TERMINATION AND RELEASE AGREEMENT
THIS TERMINATION AND RELEASE AGREEMENT
("Agreement") is made and entered into as of June 14, 1997,
by and between Frederick's of Hollywood, Inc., a Delaware
corporation (the "Company"), and Xxxxxx X. Xxxxxxx, an
individual ("Employee"), with reference to the following:
A. The parties hereto have heretofore
entered into (i) that certain Employment Agreement, dated as
of July 30, 1987 (the "1987 Employment Agreement"), (ii)
that certain Amended and Restated Employment Agreement,
dated as of August 31, 1989 (the "Restated Employment
Agreement"), and (iii) that certain Second Amendment to
Employment Agreement, dated as of August 30, 1992, copies of
which are attached hereto as Xxxxxxxx "X", "X" and "C",
respectively, (collectively, the "Employment Agreement").
B. Section 8a of the Restated Employment
Agreement ("Section 8a") provides for a lump sum payment to
be made to Employee upon the termination by Employee of his
employment with the Company upon the occurrence of an Event
(as such term is defined in Section 6 of the Restated
Employment Agreement).
C. There exists a dispute between the
Company and Employee as to the amount payable to Employee
under Section 8a.
D. The Company and Employee believe that it
is in their respective best interests to resolve this
dispute amicably without resort to litigation or other legal
proceedings.
NOW, THEREFORE, for and in consideration of the
premises and the mutual promises contained herein, and other
good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Interpretation of Section 8a. With
respect to the interpretation of Section 8a, the parties
agree as follow: (i) pursuant to Section 4a of the Restated
Employment Agreement, the term "Base Compensation" shall
mean Two Hundred Fifty Thousand Dollars ($250,000); (ii) the
"Bonus," as defined in Section 4b of the Restated Employment
Agreement, was Zero Dollars ($0) for the fiscal years of the
Company ended on September 3, 1994, September 2, 1995 and
August 31, 1996 and is expected to be Zero Dollars ($0) for
the fiscal year ending August 30, 1997; and (iii) the
applicable multiplier for computing the lump sum payment
under Section 8a is three (3) (which is the sum of the
initial term of the 1987 Employment Agreement plus one
year).
2. Payment.
(a) In light of Section 1 above, if an
Event shall occur and the employment of Employee with the
Company shall terminate as a result thereof on or before
August 29, 1998, in full satisfaction of any and all amounts
due or payable directly or indirectly for the benefit of
Employee under the Employment Agreement, whether now or
hereafter due or payable, including, without limitation, all
amounts described in Section 8a, the Company shall pay to
Employee the aggregate amount of Seven Hundred Fifty
Thousand Dollars ($750,000).
(b) The amount set forth in Section
2(a) above shall be payable in full by cashier's check at
the time of any termination of the employment of Employee
with the Company as described in said Section 2(a) above and
shall be subject to all applicable, if any, federal, state
and local laws, rules and regulations with regard to the
withholding of taxes.
3. Release.
(a) The Company, on the one hand, and
Employee, on the other hand, for themselves and on behalf
of (as applicable) their respective officers, directors,
shareholders, representatives, agents, attorneys,
administrators, executors, heirs, assigns, predecessors and
successors in interest, hereby release and forever discharge
each other and each of their respective past, present, and
future officers, directors, shareholders, agents, repre
sentatives, administrators, executors, predecessors in
interest, successors in interest and all other persons,
firms, entities or corporations with whom any of the former
have been, are now, or may hereafter be affiliated
(collectively, the "Released Parties"), from all past,
present and future claims, demands, obligations, liabilities
and causes of action of any nature whatsoever, whether in
tort (including, without limitation, acts of active
negligence), contract or any other theory of recovery in law
or equity, whether for compensatory or punitive damages,
equitable relief or otherwise, and whether now known or
unknown, suspected or unsuspected, in any way arising out
of, relating to, resulting from or connected with the
Employment Agreement (collectively, the "Released Matters").
(b) Without limiting the generality of
the foregoing, the parties hereto expressly release any and
all past, present and future claims in connection with the
Released Matters, but which said parties do not know of or
suspect to exist in their favor, whether through ignorance,
oversight, error, negligence or otherwise, and which, if
known, would materially affect their decision to enter into
this Agreement, and to this end, they and each of them,
therefore, waive all rights under Section 1542 of the Civil
Code of California which states in full as follows:
"A general release does not extend
to claims which the creditor does not
know or suspect to exist in his favor at
the time of executing the release, which
if known by him must have materially
affected his settlement with the
debtor."
4. Indemnification.
(a) If, as a result of the payments to
Employee under this Agreement, it shall be determined that
any payment by the Company to or for Employee's benefit
(whether paid or payable pursuant to the terms of this
Agreement or otherwise) (a "Payment"), is subject to the
excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (and any successor provision and
any similar provision of state or local income tax law)
(collectively, "Section 4999"), or any interest or penalty
is incurred by Employee with respect to such excise tax
(such excise tax, together with any such interest or
penalty, hereinafter collectively to be referred to as the
"Excise Tax"), then Employee shall be entitled to receive
from the Company or have paid by the Company to the Internal
Revenue Service or other appropriate authority (and any
relevant state or local authority) (collectively, "IRS") on
his behalf an additional payment or payments (each, a "Gross-
Up Payment") in an aggregate amount equal to the sum of (i)
the Excise Tax plus (ii) all taxes, penalties and interest
(including any excise tax imposed by Section 4999 of the
Code) paid or payable by Employee on account of the
operation of this Section 4, such that, after payment by
Employee of all such other taxes (including any interest or
penalty imposed with respect to such taxes) and any Excise
Tax imposed upon the Gross-Up Payment, Employee shall be in
the same position as he would have been had no Excise Tax
been imposed upon the Payment.
(b) Employee shall give the Company
written notice of any claim by the IRS that, if successful,
would require the payment by the Company of a Gross-Up
Payment. Employee shall give such notice, within ten (10)
business days after he is informed in writing of such claim,
provided that failure by Employee to provide such notice
shall not result in a waiver or forfeiture of any of
Employee's rights under this Section except to the extent of
actual damages suffered by the Company as a result of such
failure; provided further that if such failure prevents the
contest of such claim no payment shall be required with
respect to such claim by the Company under this Section 4.
