SEPARATION AGREEMENT
This Separation Agreement ("Agreement") between FACTORY CARD OUTLET
CORP., a Delaware corporation (the "Company"), and XXXXXXXXX X XXXXXXX (the
"Executive") shall be effective March 3, 2000.
RECITALS
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The Company and Executive desire to provide an orderly and amicable
arrangement with respect to the cessation of Executive's employment as Senior
Vice President and Chief Financial Officer and to resolve claims between parties
relating to his employment and the cessation of his employment.
AGREEMENT
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In consideration of the foregoing recitals, the agreements set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and Executive agree as follows:
1. Resignation.
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(a) Executive confirms his resignation as of March 3, 2000 (the
"Separation Date") as Senior Vice President and Chief Financial Officer, as an
officer of each subsidiary, if any, of the company for which Executive served in
such capacity, and any other position or office with respect to the Company or
any of its subsidiaries, including as a legal representative or trustee of any
employee benefit plan or trust of any capacity, including that of an employee,
independent contractor or otherwise, for the Company or any of its subsidiaries.
(b) As a result of his voluntary resignation and the cessation of
his employment, effective on the Separation Date, Executive will cease to
perform any duties or be entitled to or eligible for any compensation or
benefits except as expressly provided in this Agreement. As outlined below, the
company offers and Executive accepts the following package.
2. Package.
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(a) Bonuses.
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(i) If Executive would have otherwise been entitled to
receive a Management Incentive Bonus for the fiscal year ending
January 29, 2000, Executive shall receive a lump-sum payment equal to
that amount prorated in accordance with the guidelines set forth in
the company's "Fiscal Year 1999 Management Incentive Program, Officer
Group" (Such pro-ration calls for application of a fraction the
numerator of which is the number of completed months of service
during the fiscal year and the denominator of which is equal to
number of months in the fiscal period, which equals 1.00 for the
Executive). Such amount, if any, shall be paid to Executive
concurrently with the Company's payment of such bonus for fiscal year
1999 to other participants in the Management Incentive Bonus Program,
subject only to the conditions contained in that program.
(ii) In lieu of any amount which Executive would otherwise
be entitled to under the Company's "Retention Bonus Program for
Officers" the Company agrees to pay Executive (i) $20,400 on the
Separation Date and (ii) subject to Executive compliance with the
terms of this Agreement, $20,400 upon the payment of retention
bonuses to the officers of the Company in accordance with the
"Retention Bonus Program for Officers" following the Company's
receipt of final approval of a Plan of Reorganization from the
applicable judicial authority.
(b) The Company shall continue Executive's medical insurance
coverage (as in effect immediately prior to the Separation Date) until the
earlier of (i) twelve (12) months or (ii) the first date on which Executive
becomes covered under any other group health plan (as an employee or otherwise)
which does not contain any exclusion or limitation with respect to any
preexisting condition of Executive; provided that Executive shall pay an amount
equal to the portion of the periodic cost for such coverage that was payable by
Executive immediately prior to the Separation Date. As and to the extent
provided by the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"), Executive will be eligible to continue his health insurance benefits
at his own expense for up to eighteen (18) months following the end of the
twelve (12) month Package Period and, later, to convert such benefits to an
individual policy pursuant to and consistent with COBRA. Executive will be
provided with a separate notice of his COBRA rights at the end of the Severance
Period consistent with and to the extent required by COBRA.
(c) The Company will reimburse Executive for any unreimbursed
reasonable business expenses incurred and paid for by Executive prior to the
Separation Date consistent with the Company's policies in effect with respect to
travel, entertainment and other business expenses, and upon Executive's
providing to the Company reasonably acceptable documentation of such expenses
within sixty (60) days after the Separation Date. The company agrees to extend
the four thousand dollar ($4,000.00) monthly living expense arrangement
currently in force through the end of February.
(d) Except as expressly provided in this Agreement or in an
employee benefit plan of the Company, Executive shall not be entitled to receive
any severance payments or any other benefits or compensation from the Company.
(e) To the extent any stock option granted to Executive by the
Company had become exercisable as of the Separation Date, such stock option may
be exercised to the extent allowed under the applicable plan and grant document.
Effective as of the Separation Date, Executive shall not (i) be entitled to
exercise any stock option to the extent that such option had not become
exercisable as of the Separation Date or (ii) eligible to be granted any
additional options.
(f) Nothing in this Agreement shall preclude the Company from
amending or terminating any employee benefit plan, program or practice at any
time in compliance with applicable law.
