Exhibit 10.2
EXECUTIVE AGREEMENT
(Michael W. Rayden)
     This is an Agreement between Tween Brands, Inc., a Delaware corporation
(the “Corporation”), with its principal office located at 8323 Walton Parkway,
New Albany, Ohio 43054, and Michael W. Rayden (the “Executive”), effective as of
December 3, 2008.
Recitals:
     The Corporation considers the establishment and maintenance of a sound and
vital management to be part of its overall corporate strategy and essential in
protecting and enhancing the interests of the Corporation and its shareholders.
As part of this corporate strategy, the Corporation wishes to act to retain its
well-qualified executive officers notwithstanding any actual or threatened
change in control of the Corporation.
     The Executive is a key executive officer of the Corporation and the
Executive’s services, experience and knowledge of the affairs of the
Corporation, and reputation and contacts in the industry are extremely valuable
to the Corporation. The Executive’s continued dedication, availability, advice,
and counsel to the Corporation are deemed important to the Corporation, its
Board of Directors (the “Board”), and its shareholders. It is, therefore, in the
best interests of the Corporation to secure the continued services of the
Executive notwithstanding any actual or threatened change in control of the
Corporation. Accordingly, the Board has approved this Agreement with the
Executive and authorized its execution and delivery on behalf of the
Corporation.
Agreement:
     1. Term of Agreement. This Agreement will begin on the date entered above
and will irrevocably continue in effect for a three-year period from the
effective date hereof. On third anniversary date of the effective date hereof,
and on the anniversary date of each year thereafter (a “Renewal Date”), the term
of this Agreement will be extended automatically for a period of one (1) year
unless, not later than thirty (30) days prior to such Renewal Date, the
Corporation gives written notice to the Executive that it has elected not to
extend this Agreement, in which situation this Agreement shall terminate at the
end of the three-year term then in progress. Notwithstanding the above, if a
“Change in Control” (as defined herein) of the Corporation occurs during the
term of this Agreement, the term of this Agreement will be for twenty-four
(24) months beyond the end of the month in which any such Change in Control
occurs.
     2. Definitions. The following defined terms shall have the meanings set
forth below, for purposes of this Agreement:
          (a) Annual Award. “Annual Award” means the cash payment paid or
payable to the Executive with respect to a fiscal year under the Corporation’s
Incentive Compensation Performance Plan.

 

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          (b) Base Annual Salary. “Base Annual Salary” means the greater of
(1) the highest annual rate of base salary in effect for the Executive during
the twelve (12) month period immediately prior to a Change in Control, or
(2) the annual rate of base salary in effect at the time a Notice of Termination
is given (or on the date employment is terminated if no Notice of Termination is
required).
          (c) Cause. “Cause” means any of the following:
     (1) The Executive shall have (a) been convicted of a felony, or
(b) committed an act of intentional gross misconduct, fraud, or gross neglect in
connection with the Executive’s duties or in the course of the Executive’s
employment with the Corporation or any Subsidiary, and the Board shall have
determined that such act is materially harmful to the Corporation; or
     (2) The Executive shall have materially breached Section 12 of the
Executive’s Employment Agreement with the Corporation.
          For purposes of this Agreement, no act or failure to act on the part
of the Executive shall be deemed “intentional” if it was due primarily to an
error in judgment or negligence, but shall be deemed “intentional” only if done
or omitted to be done by the Executive not in good faith and without reasonable
belief that the Executive’s action or omission was in the best interest of the
Corporation. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for “Cause” under this Agreement 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 three-quarters (3/4) of the Board at a
meeting called and held for such purposes, after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive’s
counsel (if the Executive chooses to have counsel present at such meeting), to
be heard before the Board, finding that, in the good faith opinion of the Board,
the Executive had committed an act constituting “Cause” as defined in this
Agreement and specifying the particulars of the act constituting “Cause” in
detail. Nothing in this Agreement will limit the right of the Executive or the
Executive’s beneficiaries to contest the validity or propriety of any such
determination.
          (d) Change in Control. “Change in Control” means the occurrence of any
of the following:
     (1) Any “Person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) is or becomes
the “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing
twenty-five percent (25%) or more of the combined voting power of the
Corporation’s then outstanding securities (a “25% Shareholder”) provided
however, that the term 25% Shareholder shall not include any Person if such
Person would not otherwise be a 25% Shareholder but for a reduction in the
number of outstanding voting shares resulting from a stock repurchase program or
other similar plan of the Corporation or from a

