EMPLOYMENT AGREEMENT
Exhibit 10.1
This
Employment Agreement (“Agreement”) is made and entered into
as of the 18th day
of January 2007 by and between CLAIRE’S STORES, INC., a Florida corporation (the “Company”), and
XXX XXXXXX (the “Executive”).
RECITALS
A. The Executive is currently employed as the Chief Financial Officer of the Company.
B. The Executive possesses intimate knowledge of the business and affairs of the Company, its
policies, methods and personnel.
C. The Board of Directors of the Company (the “Board”) recognizes that the Executive’s talents
and abilities are unique and that the Executive has been integral to the growth and success of the
Company, and desires to assure the Company of the Executive’s continued employment and to
compensate him therefor.
D. The Board also recognizes that, in addition to the foregoing, the network of contacts among
suppliers and wholesalers that has been established and maintained by the Executive (the “Network”)
is also a unique asset that has been integral to the growth and success of the Company, and desires
to assure the Company that the Executive will not compete with the Company in the foreseeable
future.
E. The Board has determined that this Agreement will reinforce and encourage the Executive’s
continued attention and dedication to the Company and benefit the Company.
F. The Executive is willing to make his services available to the Company on the terms and
conditions hereinafter set forth, and the Company is willing to make payments and provide benefits
to the Executive on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, the
parties agree as follows:
ARTICLE I.
EMPLOYMENT
1.1. Employment and Term. The Company hereby agrees to employ the Executive and the
Executive hereby agrees to serve the Company on the terms and conditions set forth herein.
1.2. Duties of Executive. During the Term of Employment under this Agreement, the
Executive shall continue to serve as Chief Financial Officer of the Company and shall faithfully
and diligently perform all services as may be assigned to him by the Co-Chairmen of the Board, or
either of them (provided that, such services shall not materially differ from the services
currently provided by the Executive), and shall exercise such power and have such authority as may
from time to time be delegated to him by the Co-Chairmen of the Board, or either of them.
The Executive shall report directly to the Co-Chairmen of the Board. The Executive shall
devote his full time and attention to the business and affairs of the Company, render such services
to the best of his ability, and use his best efforts to promote the interests of the Company.
Notwithstanding the foregoing or any other provision of this Agreement, it shall not be a breach or
violation of this Agreement for the Executive to (i) serve on corporate, civic or charitable boards
or committees, (ii) deliver lectures or fulfill speaking engagements, or (iii) manage personal
investments, so long as such activities do not significantly interfere with or significantly
detract from the performance of the Executive’s responsibilities to the Company in accordance with
this Agreement. The restrictions in the foregoing sentence shall not apply to the Executive’s
ownership of common stock of the Company or the acquisition by the Executive, solely as an
investment, of securities of any issuer that is registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended, and that are listed or admitted for trading on any
United States national securities exchange or that are quoted on the National Association of
Securities Dealers Automated Quotations System, or any similar system or automated dissemination of
quotations of securities prices in common use, so long as the Executive does not control, acquire a
controlling interest in or become a member of a group which exercises direct or indirect control
of, more than five percent of any class of capital stock of such corporation.
ARTICLE II.
TERM OF EMPLOYMENT
2.1. In General. The Term of Employment under this Agreement, and the employment of
the Executive hereunder (including any renewal periods hereof, the “Term of Employment”), shall
commence as of the date first set forth above (the “Commencement Date”) and shall terminate upon
the earlier of (a) January 31, 2008, or (b) the date on which the employment of the Executive is
terminated pursuant to and in accordance with Article V hereof. Except as provided in Section
2.2.1 of this Article, below, the Term of Employment hereunder shall be renewed automatically for
successive periods of one (1) year, unless either the Company or the Executive elects not to renew
such term by giving written notice to the other thereof at least one hundred eighty (180) days
prior to the Expiration Date (as defined herein). For purposes hereof, the date on which the Term
of Employment under this Agreement shall terminate is sometimes referred to herein as the
“Termination Date”, and the date on which the Term of Employment shall expire or would have expired
absent an earlier termination pursuant to Article V hereof is sometimes referred to herein as the
“Expiration Date.”
2.2. Change in Control of Company.
2.2.1. Renewal of Agreement. In the event that a Change in Control of the
Company (as defined in Subsection 2.2.2 of this Article, below) shall occur during the Term
of Employment, this Agreement shall automatically be renewed for a term of three (3) years
commencing on the date on which the Change in Control of the Company becomes effective.
2.2.2. Definition. For purposes of this Agreement, the term “Change in
Control” shall mean a “Change in Control” as defined in the Company’s Amended and Restated
2005 Incentive Compensation Plan, as in effect on the date hereof.
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ARTICLE III.
COMPENSATION
3.1. Base Salary. The Executive’s current base salary at the annual rate of Five
Hundred Thousand Dollars ($500,000) shall be increased to Five Hundred Fifteen Thousand Dollars
($515,000) as of February 1, 2007 (as increased from time to time, the “Base Salary”), with such
Base Salary payable in installments consistent with the Company’s normal payroll schedule. The
Base Salary shall be reviewed on an annual basis during the Term of Employment, with the first
review occurring on or before the first anniversary of the Commencement Date. The Base Salary
shall increase annually by no less than 3%.
3.2. Bonuses: Incentive Compensation. For each fiscal year during the Term of
Employment, the Executive shall be eligible to receive additional compensation (the “Incentive
Compensation”) of up to 150% of Base Salary, based on achievement of performance criteria. As used
herein, the term “Incentive Compensation” shall include the portion of any annual incentive
compensation award that is earned by the Executive in respect of a fiscal year (including the
portion of any such award that is deferred by the Executive), but such term shall not include any
Company “matching” contributions with respect to the deferred portion of any annual bonus award.
The performance criteria for fiscal year 2007 have been established by a committee of the Board and
provided to the Executive. The performance criteria for the remaining fiscal years during the Term
of Employment shall be established each year within 90 days of the beginning of the applicable
fiscal year by a committee of the Board.
3.3. Long Term Incentives. For each fiscal year during the Term of Employment, the
Company shall provide the Executive with a long term incentive opportunity through the grant of
stock options, restricted stock, performance based stock or other similar long term incentives
(each such annual grant, a “Long Term Incentive Grant”) under a plan established by the Company for
the benefit of the Executive and other senior management of the Company (each, a “Long Term
Incentive Plan”). Any Long Term Incentive Grant shall be reflected in an agreement entered into
between the Company and the Executive and shall be subject to the terms of the Long Term Incentive
Plan and agreement pursuant to which such Long Term Incentive Grant is made, and shall be subject
to achievement of performance criteria to be established by a committee of the Board within ninety
(90) days of the beginning of each fiscal year (the “Performance Goals”), except in the case of
stock option grants or any long term awards intended to vest solely based on the passage of time.
