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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
(MICHAEL W. RAYDEN)
THIS AGREEMENT is effective as of September 15, 2000 by and between
TOO, INC., a Delaware corporation (the "Company"), and MICHAEL W. RAYDEN (the
"Executive") (hereinafter collectively referred to as "the parties").
WHEREAS, the Executive is currently employed as the Company's Chief
Executive Officer and President pursuant to that certain Agreement of Employment
by and between Executive and Company dated August 23, 1999 (the "Prior
Agreement"), and is Chairman of the Board of Directors of the Company (the
"Board"); and
WHEREAS, the Company and the Executive mutually desire that Executive
continue as the Company's Chief Executive Officer and President and as a
Director and Chairman of the Board of the Company; and
WHEREAS, the Company and Executive wish to enter into this new
Agreement to amend and restate the Prior Agreement in its entirety and to set
forth their mutual understanding as to the terms and conditions of Executive's
continued employment by the Company.
NOW, THEREFORE, in consideration of the foregoing and the respective
agreements of the parties contained herein, the parties hereby agree as follows:
1. TERM. The initial term of employment under this Agreement shall be
for the period commencing on the effective date of this Agreement (the
"Commencement Date") and ending on the fifth anniversary of the Commencement
Date (the "Initial Term"); provided, however, that upon the expiration of the
fourth anniversary of the Commencement Date and on the anniversary date of each
year thereafter (the "Renewal Date"), the term of this Agreement shall be
automatically extended for a period of one year, unless either the Company or
the Executive shall have given written notice to the other at least ninety (90)
days prior to the Renewal Date that the term of this Agreement shall not be so
extended. Notwithstanding the above, if a Change in Control (as defined below)
of the Company occurs during the term of this Agreement, the term of this
Agreement will be extended for two (2) years from the date of the Change in
Control.
2. EMPLOYMENT.
(a) POSITION. The Executive shall be employed as the President
and Chief Executive Officer or such other position of greater status and
responsibilities as may be determined by the Board. The Executive shall perform
the duties, undertake the responsibilities and exercise the authority
customarily performed, undertaken and exercised by persons employed in a similar
executive capacity.
(b) OBLIGATIONS. The Executive agrees (1) to devote his best
efforts and full business time and attention to the business and affairs of the
Company; (2) to exercise the highest degree of loyalty and care with respect to
the affairs of the Company; and (3) not to commit any willful or intentional act
with an objective to harm the Company's business or reputation. The foregoing,
however, shall not preclude the Executive from serving on corporate, civic or
charitable boards or committees or managing personal investments, so long as
such activities do not interfere with the performance of the Executive's
responsibilities hereunder.
3. BASE SALARY. Effective as of February 28, 2000, the Company agrees
to pay or cause to be paid to the Executive a minimum annual Base Salary of
$800,000 (hereinafter referred to as the "Base Salary"). This Base Salary will
be subject to annual review and may be increased from time to time by the Board
considering factors such as the Executive's responsibilities, compensation of
executives in other companies, performance of the Executive and other pertinent
factors.
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Such Base Salary shall be payable in accordance with the Company's customary
practices applicable to similarly situated executives of the Company.
4. EQUITY COMPENSATION. The Company shall grant to the Executive rights
to receive shares of the Company's common stock and options to acquire shares of
the Company's common stock as the Board or Compensation Committee of the Board
determines.
5. EMPLOYEE BENEFITS. The Executive shall be entitled to participate in
tax-qualified and nonqualified deferred compensation and retirement plans, group
term life insurance plans, short-term and long-term disability plans, employee
benefit plans, practices, and programs maintained by the Company and made
available to similarly situated executives generally, and as may be in effect
from time to time. Also, the Executive shall continue to participate in the
deferred compensation arrangement specified in Exhibit A to the Prior Agreement.
Further, in lieu of other salary payments, in the event of the Executive's
Disability, the Executive shall be entitled to the payments specified in Section
11(c)(5) hereof during the Executive's Disability, even though the Executive's
employment is not terminated as a result of such Disability.