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self-tender offer of the Corporation, which plan or tender offer commenced on or
after the date hereof, provided, however, that the term “25% Shareholder” shall
include such Person from and after the first date upon which (A) such Person,
since the date of the commencement of such plan or tender offer, shall have
acquired Beneficial Ownership of, in the aggregate, a number of voting shares of
the Corporation equal to one percent (1%) or more of the voting shares of the
Corporation then outstanding, and (B) such Person, together with all affiliates
and associates of such Person, shall Beneficially Own twenty-five percent (25%)
or more of the voting shares of the Corporation then outstanding. In calculating
the percentage of the outstanding voting shares that are Beneficially Owned by a
Person for purposes of this subsection (d)(1), voting shares that are
Beneficially Owned by such Person shall be deemed outstanding, and voting shares
that are not Beneficially Owned by such Person and that are subject to issuance
upon the exercise or conversion of outstanding conversion rights, exchange
rights, rights, warrants or options shall not be deemed outstanding.
Notwithstanding the foregoing, if the Board of Directors of the Corporation
determines in good faith that a Person that would otherwise be a 25% Shareholder
pursuant to the foregoing provisions of this subsection (d)(1) has become such
inadvertently, and such Person (a) promptly notifies the Board of Directors of
such status and (b) as promptly as practicable thereafter, either divests of a
sufficient number of voting shares so that such Person would no longer be a 25%
Shareholder, or causes any other circumstance, such as the existence of an
agreement respecting voting shares, to be eliminated such that such Person would
no longer be a 25% Shareholder as defined pursuant to this subsection (d)(1),
then such Person shall not be deemed to be a 25% Shareholder for any purposes of
this Agreement. Any determination made by the Board of Directors of the
Corporation as to whether any Person is or is not a 25% Shareholder shall be
conclusive and binding; or
     (2) A change in composition of the Board of Directors of the Corporation
occurring any time during a consecutive two-year period as a result of which
fewer than a majority of the Board of Directors are Continuing Directors (for
purposes of this section, the term “Continuing Director” means a director who
was either (A) first elected or appointed as a Director prior to the date of
this Agreement; or (B) subsequently elected or appointed as a director if such
director was nominated or appointed by at least a majority of the then
Continuing Directors); or
     (3) Any of the following occurs:
     (A) a merger or consolidation of the Corporation, other than a merger or
consolidation in which the voting securities of the Corporation immediately
prior to the merger or consolidation continue to represent (either by remaining
outstanding or being converted into securities of the surviving entity) sixty
percent (60%) or more of the combined voting power of the Corporation or
surviving entity immediately after the merger or consolidation with another
entity;

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     (B) a sale, exchange, or other disposition (in a single transaction or a
series of related transactions) of all or substantially all of the assets of the
Corporation which shall include, without limitation, the sale of assets
aggregating more than fifty percent (50%) of the assets of the Corporation on a
consolidated basis;
     (C) a liquidation or dissolution of the Corporation;
     (D) a reorganization, reverse stock split, or recapitalization of the
Corporation which would result in any of the foregoing; or
     (E) a transaction or series of related transactions having, directly or
indirectly, the same effect as any of the foregoing.
          (e) Change Year. “Change Year” means the fiscal year in which a Change
in Control occurs.
          (f) Disability. “Disability” means “Total Disability” as defined in
the Tween Brands Long-term Disability Plan (effective August 1, 2007), or any
amended or successor plan.
          (g) Employee Benefits. “Employee Benefits” means the perquisites,
benefits, and service credit for benefits as provided under any and all employee
retirement income and welfare benefit policies, plans, programs, or arrangements
in which the Executive is entitled to participate, including without limitation
any stock option, stock purchase, stock appreciation, savings, pension,
supplemental executive retirement, or other retirement income or welfare
benefit, deferred compensation, incentive compensation, group or other life,
health, medical/hospital, or other insurance (whether funded by actual insurance
or self-insured by the Corporation), disability, salary continuation, expense
reimbursement, and other employee benefit policies, plans, programs, or
arrangements that may now exist or any equivalent successor policies, plans,
programs, or arrangements that may be adopted hereafter, providing perquisites,
benefits, and service credit for benefits at least as great in a monetary
equivalent as are payable thereunder prior to a Change in Control.
          (h) Employment Agreement. “Employment Agreement” means an executed
employment agreement between the Corporation and the Executive.
          (i) Good Reason. “Good Reason” means the occurrence of any one or more
of the following:
     (1) The assignment to the Executive after a Change in Control of the
Corporation of duties which are a significant reduction in the duties,
authority, responsibilities, and status of the Executive’s position at any time
during the twelve (12) month period prior to such Change in Control;
     (2) A reduction by the Corporation in the Executive’s Base Annual Salary in
effect immediately prior to a Change in Control of the Corporation, or the
failure to