3. Restrictive Covenants.
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(a) Executive hereby agrees that during the term of the
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Employee's employment with the Company and for a period of one (1) calendar year
thereafter (the "Restriction Period"), the Executive will not, singly, jointly,
or as a partner, member, consultant, or agent of any partnership, or as an
agent, consultant, or stockholder of any other corporation or entity, or as an
investor of more than five percent (5%) of the voting stock of any entity, or in
any other capacity, directly, indirectly or otherwise beneficially:
(i) Own, manage, operate, join in, control or participate
in the ownership, management, operation, or control of, or work for
(as an employee, consultant, independent contractor or otherwise), or
permit the use of his name by, or provide financial or other
assistance to, or be connected in any manner with, any of the
following (each a "Competitive Business"): (1) any retailer located
anywhere in the Restricted Area (as herinafter defined) which
generates thirty-five percent (35%) or more of its gross revenues
from the sale, anywhere in the Restricted Area, of greeting cards,
party goods, gift wrap accessories, stationery and/or any other
products or services which materially reproduce , incorporate or copy
any of the products or services which are offered or developed for
marketing by the Company during the term of the Employee's employment
with the Company ("Competitive Products") or which offers greeting
cards for sale in the Restricted Area under a "one price" strategy at
a price per card of $.39 or less or under a "half-off" strategy at a
price per card of 2/$1.00 or less, or (2) any retailer which
generates thirty-five percent (35%) or more of its gross revenue from
the sale of Competitive Products anywhere in the restricted Area;
(ii) Induce or attempt to induce any person who, during the
term of Executive's employment with the Company, is an employee,
representative, consultant, agent or supplier of the Company, to
terminate his, her or its employment or relationship with the Company
or to violate the terms of any agreement between said representative,
agent, consultant, employee or supplier and the Company, or hire or
attempt to hire any employee of the Company who has left the
employment of the Company within sixty (60) days after the
termination of such employee's employment with the Company; or
(iii) Induce or attempt to induce any person, business or
entity which is or was a customer of the Company at any time during
the term preceding the effective date of this Agreement to terminate
any written or oral agreement or understanding with the Corporation
or to become a customer of any person, corporation, partnership or
other entity which engages in any Competitive business.
(b) For purposes of Section 3(a) hereof, "Restricted Area" means
the United States (and any of its territories), Canada and Mexico.
(c) If the Employee violates any of the restrictions contained in
Section 3(a) above, the Restriction Period automatically shall be increased by
the period of time from the commencement of any such violation until such time
as the Executive has cured such violation.
(d) Executive acknowledges and agrees that his employment by the
Company under this Agreement necessarily involves him understanding and having
access to certain trade secrets and other confidential information pertaining to
the business of the Company and any affiliates. Accordingly, Executive agrees
that for a period of two (2) years following the Separation Date, Executive
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shall not, without the express written consent of the Board or a person
authorized thereby, directly or indirectly, disclose to any person, corporation
or entity or use or knowingly permit to be so disclosed or used, for the benefit
of any person, corporation or entity, or himself, any material confidential
information obtained by the Executive while in the employ of the Company with
respect to any of the Company or any of the affiliates' products, customers, or
current or future plans, the disclosure of which the Executive knows or should
reasonably believe will be damaging to the Company; provided, that such
confidential information shall not include any information known or available
generally to the public (other than as a result of unauthorized disclosure by
the Executive). this provision is intended only to prevent unauthorized
disclosure of material confidential information and is not intended to preclude
the Executive from securing other employment following the Separation Date
except as subject to such restrictions on such other employment as set forth in
subparagraph (a) of this section.
(e) Upon the Separation Date:
(i) to the extent within his possession or control, the
Executive shall surrender and deliver to the Company or its
authorized representative all files, figures, calculations, letters,
papers, records, proposals, listings, brochures, manuals,
instruments, drawings, designs, programs, plans or statistics, or any
copies thereof, any information or instruments derived therefrom, or
any other similar documents or information of any type or
description, however such information might be obtained or recorded
and on whatever medium such information may be contained, arising out
of or in any way relating to the business of affairs of the Company
or any affiliate or obtained as a result of or in connection with the
Executive's employment by the Company or any affiliate; and
(ii) the Executive shall not be entitled to retain a copy
of any document or information referred to in section (I) above; and
(iii) Executive shall cease to represent himself as being
in any way connected with, or interested in the business of, the
Company or any affiliate.