The Performance Goals shall not be any more stringent than the criteria for the award of long term
incentives to senior management of the Company in general. The Executive acknowledges that Company
has provided him with the Long Term Incentive Grant on account of fiscal year 2007 pursuant to the
2005 Incentive Compensation Plan and the performance criteria relating thereto have been
established by a committee of the Board and provided to the Executive. In addition to the Long
Term Incentive Grants described above, the Company may (but shall not be obligated to) during the
Term of Employment provide the Executive with other incentive compensation based upon external
competitiveness, internal equity and the degree of difficulty in attaining target performance
levels.
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ARTICLE IV.
EXPENSE REIMBURSEMENT AND OTHER BENEFITS
4.1. Reimbursement of Expenses. Upon the submission of proper substantiation by the
Executive, and subject to such rules and guidelines as the Company may from time to time adopt with
respect to the reimbursement of expenses of executive personnel, the Company shall reimburse the
Executive for all reasonable expenses actually paid or incurred by the Executive during the Term of
Employment in the course of and pursuant to the business of the Company. The Executive shall
account to the Company in writing for all expenses for which reimbursement is sought and shall
supply to the Company copies of all relevant invoices, receipts or other evidence reasonably
requested by the Company.
4.2. Compensation/Benefit Programs. During the Term of Employment, the Executive
shall be entitled to participate in all medical, dental, hospitalization, accidental death and
dismemberment, disability, travel and life insurance plans, and any and all other plans as are
presently and hereinafter generally offered by the Company to its executive personnel (other than
those that may be offered by the Company to its Co-Chairmen (or either of them) and not to other
executive personnel), including savings, pension, profit-sharing and deferred compensation plans,
subject to the general eligibility and participation provisions set forth in such plans.
4.3. Working Facilities. During the Term of Employment, the Company shall furnish the
Executive with an office, secretarial help and such other facilities and services suitable to his
position and adequate for the performance of his duties hereunder in Pembroke Pines, Florida (or
such other city within Broward County, Florida in which the Company may, from time to time,
maintain its executive office). The office and staff provided to the Executive during the Term of
Employment shall be consistent with those provided to the Executive prior to the Commencement Date
hereof.
4.4. Vacation Benefits. Executive shall be entitled to five (5) weeks of paid
vacation each fiscal year during the Term of Employment, to be taken at such times as shall be
approved by the Company’s Co-Chairmen (or either of them), provided that no vacation time shall
significantly interfere with the duties required to be rendered by Executive hereunder. The
Executive may carry forward up to two (2) weeks of vacation which accrues but is unused in any
fiscal year into the next succeeding fiscal year (but any such vacation carried forward from any
fiscal year that is not used in the next succeeding fiscal year shall lapse). Except as and to
the extent otherwise expressly set forth in this Agreement, the Executive shall have no right to
receive payment of any compensation on account of any vacation which accrues but is unused in any
fiscal year. As soon as practicable on or after the date of this Agreement, the Company shall pay
to the Executive a lump sum cash amount of $224,000 in full satisfaction of all of the Executive’s
accrued vacation benefits through the date of this Agreement.
ARTICLE V.
TERMINATION
5.1. Termination for Cause. The Company shall at all times have the right, upon
written notice to the Executive, to terminate the Term of Employment, for Cause as defined below.
For purposes of this Agreement, the term “Cause” shall mean (i) an action or omission of the
Executive during the Term of Employment which constitutes a willful and material breach
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of, or willful and material failure or refusal (other than by reason of his disability or
incapacity) to perform his duties under this Agreement which is not cured within fifteen (15) days
after receipt by the Executive of written notice of same, (ii) fraud, embezzlement,
misappropriation of funds or breach of trust in connection with his services hereunder during the
Term of Employment, (iii) the conviction of, or pleading guilty or nolo contendere by, the
Executive of any felony during the Term of Employment, or (iv) gross negligence or intentional acts
during the Term of Employment, including, without limitation, immoral or disreputable conduct, that
could reasonably be expected to result in material damage to the business or reputation of the
Company. Any termination for Cause shall be made by notice in writing to the Executive, which
notice shall set forth in reasonable detail all acts or omissions upon which the Company is relying
for such termination. The Executive shall have the right to address the Board regarding the acts
set forth in the notice of termination. Upon any termination pursuant to this Section 5.1: (a)
the Company shall, within fifteen (15) days of the Termination Date, pay to the Executive: any
earned but unpaid Base Salary through the Termination Date; (b) the portion of any Long Term
Incentive Grants that have not vested or which shall remain subject to any restrictions or
performance criteria as of the Termination Date shall terminate, and (c) any stock options
previously granted to him which are not vested as of the Termination Date shall terminate and be of
no further force and effect (unless otherwise provided in the plan or agreement pursuant to which
such stock options were granted). Upon any termination effected and compensated pursuant to this
Section 5.1, the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the Termination Date, subject to
the provisions of Section 4.1 of this Agreement).
5.2. Disability. In the event that, due to the physical or mental disability or
illness of the Executive, the Executive shall be unable to perform the essential functions of his
position for a period of one hundred eighty (180) consecutive days or for one hundred eighty (180)
days, whether or not consecutive, in any twelve (12) month period, the Company shall have the
option, in accordance with applicable law, to terminate the Term of Employment upon written notice
to the Executive. Whether the Executive is subject to a “disability” and whether the disability
substantially impairs the Executive’s ability to perform the essential functions of his position
under this Agreement shall be determined by the decision of a medical specialist selected by the
Company and the Executive (or the Executive’s legal representative if the Executive is incapable of
making such determination). Upon termination pursuant to this Section 5.2: (a) the
Company shall, within fifteen (15) days of the Termination Date, pay to the Executive (i) the
greater of any earned but unpaid Base Salary through the Termination Date, or an amount
equal to the disability benefits payable to the Executive for the period of time during which the
unpaid Base Salary accrued (in the later case, net of any portion thereof that shall have been paid
or is payable by any third party insurance company, pursuant to a policy, the premiums for which
were paid by the Company) and any Incentive Compensation earned but unpaid as of the Termination
Date for any previously completed fiscal year of the Company; (ii) the Incentive Compensation
described in the “Bonuses: Incentive Compensation” section of this Agreement, above, for the
fiscal year in which the Termination Date occurs, pro-rated through the Termination Date (the
annual amount to be pro-rated under this part (ii) shall be the average annual amount of Incentive
Compensation earned by the Executive in respect of the three (3) prior fiscal years); and (iii)
payment for unused vacation days that have been carried forward from the fiscal year preceding the
fiscal year in which the Termination Date occurs in accordance with the terms of this Agreement and
any unused vacation days which have accrued during the fiscal year in which the
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Termination Date occurs (prorated for that portion of the fiscal year which occurs prior to
the Termination Date); (b) the portion of any Long Term Incentive Grants that have not vested as of
the Termination Date shall vest, any restrictions on any Long Term Incentive Grants that have not
yet lapsed shall lapse and any performance criteria relating to any Long Term Incentive Grants
shall be deemed to have been satisfied in full such that all performance-based Long Term Incentive
Grants that would otherwise be phased in over annual increments for
periods continuing after the Termination Date shall instead be completely phased
in as of the Termination Date on the basis of deemed “plan”
level performance achievement, (c) the Executive shall have one (1) year following the Termination
Date to exercise any and all stock options previously granted to him (unless otherwise provided in
the plan or agreement pursuant to which such stock options were granted, and provided further that
no stock option shall remain exercisable beyond its expiration date or beyond the date after which
the Executive would be subject to additional taxation under Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”)), and (d) the Company shall continue to provide the Executive
with the benefits he was receiving under Section 4.2 hereof (the “Benefits”) for twelve
(12) months following the Termination Date, in the manner and at such times as the Benefits
otherwise would have been payable or provided to the Executive.** Upon any termination
effected and compensated pursuant to this Section 5.2, the Company shall have no further
liability hereunder (other than for reimbursement for reasonable business expenses incurred prior
to the Termination Date, subject, however to the provisions of Section 4.1).
