EXHIBIT 10.29
EXECUTIVE AGREEMENT
(XXXXXXX X. MAY)
THIS IS AN AGREEMENT between TOO, INC., a Delaware corporation (the
"Corporation"), with its principal office located at 0000 Xxxxxx Xxxxxxx, Xxx
Xxxxxx, Xxxx 00000, and XXXXXXX X. MAY (the "Executive"), effective as of
February 23, 2004.
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
entered above and will irrevocably continue in effect for a three-year period
through February 23, 2007. On February 23, 2005, 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.
167
(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.
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
168
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;
(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.
169
(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;
(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
170
(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
171
(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.
(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).
172
(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 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 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.
(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.
173
(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.
174
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.
175
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.
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
176
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, 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
Xxxxxxx X. May
000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
177
TO THE CORPORATION
Too, Inc.
0000 Xxxxxx Xxxxxxx
Xxx Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxx, Senior Vice President -
Human Resources
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.
178
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
day and year written above.
CORPORATION:
TOO, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
XXXXXXX X. XXXXXX
Its: Chairman, Chief Executive Officer and
President
EXECUTIVE:
/s/ Xxxxxxx X. May
--------------------------------------
XXXXXXX X. MAY
179