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grant salary increases and bonus payments on a basis comparable to those granted
to other executives of the Corporation, or a reduction of the Executive’s most
recent highest incentive bonus potential prior to such Change in Control under
the Corporation’s Incentive Compensation Performance Plan, Long-Term Incentive
Compensation Performance Plan, or similar plans;
     (3) A demand by the Corporation that the Executive relocate to a location
in excess of fifty (50) miles from the location where the Executive is currently
based, or in the event of any such relocation with the Executive’s express
written consent, the failure of the Corporation or a Subsidiary to pay (or
reimburse the Executive for) all reasonable moving expenses incurred by the
Executive relating to a change of principal residence in connection with such
relocation and to indemnify the Executive against any loss in the sale of the
Executive’s principal residence in connection with any such change of residence,
all to the effect that the Executive shall incur no loss on an after tax basis;
     (4) The failure of the Corporation to abide by this Agreement or to obtain
a satisfactory agreement from any successor to the Corporation to assume and
agree to perform this Agreement, as contemplated in Section 14 of this
Agreement;
     (5) The failure of the Corporation to provide the Executive with
substantially the same Employee Benefits that were provided to him immediately
prior to the Change in Control, or with a package of Employee Benefits that,
though one or more of such benefits may vary from those in effect immediately
prior to such Change in Control, is substantially comparable in all material
respects to such Employee Benefits taken as a whole; or
     (6) Any significant reduction in the Executive’s compensation or benefits
or adverse change in the Executive’s location or duties, if such significant
reduction or adverse change occurs at any time after the commencement of any
discussion with a third party relating to a possible Change in Control of the
Corporation involving such third party, if such reduction or adverse change is
in contemplation of such possible Change in Control and such Change in Control
is actually consummated within twelve (12) months after the date of such
significant reduction or adverse change.
               The existence of Good Reason shall not be affected by the
Executive’s incapacity due to physical or mental illness. The Executive’s
continued employment shall not constitute a waiver of the Executive’s rights
with respect to any circumstance constituting Good Reason under this Agreement.
The Executive’s determination of Good Reason shall be conclusive and binding
upon the parties to this Agreement provided such determination has been made in
good faith.
          (j) Highest Incentive Compensation. “Highest Incentive Compensation”
means the greater of the Executive’s Potential Annual Award for the Executive’s
Incentive Group for (a) the Termination Year or (b) the average of the actual
Annual Awards for the three years prior to the Termination Year.

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          (k) Incentive Compensation Performance Plan. “Incentive Compensation
Performance Plan” means the Corporation’s 2004 Incentive Compensation
Performance Plan in effect as of the effective date of this Agreement, as well
as any amended, successor or similar plan or plans.
          (l) Incentive Group. “Incentive Group” means the group or category, if
any, into which an Executive is placed pursuant to the Corporation’s Incentive
Compensation Performance Plan.
          (m) Long-Term Incentive Compensation Performance Plans “Long-Term
Incentive Compensation Performance Plans” means the Corporation’s 1999 Stock
Option and Performance Incentive Plan and 2005 Stock Option and Performance
Incentive Plan in effect as of the effective date of this Agreement, as well as
any amended, similar or successor, plan or plans.
          (n) 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.
          (o) Potential Annual Award. “Potential Annual Award” means the Annual
Award the Executive could receive according to his Incentive Group pursuant to
the Corporation’s Incentive Compensation Performance Plan assuming that (1) the
Corporation met the par target (100%) criteria for the Corporation’s Incentive
Compensation Performance Plan for a particular fiscal period or year (whether or
not such target performance criteria was or could be met); (2) there are no
adjustments for business unit or individual performance; and (3) the Executive’s
Base Annual Salary is used to determine the Potential Annual Award.
          (p) 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
greater of (i) the average of the Executive’s semi-annual bonus for the previous
two similar seasons or (ii) the Executive’s par target (100%) criteria
semi-annual bonus for the current semi-annual season calculated as of the Change
in Control date. In the case of a semi-annual bonus, the portion shall be the
amount of semi-annual bonus paid or payable to the Executive with respect to the
bonus period in which the Change in Control occurs, assuming the greater of
criteria (i) or (ii) applied, pro-rated by multiplying such amount by a
fraction, the numerator of which is the number of days during the bonus period
in which the Change in Control occurs prior to the occurrence of the Change in
Control, and the denominator of which shall be one hundred eighty-two and
one-half (182-1/2).
          (q) Performance Criteria. “Performance Criteria” means the
performance-based criteria as referenced in the Corporation’s Incentive
Compensation Performance Plan.