(f) Executive agrees and acknowledges that the Company does not
have any adequate remedy at law for the breach or threatened breach by the
Executive of any of the provisions of this Section 3 and agrees that the Company
will be entitled to injunctive relief (without proof of monetary or immediate
damage and without any bond or other security being required) to bar Executive
from such breach or threatened breach in addition to any other remedies which
might be available to the Company at law or in equity. If, at any time,
Executive violates, to any material extent, any of the covenants or agreements
set forth in this Section 3, the Company shall have the right to immediately
terminate all of its obligations to make any further payments under Section 2.
4. Releases and Covenants Not To Xxx.
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(a) Executive, for himself, his legal representatives, assigns,
heirs, distributees, devisees, legatees, administrators, personal
representatives and executors (collectively, the "Executive Releasing Parties"),
releases and forever discharges the Company, its present or past subsidiaries
and affiliates, and their respective successors and assigns, and their
respective present or past officers, trustees, directors, shareholders,
employees and agents of each of them (collectively, the "Executive Released
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Parties"), from any and all claims, demands, actions, liabilities and other
claims for relief and remuneration whatsoever (including without limitation
attorneys' fees and expenses), whether known or unknown, absolute, contingent or
otherwise (each, a "Claim"), arising or which could have arisen up to and
including the date of his execution of this Agreement, including without
limitation those arising out of or relating to Executive's employment or
cessation and termination of employment, the Severance Plan or any other written
or oral agreement, any change in executive's employment status, any benefits or
compensation, any tortuous injury, breach of contract, wrongful discharge
(including any claim for constructive discharge), infliction of emotional
distress, slander, libel or defamation of character, and any Claims arising
under Title VII of the Civil rights Act of 1964 ( as amended by the Civil rights
Act of 1991), the Americans With Disabilities Act, the Rehabilitation Act of
1973, the Equal Pay Act, the Fair Labor Standards Act, the Older workers
Benefits Protection Act, the Age Discrimination in employment Act, the Illinois
Human Rights Act, the Illinois Wage Payment and Collection Act, the Employee
Retirement Income Security Act of 1974, or any other federal, state or local
stature, law, ordinance, regulation, rule or executive order, any tort or
contract claims, and any of the claims, matters and issues which could have been
asserted by Executive against the company or its subsidiaries in any legal,
administrative or other proceeding; provided, however, that the foregoing
release does not apply to (I) any Claim under or based on this Agreement or (ii)
any vested benefit Executive may have as of the Separation Date under any
applicable employee benefit plan of the Company.
(b) Executive further agrees on behalf of himself and the
Executive Releasing Parties (i) not to assert any Claim against the
Executive Released Parties which Claim has been released pursuant to
Section 4(a) and (ii) not to file or commence any proceeding in any
forum in respect of any such released Claim. Executive agrees to
indemnify and hold harmless each of the Executive Released Parties in
respect of any such Claim or proceeding. If Executive files or
commences any proceeding in respect of such claim, Executive shall
forfeit, as of the date of the institution of such proceeding, any
right to continue to receive the compensation and benefits provided
in Section 2, and Executive shall forthwith return to the Company all
payment and benefit amounts previously mad to him pursuant to this
Agreement.
(c) The Company, for itself and each of its subsidiaries
and their respective assigns, and to the extent it is legally able to
do so, for their respective present or past officers, trustees,
directors, shareholders, employees and agents (in each case solely
relating to the scope of their employment or in their corporate
capacities and to the extent such person is making a claim on behalf
of the company)(the "Company Releasing Parties") hereby releases and
forever discharges Executive from any and all Claims arising or which
could have arisen up to and including the date of the execution of
this Agreement, out of or relating to Executive's employment,
cessation of employment or change in employment status, the
termination of prior agreements with him or the performance of his
duties on behalf of the Company; including any act, omission,
occurrence, or other matters related to such employment, and any of
the claims, matters and issues which could have been asserted by the
Company against Executive in any legal, administrative, or other
proceeding; provided, however, that the foregoing release does not
apply to (i) any Claim under or based on this Agreement, (ii) any act
or omission involving fraud; and intentional tort; willful, reckless
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or grossly negligent misconduct; criminal activity; or the receipt by
Executive, directly or indirectly, of any financial or other personal
benefit to which he is not entitled, or (iii) any obligation of
Executive with respect to Section 3 of this Agreement.
(d) The Company further agrees on behalf of itself and the
Company Releasing Parties (i) not to assert any Claim against
Executive which Claim has been released pursuant to Section 4(c) and
(ii) not to file or commence any proceeding in any forum in respect
of any such released Claim. the Company agrees to indemnify and hold
harmless Executive in respect of any such Claim or proceeding.
