EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into on
this 4th day of December, 2002 by and between CLAIRE'S STORES, INC., a Florida
corporation (the "Company"), and XXXXXXX XXXXXXXX (hereinafter, the
"Executive").
R E C I T A L S
A. The Executive is currently employed as the Chief Executive Officer
and the Chairman of the Board of Directors 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 the Executive's name, image, likeness
and goodwill appurtenant thereto, and the rights of publicity in and to the
Executive's name, image, likeness and goodwill appurtenant thereto
(collectively, the "Property") are unique assets that have been integral to the
growth and success of the Company.
E. The Board also recognizes that, in addition to the foregoing, the
network of contacts among suppliers and wholesalers that has been established 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 during the Executive's lifetime.
F. The Board also recognizes that the Executive, notwithstanding the
fact that he was the founder of the Company, and has been its Chairman and Chief
Executive Officer since the Company's inception in 1961, during his term of
employment with the Company, the Executive has not received stock grants or
stock options from the Company on a regular and consistent basis and owns only
an aggregate amount of approximately 12% of the issued and outstanding shares of
Class A common stock and common stock of the Company; consequently, the Board
desires to compensate him therefor with performance-milestone-based cash
compensation opportunities.
G. The Board has been advised through a comprehensive study of industry
and peer company data conducted by an expert in the executive compensation field
that the Executive has been paid significantly less over the past ten years than
would have been appropriate for a similarly situated executive performing his
duties, and the Company has had the benefit of such lower compensation.
H. The Executive has assisted in the development of a succession plan
designed to assure the smooth transition of management of the Company.
I. The Board also recognizes that the Company has saved a substantial
amount in the costs of potential retirement benefits to the Executive due to the
Executive's continued service with the Company since 1961 and the fact that the
Company does not carry life insurance on the Executive and, consequently, the
Board desires to compensate him therefor in the event of his death or disability
during the term of this Agreement with compensation that the Executive would
have otherwise had the opportunity to earn had death or disability not
intervened; it being recognized that this Agreement contains no provision for
the Executive's retirement during its term.
J. 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.
K. 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:
1. 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 the Chief Executive
Officer and the Chairman of the Board of the Company, shall faithfully and
diligently perform all services as may be assigned to him by the Board (provided
that, such services shall not materially differ from the services currently
provided by the Executive), and shall exercise such power and authority as may
from time to time be delegated to him by the Board. The Executive shall report
directly to 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
-2-
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. Notwithstanding the foregoing or any other provision of this
Agreement, it shall not be a breach or violation of this Agreement for the
Company to modify the duties of the Executive in connection with the
implementation of the Milestones (as hereinafter defined).
2. TERM OF EMPLOYMENT. 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 November 1, 2002 (the
"COMMENCEMENT DATE") and shall terminate upon the earlier of (a) October 31,
2005, or (b) the date on which the employment of the Executive is terminated
pursuant to and in accordance with Section 5 hereof. The Term of Employment
hereunder shall be renewed automatically for successive periods of one (1) year,
unless either the Company or the Employee 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 Section 5 hereof is sometimes referred to herein as the
"EXPIRATION DATE."
3. COMPENSATION.
3.1 BASE SALARY. The Executive shall continue to receive a
base salary at the annual rate of One Million Dollars ($1,000,000) (the "Base
Salary") during the Term of Employment, with such Base Salary payable in
installments consistent with the Company's normal payroll schedule, subject to
applicable withholding and other taxes.