6. BONUS AND LONG-TERM INCENTIVES. The Executive shall be entitled to
participate in such Company bonus and long-term incentive compensation programs
which include similarly situated executives of the Company as may exist from
time to time (the "Incentive Plans"). The Executive's participation in such
Incentive Plans, practices and programs shall be on the same general basis and
terms as are applicable to similarly situated executives of the Company,
although bonuses, target levels and criteria may differ among such executives as
determined by the Board or Compensation Committee of the Board.
7. OTHER BENEFITS.
(a) LIFE INSURANCE.
(1) During the term of the Agreement, the Company
shall maintain term life insurance coverage on the life of the Executive in the
amount of $5,000,000, the proceeds of which shall be payable to the beneficiary
or beneficiaries designated by the Executive; and
(2) During the term of this Agreement, the Company
shall be entitled to maintain a "key person" term life insurance policy on the
life of the Executive, the proceeds of which shall be payable to the Company or
its designees. The Executive agrees to undergo any reasonable physical
examination and other procedures as may be necessary to maintain such policy.
(b) FRINGE BENEFITS. During the term of this Agreement, and
upon proper substantiation or documentation, the Company will reimburse the
Executive for automobile expenses, travel costs, club dues or initiation fees,
financial planning, tax preparation, legal consultation and other similar
personal fringe benefits of the Executive's choosing provided that such fringe
benefits shall not exceed $50,000 annually beginning with the Commencement Date
exclusive of the payments described in Section 7(a)(1). The Executive shall not
be entitled to accrue any amount not expended on an annual basis. Such personal
fringe benefits will be subject to all applicable federal, state and local
income and other withholding taxes.
(c) OFFICE AND FACILITIES. The Executive shall be provided
with appropriate offices and with such secretarial and other support facilities
as are commensurate with the Executive's status with the Company and adequate
for the performance of the Executive's duties hereunder.
(d) BENEFITS NOT IN LIEU OF COMPENSATION. No benefit or
perquisite provided to the Executive in this Section 7 shall be deemed to be in
lieu of Base Salary, bonus or other compensation.
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8. EXPENSES. Subject to applicable Company policies, the Executive
shall be entitled to receive prompt reimbursement of all expenses reasonably
incurred by the Executive in connection with the performance of the Executive's
duties hereunder or for promoting, pursuing or otherwise furthering the business
or interests of the Company including, without limitation, travel, automobile,
and meal and entertainment expenses.
9. VACATION. The Executive shall be entitled to four weeks of annual
vacation or, if greater, in accordance with the policies as periodically
established by the Board for similarly situated executives of the Company.
10. DEFINITIONS, TERMS AND CONDITIONS. The Executive's employment
hereunder is subject to the following terms:
(a) CAUSE. "Cause" means that the Executive:
(1) was grossly negligent in the performance of the
Executive's duties with the Company (other than a failure resulting from the
Executive's incapacity due to physical or mental illness) causing material harm
to the Company; or
(2) has pled "guilty" or "no contest" to or has been
convicted of an act which is defined as a felony under federal or state law; or
(3) engaged in intentional misconduct or fraud which
caused, or could reasonably be expected to cause, material harm to the Company's
business or its reputation; or
(4) committed a material breach of this Agreement
(including a violation of the noncompete and nondisclosure provisions) which is
materially and demonstrably injurious to the Company.
For purposes of this paragraph, no act, or failure to act, on
the Executive's part shall be considered "intentional" unless done, or omitted
to be done, by the Executive not in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than two-thirds (2/3) of the entire authorized membership of the Board at a
meeting of the Board called and held for the purpose (after reasonable notice
and an opportunity for the Executive, together with counsel, to be heard before
the Board), finding that in the good faith opinion of the Board the Executive
was guilty of conduct set forth above in clauses (1), (2), (3) or (4) of the
first sentence of this paragraph and specifying the particulars thereof in
detail.
(b) CHANGE IN CONTROL. "Change in Control" means a Change in
Control as defined in the Executive's Executive Agreement.
(c) DISABILITY. "Disability" means "Total Disability" as
defined in the Too, Inc. Long-Term Disability Program (effective October 1,
1999) (the "Disability Plan"), or any amended or successor plan.
(d) DISABILITY DATE. "Disability Date" means the date the
Executive's Disability began.
(e) EXECUTIVE AGREEMENT. "Executive Agreement" means the
Executive Agreement between the Company and the Executive dated as of September
15, 2000, as well as any such amended, successor, or substituted agreement.