Employee shall not pay such claim prior to the expiration of
fifteen (15) days following the date on which Employee gives
such notice to the Company. If the Company shall notify
Employee in writing prior to the expiration of such fifteen
(15) day period that it desires to contest such claim,
Employee shall (i) give the Company any information
reasonably requested by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing
from time to time, including, without limitation, accepting
legal representation with respect to such claim by an
attorney reasonably selected by the Company, (iii)
cooperate in good faith with the Company's contest of such
claim, and (iv) permit the Company to control any
proceedings to the extent relating to such claim; provided,
however, that the Company shall bear and pay directly all
costs and expenses (including additional interest, penalties
and attorneys' fees) incurred in connection with such
contest and shall be entitled to any recovery from the IRS
resulting from such contest.
5. Miscellaneous.
(a) Further Assurances. Each of the
parties hereto shall execute such documents and other papers
and perform such further acts as may be reasonably required
or desirable to carry out the provisions hereof and the
transactions contemplated hereby.
(b) Entire Agreement. This Agreement
constitutes and is intended to constitute the entire
agreement of the parties hereto concerning the subject
matter hereof. No covenants, agreements, representations or
warranties of any kind whatsoever have been made by any
party hereto, except as specifically set forth herein. This
Agreement expressly supersedes all prior and contemporaneous
oral and all prior written discussions and negotiations
between the parties hereto with respect to the subject
matter hereof.
(c) Modification. This Agreement and
the other agreements expressly referred to herein contain
the entire agreement between the parties hereto with respect
to the subject matter hereof, and this Agreement may not be
amended, modified or terminated except by a written
instrument signed by all parties hereto.
(d) Successors and Assigns. The terms
and provisions of this Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto, their
personal representatives, administrators, executors, heirs,
successors and assigns.
(e) Waiver. The failure of either
party hereto at any time to enforce performance by the other
party of any provision of this Agreement shall in no way
affect such party's rights thereafter to enforce the same,
nor shall the waiver by either party of any breach of any
provision hereof be deemed to be a waiver by such party of
any other breach of the same or any other provision hereof.
(f) Notices. All notices, requests and
other communications hereunder shall be in writing and shall
be delivered by courier or other means of personal service
(including by means of a nationally recognized courier
service or professional messenger service), or sent by telex
or telecopy or mailed first class, postage prepaid, by
certified mail, return receipt requested, in all cases,
addressed to:
The Company:
Frederick's of Hollywood, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
With a copy to:
Loeb & Loeb LLP
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Employee:
Xxxxxx X. Xxxxxxx
00000 Xxxx Xxxxxx Xxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
With a copy to:
Xxxx, Propper & Xxxxxxxx, Inc.
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
All notices, requests and other
communications shall be deemed given on the date of actual
receipt or delivery as evidenced by written receipt,
acknowledgement or other evidence of actual receipt or
delivery to the address. In case of service by telecopy, a
copy of such notice shall be personally delivered or sent by
registered or certified mail, in the manner set forth above,
within three (3) business days thereafter. Any party hereto
may from time to time by notice in writing served as set
forth above designate a different address or a different or
additional Person to which all such notices or
communications thereafter are to be given.
(g) Time of Essence. Time is
hereby declared to be of the essence of this Agreement and
of every part hereof.
(h) Attorneys' Fees. In the event
of any action, suit or other proceeding concerning the inter
pretation, validity, performance or breach of this Agree
ment, the prevailing party shall recover all of such party's
reasonable attorneys' fees, expenses and costs, not limited
to costs of suit, incurred in each and every such action,
suit or other proceeding, including any and all appeals or
petitions relating thereto.
(i) Severance and Enforcement. All Sec
tions, clauses and covenants contained in this Agreement are
severable, and in the event any of them shall be held to be
invalid by any court, this Agreement shall be interpreted as
if such invalid Sections, clauses or covenants were not
contained herein.
(j) Governing Law and Venue. This
Agreement shall be governed by and construed in accordance
with the laws of the State of California applicable to
contracts made and to be performed wholly within such State,
and without regard to the conflicts of laws principles
thereof. Any suit brought hereon shall be brought in the
state or federal courts sitting in Los Angeles, California,
the parties hereto hereby waiving any claim or defense that
such forum is not convenient or proper. Each party hereby
agrees that any such court shall have in personam jurisdic
tion over it and consents to service of process in any
manner authorized or permitted by California law.
(k) Gender. Where the context so
requires, the use of the masculine gender shall include the
feminine and/or neuter genders and the singular shall
include the plural, and vice versa.
(l) Counterparts. This Agreement may
be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall con
stitute one and the same Agreement.
(m) Construction. The language in all
parts of this Agreement shall in all cases be construed
simply, according to its fair meaning, and not strictly for
or against any of the parties hereto. Without limitation,
there shall be no presumption against any party on the
ground that such party was responsible for drafting this
Agreement or any part thereof.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the day and year first above
written.
"Company":
Frederick's of Hollywood, Inc.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx
Its: President
"Employee":
/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
EXHIBIT "A"
EMPLOYMENT AGREEMENT
Parties: FREDERICK'S OF HOLLYWOOD, INC., a California
corporation ("Company"), located at 0000 Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, and
XXXXXX X. XXXXXXX ("Employee").
Date: Executed as of July 30, 1987 ("Effective Date").
Recitals:
A. Employee is presently Chairman of the Board
of Directors, President and Chief Executive Officer of the
Company. The Company and Employee desire to enter into a
long-term employment agreement.
Terms and Provisions:
1. Employment. Company hereby employs Employee and
Employee hereby accepts employment by Company on the terms
and conditions hereinafter set forth.
2. Term of Employment. Subject to the
provisions for termination hereof, the term of this
Agreement shall commence the date hereof and shall terminate
two (2) years from such date (the "Term"); provided,
however, that the commencement date of the two (2) year term
of this Agreement after the date hereof shall change each
year on the first day of the Company's fiscal year to such
date unless the Board of Directors of Company (the "Board")
takes affirmative action not less than six months before
termination not to renew the Agreement.
3. Employee's Duties. Employee is to be
Chairman of the Board of Directors, President, Chief
Executive Officer and General Manager of the Company, and
his duties shall include those which he has heretofore
performed as assigned to him by the Board including, but not
limited to supervision over the business and affairs of the
Company and its subsidiaries and Employee shall report and
be responsible only to the Board, and shall have powers and
authority superior to those of any other officer or
employees of the Company or any subsidiary thereof.