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          (r) Severance Benefits. “Severance Benefits” means the benefits
described in Section 4 of this Agreement, as adjusted by the applicable
provisions of Section 5 of this Agreement.
          (s) Subsidiary. “Subsidiary” means any corporation or other entity, a
majority of the voting control of which is directly or indirectly owned or
controlled at the time by the Corporation.
          (t) Termination Year. “Termination Year” means the year of termination
of the Executive.
          (u) Window Period. “Window Period” means the period of time after a
Change in Control in which Executive can terminate the Executive’s employment
with the Corporation with or without Good Reason and receive Severance Benefits.
The Window Period begins on the one year anniversary date of a Change in Control
and lasts for thirty (30) days.
     3. Eligibility for Severance Benefits. The Corporation or its successor
shall pay or provide to the Executive the Severance Benefits if the Executive’s
employment is terminated during the term of this Agreement, either:
          (a) by the Corporation (1) at any time six (6) months prior to a
Change in Control if such termination was in contemplation of such Change in
Control and was done to avoid the effects of this Agreement or, (2) within
twenty-four (24) months after a Change in Control of the Corporation, unless in
either (1) or (2) the termination is on account of the Executive’s death or
Disability or for Cause, provided that, in the case of a termination on account
of the Executive’s Disability or for Cause, the Corporation shall give Notice of
Termination to the Executive with respect thereto; or
          (b) by the Executive for Good Reason at any time within twenty-four
(24) months after a Change in Control of the Corporation provided that the
Executive shall give Notice of Termination to the Corporation with respect
thereto; or
          (c) by the Executive with or without Good Reason at any time during
the Window Period.
     4. Severance Benefits. The Executive, if eligible under Section 3, shall
receive the following Severance Benefits, adjusted by the applicable provisions
of Section 5 (in addition to accrued compensation, bonuses, and vested benefits
and stock options):
          (a) Base Annual Salary. A lump sum cash payment equal to the sum of:
(1) any accrued base salary and vacation time payable as of the Executive’s
termination of employment (either by reason of an Employment Agreement or
otherwise); and (2) the Executive’s Base Annual Salary multiplied by three (3).
Such amount generally shall be paid to the Executive as soon as administratively
practicable after the date of termination of employment. Additionally, if the
Executive is a “specified employee” as defined in Section 409A of the Internal
Revenue

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Code of 1986, as amended, and any guidance promulgated thereunder (“Code
Section 409A”), this amount will be increased by the amount, if any, determined
under subsection 4(h).
          (b) Annual Incentive Compensation. A lump sum cash payment equal to
the sum of: (1) the Pro-Rated Bonus Amount; and (2) the Executive’s Highest
Incentive Compensation multiplied by three (3). Such amount generally shall be
paid to the Executive as soon as administratively practicable after the date of
termination of employment. Additionally, if the Executive is a “specified
employee” as defined in Code Section 409A, this amount will be increased by the
amount, if any, determined under subsection 4(h).]
          (c) Long-Term Incentive Compensation. Such compensation as shall be
payable according to the terms of the Corporation’s Long-Term Incentive
Compensation Performance Plans.
          (d) Insurance Benefits. For a three (3) year period beginning on the
date the Executive’s employment is terminated, the Corporation will arrange to
provide to the Executive, at the Corporation’s expense:
     (1) Health Care. Health care coverage comparable to that in effect for the
Executive immediately prior to the termination (or, if more favorable to the
Executive, that furnished generally to salaried employees of the Corporation),
including, but not limited to, hospital, surgical, medical, dental,
prescription, and dependent coverage. Upon the expiration of the health care
benefits required to be provided pursuant to this subsection 4(d), the Executive
shall be entitled to the continuation of such benefits under the provisions of
the Consolidated Omnibus Budget Reconciliation Act. Health care benefits
otherwise receivable by the Executive pursuant to this subsection 4(d) shall be
reduced to the extent comparable benefits are actually received by the Executive
from a subsequent employer during the three-year period following the date the
employment is terminated and any such benefits actually received by the
Executive shall be reported by the Executive to the Corporation.
     (2) Life Insurance. Life insurance coverage (including any supplemental
coverage, purchase opportunity, and double indemnity for accidental death that
was available to the Executive) equal (including policy terms) to that in effect
at the time Notice of Termination is given (or on the date the employment is
terminated if no Notice of Termination is required) or, if more favorable to the
Executive, equal to that in effect at the date the Change in Control occurs.
          In the event the Executive’s participation in any such plan or program
is not permitted, or is taxable to the Executive, the Corporation will directly
provide, at no after-tax cost to the Executive, the benefits to which the
Executive would be entitled under such plans and programs. The Corporation shall
pay such benefits in a lump sum. Any benefits or payments to be provided under
this paragraph after completion of the time period described in Treasury
Regulation Section 1.409A-1(b)(9)(v)(B) shall be subject to the following
conditions: (i) the benefits or payments provided during any taxable year of the
Executive may not affect the