(f) GOOD REASON. "Good Reason" means:
(1) a significant reduction in the Executive's
positions, duties, authority, responsibilities and reporting requirements as set
forth in Section 2 hereof;
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(2) a reduction in or a material delay in payment of
the Executive's total cash compensation, incentives and benefits from those
required to be provided in accordance with the provisions of this Agreement;
(3) the Company, the Board or any person controlling
the Company relocates the Executive to a location in excess of fifty (50) miles
from the location where the Executive is currently based;
(4) the failure of the Company to abide by this
Agreement or to obtain a satisfactory agreement from any successor to the
Company to assume and agree to perform this Agreement, as contemplated in
Section 15 of this Agreement; or
(5) the failure of the Company to obtain the
assumption in writing of its obligation to perform this Agreement by any
successor to all or substantially all of the assets of the Company within
fifteen (15) days after a merger, consolidation, sale or similar transaction.
Notwithstanding the above, Good Reason shall not include (A)
acts not taken in bad faith which are cured by the Company in all respects not
later than thirty (30) days from the date of receipt by the Company of a written
notice from the Executive identifying in reasonable detail the act or acts
constituting Good Reason (a "Preliminary Notice of Good Reason") or (B) acts
taken by the Company by reason of the Executive's physical or mental infirmity
which impairs the Executive's ability to substantially perform the duties under
this Agreement. A Preliminary Notice of Good Reason shall not, by itself,
constitute a Notice of Termination.
(g) NOTICE OF TERMINATION. "Notice of Termination" means a
written notice indicating the specific termination provision in this Agreement
relied upon and setting forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the employment under the provision
so indicated. Except for a termination of employment for Cause or Disability,
any termination by the Company or by the Executive with Good Reason shall be
communicated by a Notice of Termination to the other party thirty (30) days
prior to the Termination Date. Any voluntary termination by the Executive
without Good Reason shall be communicated by a Notice of Termination ninety (90)
days prior to the Termination Date. However, the Company may elect to pay the
Executive thirty (30) or ninety (90) days of Base Salary in lieu of thirty (30)
or ninety (90) days written notice. If the Company notifies the Executive that
it will pay the Executive in lieu of thirty (30) or ninety (90) days written
notice, the Company may deny the Executive further access to the Company's
offices subject to the Executive's right to recover any personal effects at an
agreed upon time. For purposes of this Agreement, no such purported termination
of employment shall be effective without a Notice of Termination.
(h) PRO-RATED BONUS AMOUNT. "Pro-Rated Bonus Amount" means any
accrued but unpaid bonus for a completed bonus period, plus a pro-rated portion
of the Executive's semi-annual bonus calculated as of the Termination Date. The
portion of the semi-annual bonus payable shall be the amount of semi-annual
bonus payable to the Executive with respect to the bonus period in which the
Termination Date occurs, based on the actual financial performance of the
Company for such bonus period, pro-rated by multiplying such amount by a
fraction, the numerator of which is the number of days during the bonus period
which occur prior to the Termination Date, and the denominator of which is one
hundred eighty-two and one-half (182-1/2).
(i) RETIREMENT. "Retirement" means the voluntary resigning of
employment by the Executive for the purpose of retiring which resignation occurs
after the last day in the month in which the Executive turns age sixty-five
(65).
(j) TERMINATION DATE. "Termination Date" means in the case of
the Executive's death, the date of death, or in all other cases, thirty (30) or
ninety (90) days after delivery of the Notice of Termination as provided in
subsection 10(f); provided, however, that if the Executive's employment is
terminated by the Company due to Disability, the date specified in the Notice of
Termination shall be subject to Section 11(c) of this Agreement.
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11. TERMINATION OF EMPLOYMENT; COMPENSATION UPON TERMINATION.
