Exhibit 10.4
AGREEMENT AND COMPLETE AND
FULL GENERAL RELEASE
Xxxxxx Xxxxxx ("Executive") and X. X. Xxxxx Arts & Crafts, Inc., a
Pennsylvania corporation (the "Company"), have agreed to conclude their
employment relationship. The parties have agreed that, based upon Executive's
past service to Company and the parties' mutual desire to amicably conclude the
employment relationship, that Executive and Company enter into this Agreement
and Complete and Full General Release ("Agreement"). In consideration of the sum
to be paid and other promises set out in this Agreement, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree to the following terms:
1. CONCLUSION OF EMPLOYMENT. Executive's employment by Company will
terminate on July 31, 2006 ("Separation Date"). Executive will continue to be
paid his annual compensation, at its current rate, through the Separation Date.
2. PAYMENT UPON SEPARATION. Assuming the Executive does not revoke this
Agreement within the revocation period set forth in Paragraph 8, below, in
consideration for executing this Agreement and complying with its terms,
Executive will receive severance payments from the Company in an amount equal to
one (1) years' compensation at Executive's current rate, paid in twelve (12)
equal monthly installments less appropriate tax withholdings and authorized
deductions, commencing on the first Company pay date subsequent to the
Separation Date.
3. HEALTH INSURANCE TRANSITIONAL SUPPORT. Company will comply with its
obligations and provide all required notices to Executive of Executive's rights
under the Consolidated Omnibus Budget Reconciliation Act ("COBRA"). In the event
that Executive elects health insurance continuation coverage pursuant to COBRA
subsequent to the Separation Date, Company shall reimburse Executive for all
premiums paid by Executive for such health insurance continuation for a period
of seventeen (17) months subsequent to the Separation Date.
4. EXERCISE OF STOCK OPTIONS: Company agrees that all unvested stock
options granted to Executive prior to the Separation Date will continue to vest
over the remaining unvested terms of those options and that Executive shall have
a period of up to five (5) years from July 31, 2007 to exercise all vested stock
options.
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5. CONFIDENTIALITY. Executive and Company agree to keep the terms of this
Agreement strictly confidential until such time as this Agreement is filed with
the Securities and Exchange Commission.
6. CONFIDENTIAL INFORMATION. Executive acknowledges that the information,
observations and data obtained by Executive while employed by the Company
concerning the business or affairs of the Company and its Subsidiaries
("Confidential Information") are the property of the Company. Therefore,
Executive agrees that Executive shall not disclose to any unauthorized person or
use for Executive's own purposes any Confidential Information without the prior
written consent of the Chairman of the Board of Directors of Company, unless and
to the extent such information becomes generally known to and available for use
by the public other than as a result of Executive's acts or omissions. On or
before the Separation Date, Executive shall deliver to the Company all
memoranda, notes, plans, records, reports, computer tapes, printouts and
software and other documents and data (and copies thereof) in any form or medium
relating to the Confidential Information or the business of the Company and its
Subsidiaries that Executive may then possess or have under Executive's Control
7. NON-COMPETE, NON-SOLICITATION. (a) In consideration of the payment to be
made to Executive upon separation referred to in Paragraph 1, above, Executive
agrees that for a period of seventeen (17) months after the Separation Date (the
"Non-Compete Period") Executive shall not directly or indirectly own any
interest in, manage, control, participate in, consult with, render services for,
or in any manner engage in any business competing with the businesses of the
Company and its Subsidiaries, as such businesses exist or are in process on the
Separation Date, within any geographical area in which the Company and its
Subsidiaries engage or, at the time of the execution of the Agreement, actively
plan to engage in such businesses. Nothing herein shall prohibit Executive from
being a passive owner of not more than 2% of the outstanding stock of any class
of a corporation which is publicly traded and which competes with the businesses
of Company and its Subsidiaries, so long as Executive has no direct or indirect
active participation in the business of such corporation.