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benefits or payments to be provided to the Executive in any other taxable year;
(ii) reimbursement of any eligible expense must be made on or before the last
day of the Executive’s taxable year following the taxable year in which the
expense was incurred; and (iii) the right to such benefits or payments is not
subject to liquidation or exchange for another benefit or payment.
          (e) Retirement and Nonqualified Plan Benefits. The Executive will be
entitled to all benefits provided under (1) the Corporation’s Alternative
Savings Plan and the Corporation’s Supplemental Retirement and Deferred
Compensation Plan, as well as any amended, similar or successor plans and
(2) the Corporation’s tax-qualified plans and nonqualified plans, as well as any
amended, similar, or successor plans. All qualified and nonqualified plan
benefits or deferred compensation agreements or accounts shall become
immediately vested with respect to such plan benefits as of a Change in Control.
All payments required under this paragraph shall be made in accordance with the
provisions of each applicable plan.
          (f) Stock Options. If upon the date of termination of the Executive’s
employment, the Executive holds any options with respect to stock of
Corporation, all such options will immediately become exercisable upon such date
and will be exercisable for one hundred eighty (180) days thereafter. To the
extent such acceleration of exercise of such options is not permissible under
the terms of any plan pursuant to which the options were granted, the
Corporation will pay to Executive, in a lump sum, within one hundred eighty
(180) days after termination of employment, an amount in cash equal to the
excess, if any, of the aggregate fair market value of all stock of the
Corporation subject to such options, determined on the date of termination of
employment, over the aggregate option price of such stock, and the Executive
will surrender all such options unexercised.
          (g) Outplacement. The Corporation shall pay or reimburse the Executive
all fees for outplacement services and related travel costs up to a maximum of
sixty thousand dollars ($60,000).
               (h) Code Section 409A Compliance. If the Corporation determines
that (1) the Executive is a “specified employee” as defined in Code
Section 409A, and (2) any payments under Section 4 of this Agreement will cause
the Executive to incur additional tax or interest under Code Section 409A, the
Corporation shall pay to the Executive such additional compensation as is
necessary (after taking into account all federal, state, and local income taxes
payable by the Executive as a result of the receipt of such additional
compensation) to place the Executive in the same after-tax position the
Executive would have been in had no such excise tax (or any interest or
penalties thereon) been paid or incurred with respect to any of such amounts
(the “409A Gross-Up”). The Corporation shall pay such additional compensation as
soon as administratively practicable after the time when the Corporation makes
the applicable payments under Section 4 of this Agreement to the Executive. In
no event, however, shall such payment be made after December 31 of the year
after the year in which the Executive remits such excise tax. The calculation of
the 409A Gross-Up shall be approved by the Corporation’s independent certified
public accounting firm engaged by the Corporation immediately prior to the date
of the Executive’s termination of service and the calculation shall be provided
to the Executive in

