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Exhibit 10.11
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of August 23, 1999, by and between
Too, Inc., a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxx
(the "Executive") (hereinafter collectively referred to as "the parties").
WHEREAS, the Executive has served as a key executive of the Company and
possesses an intimate knowledge of the business and affairs of the Company and
its policies, procedures, methods and personnel; and
WHEREAS, the Company has determined that it is essential and in its
best interests to retain the services of key management personnel and to ensure
their continued dedication and efforts; and
WHEREAS, the Compensation Committee of the Board of Directors of the
Company (the "Board") has determined that it is in the best interest of the
Company to secure the continued services and employment of the Executive and the
Executive is willing to render such services on the terms and conditions set
forth herein.
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 August 23, 1999 hereof (the "Commencement Date")
and ending on the sixth anniversary of the Commencement Date (the "Initial
Term"); PROVIDED, HOWEVER, that upon the expiration of the Initial Term, 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 thereto that the term of this Agreement shall
not be so extended.
2. EMPLOYMENT.
(a) POSITION. The Executive shall be employed as the President and
Chief Executive Officer or such other position of reasonably comparable or
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 to devote his full business time
and attention to the business and affairs of the Company. 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.
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3. BASE SALARY. The Company agrees to pay or cause to be paid to the
Executive during the term of this Agreement an annual base salary at the rate of
$700,000. 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 (hereinafter referred to as the "Base
Salary"). Such Base Salary shall be payable in accordance with the Company's
customary practices applicable to its executives.
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 generally outlined in the attached Exhibit A.
5. EMPLOYEE BENEFITS. The Executive shall be entitled to participate in
all employee benefit plans, practices, and programs maintained by the Company
and made available to senior executives generally and as may be in effect from
time to time.
6. BONUS. The Executive shall be entitled to participate in the
Company's applicable incentive compensation plan at a target level of one
hundred ten percent (110%) of the Executive's annual Base Salary or on such
terms and conditions as may be determined from time to time by 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. The Executive agrees to undergo any
reasonable physical examination and other procedures as may be necessary to
maintain such policy. If the Company is not able to obtain such policy due to
Executive's physical examination results, an AD&D (accidental death &
dismemberment) policy of an equivalent amount will be obtained in lieu of the
term life insurance coverage.
(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) EXPENSES. Subject to applicable Company policies, the Executive
shall be entitled to receive prompt reimbursement of all expenses reasonably
incurred by him in connection with the performance of his duties hereunder or
for promoting, pursuing or otherwise furthering the business or interests of the
Company.
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(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 his duties hereunder.
8. VACATION. The Executive shall be entitled to annual
vacation in accordance with the policies as periodically established by the
Board for similarly situated executives of the Company.
9. TERMS AND CONDITIONS. The Executive's employment hereunder is
subject to the following terms and conditions:
(a) DISABILITY. The Company shall be entitled to terminate the
Executive's employment after having established the Executive's Disability. For
purposes of this Agreement, "Disability" means a physical or mental infirmity
which impairs the Executive's ability to substantially perform those duties
under this Agreement for a period of at least six (6) months in any 12-month
calendar period as determined in accordance with the Company's Long-Term
Disability Plan.
(b) CAUSE. The Company shall be entitled to terminate the
Executive's employment for "Cause" without prior written notice. For purposes of
this Agreement, "Cause" shall mean that the Executive (1) willfully failed to
perform his duties with the Company (other than a failure resulting from the
Executive's incapacity due to physical or mental illness); or (2) has plead
"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 willful misconduct in bad
faith which could reasonably be expected to materially harm the Company's
business or its reputation.
The Executive shall be given written notice by the Board of
termination for Cause, such notice to state in detail the particular act or acts
or failure or failures to act that constitute the grounds on which the proposed
termination for Cause is based. The Executive shall be entitled to a hearing
before the Board or a committee thereof established for such purpose and to be
accompanied by legal counsel. Such hearing shall be held within fifteen (15)
days of written notice to the Company by the Executive, provided the Executive
requests such hearing within thirty (30) days of the written notice from the
Board of the termination for Cause.