Employee shall devote his full time and effort thereto,
provided, however, that Employee shall not be required to
perform functions other than as described above.
4. Base Compensation.
(a) For all services rendered by Employee
hereunder on behalf of Company and its subsidiaries and divi
sions, both presently existing and hereafter established or
acquired, Company shall pay to Employee, and Employee hereby
accepts compensation of One Hundred Fifty Thousand Dollars
($150,000.00) per annum, payable in the manner and at the
times customary to the Company ("Base Compensation"). The
amount of Base Compensation shall be reviewed by the Board
on an annual basis as of the close of each fiscal year of
the Company, and may be increased, but once increased shall
not thereafter be decreased.
(b) The Board may, in its discretion, and in
addition to any incentive compensation plan adopted for the
Company, award to Employee an annual bonus. Such bonus
shall be paid in such amount and based upon such criteria as
are from time to time adopted by the Board. Any such bonus
will be payable at the end of Company fiscal year, but the
first such eligibility will be for that fiscal period ending
August 29, 1987.
5. Additional Benefits. In addition to the
Compensation provided for in Section 4. herein, Employee
shall be entitled to receive:
(a) All employee fringe benefits in which
Employee was entitled to participate immediately prior to
the Effective Date, subject to Company eligibility
requirements for each of those benefits, including, without
limitation, life insurance, and medical plans, and such
other employee benefits as may be approved by the Board
during the term of this Agreement. Nothing in this
paragraph shall be deemed to prohibit Company making any
changes in any of the plans, programs or benefits described
in this Section 5., provided the change similarly affects
all executives similarly situated.
(b) Reimbursement for all reasonably
incurred business related expenses provided that Employee
accounts therefore in accordance with Company existing
policies as modified from time to time.
6. Change of Control. The occurrence of
any one or more of the following shall constitute an "Event"
for purposes of Sections 7.b. and 8. hereof:
(a) An event that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regula
tion 14a promulgated under the Securities Exchange Act of
1934, as in effect on the date hereof, occurs; or
(b) Any person (other than any person who as of
the date hereof is the beneficial owner of ten percent (10%)
or more of the Company's voting securities) or group of
persons acting in concert becomes the beneficial owner of
thirty percent (30%) or more of the Company's outstanding
voting securities or securities convertible into such amount
of voting securities; or
(c) During any period of two (2) consecutive
years following the execution of this Agreement, individuals
who at the beginning of such period constitute the Board and
any new director whose election by the Board or nomination
for election by Company stockholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the
period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof; or
(d) The shareholders of Company approve a merger
or consolidation of the Company with any other corporation,
or the shareholders of Company approve a plan of complete
liquidation of Company or an agreement for the sale or
disposition by Company of all or substantially all of
Company's assets, provided, however, that a merger or
consolidation which would result in the voting securities of
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at
least eighty percent (80%) of the combined voting power of
the voting securities of Company or such surviving entity
outstanding immediately after such merger or consolidation
shall not be deemed an Event.
(e) Termination. This Agreement may be
terminated (a) by Employee's death, Disability or
Retirement, (b) by Employee for Good Reason, or (c) by
action of the Board for Cause.
Disability; Retirement. If, as a result of
Employee's incapacity due to physical or mental illness,
Employee shall have been absent from the full-time
performance of his duties with Company for twelve (12)
consecutive months, and within thirty (30) days after
written notice of termination is given Employee shall not
have returned to the full-time performance of his duties,
Employee's employment may be terminated for "Disability."
Employee shall also have the right to terminate this
Agreement for Disability at any time, in the event that a
licensed physician determines that Employee's health would
be jeopardized by his continuing his employment hereunder.
Termination by Company or Employee of Employee's employment
based on "Retirement" shall mean termination in accordance
with Company's retirement policy, including early retire
ment, generally applicable to its salaried employees or in
accordance with any retirement arrangement established with
Employee's consent with respect to him.
(f) Good Reason. Employee shall be entitled to
terminate his employment within one (1) year of an Event as
defined at Section 6. for "Good Reason." "Good Reason"
shall mean the material breach of any of Company's
obligations under this Agreement, without Employee's express
written consent, or the occurrence of any of the following
circumstances unless such breach or circumstances are fully
corrected prior to the Date of Termination specified in the
Notice of Termination pursuant to subsection 7.e. and d.,
respectively:
(1) An adverse alteration in the nature or status
of Employee's responsibilities from those in effect as of
the date hereof;
(2) A reduction by Company in the Employee's
annual Base Compensation as in effect on the date hereof or
as the same may be increased from time to time;
(3) The relocation of Company's principal
executive offices to a location more than thirty (30) miles
from the present location of such offices in the Los Angeles
Metropolitan Area, or Company requiring Employee to be based
anywhere other than Company's principal executive offices
except for required travel on Company business to an extent
substantially consistent with Employee's present business
travel obligations;
(4) The failure by Company to continue in effect
any compensation plan in which Employee participates which
is material to Employee's total compensation, including but
not limited to those plans specified in Section 5.a. or any
substitute plans adopted prior to an Event, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan,
or the failure by Company to continue Employee's
participation therein (or in such substitute or alternative
plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of
Employee's participation relative to other participants, as
existed at the time of the Event; or
(5) Any purported termination of Employee's
employment which is not effected pursuant to a Notice of
Termination (as defined below) satisfying the requirements
of subsection d. below.
(6) Employee's right to terminate his employment
pursuant to this subsection b. shall not be affected by his
incapacity due to physical or mental illness. Employee's
continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
(g) For Cause. The Board may terminate
Employee's employment by action of the Board during the term
of this Agreement For Cause, which shall mean the commission
of acts of willful malfeasance resulting in material damage
to the Company's business.
(h) Notice of Termination. Any purported
termination of Employee's employment by Company or by
Employee shall be communicated by written Notice of
Termination to the other party hereto in accordance with
Section 11. hereof. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a
basis for termination of Employee's employment under the
provisions so indicated.