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writing. The Executive shall then be given fifteen (15) days, or such longer
period as the Executive reasonably requests, to accept or reject the calculation
of the 409A Gross-Up. If the Executive rejects the 409A Gross-Up calculation and
the parties are thereafter unable to agree within an additional forty-five
(45) days, the arbitration provisions of Section 10 shall control. The
Corporation shall reimburse the Executive for all reasonable legal and
accounting fees incurred with respect to the calculation of the 409A Gross-Up
and any disputes related thereto.
     For purposes of determining the amount of the 409A Gross-Up, the Executive
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the 409A Gross-Up is to be
made and state and local income taxes at the highest marginal rates of taxation
in the state and locality of the Executive’s residence on the date of
termination.
     If the excise tax is subsequently determined to be less than the amount
taken into account hereunder at the time of termination of employment, the
Executive shall repay to the Corporation at the time the reduction in excise tax
is finally determined, the portion of the 409A Gross-Up attributable to such
reduction. Notwithstanding the Executive’s acceptance or rejection of the 409A
Gross-Up calculation, if the excise tax is determined to exceed the amount taken
into account hereunder at the time of termination of employment, the Corporation
shall make an additional Tax Gross-Up payment to the Executive in respect of
such excess at the time the amount of such excess is finally determined.
     In computing and determining Severance Benefits under subsections 4(a),
(b), (c), (d), (e), (f), and (g), above, a decrease in the Executive’s salary,
incentive bonus potential, or insurance benefits shall be disregarded if such
decrease occurs within six (6) months before a Change in Control, is in
contemplation of such Change in Control, and is taken to avoid the effect of
this Agreement should such action be taken after such Change in Control. In such
event, the salary, incentive bonus potential, and/or insurance benefits used to
determine Severance Benefits shall be that in effect immediately before the
decrease that is disregarded pursuant to this Section 4.
     Except as otherwise provided, the Severance Benefits provided in
subsections 4(a), (b), (c), (e), (f), and (g) above shall be paid not later than
forty-five (45) business days following the date the Executive’s employment
terminates.
     5. Tax Gross-Up. If any Severance Benefit or other benefit paid or provided
under Section 4, or the acceleration of stock option vesting, or the payment or
distribution of any Employee Benefits or similar benefits under any plan,
program, or agreement which is applicable to the Executive are subject to excise
tax pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended
(or any similar federal or state excise tax), the Corporation shall pay to the
Executive such additional compensation as is necessary (after taking into
account all federal, state, and local income taxes payable by the Executive as a
result of the receipt of such additional compensation) to place the Executive in
the same after-tax position the Executive would have been in had no such excise
tax (or any interest or penalties thereon) been paid or incurred with respect to
any of such amounts (the “Tax Gross-Up”). The Corporation shall pay such
additional compensation at the time when the Corporation determines that any
payment is subject to the excise tax under Section 4999 of the Code, but in no
event later than December 31 of the year

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after the year in which the Executive remits such excise tax. The calculation of
the Tax Gross-Up shall be approved by the Corporation’s independent certified
public accounting firm engaged by the Corporation immediately prior to the
Change in Control and the calculation shall be provided to the Executive in
writing. The Executive shall then be given fifteen (15) days, or such longer
period as the Executive reasonably requests, to accept or reject the calculation
of the Tax Gross-Up. If the Executive rejects the Tax Gross-Up calculation and
the parties are thereafter unable to agree within an additional forty-five
(45) days, the arbitration provisions of Section 10 shall control. The
Corporation shall reimburse the Executive for all reasonable legal and
accounting fees incurred with respect to the calculation of the Tax Gross-Up and
any disputes related thereto.
     For purposes of determining the amount of the Tax Gross-Up, the Executive
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Tax Gross-Up is to be
made and state and local income taxes at the highest marginal rates of taxation
in the state and locality of the Executive’s residence on the date of
termination.
     If the excise tax is subsequently determined to be less than the amount
taken into account hereunder at the time of termination of employment, the
Executive shall repay to the Corporation at the time the reduction in excise tax
is finally determined, the portion of the Tax Gross-Up attributable to such
reduction. Notwithstanding the Executive’s acceptance or rejection of the Tax
Gross-Up calculation, if the excise tax is determined to exceed the amount taken
into account hereunder at the time of termination of employment, the Corporation
shall make an additional Tax Gross-Up payment to the Executive in respect of
such excess at the time the amount of such excess is finally determined.
     6. Withholding of Taxes. The Corporation may withhold from any amounts
payable under this Agreement all federal, state, city, or other taxes as
required by law.
     7. Acknowledgement; No Duty to Mitigate. The Corporation hereby
acknowledges that it will be difficult and may be impossible for the Executive
to find reasonably comparable employment, or to measure the amount of damages
which the Executive may suffer as a result of termination of employment
hereunder. Accordingly, the payment of the Severance Benefits by the Corporation
to the Executive in accordance with the terms of this Agreement is hereby
acknowledged by the Corporation to be reasonable and will be liquidated damages,
and the Executive will not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
will any profits, income, earnings, or other benefits from any source whatsoever
create any mitigation, offset, reduction, or any other obligation on the part of
the Executive hereunder or otherwise, except for a reduction in health insurance
coverage as provided in subsection 4(d)(1). The Corporation shall not be
entitled to set off or counterclaim against amounts payable hereunder with
respect to any claim, debt, or obligation of the Executive.
     8. Enforcement Costs; Interest. The Corporation is aware that, upon the
occurrence of a Change in Control, the Board or a stockholder of the Corporation
may then cause or attempt to cause the Corporation to refuse to comply with its
obligations under this Agreement, or may