(a) TERMINATION BY COMPANY WITH CAUSE, OR BY EXECUTIVE WITHOUT
GOOD REASON. The Company shall be entitled to immediately terminate the
Executive's employment for "Cause" after giving a Notice of Termination. Such
Notice of Termination shall state in detail the particular act or acts or
failure or failure to act that constitute the grounds on which the proposed
termination for Cause is based. The Executive may voluntarily terminate
employment without Good Reason after giving a Notice of Termination. If during
the term of this Agreement (including any extensions thereof), the Executive's
employment is terminated by the Company for Cause, or if the Executive
terminates employment without Good Reason, the Company's sole obligation
hereunder shall be to pay or reimburse the Executive (or facilitate a tax
qualified rollover of) the following amounts:
(1) the Executive's accrued Base Salary and accrued
vacation not paid as of the Termination Date;
(2) the Executive's vested benefits as of the
Termination Date pursuant to the Company's benefit, retirement, incentive and
other plans;
(3) any and all monies advanced to or expenses
incurred by the Executive pursuant to Section 8 through the Termination Date;
and
(4) the premiums provided for in Section 7(a)(1)
through the end of the calendar year in which the Executive's termination
occurs. The Executive's entitlement to any other benefits shall be determined in
accordance with the Company's employee benefit plans then in effect.
(b) TERMINATION BY COMPANY WITHOUT CAUSE, OR BY EXECUTIVE FOR
GOOD REASON. The Company may terminate the Executive without Cause after giving
a Notice of Termination. The Executive may terminate employment hereunder for
Good Reason by delivering to the Company (1) a Preliminary Notice of Good Reason
(as defined above), and (2) not earlier than thirty (30) days from the delivery
of such Preliminary Notice of Good Reason, a Notice of Termination. If the
Executive's employment is terminated by the Company other than for Cause or by
the Executive for Good Reason, the Company's sole obligation hereunder shall be
to pay or reimburse the Executive (or facilitate a tax qualified rollover of)
the following amounts:
(1) the Executive's accrued Base Salary and accrued
vacation not paid as of the Termination Date;
(2) the Executive's Pro-Rated Bonus Amount;
(3) the Executive's vested benefits as of the
Termination Date pursuant to the Company's benefit, retirement, incentive and
other plans;
(4) a lump sum amount equal to two times the sum of
(i) the Executive's Base Salary and (ii) the greater of the Executive's (a)
annual par target (100%) bonus opportunity in the year of termination or (b) the
actual annual bonus earned by the Executive in the year prior to the year of
termination;
(5) any and all monies advanced to the Company by the
Executive or expenses incurred by the Executive pursuant to Section 8 through
the Termination Date;
(6) the Company shall maintain in full force and
effect for the continued benefit of the Executive, for a two-year period after
the Termination Date, all medical coverage, programs or arrangements in which
the Executive was entitled to participate immediately prior to the Termination
Date, provided that the Executive's continued participation is possible under
the general terms and provisions of such medical plans and programs. In the
event that the
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Executive's participation in any such plan or program is barred, the Company
shall arrange to provide the Executive, on an after-tax basis, with benefits
substantially similar to those which the Executive was otherwise entitled to
receive under such plans and programs for such two-year period;
(7) the Company shall accelerate the vesting, by twenty-four
(24) additional months, of all unvested stock options, restricted stock, stock
appreciation rights, deferred compensation, and similar plan benefits and all
such benefits shall thereafter be treated as vested benefits pursuant to the
respective benefit plan;
(8) the premiums provided for in Section 7(a)(1) hereof
through the end of the calendar year in which such termination occurs; and
(9) fees and expenses for outplacement services and related
travel costs up to a maximum amount of thirty thousand dollars ($30,000).