(i) Date of Termination, etc. "Date of
Termination" shall mean (i) if Employee's employment is
terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that Employee shall not have
returned to the full-time performance of his duties during
such thirty (30) day period), and (ii) if Employee's
employment is terminated pursuant to subsection b. or c.
above or for any other reason (other than Disability) , the
date specified in the Notice of Termination; provided that
if within fifteen (15) days after any Notice of Termination
is given, or if the Date of Termination is later, prior to
the Date of Termination the party receiving such Notice of
Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be
the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, or decree of a
court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has
expired and no appeal has been perfected); provided,
further, that the Date of Termination shall be extended by a
notice of dispute only if such notice is given in good faith
and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the
pendency of any such dispute, the Company will continue to
pay Employee his full compensation in effect when the notice
giving rise to the dispute was given (including, but not
limited to, Base Compensation) and continue Employee as a
participant in all compensation, benefit, and insurance
plans in which he was participating when the notice giving
rise to the dispute was given, until the dispute is finally
resolved in accordance with this subsection, but in no event
past the expiration date of this Agreement. Amounts paid
under this subsection are in addition to all other amounts
due under this Agreement and shall not be offset against or
reduce any other amounts due under this Agreement.
7. Compensation Upon Occurrence of an Event
or Termination.
(a) By Employee Upon Occurrence of an Event or
for Good Reason. Upon termination by Employee as a result
of the occurrence of an Event as described at Section 6. or
for Good Reason as set forth at Section 7.b., Employee shall
receive a lump sum amount (the "Termination Payment") in
addition to any other compensation received hereunder or
otherwise, equal to the sum of one year's Base Compensation
as defined at Section 4. hereof and an amount equal to the
most recently received year's bonus received by Employee
multiplied by the number of complete and partial years
remaining in the term of this Agreement, plus one, and:
(1) All incentive compensation awards previously
granted but not yet paid, including, without limitation,
awards granted under the Company's Incentive Compensation
Plan or any successor plan, plus an amount equal to the
amount of the highest incentive compensation award granted
to Employee for any year during the two (2) calendar years immediately
preceding the Date of Termination multiplied by the number
of partial and whole calendar years remaining in the full
unexpired term of this Agreement, plus
(2) If and to the extent Employee so elects, an
amount equal to (w) the number of shares of Common Stock of
the Company subject to unexercised options held by Employee
at the Date of Termination, plus the number of shares of
Common Stock with respect to which stock appreciation
rights, if any, not granted in tandem with stock options
("SARs") are held by Employee at the Date of Termination,
multiplied by (x) the difference between the average
exercise price of such options and SARs and the per share
fair market value of the Common Stock, against surrender to
the Company of all options and SARs relating to the Common
Stock held by Employee at the Date of Termination and
selected by him to be treated in accordance with this Sec
tion. The per share fair market value of the Common Stock,
for purposes of this provision, shall be the higher of (y)
the closing sale price of the Common Stock as reported on
the consolidated reporting system established pursuant to
Section 11(a) of the Securities Exchange Act of 1934, as
amended, on the Effective Date or, if the Common Stock is
not so reported, the closing sale price of the Common Stock
on the principal exchange market for the Common Stock on the
Effective Date or, if the principal market for the Common
Stock is not an exchange, the mean of closing high and low
bid and asked prices for the Common Stock as reported on the
automated quotation system of the National Association of
Securities Dealers, Inc. or successor organization on the
Effective Date, and (z) the highest consideration per share
paid to Company stockholders in connection with the
transactions which resulted in the Event constituting a
Change in Control as described at Section 6.
(3) For the full unexpired term of the Employment
Period, the Company shall continue Employee's participation
in each employee benefit plan (including, without limita
tion, life insurance and medical plans) in which Employee
was entitled to participate immediately prior to the
Effective Date as if he continued to be employed by the
Company hereunder, and any benefits arranged in accordance
with subsection iv. hereof. If the terms of any benefit
plan of the Company do not permit continued participation by
Employee, the Company will arrange to provide to Employee
benefits substantially equivalent to, as
to time and amount, and no less favorable than, on an after-
tax basis, the benefits he would have been entitled to
receive under such plan if he had been continuously employed
by the Company for the full unexpired term of the Employment
Period.
(4) Subsequent to the occurrence of an Event
constituting a Change in Control, as defined at Section 6.,
the Company shall not eliminate, replace, or modify any plan
referred to in subsection iii. hereof, including, without
limitation, the Pension Plan, so as to eliminate or reduce
any benefit which Employee would be entitled to receive
under such plan as in effect immediately prior to such
Change in Control if he were continuously employed by the
Company for the full term of this Agreement, unless it
arranges to provide to Employee benefits substantially
equivalent as to time and amount and no less favorable on an
after-tax basis than such benefits.
(b) By Company or Employee for Disability Upon
Retirement and by the Company for Good Cause. Upon
termination of employment pursuant to the provisions of
Section 7.a. (Disability or Retirement) or 7.c. (For Good
Cause), Employee shall receive an amount (the "Separation
Payment") in addition to any other compensation received
hereunder or otherwise, the following:
(1) All incentive compensation awards previously
granted but not yet paid, including, without limitation,
awards granted under the Company's Incentive Compensation
Plan or any successor plan, plus
(2) The compensation provided at Section 8.a.(ii)
hereof with respect to stock options and SARs.
(c) Mitigation. Employee shall not be required
to mitigate the amount of any payment provided for in this
Agreement or otherwise by seeking other employment or
otherwise, nor shall the amount of any payment or benefit
provided for in this Agreement or otherwise be reduced by
any compensation earned by Employee as the result of
employment by another employer, by retirement benefits, by
offset against any amount claimed to be owing by Employee to
Company, or otherwise.
8. Assignability. The obligations of Employee
hereunder are personal and may not be assigned or delegated
by him or transferred in any manner whatsoever, nor are such
obligations subject to involuntary alienation, assignment,
or transfer. Company shall have the right to assign this
Agreement and to delegate all rights, duties, and
obligations hereunder, either in whole or in part, to any
parent, affiliate, successor, or subsidiary organization or
company of Company, so long as the obligations of Company
under this Agreement remain the obligations of Company.