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cause or attempt to cause the Corporation to institute, or may institute,
litigation, arbitration, or other legal action seeking to have this Agreement
declared unenforceable, or may take, or attempt to take, other action to deny
the Executive the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement could be frustrated. It is the
intent of the Corporation that the Executive not be required to incur the
expenses associated with the enforcement of the Executive’s rights under this
Agreement by litigation, arbitration, or other legal action nor be bound to
negotiate any settlement of the Executive’s rights hereunder under threat of
incurring such expenses because the cost and expense thereof would substantially
detract from the benefits intended to be extended to the Executive under this
Agreement. Accordingly, if following a Change in Control it should appear to the
Executive that the Corporation has failed to comply with any of its obligations
under this Agreement, including the proper calculation of the Tax Gross-Up, or
in the event that the Corporation or any other person takes any action to
declare this Agreement void or unenforceable, or institute any litigation or
other legal action designed to deny, diminish, or to recover from the Executive,
the benefits intended to be provided to the Executive hereunder, the Corporation
irrevocably authorizes the Executive from time to time to retain counsel (legal
and accounting) of the Executive’s choice at the expense of the Corporation as
provided in this Section 8 to represent the Executive in connection with the
calculation of the Tax Gross-Up, or the initiation or defense of any litigation
or other legal action, whether by or against the Corporation or any director,
officer, stockholder, or other person affiliated with the Corporation.
Notwithstanding any existing or prior attorney-client relationship between the
Corporation and such counsel, the Corporation irrevocably consents to the
Executive entering into an attorney-client relationship with such counsel, and
in that connection the Corporation and the Executive agree that a confidential
relationship shall exist between the Executive and such counsel. The reasonable
fees and expenses of counsel selected from time to time by the Executive as
provided in this Section shall be paid or reimbursed to the Executive by the
Corporation on a regular, periodic basis upon presentation by the Executive of a
statement or statements prepared by such counsel in accordance with its
customary practices. Notwithstanding any provision contained herein, any
reimbursement to be provided under this Section 8 shall be subject to the
following conditions: (i) the reimbursement provided during any taxable year of
the Executive may not affect the reimbursement to be provided to the Executive
in any other taxable year; (ii) reimbursement of any eligible expense must be
made on or before the last day of the Executive’s taxable year following the
taxable year in which the expense was incurred; and (iii) the right to such
benefits or payments is not subject to liquidation or exchange for another
benefit or payment. In any action involving this Agreement, the Executive shall
be entitled to prejudgment interest on any amounts found to be due him from the
date such amounts would have been payable to the Executive pursuant to this
Agreement at an annual rate of interest equal to the prime commercial rate in
effect at Citibank or its successor in effect from time to time during the
prejudgment period plus 4 percent.
     9. Indemnification. From and after the earliest to occur of a Change in
Control or termination of employment, the Corporation shall (a) for a period of
five (5) years after such occurrence, provide the Executive (including the
Executive’s heirs, executors, and administrators) with coverage under a standard
directors’ and officers’ liability insurance policy at the Corporation’s
expense, and (b) indemnify and hold harmless the Executive, to the fullest
extent permitted or authorized by the law of the State of Delaware as it may
from time to time

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be amended, if the Executive is (whether before or after the Change in Control)
made or threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, by reason of the fact that the Executive is or was a director,
officer, or employee of the Corporation or any Subsidiary, or is or was serving
at the request of the Corporation or any Subsidiary as a director, trustee,
officer, or employee of a corporation, partnership, joint venture, trust, or
other enterprise. The indemnification provided by this Section 9 shall not be
deemed exclusive of any other rights to which the Executive may be entitled
under the charter or bylaws of the Corporation or of any Subsidiary, or any
agreement, vote of shareholders or disinterested directors, or otherwise, both
as to action in the Executive’s official capacity and as to action in another
capacity while holding such office, and shall continue as to the Executive after
the Executive has ceased to be a director, trustee, officer, or employee and
shall inure to the benefit of the heirs, executors, and administrators of the
Executive.
     10. Arbitration. As the 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. The Executive shall deliver written notice to the Corporation,
including a description of the issue to be arbitrated. Within fifteen (15) days
after the Executive demands arbitration, the Corporation and the Executive 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 Corporation. Both the
Corporation 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.
     11. Employment Rights. This Agreement sets forth the Severance Benefits
payable to the Executive in the event the Executive’s employment with the
Corporation is terminated under certain conditions specified in Section 3. This
Agreement is not an employment contract nor shall it confer upon the Executive
any right to continue in the employ of the Corporation or its Subsidiaries and
shall not in any way affect the right of the Corporation or its Subsidiaries to
dismiss or otherwise terminate the Executive’s employment at any time with or
without cause subject to provisions contained in the Employment Agreement and
other agreements between the Corporation and the Executive.