5.3. Death. Upon the death of the Executive during the Term of Employment: (a) the
Company shall, within fifteen (15) days of the Termination Date, pay to the Executive’s estate (i)
the amount of any earned but unpaid Base Salary through the Termination Date and any Incentive
Compensation earned but unpaid as of the Termination Date for any previously completed fiscal year
of the Company, (ii) the Incentive Compensation described in the “Bonuses: Incentive Compensation”
section of this Agreement, above, for the fiscal year in which the Termination Date occurs, which
amount shall be pro-rated through the Termination Date (the annual amount to be pro-rated under
this part (ii) shall be the average annual amount of Incentive Compensation earned by the Executive
in respect of the three (3) prior fiscal years), and (iii) payment for unused vacation days that
have been carried forward from the fiscal year preceding the fiscal year in which the Termination
Date occurs in accordance with the terms of this Agreement and any unused vacation days which have
accrued during the fiscal year in which the Termination Date occurs (prorated for that portion of
the fiscal year which occurs prior to the Termination Date); (b) the portion of any Long Term
Incentive Grants that have not vested as of
| ** | To the extent that contributions by the Company for the benefit of the Executive to any savings, pension, profit-sharing and/or deferred compensation plan (a “Compensation Plan Benefit”) would not be allowed to continue under the Internal Revenue Code or the plan documents by reason of the termination of the Executive’s employment pursuant to Section 5.2, 5.3, 5.4, 5.5 or 5.6. of this Agreement, the Company shall pay the Executive cash equal to the value of the Compensation Plan Benefit that otherwise would have accrued for the Executive’s benefit under the plan, for the period during which said Compensation Benefit could not be provided under the plan, said cash payments to be made within 45 days after the end of the calendar year for which such contribution would have been made or would have accrued. Additionally, to the extent that any insurance Benefit to which the Executive is entitled pursuant to Section 4.2. of this Agreement, above, would not be allowed to continue by reason of the termination of the Executive’s employment pursuant to Section 5.2, 5.3, 5.4, 5.5 or 5.6. of this Agreement, the Company shall provide such coverage (or coverage substantially similar thereto) to the Executive, either through individual insurance coverage or from a commercial insurance carrier, and the Company shall maintain such coverage in effect for the period of time designated in Section 5.2., 5.3, 5.4, 5.5 or 5.6. of this Agreement, as the case may be. |
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the Termination Date shall vest, any restrictions on any Long Term Incentive Grants that have
not yet lapsed shall lapse and any performance criteria relating to any Long Term Incentive Grants
shall be deemed to have been satisfied in full such that all performance-based Long Term Incentive
Grants that would otherwise be phased in over annual increments for
periods continuing after the Termination Date shall instead be completely phased
in as of the Termination Date on the basis of deemed “plan”
level performance achievement, and (c) the Executive’s estate shall have one (1) year following the
Termination Date to exercise any and all stock options previously granted to the Executive (unless
otherwise provided in the plan or agreement pursuant to which such stock options were granted, and
provided further that no stock option shall remain exercisable beyond its expiration date or beyond
the date after which the Executive would be subject to additional taxation under Section 409A of
the Code). Upon any termination effected and compensated pursuant to this Section 5.3, the
Company shall have no further liability hereunder (other than for reimbursement for reasonable
business expenses incurred prior to the date of the Executive’s death, subject, however to the
provisions of Section 4.1).
5.4. Termination Without Cause.
5.4.1. Termination; Notice Period. Except as provided in Section 5.6., the
Company shall have the right to terminate the Term of Employment by written notice, not less
than thirty (30) days prior to the Termination Date (the “Without Cause Notice Period”), to
the Executive. If the Company gives the Executive notice of termination pursuant to this
Section 5.4, the Company may, upon the date such notice is given, or anytime
thereafter, relieve the Executive, in whole or in part, of Executive’s duties, provided,
however, that the Termination Date for purposes of determining the Executive’s rights under
this Section 5.4. shall be the last day of the Without Cause Notice Period.
5.4.2. Executive’s Rights. Upon any termination pursuant to this Section
5.4. (that is not a termination under any of Sections 5.1, 5.2, 5.3, 5.5 or 5.6.), the
Company shall within fifteen (15) days of the Termination Date, pay to the Executive (i) an
amount equal to the Executive’s annual Base Salary payable during the fiscal year in which
the Termination Date occurs; (ii) an amount equal to the Incentive Compensation described in
the “Bonuses: Incentive Compensation” section of this Agreement above, based upon the
average annual amount of Incentive Compensation earned by the Executive in respect of the
prior three (3) fiscal years (such average annual bonus, the “Bonus Amount”); (iii) payment
for unused vacation days that have been carried forward from the fiscal year preceding the
fiscal year in which the Termination Date occurs in accordance with the terms of this
Agreement and any unused vacation days which have accrued during the fiscal year in which
the Termination Date occurs (prorated for that portion of the fiscal year which occurs prior
to the Termination Date); (iv) all accrued Base Salary through the Termination Date and any
Incentive Compensation earned but unpaid as of the Termination Date for any previously
completed fiscal year of the Company; and (v) an amount equal to
the Bonus Amount multiplied
by a fraction, the numerator of which shall equal the number of days the Executive was
employed by the Company in the Company fiscal year in which the Executive’s termination
occurs and the denominator of which shall equal 365. The Executive shall also receive such
other benefits, if any, to which the Executive may be entitled pursuant to the terms and
conditions of the employee compensation, incentive, equity, benefit or fringe benefit plans,
policies or programs of the Company, other than any Company severance policy (or any other
payment that
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would result in duplication of benefits), and the Company shall continue to provide the
Executive with the benefits he was receiving under Section 4.2 hereof (the
“Benefits”) for twelve (12) months following the Termination Date, in the manner and at such
times as the Benefits otherwise would have been payable or provided to the
Executive.** Additionally, the portion of any Long Term Incentive Grants that
have not vested as of the Termination Date shall vest, any restrictions on any Long Term
Incentive Grants that have not yet lapsed shall lapse and any performance criteria relating
to any Long Term Incentive Grants shall be deemed to have been satisfied in full such that
all performance-based Long Term Incentive Grants that would otherwise be phased in over
annual increments for
periods continuing after the Termination Date shall instead be completely phased in as of the
Termination Date on the basis of deemed “plan”
level performance achievement, and the
Executive shall have ninety (90) day following the Termination Date to exercise any and all
stock options previously granted to the Executive (unless otherwise provided in the plan or
agreement pursuant to which such stock options were granted, and provided further that no
stock option shall remain exercisable beyond its expiration date or beyond the date after
which the Executive would be subject to additional taxation under Section 409A of the Code).