9. Termination Payment Limitation. Notwithstanding
anything contained herein to the contrary, any payment or
benefit received or to be received by Employee in connection
with an Event or the termination of Employee's employment,
whether pursuant to this Agreement or otherwise ("Total
Payment") would not be deductible (in whole or in part) by
the Company as a result of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), the Total
Payment shall be reduced until no portion of the Total
Payment is not deductible as a result of Section 280G of the
Code. For purposes of its limitation (i) no portion of the
Total Payment the receipt of enjoyment of which Employee
shall have effectively waived in writing prior to the date
of payment of the Termination Payment shall be taken into
account, (ii) no portion of the Total Payment shall be taken
into account which in the opinion of tax counsel selected by
Company's independent auditors and acceptable to Employee
does not constitute a "parachute payment" within the meaning
of Section 280G of the Code, (iii) the Termination Payment
shall be reduced only to the extent necessary so that the
Total Payment (other than those referred to in clauses (i)
or (ii)) in their entirety constitute reasonable
compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code, in the opinion of
the tax counsel referred to in clause (ii); and (iv) the
value of any non-cash benefit or any deferred payment or
benefit included in the Total Payment shall be determined by
Company's independent auditors in accordance with the
principles of Section 280G(d)(3) and (4) of the Code.
10. Notice. For the purpose 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 States
registered mail, return receipt requested, postage prepaid,
addressed to the Company at its principal office address
directed to the attention of the Board with a copy to the
Secretary of the Company, and to Employee at Employee's
residence address on the records 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.
11. 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.
12. Successors; Binding Agreement.
(a) The Company will require any successor to all
or substantially all of the business and/or assets of the
Company (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to expressly assume and agree
to perform this Agreement in the same manner and to the same
extent that Company would be required to perform it if no
such succession had taken place. Failure of Company to
obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall
entitle Employee to compensation from Company in the same
amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Good Reason,
except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement,
Company shall mean Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which
executes and delivers the Agreement provided for in this
Section 13. or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law.
This Agreement and all rights of Employee hereunder shall inure
to the benefit of and be enforceable by Employee's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees. If Employee should die while
any amounts would still have been payable to him hereunder if
he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Employee's
devisee, legatee, or other designee, or, if there be not such designee, to
Employee's estate.
13. Miscellaneous. No provision of this Agreement may
be modified, waived, or discharged unless such waiver,
modification, or discharge is agreed to in a writing signed
by Employee and such officer as may be specifically
authorized by the Board. No Waiver by either party hereto
at any time of any breach by the other party hereof of, or
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 otherwise, express
or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly
in this Agreement. The validity, interpretation,
construction, and performance of this Agreement shall be
governed by the laws of the State of California. All
references to sections of the Securities Exchange Act of
1934 or the Internal Revenue Code of 1986 shall be deemed
also to refer to any successor provisions to such sections.
Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state, or
local law.
14. 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 will constitute
one and the same instrument.
15. Arbitration. Any dispute or controversy
arising under or in connection with this Agreement shall be
settled exclusively by arbitration in Los Angeles,
California in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having
jurisdiction; provided, however, that Employee shall be
entitled to seek specific performance of his right to be
paid until the Date of Termination during the pendency of
any dispute or controversy arising under or in connection
with this Agreement. The Company shall reimburse Employee
for all expenses, including, without limitation, attorney's,
accountant's, actuary's, and other experts' fees, reasonably
incurred by Employee at any time in connection with
defending the validity of, enforcing his rights under, or
recovering amounts due or damages under this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date and year first above written.
Company: FREDERICK'S OF HOLLYWOOD, INC.
By: /s/ Xxxx X. Xxxxxx
Its Chairman of the
Compensation Committee
Employee: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
EXHIBIT "B"
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
PARTIES: FREDERICK'S OF HOLLYWOOD, INC., a Delaware
corporation ("Company"), located at 0000 Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, and
XXXXXX X. XXXXXXX ("Employee").
DATE: Executed August 31, 1989
RECITALS:
A. Employee is presently Chairman of the Board
of Directors, President and Chief Executive Officer of the
Company.
B. On July 30, 1987, the Company and Employee
entered into an Employment Agreement with an initial two
year term, renewable annually on an "evergreen" basis,
unless the Board of Directors takes action not to renew not
less than six months before termination.
C. The parties wish to amend the July 30, 1987
agreement by execution of this Amended and Restated
Employment Agreement ("Agreement").
TERMS AND PROVISIONS:
D. Employment. Company hereby employs Employee
and Employee hereby accepts employment by Company on the
terms and conditions hereinafter set forth.
E. Term of Employment. Subject to the
provisions for termination hereof, the term of this
Agreement shall commence September 1, 1989 ("Effective
Date") and shall terminate three (3) years from such date
(the "Term"); provided, however, that the commencement date
of the three (3) year term of this Agreement after the date
hereof shall change each year on the first day of the
Company's fiscal year to such date unless the Board of
directors of Company ("the Board") takes affirmative action
not less than six months before termination not to renew the
Agreement.
F. Employee's Duties. Employee is to be
Chairman of the Board of Directors, President, Chief
Executive Officer and General Manager of the Company, and
his duties shall include those which he has heretofore
performed as assigned to him by the Board including, but not
limited to supervision over the business and affairs of the
Company and its subsidiaries, and Employee shall report and
be responsible only to the Board, and have powers and
authority superior to those of any other officer or
employees of the Company or any subsidiary thereof.
Employee shall devote his full time and effort thereto,
provided, however, that Employee shall not be required to
perform functions other than as described above.
G. Regular Compensation.
A. Base Compensation. For all services rendered by
Employee hereunder on behalf of Company and its subsidiaries
and divisions, both presently existing and hereafter
established or acquired, Company shall pay to Employee, and
Employee hereby accepts compensation of Two Hundred Fifty
Thousand Dollars ($250,000) per annum, payable in the manner
and at the times customary to the Company ("Base
Compensation"). The amount of Base Compensation shall be
reviewed by the Board on an annual basis as of the close of
each fiscal year of the Company, and may be increased, but
once increased shall not thereafter be decreased.
B. Annual Bonus. The Board shall, in addition to any
other compensation provided for herein, award to Employee an
annual bonus (the "Bonus") based upon the following
criteria:
a. The Bonus shall be an amount equal to not
less than two percent (2%) of Company earnings before income
taxes for any fiscal year in which Company achieves earnings
before income taxes of at least 5.5% of sales, as reflected
on its financial statements for the year then ended. It is
understood that no bonus shall be due Employee if earnings
before income taxes do not reach at least 5.5% of sales for
the year then ended.
b. The Bonus amount shall be increased by an
amount equal to .25% of earnings for each additional .5% of
earnings on sales before income taxes in excess of earnings
of 5.5% of sales.