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     12. Arrangements Not Exclusive. The specific benefit arrangements referred
to in this Agreement are not intended to exclude the Executive from
participation in or from other benefits available to executive personnel
generally or to preclude the Executive’s right to other compensation or benefits
as may be authorized by the Board at any time. The provisions of this Agreement
and any payments provided for hereunder shall not reduce any amounts otherwise
payable, or in any way diminish the Executive’s existing rights, or rights which
would accrue solely as the result of the passage of time under any compensation
plan, benefit plan, incentive plan, stock option plan, employment agreement, or
other contract, plan, or arrangement except as may be specified in such
contract, plan, or arrangement. Notwithstanding anything to the contrary in this
Section 12, the Severance Benefits provided in Section 4 are in lieu of any
benefits to which the Executive would be entitled following the termination of
the Executive’s employment pursuant to any employment agreement or other plan or
agreement pursuant to the Corporation’s transition pay or any successor to such
plan.
     13. Termination. Except for termination of employment described in
Section 3(a), this Agreement shall terminate if the employment of the Executive
with the Corporation shall terminate prior to a Change in Control.
     14. Successors; Binding Agreements. This Agreement shall inure to the
benefit of and be enforceable by the Executive’s personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees. The Executive’s rights and benefits under this Agreement
may not be assigned, except that if the Executive dies while any amount would
still be payable to the Executive hereunder if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement, to the beneficiaries designated by
the Executive to receive benefits under this Agreement in a writing on file with
the Corporation at the time of the Executive’s death or, if there is no such
beneficiary, to the Executive’s estate. The Corporation will require any
successor (whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business and/or assets of the
Corporation (or of any division or Subsidiary thereof employing the Executive)
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Corporation would be required to perform it if no
such succession had taken place. Failure of the Corporation to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle the Executive to compensation
from the Corporation in the same amount and on the same terms to which the
Executive would be entitled hereunder if the Executive terminated employment for
Good Reason following a Change in Control.
     15. No Vested Interest. Neither the Executive nor the Executive’s
beneficiaries shall have any right, title, or interest in any benefit under this
Agreement prior to the occurrence of the right to the payment of such benefit.
     16. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the such addresses as each party may designate from time to time

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to the other party in writing in the manner provided herein. Unless designated
otherwise notices should be addressed as follows:
TO THE EXECUTIVE

Michael W. Rayden
5014 Kitzmiller Road
New Albany, OH 43054

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TO THE CORPORATION

Tween Brands, Inc.
8323 Walton Parkway
New Albany, OH 43054
Attention: Michael C. Keane, Senior Vice President — Human Resources
     If the parties by mutual agreement supply each other with telecopier
numbers for the purposes of providing notice by facsimile, such notice shall
also be proper notice under this Agreement. Notice sent by certified or
registered mail shall be effective two (2) days after deposit by delivery to the
U.S. Post Office.
     17. Savings Clause. If any payments otherwise payable to the Executive
under this Agreement are prohibited or limited by any statute or regulation in
effect at the time the payments would otherwise be payable:
          (a) Corporation will use its best efforts to obtain the consent of the
appropriate governmental agency to the payment by Corporation to the Executive
of the maximum amount that is permitted; and
          (b) the Executive will be entitled to elect to have apply, and
therefore to receive benefits directly under, either (i) this Agreement or
(ii) any generally applicable Corporation severance, separation pay, and/or
salary continuation plan that may be in effect at the time of the Executive’s
termination.
     Following any such election, the Executive will be entitled to receive
benefits under this agreement or plan elected only if and to the extent the
agreement or plan is applicable and subject to its specific terms.
     18. Amendment; Waiver. This Agreement may not be amended or modified and no
provision may be waived unless such amendment, modification, or waiver is agreed
to in writing and signed by the Executive and the Corporation.
     19. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
     20. Prior Executive Agreements. This Agreement supersedes any and all prior
executive agreements or similar agreements between the Corporation (or any
predecessor of the Corporation) and the Executive and no payments or benefits of
any kind shall be made under, on account of, or by reference to the prior
executive agreements.
     21. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.

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     22. 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.
     In witness whereof, the parties have signed this Agreement as of the day
and year written above.

                  Corporation:    
 
                TWEEN BRANDS, INC.    
 
           
 
  By:   /s/ Michael C. Keane
 
Michael C. Keane    
 
      Its: Senior Vice President — Human Resources    
 
                Executive:    
 
                /s/ Michael W. Rayden              
 
      Michael W. Rayden    

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