(c) TERMINATION BY THE EXECUTIVE. The Executive may terminate
employment hereunder for "Good Reason" by delivering to the Company (1) a
Preliminary Notice of Good Reason (as defined below), and (2) not earlier than
thirty (30) days from the delivery of such Preliminary Notice, a Notice of
Termination. For purposes of this Agreement, "Good Reason" means (i) the failure
to continue the Executive in a capacity as contemplated by Section 2 hereof;
(ii) the assignment to the Executive of any duties materially inconsistent with
the Executive's positions, duties, authority, responsibilities and reporting
requirements as set forth in Section 2 hereof; (iii) a reduction in or a
material delay in payment of the Executive's total cash compensation and
benefits from those required to be provided in accordance with the provisions of
this Agreement; (iv) the Company, the Board or any person controlling the
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Company requires the Executive to be based outside of the United States, other
than on travel reasonably required to carry out the Executive's obligations
under the Agreement, or (v) 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; PROVIDED, HOWEVER, that
"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.
(d) NOTICE OF TERMINATION. Subject to Section 9(b), any
purported termination for Cause by the Company or for Good Reason by the
Executive shall be communicated by a written Notice of Termination to the other
two (2) weeks prior to the Termination Date (as defined below). Any termination
by the Company other than for Cause or by the Executive without Good Reason
shall be communicated by a written Notice of Termination to the other two (2)
months prior to the Termination Date. However, the Company may elect to pay the
Executive in lieu of two (2) months written notice. For purposes of this
Agreement, no such purported termination of employment shall be effective
without such Notice of Termination.
(e) TERMINATION DATE, ETC. "Termination Date" shall mean in
the case of the Executive's death, the date of death, or in all other cases, the
date specified in the Notice of Termination; 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 at least thirty (30) days from
the date the Notice of Termination is given to the Executive.
10. COMPENSATION UPON TERMINATION.
(a) If during the term of this Agreement (including any
extensions thereof), the Executive's employment is terminated by the Company for
Cause, by reason of the Executive's death or if the Executive gives written
notice not to extend the term of this Agreement, the Company's sole obligation
hereunder shall be to pay the Executive the following amounts earned hereunder
but not paid as of the Termination Date: (i) Base Salary, (ii) reimbursement for
any and all monies advanced or expenses incurred pursuant to Section 7(b)
through the Termination Date, and (iii) any earned compensation which the
Executive had previously deferred (including any interest earned or credited
thereon) (collectively, "Accrued Compensation"), PROVIDED, HOWEVER, that if the
Executive gives such written notice not to extend, the Company shall continue to
pay 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.
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(b) 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 as follows:
(i) the Company shall pay the Executive the
Accrued Compensation;
(ii) the Company shall continue to pay the
Executive the Base Salary for a period of one (1) year
following the Termination Date; and
(iii) the Company shall continue to pay the
premiums provided for in Section 7(a)(1) hereof through the
end of the calendar year in which such termination occurs.
(c) 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 as follows:
(i) the Company shall pay the Executive the
Accrued Compensation;
(ii) the Company shall continue to pay the
Executive one hundred percent (100%) of the Base Salary for
the first twelve (12) months following the Termination Date,
eighty percent (8 0%) of the Base Salary for the second twelve
(12) months following the Termination Date, and sixty percent
(60%) of the Base Salary for the third twelve (12) months
following the Termination Date; PROVIDED, HOWEVER, that such
Base Salary shall be reduced by the amount of any benefits the
Executive receives by reason of his Disability under the
Company's relevant disability plan or plans; and
(iii) if the Executive is disabled beyond
thirty-six (36) months, 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, as defined in the
Company's relevant disability plans; PROVIDED, HOWEVER, that
such payments shall be reduced by the amount of any benefits
the Executive receives by reason of his Disability under the
Company's relevant disability plan or plans; and
(iv) the Company shall continue to pay the
premiums provided for in Section 7(a)(1) hereof through the
end of the calendar year in which such termination occurs.