5. No Detrimental Communication.
-----------------------------
(a) Executive will not disclose or cause to be disclosed any
negative, adverse or derogatory comments or information about the Company, about
any product or service provided by the Company, or about the Company's prospects
for the future, except as may be required by legal process. Without limiting the
generality of the foregoing, Executive agrees that, without the prior written
consent of the Company, he will not engage in discussions with or provide any
information or data relating directly or indirectly to the Company to any person
or entity which (i) is considering a potential acquisition of an equity interest
in, or substantial portion of the business or assets of, the Company or any of
its subsidiaries or (ii) has provided financing to, or is considering financing,
the Company or any of its subsidiaries.
(b) The Company will not disclose or cause to be disclosed any
negative, adverse or derogatory comments or information about Executive, except
as may be required by legal process; provided, however, that the Company may (I)
provide factual information regarding the beginning and ending dates of
executive's employment by the Company and the positions which he held during
such employment and (ii) make all disclosures which, based on the advice of
legal counsel, the Company reasonably believes to be required by securities or
other law.
6. Further Assistance. For a period of three years after the
Separation Date, Executive shall from time to time provide the Company with such
assistance and cooperation as the Company may from time to time request in
connection with any investigation, claim, dispute, judicial, legislative,
administrative or arbitral proceeding, or litigation (any of the foregoing, a
"Proceeding") arising out of matters within the knowledge of Executive and
related to his position as an employee or director of the Company. such
assistance and cooperation shall include providing information, declarations or
statements to the Company, meeting with attorneys or other representatives of
the Company, and preparing for and giving truthful testimony in connection with
any Proceeding or related deposition. In any such instance, Executive shall
provide such assistance and cooperation at times and in places mutually
convenient for the Company and Executive and which do not unreasonable interfere
with Executive's business or personal activities. the company shall (i) pay
Executive's reasonable out-of-pocket costs and expenses in connection with such
assistance and cooperation, whenever provided, and (ii) if the Company shall
require Executive to provide than assistance or cooperation pursuant to this
Section, the Company shall pay Executive a consulting fee equal to $1,200 for
each such day; provide that clause (ii) of this sentence shall not apply to any
testimony provided by Executive at any time pursuant to this Section in
connection with any Proceeding or related deposition.
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7. Voluntary Agreement. Executive acknowledges and represents that he
(i) has red this Agreement, (ii) has had the opportunity to consult with legal
counsel prior to executing this Agreement, (iii) understands the legal effect
and binding nature of this Agreement; and (iv) is acting voluntarily and with
full knowledge of his actions in executing this Agreement. Further, Executive
acknowledges that he has been given at least twenty-one (21) days to fully
consider entering into this Agreement before its execution.
8. Revocation. This Agreement may be revoked by Executive within the
first seven days after his execution of this Agreement, in which case this
Agreement shall not become effective or enforceable and all terms of this
Agreement shall become null and void. Notwithstanding any provision of this
Agreement to the contrary, Executive shall in no event be entitled to any
payment pursuant to the Agreement before the expriation of such seven-day
revocation period. If not revoked during this seven-day revocation period, this
Agreement shall remain in full force and effect.
9. No Charges or Complaints Filed. Executive represents that he has
not filed any complaints or charges against the Company with any local, state or
federal agency or court. If any such complaint or charge was filed on his
behalf, Executive shall take all reasonable steps necessary to effectuate
withdrawal of such complaint or charge.
10. Confidentiality. Executive shall keep confidential the existence
of this Agreement, as well as all of its terms and conditions, and shall not
disclose the existence, terms or conditions of this Agreement to any Person
except to his attorney, accountant, and members of his immediate family who have
agreed to keep confidential the existence, terms and conditions of this
Agreement; and except that Executive may inform any prospective employer that
the reason for his separation from employment with the Company was to pursue
other opportunities. In the event that Executive believes he is compelled by law
to divulge the existence, terms or conditions of this Agreement, he will notify
the Company in writing of the basis for that belief before actually divulging
the information, in order to permit the Company to take steps to protect its
interests. Executive will cooperate with the Company in all reasonable respects
to permit the Company to oppose such disclosure. Executive represents that, as
of the date of this Agreement, he has not disclosed the existence, terms or
conditions of this Agreement, except as permitted by this Section. The Company
shall not disclose the existence, terms or conditions of this Agreement, except
to the extent necessary to further the Company's legitimate business interests
or as may be required by legal process or by applicable law, rule or regulation.