(c) TERMINATION UPON DISABILITY. The Company or the Executive shall be
entitled to terminate the Executive's employment after having established the
Executive's Disability and given a Notice of Termination which shall indicate
the Disability Date. If the Executive's employment is terminated by the Company
by reason of the Executive's Disability, the Company's sole obligation hereunder
shall be to pay or reimburse the Executive (or facilitate a tax qualified
rollover of) the following amounts:
(1) the Executive's accrued Base Salary and accrued vacation
not paid as of the Disability Date;
(2) the Executive's Pro-Rated Bonus Amount;
(3) the Executive's vested benefits as of the Termination Date
pursuant to the Company's benefit, retirement, incentive and other plans;
(4) any and all monies advanced to or expenses incurred by the
Executive pursuant to Section 8 through the Disability Date;
(5) one hundred percent (100%) of the Base Salary for the
first twelve (12) months following the Disability Date, eighty percent (80%) of
the Base Salary for the second twelve (12) months following the Disability Date,
and sixty percent (60%) of the Base Salary for the third twelve (12) months
following the Disability Date; provided, however, that such Base Salary shall be
reduced by the amount of any benefits the Executive receives by reason of the
Executive's Disability under the Company's relevant disability plan or plans, if
any;
(6) if the Executive is disabled beyond thirty-six (36) months
from the Disability Date, the Company shall continue to pay the Executive sixty
(60%) of Base Salary up to a maximum of two hundred fifty thousand dollars
($250,000) per year for the period of the Executive's Disability, provided,
however, that such payments shall be reduced by the amount of any benefits the
Executive receives by reason of the Executive's Disability under the Company's
relevant disability plan or plans;
(7) the premiums provided for in Section 7(a)(1) hereof
through the end of the calendar year in which such Disability terminates; and
(8) during the period the Executive is receiving salary
continuation pursuant to this Section 11(c), the Company shall, at its expense,
provide to the Executive and the Executive's beneficiaries medical and dental
benefits substantially similar in the aggregate to those provided to the
Executive immediately prior to the Executive's Disability.
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Notwithstanding the above, the salary continuation payments
will cease at the earlier of (a) the Disability ceasing to exist or (b)
Retirement. Further, at the end of the first thirty-six (36) month disability
salary continuation period, the Executive shall be removed as an active employee
of the Company.
(d) TERMINATION UPON DEATH. If the Executive's employment is terminated
by reason of Executive's death, the Company's sole obligation hereunder shall be
to pay or reimburse (or facilitate a tax qualified rollover of) to the
Executive's spouse, assignee, estate, or designated beneficiary, as the case may
be, the following amounts:
(1) the Executive's accrued Base Salary and vacation not paid
as of the Termination Date;
(2) the Executive's Pro-Rated Bonus Amount;
(3) the Executive's vested benefits as of the Termination Date
pursuant to the Company's benefit, retirement, incentive and other plans; and
(4) any and all monies advanced to or expenses incurred by the
Executive pursuant to Section 8 through the Termination Date.
(e) RETIREMENT. If the Executive's employment is terminated as a result
of Retirement, the Company's sole obligation hereunder shall be to pay or
reimburse the Executive (or facilitate a tax qualified rollover of) the
following amounts:
(1) the Executive's accrued Base Salary and accrued vacation
not paid as of the Termination Date;
(2) the Executive's Pro-Rated Bonus Amount;
(3) the Executive's vested benefits as of the Termination Date
pursuant to the Company's benefit, retirement, incentive and other plans; and
(4) any and all monies advanced to or expenses incurred by the
Executive pursuant to Section 8 through the Termination Date.
(f) TERMINATION UPON CHANGE IN CONTROL. In the event of a Change in
Control and subsequent termination of Executive's employment without Cause by
the Company, or any successor, or with Good Reason by the Executive, the
Executive shall be solely entitled to the benefits described in the Executive
Agreement and shall not be entitled to any benefits under this Agreement.
(g) RESTRICTED STOCK, STOCK OPTIONS. Except as provided in Section
11(b)(7), for purposes of this Agreement, restricted stock and stock options
shall vest and be exercisable according to the terms of the applicable plan.
(h) NO DUTY TO MITIGATE. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise and no payment hereunder shall be offset or
reduced by the amount of any compensation or benefits provided to the Executive
in any subsequent employment.
(i) PAYMENT DATE. Except as otherwise provided, all amounts to be paid
by the Company under this Section 11 shall be paid by the Company within thirty
(30) days of the Termination Date.
(j) EXECUTIVE ADVANCES. Upon the termination of the Executive's
employment pursuant to Sections 11(a), (b), (c), (d), or (e) hereunder, the
Executive agrees that all monies that are advanced to the Executive prior to
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such termination shall be repaid to the Company or the Company shall be entitled
to offset such amount against any payments to the Executive as provided for in
this Agreement.