(b). During the Non-Compete Period, Executive shall not directly or
indirectly through another person or entity (i) induce or attempt to induce any
employee of the Company or any Subsidiary to leave the employ of the Company or
such Subsidiary, or in any way interfere with the relationship between the
Company or any Subsidiary and any employee thereof, (ii) hire an employee of the
Company or any Subsidiary, or (iii) induce or attempt to induce any customer,
supplier, licensee, licensor, franchisee or other business relation of the
Company or any Subsidiary to cease doing business with the Company or such
Subsidiary,
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or in any way interfere with the relationship between any such customer,
supplier, licensee, licensor, franchisee, or business relation and the Company
or any Subsidiary (including, without limitation, making any negative statements
or communications about the Company or its Subsidiaries).
8. WAIVER OF CLAIMS. Executive, individually and on behalf of Executive's
estate, heirs, personal representatives, and assigns hereby release, remise and
forever discharge the Company and its Subsidiaries of and from any and all
actions, causes of action, claims, debts, dues, accounts, accountings, losses,
liabilities, contracts, commitments, rights, obligations, damages, costs and
expenses, including without limitation litigation expenses and attorneys fees,
of any nature whatsoever, whether known or unknown, liquidated or contingent,
whether now existing or hereafter arising, (each individually a "Claim" and all
of the foregoing collectively called "Claims"), which Executive had, now has, or
may in the future have, including without limitation any Claims: (a) for libel,
slander, defamation, or tortious interference with actual or prospective
business or contractual relations, which are based in whole or in part on any
facts, circumstances or events which are now existing or which occurred on or
prior to the date hereof, or (b) for breach of contract, wrongful discharge,
non-payment of wages or other sums, with the sole exception of Claims arising
under the express provisions of this Agreement.
Except as expressly provided to the contrary in the first paragraph of
this Section 8, the Claims and rights being released in this section include,
but are not limited to: all Claims and rights arising from or in connection with
any agreement of any kind Executive may have had with Company and its
Subsidiaries, or in connection with Executive's status or separation of
employment from Company; all Claims and rights for wrongful discharge, breach of
contract, either express or implied, emotional distress, back pay, front pay,
benefits, fraud, or misrepresentation; all Claims and rights, if any, arising
under the Civil Rights Acts of 1964 and 1991, as amended, (which prohibits the
discrimination in employment based on race, color, national origin, religion or
sex), the Americans with Disabilities Act (ADA), as amended (which prohibits
discrimination in employment based on disability), the Age Discrimination in
Employment Act (ADEA), as amended (which prohibits age discrimination in
employment), the Employee Retirement Income Act of 1974 (ERISA), as amended, all
other wage and hour/wage payment statutes and laws, the Pennsylvania Human
Relations Act and all similar statutes and laws, and the Health Insurance
Portability and Accountability Act (HIPPA), to the extent such statutes and laws
may be applicable; and, any and all other Claims or rights whether arising under
federal, state, or local law, rule, regulation, constitution, ordinance or
public policy.
Executive acknowledges that Executive is waiving any rights Executive
may have under the Age Discrimination in Employment Act, that
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Executive was advised to review this Agreement with Executive's legal counsel
before signing the Agreement, that Executive has been advised to carefully read
the provisions of this release, that Executive understands its contents, that
Executive has twenty-one (21) days from the date Executive received a copy of
this release to consider entering into this release and accepting the payments
provided for herein, and that if Executive signs and returns this release before
the end of the 21-day period, Executive will have voluntarily waived Executive's
right to consider this release for the full twenty-one (21) days.
Executive acknowledges that Executive may revoke this release within
seven (7) days of Executive's execution of this Agreement by submitting written
notice of Executive's revocation of this release and of this Agreement to the
Chairman of the Board of the Company. Executive also understands that this
release and Agreement shall not become effective or enforceable until the
expiration of that 7-day period without Executive having given such notice. If
Executive gives such notice of revocation, then this Agreement will be null and
void and of no further force and effect.