3.2 BONUSES.
a. TRANSITION BONUS. Upon execution of this
Agreement, the Company shall pay (or become obligated to pay) to the Executive,
as a bonus (the "Transition Bonus"), an amount of Three Million Dollars
($3,000,000), payable as follows: (i) One Million Five Hundred Thousand Dollars
($1,500,000), less applicable withholding and employment taxes, payable in a
lump sum as soon as practicable after full execution of this Agreement; (ii)
Seven Hundred Fifty Thousand Dollars ($750,000), less applicable withholding and
employment taxes, payable in a lump sum as soon as practicable, but no later
than fifteen (15) days, after the successful achievement of the milestones set
forth in Part 1 of Exhibit A attached hereto (the "First Milestones"); and (iii)
Seven Hundred Fifty Thousand Dollars ($750,000), less applicable withholding and
employment taxes, payable in a lump sum as soon as practicable, but no later
than fifteen (15) days, after the successful achievement of the milestones set
forth in Part 2 of Exhibit A attached hereto (the "Second Milestones" and
together with the First Milestones, the "Milestones").
b. INCENTIVE COMPENSATION. During the Term of
Employment, the Executive shall be eligible to receive compensation (the
"Incentive Compensation") pursuant to and in accordance with the terms and
conditions set forth in the Claire's Stores, Inc. 2000 Incentive Compensation
Plan for Xxxxxxx Xxxxxxxx (the "2000 Incentive Plan"), as amended from time to
time, or any successor or additional incentive compensation plan (each an
"Additional Incentive Plan" and together with the 2000 Plan, each referred to as
-3-
an "Incentive Compensation Plan"); provided, that, any Additional Incentive Plan
must be approved by the Board and the shareholders of the Company.
3.3 ADDITIONAL COMPENSATION. In consideration for the
Executive agreeing to be bound by the restrictive covenant provisions set forth
in Section 6 as well as the terms and conditions set forth in Section 7 hereof,
and contingent upon the achievement of the Milestones, the Company shall pay to
the Executive additional compensation at an annual rate of One Million Three
Hundred Thousand Dollars ($1,300,000) (the "Additional Compensation") during the
Term of Employment, subject to applicable withholding and other taxes, payable
in equal quarterly installments on November 1, February 1, May 1 and August 1 of
each year, commencing on November 1, 2003; provided, that, in the event that the
Milestones have not been met by November 1, 2003, the quarterly installments of
the Additional Compensation shall commence on the first day of the calendar
month after the Milestones have been met, and shall be paid in equal quarterly
installments thereafter during the Term of Employment.
4. 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 offered by the Company to its 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 Xxxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxx Xxxx,
Xxx Xxxx and Hoffman Estates, Illinois (or any replacement offices thereof). The
Executive shall be provided with an office at each of the foregoing cities, but
shall only be provided with one staff team, although such staff team shall be
required to service the Executive's needs in all three offices. 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 OTHER BENEFITS. The Executive shall be entitled to six (6)
weeks of paid vacation each calendar year during the Term of Employment, to be
taken at such times as the Executive and the Company shall mutually determine
and provided that no vacation time shall significantly interfere with the duties
-4-
required to be rendered by the Executive hereunder. Any vacation time not taken
by Executive during any calendar year may not be carried forward into any
succeeding calendar year.
5. 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 which constitutes
a willful and material breach 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, (iii) the conviction of, or pleading guilty or nolo contendre by, the
Executive of any felony, or (iv) gross negligence or intentional acts,
including, without limitation, immoral or disreputable conduct, that 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, the Company shall (i) within
fifteen (15) days of the Termination Date, pay to the Executive any earned but
unpaid Base Salary, Transition Bonus and Additional Compensation through the
Termination Date, and (ii) pay to the Executive the Incentive Compensation, in
the manner and at such times as determined in accordance with the provisions of
any Incentive Compensation Plan. Upon any termination effected and compensated
pursuant to this SECTION 5.1, the Company shall have no further liability
hereunder (other than for (x) reimbursement for reasonable business expenses
incurred prior to the Termination Date, subject, however, to the provisions of
Section 4.1, and (y) payment of compensation for unused vacation days that have
accumulated during the calendar year in which such termination occurs).