Upon any termination effected and compensated pursuant to this Section 5.2, the
Company shall have no further liability hereunder (other than for reimbursement for
reasonable business expenses incurred prior to the Termination Date, subject, however to the
provisions of Section 4.1).
5.5. Termination by Executive.
5.5.1. Right of Executive to Terminate Agreement. The Executive shall at all
times have the right, by written notice not less than thirty (30) days prior to the
Termination Date (the “Voluntary Termination Notice Period”), to terminate the Term of
Employment hereunder. If the Executive gives the Company notice of termination pursuant to
this Section 5.5, the Company may, upon the date such notice is given, or anytime
thereafter, relieve the Executive, in whole or in part, of Executive’s duties, provided,
however, that the Termination Date for purposes of determining the Executive’s rights under
this Section 5.5 shall be the last day of the Voluntary Termination Notice Period.
5.5.2. Termination by Executive Without Good Reason. Upon termination of the
Term of Employment pursuant to this Section 5.5 by the Executive without Good Reason
(as defined below): (a) the Company shall, within fifteen (15) days of the Termination
Date, pay to the Executive any earned but unpaid Base Salary through the Termination Date;
(b) the portion of any Long Term Incentive Grants that have not vested or which shall remain
subject to any restrictions or performance criteria as of the Termination Date shall
terminate, and (c) any stock options previously granted to Executive which are vested as of
the Termination Date shall terminate and be of no further force and effect unless exercised
on or prior to the Termination Date (unless otherwise provided in the plan or agreement
pursuant to which such stock options were granted). Upon any termination effected and
compensated pursuant to this Section 5.1, the Company shall have no further
liability hereunder (other than for reimbursement for reasonable business expenses incurred
prior to the Termination Date, subject to the provisions of Section 4.1 of this
Agreement).
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5.5.3. Termination by Executive for Good Reason. Upon termination of the Term
of Employment pursuant to this Section 5.5 by the Executive for Good Reason, the
Company shall pay to the Executive the same amounts, and shall continue or compensate for
Benefits in the same amounts, and shall provide the same conditions for the vesting of any
Long Term Incentive Awards by the Executive, that would have been payable or provided by the
Company to the Executive under Section 5.4 of this Agreement, above, if the Term of
Employment had been terminated by the Company without Cause. Except as provided in
Section 5.7 of this Agreement, below, and all subsections thereof, upon any
termination effected and compensated pursuant to this Subsection 5.5.3, the Company
shall have no further liability hereunder (other than for reimbursement for reasonable
business expenses incurred prior to the Termination Date, subject, however, to the
provisions of Section 4.1).
5.5.4. Definition. For purposes of this Agreement, “Good Reason” shall mean
(i) the assignment to the Executive of any duties inconsistent in any material respect with
the Executive’s chief financial officer position (including status, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section 1.2. of this
Agreement, or any other action by the Company which results in a material diminution in such
position, authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial or inadvertent action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive; (ii) any failure by
the Company to comply with any of the provisions of Article III of this Agreement, other
than an isolated, insubstantial or inadvertent failure not occurring in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given by the Executive;
and (iii) the Company’s requiring the Executive to be primarily based at any office or
location outside of Broward County, Florida, except for travel reasonably required in the
performance of the Executive’s responsibilities.
5.6. Change of Control Protection Benefits.
5.6.1. Termination; Notice Period. In the event that a Change in Control of
the Company (as defined in Subsection 2.2.2 of this Agreement above) shall occur during the
Term of Employment, the Company shall have the right to terminate the Term of Employment by
written notice, not less than (30) days prior to the Termination Date (the “Change of
Control Notice Period”), to the Executive. If the Company gives the Executive notice of
termination pursuant to this Section 5.6, the Company may, upon the date such notice is
given, or anytime thereafter, relieve the Executive, in whole or in part, of Executive’s
duties, provided, however, that the Termination Date for purposes of determining the
Executive’s rights under this Section 5.6. shall be the last day of the Change of Control
Notice Period.
5.6.2. Executive’s Rights. Upon any termination of the Executive’s employment
within twenty four (24) months following the Change in Control of the Company due to (a) an
involuntary termination by the Company without Cause or (b) a termination by the Executive
for Good Reason, the Company shall within fifteen (15) days of the Termination Date, pay to
the Executive (in lieu of the amounts that would otherwise be paid under Section 5.4 or
5.5): (i) an amount equal to two-and-one-half (2.5) times the Executive’s annual Base Salary
payable during the fiscal year in which the Termination
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Date occurs; (ii) an amount equal to two-and-one-half (2.5) times the Bonus Amount;
(iii) payment for unused vacation days that have been carried forward from the fiscal year
preceding the fiscal year in which the Termination Date occurs in accordance with the terms
of this Agreement and any unused vacation days which have accrued during the fiscal year in
which the Termination Date occurs (prorated for that portion of the fiscal year which occurs
prior to the Termination Date); (iv) all accrued Base Salary through the Termination Date
and any Incentive Compensation earned but unpaid as of the Termination Date for any
previously completed fiscal year of the Company; and (v) an amount equal to the Bonus Amount
multiplied by a fraction, the numerator of which shall equal the number of days the
Executive was employed by the Company in the Company fiscal year in which the Executive’s
termination occurs and the denominator of which shall equal 365. The Executive shall also
receive such other benefits, if any, to which the Executive may be entitled pursuant to the
terms and conditions of the employee compensation, incentive, equity, benefit or fringe
benefit plans, policies or programs of the Company, other than any Company severance policy
(or any other payment that would result in duplication of benefits), and the Company shall
continue to provide the Executive with the Benefits he was receiving under Section
4.2 hereof for thirty (30) months following the Termination Date, in the manner and at
such times as the Benefits otherwise would have been payable or provided to the
Executive.** Upon any termination effected and compensated pursuant to this
Section 5.6.2, the Company shall have no further liability hereunder (other than
pursuant to Section 5.7 or for reimbursement for reasonable business expenses incurred prior
to the Termination Date, subject to the provisions of Section 4.1 of this
Agreement).
