EXHIBIT 10.19
Xxxxxxx X. Xxxxxx
00 Xxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Re: SEVERANCE AGREEMENT
Dear Xxxxxxx:
Trans World Entertainment Corporation, a New York Corporation, and its wholly
owned subsidiary, Record Town, Inc. (collectively, the "Company"), considers the
establishment and maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and its shareholders.
In order to induce you to join the Company, this Agreement sets forth the
severance benefits which the Company agrees will be provided to you in the event
your employment with the company is terminated without "Cause," as further
described below.
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof and
shall continue in effect until May 1, 2000 (the "Term"); provided, however,
that commencing of May 1, 2000 and each May thereafter, the term of this
Agreement shall automatically be extended for one additional year.
Notwithstanding anything in this Section 1 to the contrary, this Agreement
shall terminate if you otherwise separate your employment from the Company.
2. SEPARATION FOR DISABILITY OR FOR CAUSE.
a) You shall be entitled to the benefits provided in Section 3 if, during
the Term of this Agreement, your employment with the Company is ever
terminated for any reason other than Cause (defined below), unless such
termination is for Disability (defined below.)
b) DISABILITY. Termination by the Company of your employment based on
"Disability" shall mean termination because of your absence from your
duties with the Company on a full time basis for sixty (60) consecutive
days as a result of your incapacity due to physical or mental illness,
unless within thirty (30) days after notice of termination is given to
you following such absence you shall have returned to the full-time
performance of your duties. This provision shall not apply to
accidents.
c) CAUSE. Termination by the Company of your employment for "Cause" shall
mean termination for any of the following reasons: (i) the willful and
continued failure by you to perform substantially your duties with the
Company (other than any such failure resulting from your incapacity due
to physical or mental illness) after demand for substantial performance
is delivered to you by the Chairman of the Board or the CEO of the
Company, which demand specifically identifies the manner in which such
executive believes that you have not substantially performed your
duties; (ii) the willful engaging by you in illegal conduct that
materially and demonstrably damages the Company's business or
reputation; (iii) the commission of any act which injures, or in the
reasonable judgment of the Board could reasonably be expected to
injure, materially the reputation, business or business relationships
of the Company, including, without limitation, any breach of written
policies of the Company with respect to trading in securities; or (iv)
any conduct in the course of your employment that constitutes, in the
Company's reasonable judgement, gross negligence, fraud, embezzlement
or any acts of moral turpitude that result or are intended to result,
directly or indirectly, to your personal enrichment at the Company's
expense. For purposes of this Section 2(c), no act or failure to act on
your part shall be considered "willful" unless done, or omitted to be
done, by you in bad faith and without reasonable belief that your
action or omission was in, or not opposed to, the best interests of the
Company. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the
advise of counsel for the company shall be conclusively presumed to be
done, or omitted to be done, by you in good faith and in the best
interests of the corporation.
d) EMPLOYMENT AT WILL. The Company or you may separate your employment at
any time, subject to the Company's covenant to provide the benefits
specified in accordance with the terms of this Agreement.
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3. COMPENSATION UPON TERMINATION OR DURING DISABILITY: OTHER AGREEMENTS.
a) During any period that you fail to perform your duties as a result of
incapacity due to physical or mental illness, you shall continue to
receive your salary at the rate then in effect and any benefits or
awards under any benefit plans shall continue to accrue during such
period, which period shall be at least 90 days, until your employment
is terminated without cause. Thereafter, your benefits shall be
determined in accordance with any applicable benefit plans then in
effect.
b) If your employment shall be terminated, other than for Cause, by the
Company, then the Company shall pay you your base salary for 24 months
at the rate in effect just prior to the time a notice of termination is
given, plus (i) the lesser of (x) your bonus paid by the Company for
the last fiscal year (or guaranteed to be paid in the case of fiscal
1999) and (y) the bonus you would have earned for the current fiscal
year (not to exceed the bonus payable based upon achieving target) and
(ii) any benefits (including health, disability and 401(k) or awards
including both cash, bonus and stock components) which, pursuant to the
terms of any applicable plans, have been earned or become payable, but
which have not yet been paid to you (it being understood that options
and restricted stock awards that have not vested as of the date of
termination shall terminate upon such date of termination). Thereafter,
the Company shall have no further obligations to you under this
Agreement; provided that (i) your benefits under the Company's
Supplemental Executive Retirement Plan shall continue to accrue for a
period of two years from the date of termination or your subsequent
employment by a third party, whichever occurs sooner, at the rate
accrued in the last full fiscal year prior to the notice of
termination, and (ii) the Company shall continue your existing life
insurance and health benefits for a period of two years from the date
of termination or your subsequent employment by a third party,
whichever occurs sooner.