12. EXECUTIVE COVENANTS.
(a) UNAUTHORIZED DISCLOSURE, NONDISPARAGEMENT. The Executive
shall not, during the term of this Agreement and thereafter, make any
disparaging comments which may be harmful to the Company's reputation or any
Unauthorized Disclosure. For purposes of this Agreement, "Unauthorized
Disclosure" shall mean disclosure by the Executive without the prior written
consent of the Board to any person other than a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of duties as an executive of the Company or as may be legally
required, of any information relating to the business or prospects of the
Company (including, but not limited to, any confidential information with
respect to any of the Company's customers, products, methods of distribution,
strategies, business and marketing plans and business policies and practices);
provided, however, that such term shall not include the use or disclosure by the
Executive, without consent, of any information known generally to the public
(other than as a result of disclosure by the Executive in violation of this
Section 12(a)). This confidentiality covenant has no temporal, geographical or
territorial restriction.
(b) NON-COMPETITION. During the Non-Competition Period defined
below, the Executive shall not, directly or indirectly, without the prior
written consent of the Board, own, manage, operate, join, control, be employed
by, consult with or participate in the ownership, management, operation or
control of, or be connected with (as a stockholder, partner, or otherwise), any
business, individual, partner, firm, corporation, or other entity that competes
or plans to compete, directly or indirectly, with the Company, its products, or
any division, subsidiary or affiliate of the Company; provided, however, that
the "beneficial ownership" by the Executive after termination of employment with
the Company, either individually or as a member of a "group," as such terms are
used in Rule 13d of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), of not more than two
percent (2%) of the voting stock of any publicly held corporation, shall not be
a violation of Section 12 of this Agreement.
The "Non-Competition Period" means the period the Executive is
employed by the Company plus two (2) years from the Termination Date if the
Executive's employment is terminated (i) by the Company for any reason, (ii) by
the Executive for any reason, or (iii) by reason of either the Company's or the
Executive's decision not to extend the term of this Agreement as contemplated by
Section 1 hereof. Notwithstanding anything in this Agreement or the Executive
Agreement to the contrary, the Non-Competition Period shall terminate after a
Change in Control, upon a termination without Cause by the Company or by the
Executive for Good Reason.
(c) NON-SOLICITATION. During the No-Raid Period defined below,
the Executive shall not, either directly or indirectly, alone or in conjunction
with another party, attempt to recruit or hire, interfere with or harm, or
attempt to interfere with or harm, the relationship of the Company, its
subsidiaries and/or affiliates, with any person who at any time was an employee,
customer or supplier of the Company, its subsidiaries and/or affiliates or
otherwise had a business relationship with the Company, its subsidiaries and/or
affiliates.
The "No-Raid Period" means the period the Executive is
employed by the Company plus two (2) years from the Termination Date if the
Executive's employment is terminated (i) by the Company for any reason, (ii) by
the Executive for any reason, or (iii) by reason of either the Company's or the
Executive's decision not to extend the term of this Agreement as contemplated by
Section 1 hereof.
(d) DELIVERY OF DOCUMENTS UPON TERMINATION. The Executive
shall deliver to the Company or its designee at the termination of the
Executive's employment all correspondence, memoranda, notes, records, drawings,
sketches, plans, customer lists, product compositions, and other documents and
all copies thereof, made, composed or received by the Executive, solely or
jointly with others, that are in the Executive's possession, custody, or control
at termination and that are related in any manner to the past, present, or
anticipated business of the Company, its subsidiaries and/or affiliates. In this
regard, the Executive hereby grants and conveys to the Company all right, title
and interest in and to,
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including without limitation, the right to possess, print, copy, and sell or
otherwise dispose of, any reports, records, papers, summaries, photographs,
drawings or other documents, and writings, and copies, abstracts or summaries
thereof, that may be prepared by the Executive or under the Executive's
direction or that may come into the Executive's possession in any way during the
term of the Executive's employment with the Company that relate in any manner to
the past, present or anticipated business of the Company, its subsidiaries
and/or affiliates.