By way of example and assuming
sales of $80,000,000, the bonus shall be as follows:
Earnings as a Bonus Amount
Earnings Percentage of as a Bonus
Sales Percentage of Dollars
Earnings
$4,400,000 5.5% 2.00% $ 88,000
$4,800,000 6.0% 2.25% 108,000
c. For Bonus calculation purposes, the following
shall be assumed: 5.49% to 5.98% = 5.5%, 5.99% to 6.48% =
6.0%; 6.49% to 6.98% = 6.5% and so on.
d. Notwithstanding the foregoing, the Bonus
payable with respect to any one fiscal year of the Company
shall not exceed an amount equal to 5% of the Company's
earnings before income taxes for such fiscal year.
e. The Bonus shall accrue and be due Employee
with respect to the end of Company's fiscal year and shall
be payable not later than January 10 of the next succeeding
calendar year. Employee shall be eligible for the Bonus
with respect to the fiscal year ending September 2, 1989 and
each fiscal year ending thereafter.
C. Special Bonus. Without regard to the Bonus, if
any, due Employee under the provisions of Section 4b(v) with
respect to the Company's fiscal year ending September 2,
1989 and not as a part thereof, the Company shall, on
January 2, 1990, pay to Employee a One Hundred Thousand
Dollar ($100,000,00) Special Bonus by way of extra
compensation for services rendered and results achieved
during fiscal 1989.
D. Other Compensation Plans. Nothing contained in
this Section 4 or otherwise in this Agreement shall limit to
any degree Employee's right to participate in any other
compensation or incentive compensation plan of the Company
now or hereafter adopted with respect to which Employee is
otherwise eligible, including, but not limited to those
described at Section 5 hereof.
H. Additional Benefits.
In addition to the compensation provided for in
Section 4 herein, Employee shall be entitled to receive:
A.
All employee fringe benefits in which
Employee was entitled to participate immediately prior to
the Effective Date, subject to Company eligibility
requirements for each of those benefits, including, without
limitation, life insurance, and medical plans, and such
other employee benefits as may be approved by the Board
during the term of this Agreement. Nothing in this
paragraph shall be deemed to prohibit Company making any
changes in any of the plans, programs or benefits described
in this Section 5, provided the change similarly affects all
executives similarly situated.
B. Reimbursement for all reasonably incurred business
related expenses provided that Employee accounts therefore
in accordance with Company existing policies as modified
from time to time.
C. Employee shall, during the term hereof, be
entitled to the use of a new Mercedes Benz Model 420 SEL
automobile or its equivalent ("Vehicle") to be replaced with
a new Vehicle not less often than every three (3) years with
all expenses paid by Employer.
I. Change of Control. The occurrence of any one
or more of the following shall constitute an "Event" for
purposes of Sections 7.b and 8 hereof:
A. An event that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14a
promulgated under the Securities Exchange Act of 1934, as in
effect on the date hereof, occurs; or
B. Any person (other than any person who as of the
date hereof is the beneficial owner of ten percent (10%) or
more of the Company's voting securities) or group of persons
acting in concert becomes the beneficial owner of thirty
percent (30%) or more of the Company's outstanding voting
securities or securities convertible into such amount of
voting securities; or
C. During any period of two (2) consecutive years
following the execution of this Agreement, individuals who
at the beginning of such period constitute the Board and any
new director whose election by the Board or nomination for
election by Company stockholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the
period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof; or
D. The shareholders of Company approve a merger or
consolidation of the Company with any other corporation, or
the shareholders of Company approve a plan of complete
liquidation of Company or an agreement for the sale or
disposition by Company of all or substantially all of
Company's assets, provided, however, that a merger or
consolidation which would result in the voting securities of
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at
least eighty percent (80%) of the combined voting power of
the voting securities of Company or such surviving entity
outstanding immediately after such merger or consolidation
shall not be deemed an Event.
E. Notwithstanding the foregoing provisions of this
Section 6, the acquisition of any security of the Company by
the trustee of any employee stock ownership plan of the
Company ("ESOP") qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), or
any similar tax qualified employee benefit plan now or
hereafter authorized under the Code, shall not be deemed an
"Event" for purposes of Sections 7.b and 8 hereof.
J. Termination.
This Agreement may be terminated (a) by Employee's
death, Disability or Retirement, (b) by Employee for Good
Reason, or (c) by action of the Board for Cause.
A. Disability; Retirement. If, as a result of
Employee's incapacity due to physical or mental illness,
Employee shall have been absent from the full-time
performance of his duties with Company for twelve (12)
consecutive months, and within thirty (30) days after
written notice of termination is given Employee shall not
have returned to the full-time performance of his duties,
Employee's employment may be terminated for "Disability".
Employee shall also have the right to terminate this
Agreement for Disability at any time, in the event that a
licensed physician determines that Employee's health would
be jeopardized by his continuing his employment hereunder.
Termination by Company or Employee of Employee's employment
based on "Retirement" shall mean termination in accordance
with Company's retirement policy, including early
retirement, generally applicable to its salaried employees
or in accordance with any retirement arrangement established
with Employee's consent with respect to him.
B.
Good Reason. Employee shall be entitled to
terminate his employment within one (1) year of an Event as
defined at Section 6 or for "Good Reason". "Good Reason"
shall mean the material breach of any of Company's
obligations under this Agreement, without Employee's express
written consent, or the occurrence of any of the following
circumstances unless such breach or circumstances are fully
corrected prior to the Date of Termination specified in the
Notice of Termination pursuant to subsection 7e and d,
respectively:
a. An adverse alteration in the nature or status
of Employee's responsibilities from those in effect as of
the date hereof;
b. Any attempted reduction by Company in the
Employee's Compensation as reflected at Section 4 hereof,
and in effect on the date hereof or as increased from time
to time;
c. The relocation of Company's principal
executive offices to a location more than thirty (30) miles
from the present location of such offices in the Los Angeles
Metropolitan Area, or Company requiring Employee to be based
anywhere other than Company's principal executive offices
except for required travel on company business to an extent
substantially consistent with Employee's present business
travel obligations;
d. The failure by Company to continue in effect
any compensation plan in which Employee participates which
is material to Employee's total compensation, including but
not limited to those plans specified in Section 5a or any
substitute plans adopted prior to an Event, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan,
or the failure by Company to continue Employee's
participation therein (or in such substitute or alternative
plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of
Employee's participation relative to other participants, as
existed at the time of the Event; or
e. Any purported termination of Employee's
employment which is not effected pursuant to a Notice of
Termination (as defined below) satisfying the requirements
of subsection d below.
f.