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 ninety (90)
consecutive days or for ninety (90) days, whether or not consecutive, in any six
(6) month period, the Company shall have the option, in accordance with
applicable law, to terminate this Agreement 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, the Company
shall (i) within fifteen (15) days of the Termination Date, pay to the Executive
any earned but unpaid Base Salary through the Termination Date, (ii) pay to the
Executive the Incentive Compensation, in the manner and at such times as
determined in accordance with the provisions of any Incentive Compensation Plan;
(iii) within fifteen (15) days of the Termination Date, pay to the Executive any
unpaid Transition Bonus that otherwise would have been payable to the Executive
whether or not all Milestones had been satisfied on or before the Termination
Date, and (iv) continue to pay the Executive's Additional Compensation through
-5-
the Expiration Date, in the manner and at such times as the Additional
Compensation otherwise would have been payable to the Executive, whether or not
all Milestones had been satisfied on or before the Termination Date. Upon any
termination effected and compensated pursuant to this SECTION 5.2, the Company
shall have no further liability hereunder (other than for (x) reimbursement for
reasonable business expenses incurred prior to the Termination Date, subject,
however to the provisions of Section 4.1, and (y) payment of compensation for
unused vacation days that have accumulated during the calendar year in which
such termination occurs).
5.3 DEATH. Upon the death of the Executive during the Term of
Employment, the Company shall (i) within fifteen (15) days of the Termination
Date, pay to the estate of the deceased Executive any earned but unpaid Base
Salary through the Executive's date of death, (ii) pay to the estate of the
deceased Executive the Incentive Compensation, in the manner and at such times
as determined in accordance with the provisions of any Incentive Compensation
Plan; (iii) within fifteen (15) days of the Termination Date, pay to the estate
of the deceased Executive any unpaid Transition Bonus that otherwise would have
been payable to the Executive whether or not all Milestones had been satisfied
on or before the Executive's death, and (iv) continue to pay to the estate of
the deceased Executive, the Executive's Additional Compensation through the
Expiration Date, in the manner and at such times as the Additional Compensation
otherwise would have been payable to the Executive, whether or not all
Milestones had been satisfied on or before the Termination Date. Upon any
termination effected and compensated pursuant to this SECTION 5.3, the Company
shall have no further liability hereunder (other than for (x) reimbursement for
reasonable business expenses incurred prior to the date of the Executive's
death, subject, however to the provisions of Section 4.1, and (y) payment of
compensation for unused vacation days that have accumulated during the calendar
year in which such termination occurs).
5.4 TERMINATION WITHOUT CAUSE.
a. TERMINATION; NOTICE PERIOD. At any time 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.
b. 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 or 5.5), the Company shall (i) within fifteen (15) days of the Termination
Date, pay to the Executive any earned but unpaid Base Salary through the
Termination Date, (ii) pay to the Executive the Incentive Compensation, in the
manner and at such times as determined in accordance with the provisions of any
Incentive Compensation Plan, (iii) within fifteen (15) days of the Termination
Date, pay to the Executive a lump sum payment for any unpaid Transition Bonus
that otherwise would have been payable to the Executive whether or not all
Milestones had been satisfied on or before the Termination Date, (iv) within
fifteen (15) days of the Termination Date, pay to the Executive a lump sum
payment for the Base Salary and Additional Compensation that would have been
paid to the Executive had the Executive continued to be employed by the Company
through the Expiration Date hereof and, for purposes of the Additional
Compensation, whether or not all Milestones had been satisfied on or before the
Termination Date; (v) continue to provide the Executive with the benefits he was
receiving under Section 4.2 hereof (the "Benefits") through the Expiration Date,
in the manner and at such times as the Benefits otherwise would have been
payable or provided to the Executive, and (vi) within fifteen (15) days of the
Termination Date, pay to the Executive a lump sum benefit equal to the value of
the portion of his benefits under any savings, pension, profit sharing or
-6-
deferred compensation plans that are forfeited under such plans by reason of the
termination of his employment hereunder prior to the Expiration Date. The annual
Benefits referred to under clause (v) of this Section 5.4 shall be equal (in the
aggregate) to the Benefits provided to the Executive during the calendar year
immediately preceding the Termination Date. In the event that the Company is
unable to provide the Executive with any Benefits required hereunder by reason
of the termination of the Executive's employment pursuant to this Section 5.4,
then the Company shall pay the Executive cash equal to the value of the Benefit
that otherwise would have accrued for the Executive's benefit under the plan,
for the period during which such Benefits could not be provided under the plans,
said cash payments to be made within 45 days after the end of the year for which
such contributions would have been made or would have accrued. The Company's
good faith determination of the amount that would have been contributed or the
value of any Benefits that would have accrued under any plan shall be binding
and conclusive on the Executive. For this purpose, the Company may use as the
value of any Benefit the cost to the Company of providing that Benefit to the
Executive. Upon any termination effected and compensated pursuant to this
SECTION 5.4, the Company shall have no further liability hereunder (other than
for (x) reimbursement for reasonable business expenses incurred prior to the
Termination Date, subject, however, to the provisions of Section 4.1, and (y)
payment of compensation for unused vacation days that have accumulated during
the calendar year in which such termination occurs).