(e) INTELLECTUAL PROPERTY. The Executive shall hold in trust
for the benefit of the Company, and shall disclose promptly and fully to the
Company in writing, and hereby assigns, and binds the Executive's heirs,
executors, and administrators to assign, to the Company any and all inventions,
discoveries, ideas, concepts, improvements, copyrightable works, and other
developments (the "Developments") conceived, made, discovered or developed by
the Executive, solely or jointly with others, during the term of the Executive's
employment by the Company, whether during or outside of usual working hours and
whether on the Company's premises or not, that relate in any manner to the past,
present or anticipated business of the Company, its subsidiaries and/or
affiliates. All works of authorship created by the Executive, solely or jointly
with others, shall be considered works made for hire under the Copyright Act of
1976, as amended, and shall be owned entirely by the Company. Any and all such
Developments shall be the sole and exclusive property of the Company, whether
patentable, copyrightable, or neither, and the Executive shall assist and fully
cooperate in every way, at the Company's expense, in securing, maintaining, and
enforcing, for the benefit of the Company or its designee, patents, copyrights
or other types of proprietary or intellectual property protection for such
Developments in any and all countries. Within one (1) year following the end of
the term of this Agreement and without limiting the generality of the foregoing,
any Development of the Executive relating to any subject matter on which the
Executive worked or was informed during the Executive's employment by the
Company shall be conclusively presumed to have been conceived and made prior to
the termination of the Executive's employment (unless the Executive clearly
proves that such Development was conceived and made following the termination of
the Executive's employment), and shall accordingly belong and be assigned to the
Company and shall be subject to this Agreement.
(f) REMEDIES. The Executive agrees that any breach of the
terms of this Section 12 would result in irreparable injury and damage to the
Company for which the Company would have no adequate remedy at law; the
Executive therefore also agrees that in the event of said breach or any threat
of breach, the Company shall be entitled to an immediate injunction and
restraining order to prevent such breach and/or threatened breach and/or
continued breach by the Executive and/or any and all persons and/or entities
acting for and/or with the Executive, without having to prove damages, and to
all costs and expenses, including reasonable attorneys' fees and costs, in
addition to any other remedies to which the Company may be entitled at law or in
equity. The terms of this paragraph shall not prevent the Company from pursuing
any other available remedies for any breach or threatened breach hereof,
including but not limited to the recovery of damages from the Executive. The
Executive and the Company further agree that the provisions of the covenants not
to compete and solicit are reasonable and that the Company would not have
entered into this Agreement but for the inclusion of such covenants herein.
Should a court determine, however, that any provision of the covenants is
unreasonable, either in period of time, geographical area, or otherwise, the
parties hereto agree that the covenant should be interpreted and enforced to the
maximum extent which such court or arbitrator deems reasonable.
The provisions of this Section 12 shall survive any
termination of this Agreement, and the existence of any claim or cause of action
by the Executive against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
the covenants and agreements of this Section 12; provided, however, that this
paragraph shall not, in and of itself, preclude the Executive from defending
against the enforceability of the covenants and agreements of this Section 12.
13. ADJUSTMENT TO PAYMENTS.
(a) GROSS-UP PAYMENT. In the event it shall be determined that
any payment or distribution of any type to or for the benefit of the Executive,
by the Company, any of its affiliates, any person who acquires ownership or
effective control of the Company or ownership of a substantial portion of the
Company's assets within the meaning of Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code"), and the regulations thereunder or any
affiliate of such
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person, whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise (the "Total Payments"), would be subject to
the excise tax imposed by Section 4999 of the Code or any interest or penalties
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Total Payments (not including any Gross-Up Payment).
(b) All determinations as to whether any of the Total Payments
are "parachute payments" (within the meaning of Section 280G of the Code),
whether a Gross-Up Payment is required, the amount of such Gross-Up Payment and
any amounts relevant to the last sentence of Subsection 13(a), shall be made by
an independent accounting firm selected by the Company from among the largest
five accounting firms in the United States (the "Accounting Firm"). The
Accounting Firm shall provide its determination (the "Determination"), together
with detailed supporting calculations regarding the amount of any Gross-Up
Payment and any other relevant matter, both to the Company and the Executive
within thirty (30) days of the Termination Date, if applicable, or such earlier
time as is requested by the Company or the Executive (if the Executive
reasonably believes that any of the Total Payments may be subject to the Excise
Tax). Any determination by the Accounting Firm shall be binding upon the Company
and the Executive. As a result of uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that the Company should have made Gross-Up Payments
("Underpayment"), or that Gross-Up Payments will have been made by the Company
which should not have been made ("Overpayments"). In either such event, the
Accounting Firm shall determine the amount of the Underpayment or Overpayment
that has occurred. In the case of an Underpayment, the amount of such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive. In the case of an Overpayment, the Executive shall, at the direction
and expense of the Company, take such steps as are reasonably necessary
(including the filing of returns and claims for refund), follow reasonable
instructions from, and procedures established by, the Company, and otherwise
reasonably cooperate with the Company to correct such Overpayment.