5.6.3. Certain Other Change in Control Benefits. Subject to the Executive’s
continued employment with the Company and its Subsidiaries through the date of a Change in
Control during the Term of Employment, the Company shall pay to the Executive the following
amounts 15 business days after the Change in Control: (i) a lump sum amount in cash equal
to the sum of 6 months’ Base Salary plus 50% of the Incentive Compensation amount that
Executive would be entitled to receive for “plan” level performance with respect to the
Company’s fiscal year ending January 31, 2007, (ii) all amounts accrued under the Company’s
1999 and 2005 Management Deferred Compensation Plans and (iii) all previously deferred
annual bonus payments (including both the employee “holdback” portions and the Company
matching contributions thereon). Additionally, the portion of any Long Term Incentive
Grants that have not vested as of the Change in Control shall vest, any restrictions on any
Long Term Incentive Grants that have not yet lapsed shall lapse and any performance criteria
relating to any Long Term Incentive Grants shall be deemed to have been satisfied in full
such that all performance-based Long Term Incentive Grants that would otherwise be phased in
over annual increments for
periods continuing after the date of the Change in Control shall instead be completely phased in as of the date of the Change in
Control on the basis of deemed “plan”
level performance achievement.
5.6.4. Failure to Renew Term of Employment Following a Change in Control. In
the event that the Company delivers a notice of non-renewal to the Executive pursuant to
Section 2.1 following a Change in Control (but prior to the date that is 180 days prior to
the third anniversary of the Change in Control) such that the Executive’s employment
10
terminates on the third anniversary of the Change in Control, then the Executive shall
be entitled to receive, and the Company shall be required to provide the enhanced Change in
Control termination protection payments and benefits described in Section 5.6.2. In the
event that the Term of Employment is renewed for at least one additional year following the
third anniversary of the Change in Control, and the Company subsequently delivers a notice
of non-renewal to the Executive pursuant to Section 2.1 such that the Executive’s employment
terminates on an Expiration Date that occurs after the third anniversary of the Change in
Control, then the Executive shall be entitled to receive, and the Company shall be required
to provide the termination payments and benefits described in Section 5.4.2.
5.7. Section 280G Gross-Up. If the payments to which the Executive is entitled
hereunder or otherwise (collectively the “Company Payments”) will cause the Executive to be subject
to the tax (the “Excise Tax”) imposed by §4999 of the Code, the Company shall pay to or for the
benefit of the Executive at the time specified in Subsection 5.7.2, below, an additional
amount (the “Gross-up Payment”) such that the net amount retained by the Executive, after deduction
of any Excise Tax on the Company Payments and any U.S. federal, state, and for local income or
payroll tax upon the Gross-up Payment, but before deduction for any U.S. federal, state, and local
income or payroll tax on the Company Payments, shall be equal to the Company Payments. For
purposes of calculating the Gross-Up Payment, the Executive shall be deemed to pay income taxes at
the highest applicable marginal rate of federal, state or local income taxation for the calendar
year in which the Gross-Up Payment is to be made.
5.7.1. Calculation of Gross-Up Payments. Subject to any determinations made by
the Internal Revenue Service (the “IRS”), all determinations as to whether a Gross-Up
Payment is required and the amount of Gross-Up Payment and the assumptions to be used in
arriving at the determination shall be made by the Company’s independent certified public
accountants, appointed prior to any change in ownership (as defined under Code §280G(b)(2)),
and/or tax counsel selected by such accountants (the “Accountants”) in accordance with the
principles of §280G of the Code. Subject to any determinations made by the IRS,
determinations of the Accountants under this Agreement with respect to (i) the initial
amount of any Gross-Up Payment and (ii) any subsequent adjustment of such payment shall be
binding on the Company and the Executive.
5.7.2. Time for Payment to Executive. The Gross-Up Payment calculated pursuant
to Subsection 5.7.1, above, shall be paid no later than the thirtieth (30th) day
following an event occurring which subjects the Executive to the Excise Tax; provided,
however, that if the amount of such Gross-Up Payment or portion thereof cannot be reasonably
determined on or before such day, the Company shall pay to the Executive the amount of the
Gross-Up Payment no later than 10 days following the determination of the Gross-Up Payments
by the Accountants. Notwithstanding the foregoing, the Gross-Up Payment shall be paid to or
for the benefit of the Executive no later than 15 business days prior to the date by which
the Executive is required to pay the Excise Tax or any portion of the Gross-Up Payment to
any federal, state or local taxing authority, without regard to extensions.
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5.7.3. If Gross-Up Payment Is Excessive. In the event that the Excise Tax or
the Gross-Up Payment is subsequently determined by the Accountants to be less than the
amount taken into account hereunder at the time the Gross-up Payment is made, the Executive
shall repay to the Company, at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the prior Gross-up Payment attributable to such reduction
(plus the portion of the Gross-up Payment attributable to the Excise Tax and U.S. federal,
state and local income tax imposed on the portion of the Gross-up Payment being repaid by
the Executive if such repayment results in a reduction in Excise Tax or a U.S. federal,
state and local income tax deduction), plus interest on the amount of such repayment at the
rate provided in § 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event
any portion of the Gross-up Payment to be refunded to the Company has been paid to any U.S.
federal, state and local tax authority, repayment thereof (and related amounts) shall not be
required until actual refund or credit of such portion has been made to the Executive, and
interest payable to the Company shall not exceed the interest received or credited to the
Executive by such tax authority for the period it held such portion. The Executive and the
Company shall cooperate in good faith in determining the course of action to be pursued (and
the method of allocating the expense thereof) if the Executive’s claim for refund or credit
is denied. However, if agreement cannot be reached, the Company shall decide the
appropriate course of action to pursue provided that the action does not adversely impact
any issues the Executive may have with respect to his tax return, other than the Excise Tax.
5.7.4. If Gross-Up Payment is Insufficient. In the event that the Excise Tax
is later determined by the Accountants or the IRS to exceed the amount taken into account
hereunder at the time the Gross-up Payment is made (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-up Payment), the
Company shall make an additional Gross-up Payment to or for the benefit of the Executive in
respect of such excess (plus any interest or penalties payable with respect to such excess)
at the time that the amount of such excess is finally determined.
5.7.5. Controversy With IRS. In the event of any controversy with the IRS (or
other taxing authority) with regard to the Excise Tax, the Executive shall permit the
Company to control issues related to the Excise Tax (at its expense), provided that such
issues do not potentially materially adversely affect the Executive. In the event issues are
interrelated, the Executive and the Company shall in good faith cooperate so as not to
jeopardize resolution of either issue. In the event of any conference with any taxing
authority as to the Excise Tax or associated income or payroll taxes, the Executive shall
permit the representative of the Company to accompany the Executive, and the Executive and
the Executive’s representative shall cooperate with the Company and its representative.
5.7.6. Accounting Fees. The Company shall be responsible for all fees and
expenses of the Accountant.
5.7.7. Sharing of Communication. The Company and the Executive shall promptly
deliver to each other copies of any written communications, and summaries of any verbal
communications, with any taxing authority regarding the Excise Tax or associated income or
payroll taxes.
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5.8. Release. Notwithstanding anything to the contrary contained herein, the
Executive shall, as a condition to his right to receive any payments or other benefits discussed in
Article V of this Agreement, execute and deliver to the Company a release of any and all claims
that may be brought against the Company at any time and for any reason in the form attached hereto
as Exhibit A (with such changes to such form as may in the opinion of counsel to the
Company be required to cause such release to comply with then applicable law).