5.5 TERMINATION BY EXECUTIVE.
a. The Executive shall at all times have the right,
by written notice not less than (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.
b. Upon termination of the Term of Employment
pursuant to this Section 5.5 by the Executive without Good Reason (as defined
below), the Company shall (i) within fifteen (15) days of the Termination Date,
pay to the Executive any unpaid Base Salary, Transition Bonus and Additional
Compensation through the Termination Date, and (ii) pay to the Executive the
Incentive Compensation, in the manner and at such times as determined in
accordance with the provisions of any Incentive Compensation Plan. Upon any
termination effected and compensated pursuant to this SECTION 5.5(B), the
Company shall have no further liability hereunder (other than for (x)
reimbursement for reasonable business expenses incurred prior to the Termination
Date, subject, however, to the provisions of Section 4.1, and (y) payment of
compensation for unused vacation days that have accumulated during the calendar
year in which such termination occurs).
-7-
c. 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, that would have been payable or provided by the
Company to the Executive under Section 5.4 of this Agreement if the Term of
Employment had been terminated by the Company without Cause. Upon any
termination effected and compensated pursuant to this SECTION 5.5(C), the
Company shall have no further liability hereunder (other than for (x)
reimbursement for reasonable business expenses incurred prior to the Termination
Date, subject, however, to the provisions of Section 4.1, and (y) payment of
compensation for unused vacation days that have accumulated during the calendar
year in which such termination occurs).
d. 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 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 either (x) an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive, or (y) any change in authority, duties, responsibilities or position
consistent with the Milestones; (ii) any failure by the Company to comply with
any of the provisions of Article 3 of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive; (iii) the Company's requiring the Executive to be primarily based at
any office or location outside of Broward County, Florida or New York City, New
York, except for travel reasonably required in the performance of the
Executive's responsibilities; and (iv) any purported termination by the Company
of the Executive's employment otherwise than for Cause pursuant to Section 5.1,
or by reason of the Executive's disability pursuant to Section 5.2 of this
Agreement, prior to the Expiration Date.
5.6 CHANGE IN CONTROL OF THE COMPANY.
a. In the event that (i) a Change in Control (as
defined in paragraph (b) of this Section 5.6) in the Company shall occur during
the Term of Employment, and (ii) prior to the first anniversary date of the
Change in Control, either (x) the Term of Employment is terminated by the
Company without Cause, pursuant to Section 5.4 hereof or (y) the Executive
terminates the Term of Employment for Good Reason pursuant to Section 5.5(b)
hereof, the Company shall pay to the Executive the same amounts, and shall
continue or compensate for Benefits in the same amounts, that would have been
payable or provided by the Company to the Executive under Section 5.4 of this
Agreement if the Term of Employment had been terminated by the Company without
Cause. The Company shall have no further liability hereunder (other than for (1)
reimbursement for reasonable business expenses incurred prior to the Termination
Date, subject, however, to the provisions of Section 4.1, and (2) payment of
compensation for unused vacation days that have accumulated during the calendar
year in which such termination occurs).
b. For purposes of this Agreement, the term "Change
in Control" shall mean a "Fundamental Change" as defined in the Company's
current Amended and Restated Articles of Incorporation, dated June 29, 2000.
-8-
5.7 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.