14. EXECUTIVE REPRESENTATION. The Executive expressly represents and
warrants to the Company that the Executive is not a party to any contract or
agreement and is not otherwise obligated in any way, and is not subject to any
rules or regulations, whether governmentally imposed or otherwise, which will or
may restrict in any way the Executive's ability to fully perform the Executive's
duties and responsibilities under this Agreement.
15. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and shall inure to
the benefit of the Company, its successors and assigns, and the Company shall
require any successor or assign to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place. The
term "the Company" as used herein shall include any such successors and assigns
to the Company's business and/or assets. The term "successors and assigns" as
used herein shall mean a corporation or other entity acquiring or otherwise
succeeding to, directly or indirectly, all or substantially all the assets and
business of the Company (including this Agreement) whether by operation of law
or otherwise.
(b) Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, the Executive's
beneficiaries or legal representatives, except by will or by the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
16. ARBITRATION. Except with respect to the remedies set forth in
Section 12(f), as a method for resolving any dispute arising out of this
Agreement, the Executive, in the Executive's sole discretion, may select binding
arbitration in accordance with this Section. Except as provided otherwise in
this Section, arbitration pursuant to this Section shall be governed by the
Commercial Arbitration Rules of the American Arbitration Association. If the
Executive wishes to arbitrate an issue under this Section 16, the Executive
shall deliver written notice to the Company, including a description of the
issue to be arbitrated. Within fifteen (15) days after the Executive demands
arbitration, the Company and the Executive
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shall each appoint an arbitrator. Within fifteen (15) additional days, these two
arbitrators shall appoint the third arbitrator by mutual agreement; if they fail
to agree within this fifteen (15) day period, then the third arbitrator shall be
selected promptly pursuant to the rules of the American Arbitration Association
for Commercial Arbitration. The arbitration panel shall hold a hearing in
Columbus, Ohio, within ninety (90) days after the appointment of the third
arbitrator. The fees and expenses of the arbitrators, and any American
Arbitration Association fees, shall be paid by the Company. Both the Company and
the Executive may be represented by counsel and may present testimony and other
evidence at the hearing. Within ninety (90) days after commencement of the
hearing, the arbitration panel will issue a written decision; the majority vote
of two of the three arbitrators shall control. The majority decision of the
arbitrators shall be binding on the parties, and the parties may not pursue
other available legal remedies if the parties are not satisfied with the
majority decision of the arbitrator. The Executive shall be entitled to seek
specific performance of the Executive's rights under this Agreement during the
pendency of any dispute or controversy arising under or in connection with this
Agreement.
17. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duty given
when personally delivered or sent by registered or certified mail, return
receipt requested, postage prepaid, or upon receipt if overnight delivery
service or facsimile is used, addressed as follows:
TO THE EXECUTIVE:
Michael W. Rayden
7677 Sutton Place
New Albany, Ohio 43054
TO THE COMPANY:
Too, Inc.
3885 Morse Road
Columbus, Ohio 43219
Attn: Kathleen C. Maurer, Senior Vice President-Human Resources
18. SETTLEMENT OF CLAIMS. Except as otherwise provided, the Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Executive or others.
19. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the 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. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
20. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Ohio
without giving effect to conflict of law principles thereof. The parties hereby
consent to the exclusive jurisdiction of the state courts of the State of Ohio
and venue in Franklin County, Ohio.
21. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
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22. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, if any, understandings and arrangements, oral
or written, between the parties hereto with respect to the subject matter
hereof.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duty authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
TOO, INC.
By: /s/ Kent A. Kleeberger
-----------------------------------------------
Name: Kent A. Kleeberger
Title: Senior Vice President and Chief Financial
Officer
By: /s/ Kathleen C. Maurer
-----------------------------------------------
Name: Kathleen C. Maurer
Title: Senior Vice President - Human Resources
EXECUTIVE
/s/ Michael W. Rayden
--------------------------------------------------
Michael W. Rayden
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