5.9. No Mitigation. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement, and compensation earned from such employment or
otherwise shall not reduce the amounts otherwise payable under this Agreement.
5.10. Resignation. Upon the Termination Date or the Expiration Date, whichever is
applicable, the Executive shall be deemed to have resigned as an officer, and if he was then
serving as a director of the Company, as a director, and if required by the Board, the Executive
hereby agrees to immediately execute a resignation letter to the Board.
5.11. Survival. The provisions of this Article V shall survive the termination of
this Agreement, as applicable. Any payments required to be made to the Executive as a result of
termination of his employment pursuant to this Article V shall be made to the estate of the
Executive in the event the Executive dies prior to the date such payment is actually made by the
Company.
ARTICLE VI.
RESTRICTIVE COVENANTS
6.1. Non-competition. At all times while the Executive is employed by the Company and
(a) upon a termination pursuant to Section 5.6 above, for two (2) years following the Termination
Date or the Expiration Date, whichever is applicable, and (b) upon a termination other than
pursuant to Section 5.6 above, for one (1) year following the Termination Date or the Expiration
Date, whichever is applicable, the Executive shall not, directly or indirectly, engage in or have
any interest in any sole proprietorship, corporation, company, partnership, association, venture or
business or any other person or entity (whether as an employee, officer, director, partner, agent,
security holder, creditor, consultant or otherwise) that directly or indirectly (or through any
affiliated entity) engages in any Competing Business, or benefits or could benefit in any manner
from the use of the Network. For purposes of this Agreement, the term “Competing Business” shall
mean any retail business that derives 50% or more of its business
from sales of costume jewelry, accessories and/or cosmetics targeted
to girls and women. The restrictions in the foregoing
sentence shall not apply to the Executive’s ownership of Common Stock of the Company or the
acquisition by the Executive, solely as an investment, of securities of any issuer that is
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, and
that are listed or admitted for trading on any United States national securities exchange or that
are quoted on the National Association of Securities Dealers Automated Quotations System, or any
similar system or automated dissemination of quotations of securities prices in common use, so long
as the Executive does not control, acquire a controlling interest in or become a member of a group
which exercises direct or indirect control of, more than five percent of any class of capital stock
of such corporation.
13
6.2. Confidential Information. The Executive shall not at any time divulge,
communicate, use to the detriment of the Company or for the benefit of any other person or persons,
or misuse in any way, any Confidential Information (as hereinafter defined) pertaining to the
business of the Company. Any Confidential Information or data now or hereafter acquired by the
Executive with respect to the business of the Company (which shall include, but not be limited to,
information concerning the Company’s financial condition, prospects, technology, customers,
suppliers, sources of leads and methods of doing business) shall be deemed a valuable, special and
unique asset of the Company that is received by the Executive in confidence and as a fiduciary, and
Executive shall remain a fiduciary to the Company with respect to all of such information. For
purposes of this Agreement, “Confidential Information” means information disclosed to the Executive
or known by the Executive as a consequence of or through the unique position of his employment with
the Company (including information conceived, originated, discovered or developed by the Executive)
prior to or after the date hereof, and not generally or publicly known, about the Company or its
business. Notwithstanding the foregoing, nothing herein shall be deemed to restrict the Executive
from disclosing Confidential Information to the extent required by law.
6.3. Non-solicitation of Employees and Customers. At all times while the Executive is
employed by the Company and for two (2) years following the Termination Date or the Expiration
Date, whichever is applicable, the Executive shall not, directly or indirectly, for himself or for
any other person, firm, corporation, partnership, association or other entity (a) employ or attempt
to employ or enter into any contractual arrangement with any employee or former employee of the
Company, unless such former employee has not been employed by the Company for a period in excess of
six months, and/or (b) call on or solicit any of the actual or targeted prospective customers or
clients of the Company on behalf of any person or entity in connection with any Competing Business,
nor shall the Executive make known the names and addresses of such clients or any information
relating in any manner to the Company’s trade or business relationships with such customers, other
than in connection with the performance of Executive’s duties under this Agreement.
6.4. Ownership of Developments. All copyrights, patents, trade secrets, or other
intellectual property rights associated with any ideas, concepts, techniques, inventions,
processes, or works of authorship developed or created by Executive during the course of performing
work for the Company or its clients, whether prior to or during the term of this Agreement
(collectively, the “Work Product”), shall belong exclusively to the Company and shall, to the
extent possible, be considered a work made by the Executive for hire for the Company within the
meaning of Title 17 of the United States Code. To the extent the Work Product may not be
considered work made by the Executive for hire for the Company, the Executive agrees to assign, and
automatically assign at the time of creation of the Work Product, without any requirement of
further consideration, any right, title, or interest the Executive may have in such Work Product.
Upon the request of the Company, the Executive shall take such further actions, including execution
and delivery of instruments of conveyance, as may be appropriate to give full and proper effect to
such assignment.
6.5 Books and Records. All books, records, and accounts relating in any manner to the
customers or clients of the Company, whether prepared by the Executive or otherwise coming into the
Executive’s possession, shall be the exclusive property of the Company and
14
shall be returned immediately to the Company on termination of the Executive’s employment
hereunder or on the Company’s request at any time.
6.6. Non Disparagement. The Executive agrees that at all times during and after the
Term of Employment, the Executive will not engage in any conduct that is injurious to the
reputation or interests of the Company or its affiliates, including, without limitation, making
disparaging comments (or inducing or encouraging others to make disparaging comments) about the
Company or any of its affiliates, or any of their respective directors, officers, employees or
agents, or their respective businesses, operations, financial condition, prospects, products or
services.
6.7. Definition of Company. Solely for purposes of this Article VI, the term
“Company” also shall include any existing or future subsidiaries of the Company that are operating
during the time periods described herein and any other entities that directly or indirectly,
through one or more intermediaries, control, are controlled by or are under common control with the
Company during the periods described herein.
6.8. Acknowledgment by Executive. The Executive acknowledges and confirms that (a) the
restrictive covenants contained in this Article VI are reasonably necessary to protect the
legitimate business interests of the Company, and (b) the restrictions contained in this Article VI
(including without limitation the length of the term of the provisions of this Article VI) are not
overbroad, overlong, or unfair and are not the result of overreaching, duress or coercion of any
kind. The Executive further acknowledges and confirms that his full, uninhibited and faithful
observance of each of the covenants contained in this Article VI will not cause him any undue
hardship, financial or otherwise, and that enforcement of each of the covenants contained herein
will not impair his ability to obtain employment commensurate with his abilities and on terms fully
acceptable to him or otherwise to obtain income required for the comfortable support of him and his
family and the satisfaction of the needs of his creditors. The Executive acknowledges and confirms
that his special knowledge of the business of the Company is such as would cause the Company
serious injury or loss if he were to use such ability and knowledge to the benefit of a competitor
or were to compete with the Company in violation of the terms of this Article VI. The Executive
further acknowledges that the restrictions contained in this Article VI are intended to be, and
shall be, for the benefit of and shall be enforceable by, the Company’s successors and assigns.