5.8 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.
5.9 SURVIVAL. The provisions of this Article 5 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 5 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.
6. RESTRICTIVE COVENANTS.
6.1 NON-COMPETITION. At all times while the Executive is
employed by the Company and for the remainder of the Executive's lifetime 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 Property or the Network. For purposes of this Agreement, the term "Competing
Business" shall mean any retail business. 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.
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
-9-
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 NONSOLICITATION OF EMPLOYEES AND CUSTOMERS. At all times
while the Executive is employed by the Company and for the remainder of the
Executive's lifetime, 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
employee or 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 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 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 DEFINITION OF COMPANY. Solely for purposes of this Article
6, 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.
6.7 ACKNOWLEDGMENT BY EXECUTIVE. The Executive acknowledges
and confirms that (a) the restrictive covenants contained in this Article 6 are
reasonably necessary to protect the legitimate business interests of the
Company, (b) the restrictions contained in this Article 6 (including without
limitation the length of the term of the provisions of this Article 6) are not
overbroad, overlong, or unfair and are not the result of overreaching, duress or
coercion of any kind, and (c) the restrictive covenants contained in this
Article 6 were critical to the Company's decision to pay the Executive the
Additional Compensation. The Executive further acknowledges and confirms that
-10-
his full, uninhibited and faithful observance of each of the covenants contained
in this Article 6 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 6. The Executive further acknowledges that the
restrictions contained in this Article 6 are intended to be, and shall be, for
the benefit of and shall be enforceable by, the Company's successors and
assigns.
6.8 REFORMATION BY COURT. In the event that a court of
competent jurisdiction shall determine that any provision of this Article 6 is
invalid or more restrictive than permitted under the governing law of such
jurisdiction, then only as to enforcement of this Article 6 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.
6.9 EXTENSION OF TIME. If the Executive shall be in violation
of any provision of this Article 6, then each time limitation set forth in this
Article 6 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 6 shall be extended for a period of time equal to the pendency of such
proceeding including all appeals by the Executive.
6.10 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 6 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 6 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.
6.11 SURVIVAL. The provisions of this Article 6 shall survive
the expiration or other termination of this Agreement, as applicable.
7. ASSIGNMENT OF PROPERTY. The Executive hereby assigns and grants to
the Company, its successors, licensees and assigns, the irrevocable, perpetual,
royalty-free worldwide right, license and authority to use the Property for the
marketing, selling, publicizing, advertising and promoting the business of the
Company. The Executive further agrees to be personally available as, where and
when required by the Company to participate (and provide the Company with all
reasonable assistance in) the marketing, selling, publicizing, advertising and
promoting such business. This assignment shall survive the expiration or other
termination of this Agreement.
-11-
8. ARBITRATION.
8.1 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 Section 8. Except
as set forth below with respect to Section 6 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 Section 8 shall not apply to any injunctions
that may be sought with respect to disputes arising out of or relating to
Section 6 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.
8.2 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.
8.3. 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
-12-
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 (the "Fees") shall be borne by the non-prevailing party.
9. 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.
10. 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 Section 8 hereof, shall be the state or federal courts located within
Broward County, Florida.
11. 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.
12. 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: President, 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.
13. 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.
-13-
14. 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.
15. 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.
16. 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.
17. 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.
18. 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.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
COMPANY:
CLAIRE'S STORES, INC.
By:
----------------------------------
Name:
Title:
EXECUTIVE:
-------------------------------------
XXXXXXX XXXXXXXX
-14-
EXHIBIT A
PART I - MILESTONES
Accelerate the establishment of the following "best practices" in
corporate governance:
o Appoint fifth independent director
o Create nominating committee consisting of three independent
directors and adopt charter for the nominating committee
o Create compensation committee consisting of three independent
directors and adopt charter for the compensation committee
o Review and revise internal audit function
o Review and revise code of business conduct and ethics
o Establish procedures for conducting regular meetings between
non-management directors and management
PART II - MILESTONES
o Election by the Company's Board of Directors of a Chief Operating
Officer of the Company.