Employee's right to terminate his employment
pursuant to this subsection b shall not be affected by his
incapacity due to physical or mental illness. Employee's
continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
C. For Cause. The Board may terminate Employee's
employment by action of the Board during the term of this
Agreement For Cause, which shall mean the commission of acts
of willful malfeasance resulting in material damage to the
Company's business.
D. Notice of Termination. Any purported termination
of Employee's employment by Company or by Employee shall be
communicated by Written Notice of Termination to the other
party hereto in accordance with Section 11 hereof. For
purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Employee's employment
under the provisions so indicated.
E. Date of Termination, etc. "Date of Termination"
shall mean (i) if Employee's employment is terminated for
Disability, thirty (30) days after Notice of Termination is
given (provided that Employee shall not have returned to the
full-time performance of his duties during such thirty (30)
day period), and (ii) if Employee's employment is terminated
pursuant to subsection b or c, above, or for any other
reason (other than Disability), the date specified in the
Notice of Termination; provided that if within fifteen (15)
days after any Notice of Termination is given, or if the
Date of Termination is later, prior to the Date of
Termination the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date
on which the dispute is finally determined, either by mutual
written agreement of the parties, by a binding arbitration
award, or by a final judgment, or decree of a court of
competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired
and no appeal has been perfected); provided, further, that
the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the
party giving such notice pursues the resolution of such
dispute with reasonable diligence. Notwithstanding the
pendency of any such dispute, the Company will continue to
pay Employee his full compensation in effect when the notice
giving rise to the dispute was given (including, but not
limited to, Base Compensation) and continue Employee as a
participant in all compensation, benefit, and insurance
plans in which he was participating when the notice giving
rise to the dispute was given, until the dispute is finally
resolved in accordance with this subsection, but in no event
past the expiration date of this Agreement. Amounts paid
under this subsection are in addition to all other amounts
due under this Agreement and shall not be offset against or
reduce any other amounts due under this Agreement.
K. Compensation Upon Occurrence of an Event or
Termination.
A. By Employee Upon Occurrence of an Event or for
Good Reason. Upon termination by Employee as a result of
the occurrence of an Event as described at Section 6 or for
Good Reason as set forth at Section 7b, Employee shall
receive a lump sum amount (the "Termination Payment") in
addition to any other compensation received hereunder or
otherwise, equal to the sum of one year's Base Compensation
as defined at Section 4a hereof and an amount equal to the
most recently received Bonus as defined at Section 4b hereof
received by Employee multiplied by the number of complete
and partial years remaining in the term of this Agreement,
plus one, and:
a. All incentive compensation awards previously
granted but not yet paid, including, without limitation,
awards granted under the Company's Incentive Compensation
Plan or any successor plan, plus an amount equal to the
amount of the highest incentive compensation award granted
to Employee for any year during the three (3) calendar years
immediately preceding the Date of Termination multiplied by
the number of partial and whole calendar years remaining in
the full unexpired term of this Agreement, plus
b. If and to the extent Employee so elects, an
amount equal to (w) the number of shares of Common Stock of
the Company subject to unexercised options held by Employee
at the Date of Termination, plus the number of shares of
Common Stock with respect to which stock appreciation
rights, if any, not granted in tandem with stock options
("SARs") are held by Employee at the Date of Termination,
multiplied by (x) the difference between the average
exercise price of such options and SARs and the per share
fair market value of the Common Stock, against surrender to
the Company of all options and SARs relating to the Common
Stock held by Employee at the Date of Termination and
selected by him to be treated in accordance with this
Section. The per share fair market value of the Common
Stock, for purposes of this provision, shall be the higher
of (y) the closing sale price of the Common Stock as
reported on the consolidated reporting system established
pursuant to Section 11(a) of the Securities Exchange Act of
1934, as amended, on the Effective Date or, if the Common
Stock is not so reported, the closing sale price of the
Common Stock on the principal exchange market for the Common
Stock on the Effective Date or, if the principal market for
the Common Stock is not an exchange, the mean of closing
high and low bid and asked prices for the Common Stock as
reported on the automated quotation system of the National
Association of Securities Dealers, Inc. or successor
organization on the Effective Date, and (z) the highest
consideration per share paid to Company stockholders in
connection with the transactions which resulted in the Event
constituting a Change in Control as described at Section 6.
c. For the full unexpired term of the Employment
Period, the Company shall continue Employee's participation
in each employee benefit plan (including, without
limitation, life insurance and medical plans) in which
Employee was entitled to participate immediately prior to
the Effective Date as if he continued to be employed by the
Company hereunder, and any benefits arranged in accordance
with subsection (iv) hereof. If the terms of any benefit
plan of the Company do not permit continued participation by
Employee, the Company will arrange to provide to Employee
benefits substantially equivalent to, as to time and amount,
and no less favorable than, on an aftertax basis, the
benefits he would have been entitled to receive under such
plan if he had been continuously employed by the Company for
the full unexpired term of the Employment Period.
d. Subsequent to the occurrence of an Event
constituting a Change in Control, as defined at Section 6,
the Company shall not eliminate, replace, or modify any plan
referred to in subsection (iii) hereof, including, without
limitation, the Pension Plan, so as to eliminate or reduce
any benefit which Employee would be entitled to receive
under such plan as in effect immediately prior to such
Change in Control if he were continuously employed by the
Company for the full term of this Agreement, unless it
arranges to provide to Employee benefits substantially
equivalent as to time and amount and no less favorable on an
after-tax basis than such benefits.
B. By Company or Employee for Disability
Upon Retirement and by the Company for Good Cause. Upon
termination of employment pursuant to the provisions of
Section 7a (Disability or Retirement) or 7c (For Good
Cause), Employee shall receive an amount (the "Separation
Payment") in addition to any other compensation received
hereunder or otherwise, the following:
a. All incentive compensation awards previously
granted but not yet paid, including, without limitation,
awards granted under the Company's Incentive Compensation
Plan or any successor plan, plus
b. The compensation provided at Section 8a(ii)
hereof with respect to stock options and SARs.