6.9. Reformation by Court. In the event that a court of competent jurisdiction shall
determine that any provision of this Article VI is invalid or more restrictive than permitted under
the governing law of such jurisdiction, then only as to enforcement of this Article VI within the
jurisdiction of such court, such provision shall be interpreted and enforced as if it provided for
the maximum restriction permitted under such governing law.
6.10. Extension of Time. If the Executive shall be in violation of any provision of
this Article VI, then each time limitation set forth in this Article VI shall be extended for a
period of time equal to the period of time during which such violation or violations occur. If the
Company seeks injunctive relief from such violation in any court, then the covenants set forth in
this Article VI shall be extended for a period of time equal to the pendency of such proceeding
including all appeals by the Executive.
15
6.11. Injunction. It is recognized and hereby acknowledged by the parties hereto that
a breach by the Executive of any of the covenants contained in Article VI of this Agreement will
cause irreparable harm and damage to the Company, the monetary amount of which may be virtually
impossible to ascertain. As a result, the Executive recognizes and hereby acknowledges that the
Company shall be entitled to an injunction from any court of competent jurisdiction enjoining and
restraining any violation of any or all of the covenants contained in Article VI of this Agreement
by the Executive or any of his affiliates, associates, partners or agents, either directly or
indirectly, and that such right to injunction shall be cumulative and in addition to whatever other
remedies the Company may possess.
6.12. Survival. The provisions of this Article VI shall survive the expiration or
other termination of this Agreement, as applicable.
ARTICLE VII.
ARBITRATION
7.1. Exclusive Remedy. The parties recognize that litigation in federal or state
courts or before federal or state administrative agencies of disputes arising out of the
Executive’s employment with the Company or out of this Agreement, or the Executive’s termination of
employment or termination of this Agreement, may not be in the best interests of either the
Executive or the Company, and may result in unnecessary costs, delays, complexities, and
uncertainty. The parties agree that any dispute between the parties arising out of or relating to
the Executive’s employment, or to the negotiation, execution, performance or termination of this
Agreement or the Executive’s employment, including, but not limited to, any claim arising out of
this Agreement, claims under Title VII of the Civil Rights Act of 1964, as amended, the Civil
Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with
Disabilities Act of 1990, Section 1981 of the Civil Rights Act of 1966, as amended, the Family
Medical Leave Act, the Employee Retirement Income Security Act, and any similar federal, state or
local law, statute, regulation, or any common law doctrine, whether that dispute arises during or
after employment shall be resolved by arbitration in the Broward County, Florida area, in
accordance with the National Employment Arbitration Rules of the American Arbitration Association,
as modified by the provisions of this Article VII. Except as set forth below with respect to
Article VI of this Agreement, the parties each further agree that the arbitration provisions of
this Agreement shall provide each party with its exclusive remedy, and each party expressly waives
any right it might have to seek redress in any other forum, except as otherwise expressly provided
in this Agreement. Notwithstanding anything in this Agreement to the contrary, the provisions of
this Article VII shall not apply to any injunctions that may be sought with respect to disputes
arising out of or relating to Article VI of this Agreement. The parties acknowledge and agree that
their obligations under this arbitration agreement survive the expiration or termination of this
Agreement and continue after the termination of the employment relationship between the Executive
and the Company. By election of arbitration as the means for final settlement of all claims, the
parties hereby waive their respective rights to, and agree not to, xxx each other in any action in
a Federal, State or local court with respect to such claims, but may seek to enforce in court an
arbitration award rendered pursuant to this Agreement. The parties specifically agree to waive
their respective rights to a trial by jury, and further agree that no demand, request or motion
will be made for trial by jury.
16
7.2. Arbitration Procedure and Arbitrator’s Authority. In the arbitration proceeding,
each party shall be entitled to engage in any type of discovery permitted by the Federal Rules of
Civil Procedure, to retain its own counsel, to present evidence and cross-examine witnesses, to
purchase a stenographic record of the proceedings, and to submit post-hearing briefs. In reaching
his/her decision, the arbitrator shall have no authority to add to, detract from, or otherwise
modify any provision of this Agreement. The arbitrator shall submit with the award a written
opinion which shall include findings of fact and conclusions of law. Judgment upon the award
rendered by the arbitrator may be entered in any court having competent jurisdiction.
7.3. Effect of Arbitrator’s Decision: Arbitrator’s Fees. The decision of the
arbitrator shall be final and binding between the parties as to all claims which were or could have
been raised in connection with the dispute, to the full extent permitted by law. In all cases in
which applicable federal law precludes a waiver of judicial remedies, the parties agree that the
decision of the arbitrator shall be a condition precedent to the institution or maintenance of any
legal, equitable, administrative, or other formal proceeding by the Executive in connection with
the dispute, and that the decision and opinion of the arbitrator may be presented in any other
forum on the merits of the dispute. If the arbitrator finds that the Executive was terminated in
violation of law or this Agreement, the parties agree that the arbitrator acting hereunder shall be
empowered to provide the Executive with any remedy available should the matter have been tried in a
court, including equitable and/or legal remedies, compensatory damages and back pay. The
arbitrator’s fees and expenses and all administrative fees and expenses associated with the filing
of the arbitration shall be borne by the non-prevailing party.
ARTICLE VIII.
ASSIGNMENT
The Company shall have the right to assign this Agreement and its rights and obligations
hereunder in whole, but not in part, to any corporation or other entity with or into which the
Company may hereafter merge or consolidate or to which the Company may transfer all or
substantially all of its assets, if in any such case said corporation or other entity shall by
operation of law or expressly in writing assume all obligations of the Company hereunder as fully
as if it had been originally made a party hereto, but may not otherwise assign this Agreement or
its rights and obligations hereunder. The Executive may not assign or transfer this Agreement or
any rights or obligations hereunder.
ARTICLE IX.
GOVERNING LAW; VENUE
This Agreement shall be governed by and construed and enforced in accordance with the internal
laws of the State of Florida. The exclusive venue for any action to enforce this Agreement, other
than those actions or claims that are subject to the Arbitration provisions set forth in Article
VII hereof, shall be the state or federal courts located within Broward County, Florida.
17
ARTICLE X.
ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and, upon its effectiveness, shall supersede all prior agreements,
understandings and arrangements, both oral and written, between the Executive and the Company (or
any of its affiliates) with respect to such subject matter. This Agreement may not be modified in
any way unless by a written instrument signed by both the Company and the Executive.
ARTICLE XI.
NOTICES
All notices required or permitted to be given hereunder shall be in writing and shall be
personally delivered by courier, sent by registered or certified mail, return receipt requested or
sent by confirmed facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given on the date of
delivery and notices mailed in accordance with the foregoing shall be deemed given upon the earlier
of receipt by the addressee, as evidenced by the return receipt thereof, or three (3) days after
deposit in the U.S. mail. Notice shall be sent (i) if to the Company, addressed to 0 XX
000xx Xxxxxx, Xxxxxxxx Xxxxx, Xxxxxxx 00000, Attention: General Counsel, and (ii) if to
the Executive, to his address as reflected on the payroll records of the Company, or to such other
in accordance with this provision.
