arbitration Association
for Commercial Arbitration. The arbitration panel shall hold a hearing in
Columbus, Ohio, within ninety (90) days after the appointment of the third
arbitrator. The fees and expenses of the arbitrators, and any American
Arbitration Association fees, shall be paid by the Corporation. Both the
Corporation and the Executive may be represented by counsel and may present
testimony and other evidence at the hearing. Within ninety (90) days after
commencement of the hearing, the arbitration panel will issue a written
decision; the majority vote of two of the three arbitrators shall control. The
majority decision of the arbitrators shall be binding on the parties, and the
parties may not pursue other available legal remedies if the parties are not
satisfied with the majority decision of the arbitrator. The Executive shall be
entitled to seek specific performance of the Executive's rights under this
Agreement during the pendency of any dispute or controversy arising under or in
connection with this Agreement.
11. Employment Rights. This Agreement sets forth the Severance Benefits
payable to the Executive in the event the Executive's employment with the
Corporation is terminated under certain conditions specified in Section 3. This
Agreement is not an employment contract nor shall it confer upon the Executive
any right to continue in the employ of the Corporation or its Subsidiaries and
shall not in any way affect the right of the Corporation or its Subsidiaries to
dismiss or otherwise terminate the Executive's employment at any time with or
without cause subject to provisions contained in Employment Agreements and other
agreements between the Corporation and the Executive.
12. Arrangements Not Exclusive. The specific benefit arrangements
referred to in this Agreement are not intended to exclude the Executive from
participation in or from other benefits available to executive personnel
generally or to preclude the Executive's right to other compensation or benefits
as may be authorized by the Board at any time. The provisions of this Agreement
and any payments provided for hereunder shall not reduce any amounts otherwise
payable, or in any way diminish the Executive's existing rights, or rights which
would accrue solely as the result of the passage of time under any compensation
plan, benefit plan, incentive plan, stock option plan, employment agreement, or
other contract, plan, or arrangement except as may be specified in such
contract, plan, or arrangement. Notwithstanding anything to the contrary in
this Section 12, the Severance Benefits provided in Section 4 are in lieu of any
benefits to which the Executive would be entitled following the termination of
the Executive's employment pursuant to any employment agreement or other plan or
agreement pursuant to the Corporation's transition pay or any successor to such
plan.
13. Termination. Except for termination of employment described in Section
3(a), this Agreement shall terminate if the employment of the Executive with the
Corporation shall terminate prior to a Change in Control.
14. Successors; Binding Agreements. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees. The Executive's rights and benefits under this Agreement
may not be assigned, except that if the Executive dies while any amount would
still be payable to the Executive hereunder if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement, to the beneficiaries designated by
the Executive to receive benefits under this Agreement in a writing on file with
the Corporation at the time of the Executive's death or, if there is no such
beneficiary, to the Executive's estate. The Corporation will require any
successor (whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business and/or assets of the
Corporation (or of any division or Subsidiary thereof employing the Executive)
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Corporation would be required to perform it if no
such succession had taken place. Failure of the Corporation to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle the Executive to compensation
from the Corporation in the same amount and on the same terms to which the
Executive would be entitled hereunder if the Executive terminated employment for
Good Reason following a Change in Control.
15. No Vested Interest. Neither the Executive nor the Executive's
beneficiaries shall have any right, title, or interest in any benefit under this
Agreement prior to the occurrence of the right to the payment of such benefit.
16. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or mailed by United
States registered mail,
36
return receipt requested, postage prepaid, addressed to the such addresses as
each party may designate from time to time to the other party in writing in the
manner provided herein. Unless designated otherwise notices should be addressed
as follows:
TO THE EXECUTIVE
Xxxxxx Xxxxx
0000 Xxxxxxxxx Xx.
Xxx Xxxxxx, XX 00000
TO THE CORPORATION
Too, Inc.
0000 Xxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxx/Sr. Vice President-Chief Financial
Officer
If the parties by mutual agreement supply each other with telecopier numbers for
the purposes of providing notice by facsimile, such notice shall also be proper
notice under this Agreement. Notice sent by certified or registered mail shall
be effective two (2) days after deposit by delivery to the U.S. Post Office.
17. Savings Clause. If any payments otherwise payable to the Executive
under this Agreement are prohibited or limited by any statute or regulation in
effect at the time the payments would otherwise be payable:
(a) Corporation will use its best efforts to obtain the consent of
the appropriate governmental agency to the payment by Corporation to the
Executive of the maximum amount that is permitted; and
(b) the Executive will be entitled to elect to have apply, and
therefore to receive benefits directly under, either (i) this Agreement or
(ii) any generally applicable Corporation severance, separation pay, and/or
salary continuation plan that may be in effect at the time of the
Executive's termination.
Following any such election, the Executive will be entitled to receive benefits
under this agreement or plan elected only if and to the extent the agreement or
plan is applicable and subject to its specific terms.
18. Amendment; Waiver. This Agreement may not be amended or modified and
no provision may be waived unless such amendment, modification, or waiver is
agreed to in writing and signed by the Executive and the Corporation.
19. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
20. Prior Executive Agreements. This Agreement supersedes any and all
prior executive agreements or similar agreements between the Corporation (or
any predecessor of the Corporation) and the Executive and no payments or
benefits of any kind shall be made under, on account of, or by reference to the
prior executive agreements.
21. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
22. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Ohio, without
giving effect to conflict of law principles thereof. The parties hereby consent
to the exclusive jurisdiction of the state courts of the State of Ohio and venue
in Franklin County, Ohio.
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In witness whereof, the parties have signed this Agreement as of the first
day and year written above.
Corporation:
-----------
TOO, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
XXXXXXX X. XXXXXX
President and Chief Executive Officer
Executive:
---------
/s/ Xxxxxx Xxxxx
------------------------------------------
XXXXXX XXXXX
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