C. Mitigation. Employee shall not be required to
mitigate the amount of any payment provided for in this
Agreement or otherwise by seeking other employment or
otherwise, nor shall the amount of any payment or benefit
provided for in this Agreement or otherwise be reduced by
any compensation earned by Employee as the result of
employment by another employer, by retirement benefits, by
offset against any amount claimed to be owing by Employee to
Company, or otherwise.
L. Assignability.
The obligations of the Employee hereunder are
personal and may not be assigned or delegated by him or
transferred in any manner whatsoever, nor are such
obligations subject to involuntary alienation, assignment,
or transfer, Company shall have the right to assign this
Agreement and to delegate all rights, duties, and
obligations hereunder, either in whole or in part, to any
parent, affiliate, successor, or subsidiary organization or
company of Company, so long as the obligations of Company
under this Agreement remain the obligations of Company.
M. Termination Payment Limitation. Notwith-
standing anything contained herein to the contrary, if any
payment or benefit received or to be received by Employee in
connection with an Event or the termination of Employee's
employment, whether pursuant to this Agreement or otherwise
would as a result of the application of Section 280G of the
Code be deemed an "excess parachute payment" under Code
Section 280G(b)(i) Employee shall, nevertheless, receive
such payment or benefit in full and in the taxable year of
Employee in which it would otherwise be payable by Company
hereunder, less the amount of additional withholding
required under Code Section 4999(c)(1) as a result of the
imposition of the additional tax on Employee imposed under
Code Section 4999(a) as a result of such "excess parachute
payment" ("Excise Tax") and Company shall pay to Employee on
or before January 10 of Employee's next succeeding taxable
year the amount of any such Excise Tax and any other payment
required so that he shall receive any payment of benefit
hereunder as net income without deduction, credit or
exception and without any reduction on account of any
"Excise Tax" or other similar tax withheld, or otherwise due
with respect thereto either federal, or California State
which is imposed by way of a penalty or in addition to
Employee's normal taxes on earned income.
N. Notice.
For the purpose 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 States registered mail, return
receipt requested, postage prepaid, addressed to the Company
at its principal office address directed to the attention of
the Board with a copy to the Secretary of the Company, and
to Employee at Employee's residence address on the records
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.
O. 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.
P. Successors; Binding Agreement.
A. The Company will require any successor to all or
substantially all of the business and/or assets of the
Company (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to expressly assume and agree
to perform this Agreement in the same manner and to the same
extent that Company would be required to perform it if no
such succession had taken place. Failure of Company to
obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall
entitle Employee to compensation from Company in the same
amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Good Reason,
except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement,
Company shall mean Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which
executes and delivers the Agreement provided for in this
Section 13 or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law.
B. This Agreement and all rights of Employee
hereunder shall inure to the benefit of and be enforceable
by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees,
and legatees. If Employee should die while any amounts
would still have been payable to him hereunder if he had
continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms
of this Agreement to Employee's devisee, legatee, or other
designee, or, if there be not such designee, to Employee's
estate.
Q. Miscellaneous.
No provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or
discharge is agreed to in a writing signed by Employee and
such officer as may be specifically authorized by the Board.
No waiver by either party hereto at any time of any breach
by the other party hereof, or 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
otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not
set forth expressly in this Agreement. The validity,
interpretation, construction, and performance of this
Agreement shall be governed by the laws of the State of
California. All references to sections of the Securities
Exchange Act of 1934 or the Internal Revenue Code of 1986
shall be deemed also to refer to any successor provisions to
such sections. Any payments provided for hereunder shall be
paid net of any applicable withholding required under
federal, state, or local law.
R. 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 will constitute one and
the same instrument.
S. Arbitration.
Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively
by arbitration in Los Angeles, California in accordance with
the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that
Employee shall be entitled to seek specific performance of
his right to be paid until the Date of Termination during
the pendency of any dispute or controversy arising under or
in connection with this Agreement. The Company shall
reimburse Employee for all expenses, including, without
limitation, attorney's, accountant's, actuary's, and other
experts' fees, reasonably incurred by Employee at any time
in connection with defending the validity of, enforcing his
rights under, or recovering amounts due or damages under
this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date and year first above written.
Company: FREDERICK'S OF HOLLYWOOD, INC.
By /s/ Xxxx X. Xxxxxx
Its Chairman of the
Compensation Committee
Employee: /s/ Xxxxxx X. Xxxxxxx
XXXXXX X. XXXXXXX
EXHIBIT "C"
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
PARTIES: FREDERICK'S OF HOLLYWOOD, INC., a Delaware
corporation ("Company"), located at 0000 Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxxxxx, XX 00000, and XXXXXX X.
XXXXXXX ("Employee").
DATE: Effective as of August 30, 1992.
RECITALS:
T. Employee is presently Chairman of the Board
of Directors, President and Chief Executive Officer of the
Company.
U. On July 30, 1987, the Company and Employee
entered into an employment agreement which was amended and
restated August 31, 1989 (the "Agreement").
V. The Agreement, as amended, provides for an
initial three year term, renewable annually on an
"evergreen" basis unless terminated by action of the Board
not less than six months prior to termination. The Board
has not taken action to terminate.
W. The parties wish to change the term of the
Agreement by this amendment to provide for an initial term
of five years also renewable on an "evergreen" basis, as
hereinabove described.
TERMS AND PROVISIONS: In consideration of the mutual
promises contained herein and other valuable consideration
receipt of which is hereby acknowledged, the parties agree
to amend the Agreement as follows:
1. Paragraph 2 "Term of Employment" is deleted and
the following new paragraph is inserted in its place and
stead:
2. Term of Employment. Subject to
the provisions for termination hereof,
the term of this Agreement shall
commence August 30, 1992 ("Effective
Date") and shall terminate five (5)
years from such date (the "Term");
provided, however, that the commencement
date of the five (5) year term of this
Agreement after the date hereof shall
change each year on the first day of the
Company's fiscal year to such date
unless the Board of Directors of the
Company (the "Board") takes affirmative
action not less than six months before
termination not to renew the Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date and year first above written.
COMPANY: FREDERICK'S OF HOLLYWOOD, INC.
By /s/ Xxxx X. Xxxxxx
Chairman of the
Compensation Committee
EMPLOYEE: /s/ Xxxxxx X. Xxxxxxx
XXXXXX X. XXXXXXX