11. Governing Law: Disputes. This Agreement shall be governed by, and
construed and enforced in accordance with the Employee Retirement Income
Security Act of 1974 ("ERISA") to the extent applicable and, the laws of the
State of Illinois, without giving effect to its conflict or choice of law
provisions. Any action brought to enforce this Agreement may be brought in a
state or federal xxxx of competent jurisdiction located in DuPage County,
Illinois. Executive submits to the jurisdiction of any state court located in
DuPage Count, Illinois or any federal court located in the Northern District of
Illinois and waives the defense of an inconvenient forum to the maintenance of
any action in such jurisdiction. Each party agrees that, if any action is
brought to enforce this Agreement in a state court outside of DuPage County,
Illinois or any federal court outside of the Northern District of Illinois, such
party consents to a transfer to a state court located in DuPage county, Illinois
or a federal court located in the Northern District of Illinois, and will accept
service of process and other papers by any method permitted by the rules of the
court to which such action is transferred.
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12. Notices. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
delivered personally, sent by certified, registered or express mail, postage
prepaid, or by overnight delivery service and shall be deemed to have been duly
given when delivered or three days after mailing (in the case of communications
sent by mail), as follows:
If to the Company:
Factory Card Outlet Corp.
0000 Xxxxx xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Chairman of the Board or
V.P. of Human Resources
with a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxx, Esq.
If to Executive:
Xxxxxxxxx X. Xxxxxxx
0 Xxxxxx Xx.
Xxxxxxxx, Xxxxxxxx 00000
Notice may also be given at such other address as either party may have
furnished to the other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
13. Waiver. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by Executive and the Company. No waiver by either party hereto at any
time of any breach by the other party hereto 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.
14. Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed shall be deemed to be an original
but both of which together will constitute one and the same instrument.
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15. Withholding. The Company shall withhold from all benefits and
other amounts due or otherwise payable to Executive hereunder in order to comply
with any federal, state, local or other income or other tax laws requiring
withholding with respect to compensation and benefits provided to Executive
pursuant to this Agreement, or to comply with any personal or voluntary
deduction, including without limitation the employee contribution for any
insurance plan in which Executive participates, or other deductions authorized
by law or that have been requested by Executive during the course of his
employment.
16. Non-Admission. Nothing contained in this Agreement, nor any
actions taken by any party hereto in connection herewith, shall constitute, be
construed as, or be deemed to be, an admission of fault, liability, or
wrongdoing of any kind whatsoever on the part of any party hereto. The Company
asserts that at all times its treatment of Executive is, was and has been fully
consistent with the requirements of the law and the Company's policies and
Executive acknowledges the Company's assertion.
17. Validity. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, covenants and
restrictions of this Agreement shall remain in full force and effect and in no
way shall affect, impair or invalidate this Agreement. If any court determines
that any provision of Section 4 of this Agreement or Section 14 of the
Employment Agreement is unenforceable because of the duration or geographical
scope of such provision, such court shall have the power to reduce the duration
or scope of such provision, as the case may be, and, in its reduced form, such
provision shall then be enforceable.
18. Entire Agreement. Except as otherwise expressly provided in this
Agreement, this Agreement contains the entire agreement between the parties
hereto with respect to the transactions contemplated hereby and supercedes all
previous oral and written agreements and all prior or contemporaneous oral
negotiations, commitments and understandings. Neither party has mad, and neither
party has relied upon, any representation or warranty in connection with this
Agreement except as expressly set forth herein.
19. Assignment of Interests. Executive warrants that he has not
assigned, transferred or purported to assign or transfer any claim of Executive
against the Company.
20. Sections. Except where otherwise indicated by the context, any
reference to a "Section" shall be to a section of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the first date set forth above.
FACTORY CARD OUTLET CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxx
EXECUTIVE:
/s/ Xxxxxxxxx X. Xxxxxxx
------------------------------------
Xxxxxxxxx X. Xxxxxxx
Witness:
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
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INDIVIDUAL ACKNOWLEDGEMENT
STATE OF ILLINOIS )
) SS.
COUNTY OF DU PAGE )
On the 24 day of January, 2000, before me personally appeared
Xxxxxxxxx X. Xxxxxxx, known to me or proved to me on the basis of satisfactory
evidence to be the individual described in and who acknowledged the foregoing
instrument and swore and acknowledged that he executed the same as his free act
and deed.
/s/ Xxxxx X. Xxxxxx
--------------------------------------
Notary Public
Xxxxx X. Xxxxxx, Notary
My commission expires: July 23, 2002
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