c) To the extent that you shall receive cash compensation that is subject
to federal income taxation in respect of other employment or a
consulting position with another organization, and that consideration
is payable to you solely in respect of the remainder of the Term of
this Agreement as in effect immediately prior to such termination, or a
portion thereof, the payments to be made by the Company under this
Section 3, shall be proportionately reduced.
d) To the extent that following a Change of Control (as such term is
defined in the Company's 1998 Stock Option Plan as in effect on the
date hereof) your responsibilities within the Company are materially
diminished, you shall have the right to deem your employment to have
been terminated, other than for Cause, by the Company by written notice
to the Company within 30 days of such diminution of such
responsibility.
4. TAXES. All payments to be made to you under this Agreement will be subject
to required withholding of federal, state, and local income and employment
taxes.
5. SURVIVAL. The respective obligations of, and benefits afforded to, the
Company or you as provided in this Agreement shall survive any expiration
or termination of this Agreement.
6. NOTICES. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United Sates
registered mail, return receipt requested, postage prepaid and addressed,
in the case of the Company, to the address set forth on the first page of
this Agreement, or, in the case of the undersigned employee, to the address
set forth below his signature, provided that all notices to the Company
shall be directed to the attention of the Chairman of the company, with a
copy to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon
receipt.
7. MODIFICATION WAIVER: GOVERNING LAW. No provision of this Agreement may be
modified, waived or discharged unless such modification, waiver or
discharge is agreed to in writing signed by you and the Chairman of the
Board or the CEO of the Company. No waiver by either party hereto at any
time of any breach by the other party hereto of, or of compliance with, any
condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or other wise, expressed or implied, with respect to
the subject matter hereof have been made by either party, which are not
expressly set forth in this Agreement.
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The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York without
reference to its principles of conflict of laws.
8. ARBITRATION. Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration in Albany, New
York by three arbitrators in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrators' award in any court having jurisdiction. The Company shall bear
all costs and expenses arising in connection with any arbitration
proceeding pursuant to this Section 8.
9. EMPLOYEE'S CONTINUING COVENANTS.
a) For a period of 24 months after your employment is separated from the
Company for whatever reason, whether or not it is for Cause, you
covenant and agree not to compete with the Company, whether directly or
indirectly, alone or as an employee, independent contractor of any
type, partner, substantial shareholder (5% or greater) or holder of an
option or right to become a substantial shareholder, in any music or
video business in the United States. If any of the restrictions on
post-employment competitive activity contained in this Section 9 are
held by a court of competent jurisdiction to be excessively broad as to
duration, geographical scope, activity or subject such restrictions
shall be construed to be enforceable to the extent compatible with
applicable law as it shall then exist, it being understood that by the
execution of this Agreement the parties hereto regard such restrictions
as reasonable and compatible with their respective rights and
obligations.
b) In consideration for the Company's agreement hereunder, you agree that
subsequent to your period of employment with the Company, you will not
at any time communicate or disclose to any unauthorized person, without
the written consent of the Company, business information, trade
secrets, sales data or any proprietary processes of the Company or any
subsidiary or other confidential information concerning their business
affairs, products, suppliers, or customers, unless otherwise required
by law.
If this letter correctly sets forth our agreement on the subject matter hereof,
kindly sign and return it to the Company, which will then constitute our
agreement.
Sincerely,
TRANS WORLD ENTERTAINMENT CORP.
RECORD TOWN, INC.
BY:
__________________________________
Xxxxxx X. Xxxxxxx
Chairman & CEO
ACKNOWLEDGED AND AGREED TO:
By:
______________________________
Xxxxxxx X. Xxxxxx
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