Executive agrees that if any provision of this release is or shall be
declared invalid or unenforceable by a court of competent jurisdiction, then
such provision will be modified only to the extent necessary to cure such
invalidity and with a view to enforcing the parties' intention as set forth in
this release to the extent permissible and the remaining provisions of this
release shall not be affected thereby and shall remain in full force and
9. TRANSITION ASSISTANCE. Executive further agrees that, for the one year
period subsequent to the Termination Date he will, without compensation in
addition to that provided herein, provide on average two (2) to three (3)days
transition assistance per week to Company in the areas of investor relations,
financial assistance, Board of Directors assistance and other consulting as
requested by the Company. The Company shall reimburse Executive for travel and
expenses, approved in advance in writing by the Company, which Executive
incurred in providing such assistance.
10. NO WRONGDOING BY COMPANY. Executive acknowledges and understands that
by offering and/or executing this Agreement, Company does not admit, and indeed
expressly denies, that Company, its employees, managers, agents, directors and
officers have done anything improper or violated any law. The signing of this
Agreement is not an admission of liability or wrongdoing by Company, its
employees, managers, agents, directors or officers.
11. TAXES. Company will withhold all appropriate taxes and issue to
Executive an IRS Tax Form W-2. The parties acknowledge, however, that there may
be tax consequences for Executive in excess of the amounts withheld from the
consideration described in Paragraphs 2 and 3 of this Agreement. It is expressly
understood that Executive is responsible for all taxes which Executive
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may owe as a result of Executive receiving the consideration under this
Agreement. Executive expressly understands that if Executive or Executive's
family owe taxes, or additional taxes, at any time as a result of the impact of
this Agreement, that Executive alone is responsible for making those payments
and that Executive will not seek additional sums from Company to make those
payments. Similarly, if Executive seeks to recover certain portions of or all of
the withheld amounts from the appropriate taxation authorities, such a recovery
would be a private matter between Executive and the appropriate government
agency or agencies. Company will not provide Executive with, nor will Executive
ask for, any additional funds to offset the amount paid or owed in taxes,
accrued interest, penalties or for attorneys fees which Executive may incur in
resolving Executive's claims with any government agency or agencies or courts of
law.
12. COMPLETE INTEGRATION. The terms contained in this Agreement are the
only terms agreed upon by Executive and Company. Notwithstanding any other
statements, all benefits which Executive had as a result of Executive's
employment, and which are not expressly listed in this Agreement, terminate in
accordance with Company's benefit contracts, but in no case later than the end
of June, 2006. It is the express intent of the parties that this Agreement fully
integrates and expressly replaces any other terms, conditions, conversations,
discussions, or any other issues which were discussed regarding Executive's
employment at Company, or for any and all reasons based on conduct which has
occurred through the date of executing this Agreement. Any other conversations,
promises or conditions which do not appear in this document are waived or
rejected by agreement of Executive and Company.
13. INTERPRETATION AND ENFORCEMENT. Because Executive has been advised to
seek counsel prior to signing this Agreement, the parties agree that the general
rule that the document shall be interpreted against the party that drafted it
shall not apply to any subsequent issue of interpretation. In the event a
dispute arises over the terms of this Agreement, both Executive and Company are
equal without regard to who authored this document. All claims, disputes or
issues of interpretation which arise, or may arise, out of this Agreement shall
be resolved by an Arbitrator under the American Arbitration Association's Rules
and Procedures for Employment Cases. The Arbitrator shall have the power to
order appropriate remedies for any proven breaches of this Agreement. However,
each side shall bear its own attorneys fees. The decision and award of any
Arbitrator shall be final and binding. The Parties agree to keep any Decision
and Award confidential.
14. COUNTER-PARTS. This Agreement may be signed in separate counter-parts.
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15. SIGNATURES
/s/ Xxxxxx Xxxxxx 6/1/06
---------------------------------------- Date
Xxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx 6/1/06
---------------------------------------- Date
X. X. Xxxxx Arts & Crafts, Inc.
By: Xxxxxxx Xxxxxx
Authorized Agent of Company
Presented to Executive on: May 26, 2006.
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