ARTICLE XII.
BENEFITS; BINDING EFFECT
BENEFITS; BINDING EFFECT
This Agreement shall be for the benefit of and binding upon the parties hereto and their
respective heirs, personal representatives, legal representatives, successors and, where permitted
and applicable, assigns, including, without limitation, any successor to the Company, whether by
merger, consolidation, sale of stock, sale of assets or otherwise.
ARTICLE XIII.
SEVERABILITY
SEVERABILITY
The invalidity of any one or more of the words, phrases, sentences, clauses, provisions,
sections or articles contained in this Agreement shall not affect the enforceability of the
remaining portions of this Agreement or any part thereof, all of which are inserted conditionally
on their being valid in law, and, in the event that any one or more of the words, phrases,
sentences, clauses, provisions, sections or articles contained in this Agreement shall be declared
invalid, this Agreement shall be construed as if such invalid word or words, phrase or phrases,
sentence or sentences, clause or clauses, provisions or provisions, section or sections or article
or articles had not been inserted. If such invalidity is caused by length of time or size of area,
or both, the otherwise invalid provision will be considered to be reduced to a period or area which
would cure such invalidity.
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ARTICLE XIV.
WAIVERS
The waiver by either party hereto of a breach or violation of any term or provision of this
Agreement shall not operate nor be construed as a waiver of any subsequent breach or violation.
ARTICLE XV.
SECTION HEADINGS
The article, section and paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
ARTICLE XVI.
NO THIRD PARTY BENEFICIARY
Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer
upon or give any person other than the Company, the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and permitted assigns, any rights or
remedies under or by reason of this Agreement.
ARTICLE XVII.
COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which shall be deemed to
be an original but all of which together shall constitute one and the same instrument and
agreement.
ARTICLE XVIII.
TAX WITHHOLDING
Notwithstanding any other provision of this Agreement, the Company may, to the extent required
by law, withhold applicable federal, state and local income and other taxes from any payments due
to the Executive hereunder.
ARTICLE XIX.
SECTION 409A
In the event that it is reasonably determined by the Company that, as a result of Section 409A
(“Section 409A”) of the Code (and any related regulations or other pronouncements thereunder), any
of the payments that the Executive is entitled to under the terms of this Agreement or any
nonqualified deferred compensation plan (as defined under Section 409A) may not be made at the time
contemplated by the terms hereof or thereof, as the case may be, without causing the Executive to
be subject to an income tax under Section 409A, the Company will make such payment on the first day
that would not result in the Executive incurring any tax liability under Section 409A, together
with an additional interest payment on any such delayed payments at the rate provided in Section
1274(b)(2)(B) of the Code. In addition, other provisions of this Agreement or any other plan
notwithstanding, the Company shall have no right to accelerate any such payment or to make any such
payment as the result of an event if such payment would, as a result, be subject to the tax imposed
by Section 409A; provided, however,
19
that if any payments or benefits that the Company would otherwise be required to provide under
this Agreement or any Company plan cannot be provided in the manner contemplated herein or under
the applicable plan without subjecting the Executive to income tax under Section 409A, the Company
shall provide such intended payments or benefits to the Executive in an alternative manner that
conveys an equivalent economic benefit to the Executive (without materially increasing the
aggregate cost to the Company).
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above
written.
| COMPANY: CLAIRE’S STORES, INC. |
||||
| By: | /s/ E. XXXXXX XXXXXXXX | |||
| Name: E. XXXXXX XXXXXXXX | ||||
| Title: CO-CHAIRMAN/ CEO | ||||
| EXECUTIVE: |
||||
| /s/ XXX XXXXXX | ||||
| XXX XXXXXX | ||||
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Exhibit A
WAIVER AND RELEASE OF CLAIMS
1. Release by the Executive. In consideration of, and subject to, the payments to be
made to Xxx Xxxxxx (the “Executive”) by Claire’s Stores, Inc., or any of its subsidiaries, or its
or their successor(s) or assigns (the “Company”), pursuant to the attached Employment Agreement
(the “Employment Agreement”) dated January 18, 2007, the Executive hereby releases and forever
discharges the Company, and its respective past and present officers, directors, shareholders,
employees and agents from any and all claims and causes of action, known or unknown, which may
heretofore have existed or which may now exist, up to and including the date on which the Executive
signs this Waiver and Release of Claims, arising out of or relating to the Executive’s employment
with the Company or the termination thereof, including, but not limited to, wrongful discharge,
breach of contract, tort, fraud, the Civil Rights Act, Age Discrimination in Employment Act,
Employee Retirement Income Security Act, Americans with Disabilities Act, or any other federal,
state or local legislation or common law relating to employment or discrimination in employment.
Notwithstanding the foregoing or any other provision hereof, nothing in this Waiver and
Release of Claims shall adversely affect (i) the Executive’s rights under the Employment Agreement;
(ii) the Executive’s rights to benefits other than severance benefits under plans, programs and
arrangements of the Company which are accrued but unpaid as of the date of the Executive’s
termination; or (iii) the Executive’s rights to indemnification under any indemnification
agreement, applicable law, and certificates of incorporation and bylaws of the Company, and the
Executive’s rights under any directors’ and officers’ liability insurance policy covering the
Executive.
The Executive acknowledges that he has signed this Waiver and Release of Claims voluntarily,
knowingly, of his own free will and without reservation or duress, and that no promises or
representations have been made to the Executive by any person to induce the Executive to do so
other than the promise of payment set forth in the first paragraph above and the Company’s
acknowledgement of the Executive’s rights reserved under the second paragraph above.
The Executive acknowledges that he has been given not less than [twenty-one (21)] [forty-five
(45)] days to review and consider this Waiver and Release of Claims, and that he has had the
opportunity to consult with an attorney or other advisors of his choice and has been advised by the
Company to do so if he chooses. The Executive may revoke this Waiver and Release of Claims seven
days or less after its execution by providing written notice to the Company. Finally, the
Executive acknowledges that he has read this Waiver and Release of Claims and understands all of
its terms.
2. Release by the Company. In consideration of the Executive’s release and the other
promises contained herein and other good and valuable consideration, the Company completely
releases and forever discharges the Executive and his heirs, personal representatives, successors
and assigns from any and all claims and causes of action, known or unknown, which may heretofore
have existed or which may now exist, up to and including the date on which the Executive signs this
Waiver and Release of Claims, arising out of or relating to the Executive’s
21
employment with the Company or the termination thereof; provided, however, that the
Company shall not release the Executive for any claims arising out of any acts or omissions by the
Executive which constitute the violation of any applicable criminal law or any claims arising out
of the Executive’s breach of this Waiver and Release of Claims.
IN WITNESS WHEREOF, the undersigned have executed this Waiver and Release of Claims as of the
date indicated below.
| COMPANY: CLAIRE’S STORES, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| EXECUTIVE: |
||||
| XXX XXXXXX | ||||
| Date Signed | ||||
22