(d) If the Executive's employment is terminated by reason of
the Company's written notice to the Executive of its decision not to extend the
term of this Agreement as contemplated in Section 1 hereof, the Company's sole
obligation hereunder shall be as follows:
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(i) the Company shall pay the Executive the
Accrued Compensation;
(ii) the Company shall continue to pay the
Executive the Base Salary for a period of one (1) year
following the expiration of such term; and
(iii) the Company shall continue to pay the
premiums provided for in Section 7(a)(1) hereof through the
end of the calendar year in which the Executive's termination
occurs.
(e) During the period the Executive is receiving salary
continuation pursuant to Section 10(b)(ii), 10(c)(ii) or 10(d)(ii) hereof,
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
Termination Date; PROVIDED, HOWEVER, that the Company's obligation with respect
to the foregoing benefits shall be reduced to the extent that the Executive or
the Executive's beneficiaries obtains any such benefits pursuant to a subsequent
employer's benefit plans.
(f) 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 such payment shall be offset or reduced by the amount of any
compensation provided to the Executive in any subsequent employment.
11. EMPLOYEE COVENANTS.
(a) UNAUTHORIZED DISCLOSURE. The Executive shall not, during
the term of this Agreement and thereafter, make 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 11(a)). This confidentiality
covenant has no temporal, geographical or territorial restriction.
(b) NON-COMPETITION. During the Non-Competition Period
described below, the Executive shall not, directly or indirectly, without the
prior written consent of the Company, 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
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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 11 of this Agreement.
The "Non-Competition Period" means the period the
Executive is employed by the Company plus one (1) year 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.
(c) NON-SOLICITATION. During the No-Raid Period described
below, the Executive shall not, either directly or indirectly, alone or in
conjunction with another party, 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 one (1) year 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) REMEDIES. The Executive agrees that any breach of the
terms of this Section 11 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.
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The provisions of this Section 11 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 11; PROVIDED, HOWEVER, that this
paragraph shall not, in and of itself, preclude the Executive from defending
himself against the enforceability of the covenants and agreements of this
Section 11.
12. LIMITATION OF 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 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 12(a), shall be made by
an independent accounting firm selected by the Company from among the largest
six 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 five (5) 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
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(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.
13. EMPLOYEE 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.
The Executive hereby consents to the cancellation of his Employment Agreement
with The Limited, Inc. dated May 20, 1997 and acknowledges that The Limited,
Inc. has fulfilled all of its obligations under said Employment Agreement.
14. 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.
15. ARBITRATION. Except with respect to the remedies set forth
in Section 11(d) hereof, any controversy or claim between the Company or any of
its affiliates and the Executive arising out of or relating to this Agreement or
its termination shall be settled and determined by binding arbitration. The
American Arbitration Association under its Commercial Arbitration Rules shall
administer the binding arbitration. The arbitration shall take place in
Columbus, Ohio. The Company and the Executive shall each appoint one person to
act as an arbitrator, and a third arbitrator shall be chosen by the first two
arbitrators (such three arbitrators, the "Panel"). The Panel shall have no
authority to award punitive damages against the Company or the Executive. The
Panel shall have no authority to add to, alter, amend or refuse to enforce any
portion of the disputed agreements. The Company and the Executive each waive any
right to a jury trial or to petition for stay in any action or proceeding of any
kind arising out of or relating to this Agreement or its termination.
16. 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
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writing and shall be deemed to have been duly 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:
Xxxxxxx X. Xxxxxx
0000 Xxxxxx Xxxxx
Xxx Xxxxxx, Xxxx 00000
TO THE COMPANY:
Too, Inc.
0000 Xxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attn: Secretary
17. SETTLEMENT OF CLAIMS. 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.
18. 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.
19. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Ohio without
giving effect to the conflict of law principles thereof.
20. 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.
22. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior
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agreements, if any, understandings and arrangements, oral or written, between
the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
TOO, INC.
By:/s/Xxxx Xxxxxxxxxx
------------------
Name: Xxxx Xxxxxxxxxx
Title: Vice President and Chief Financial Officer
By:/s/Xxxxx Xxxxxx
---------------
Name: Xxxxx Xxxxxx
Title: Vice President Human Resources
/s/Xxxxxxx X. Xxxxxx
--------------------
Xxxxxxx X. Xxxxxx
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