Exhibit 10.3
EMPLOYMENT AGREEMENT
(Kenneth T. Stevens)
     THIS AGREEMENT is effective as of January 29, 2007 by and between Tween
Brands, Inc., a Delaware corporation (the “Company”), and Kenneth T. Stevens
(the “Executive”) (hereinafter collectively referred to as “the parties”).
     WHEREAS, the Executive will serve as a key executive of the Company and
possess 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 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 the effective date of this Agreement (the “Commencement
Date”) and ending on the third anniversary of the Commencement Date (the
“Initial Term”); provided, however, that upon the expiration of the first
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 Operating Officer of the Company, 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 (1) to devote the Executive’s
best efforts and full business time and attention to the business and affairs of
the Company; (2) to

 

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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 January 29, 2007, 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. 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. 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. 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.

 

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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 and conditions:
          (a) CAUSE. “Cause” means that the Executive:
               (1) was grossly negligent in the performance of 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.
          (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) or any
amended or successor plan (the “Disability 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 January 29, 2007, as
well as any such amended, successor, or substituted agreement.
          (f) GOOD REASON. “Good Reason” means:
     (1) a significant reduction in the Executive’s position, duties, authority,
responsibilities and reporting requirements as set forth in section 2 hereof;

 

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     (2) a reduction in or material delay in payment of the Executive’s total
cash compensation, incentives and benefits from those required to be provided
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 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
obligations to perform this Agreement by any successor to all or substantially
all of the assets of the Company withing fiftenn (15) days after a merger,
consolidation, sale or similar transaction.
     Nothwithstanding 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 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, to the extent applicable, 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 for Cause or
Disability, any termination of employment by the Company or by the Executive
shall be communicated by a Notice of Termination to the other party thirty
(30) days prior to the Termination Date. However, the Company may elect to pay
the Executive thirty (30) days of Base Salary in lieu of thirty (30) days
written notice. If the Company notifies the Executive that it will pay the
Executive in lieu of thirty (30) 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 payment 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

 

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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, 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 subject to Section 11(c) of this Agreement.
     11. TERMINATION OF EMPLOYMENT; COMPENSATION UPON TERMINATION.
          (a) TERMINATION BY COMPANY WITH CAUSE, OR VOLUNTARY TERMINATION 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 for any 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
voluntarily terminates employment without Good Reason, subject to the execution
by the Executive and the Company of a mutual release in favor of each of the
Parties, 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; and
               (3) any and all monies advanced to or expenses incurred by the
Executive pursuant to Section 8 through the Termination Date.
          (b) TERMINATION BY COMPANY WITHOUT CAUSE OR TERMINATION BY EXECUTIVE
WITH GOOD REASON. The Company may terminate the Executive without Cause after
giving a Notice of Termination or the Executive may terminate employment for
Good Reason after giving the Company a Notice of Termination. If the Executive’s
employment is terminated by the Company without Cause or by the Executive for
Good Reason, subject to the execution by the Executive and the Company of a
mutual release in favor of each of the Parties, the Company’s sole obligation
hereunder shall be to pay, maintain or reimburse the Executive (or facilitate a
tax qualified rollover of) the following items:
               (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;

 

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               (4) a lump sum equal to one and one-half (1.5) times the
Executive’s Base Salary;
               (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 an eighteen (18) month period after the
Termination Date, all medical coverage, programs or arrangements in which the
Executive was participating immediately prior to the Termination Date, provided
that Executive’s continued participation is possible under the general terms and
provisions of such medical plans and programs. In the event that the 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 entitle to receive pursuant
to this section 11(b)(6);
               (7) the Company shall accelerate the vesting, by twelve
(12) 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; provided, however, that notwithstanding the foregoing,
the acceleration of vesting under this provision shall not apply to any stock
options, restricted stock, stock appreciation rights, deferred compensation, and
similar plan benefits where such options, stock, rights, compensation or similar
plan benefits were by the terms of grant thereof or their respective benefit
plans subject to one time cliff vesting two or more years from the grant or
issuance thereof; and
               (8) expenses for outplacement services up to a maximum amount of
twenty thousand dollars ($20,000).
          (c) TERMINATION UPON DISABILITY. The Company or Executive shall be
entitled to terminate the Executive’s employment after having established the
Executive’s Disability and giving a Notice of Termination which shall indicate
the Disability Date. If the Executive’s employment is terminated by the Company
or Executive 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) the Company shall continue to pay the Executive 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

 

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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;
               (6) if the Executive is disabled beyond thirty-six (36) months
from the Disability Date, the Company shall continue to pay the Executive the
lesser of (a) sixty (60%) of Base Salary or (b) the maximum benefit under the
Disability Plan 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; and
               (7) 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.
               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 twelve (12) months of the 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 the 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, estate or designated beneficiary, as the case may
be, 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.
          (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

 

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               (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 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 for 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.
          (i) 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
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.
          (j) SECTION 409A COMPLIANCE. The Executive and the Company desire to
comply with Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), in accordance with the transition rules applicable under IRS Notice
2005-1 and Proposed Regulations issued under Section 409A of the Code.
Therefore, notwithstanding any provision of this Agreement to the contrary, if
the Company determines that Executive is a “specified employee” as defined in
Section 409A of the Code or any guidance promulgated thereunder (“Code
Section 409A”), Executive shall not be entitled to any payments under Sections
11(b) or 11(c) of this Agreement after the Termination Date that otherwise would
cause Executive to incur any additional tax or interest under Code Section 409A,
until the earlier of (i) the date which is six months after the Termination
Date, or (ii) the date of Executive’s death. If any provision of this Agreement
(or of any award of compensation, including equity compensation or benefits)
would cause Executive to incur any additional tax or interest under Code
Section 409A, the Company shall, after consulting with Executive and receiving
Executive’s approval (which shall not be unreasonably withheld), reform such
provision in such a manner as shall not cause Executive to incur any such tax or
interest.
     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

 

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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 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 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 to the contrary,
after a Change in Control, the Non-Competition Period shall terminate 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,

 

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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, 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.
          (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 under this Agreement, 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 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. 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 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.

 

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     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 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. 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 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 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:

 

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     TO THE EXECUTIVE:
Kenneth T. Stevens
7309 Lambton Park Road
New Albany, OH 43054
     TO THE COMPANY:
Tween Brands, Inc.
8323 Walton Parkway
New Albany, Ohio 43054
Attn: Executive 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. 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.
     22. ENTIRE AGREEMENT. This Agreement and the offer letter executed by the
Company and Executive on or about January 8, 2007 constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede 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.

                  TWEEN BRANDS, INC.    
 
           
 
  By:
Name:   /s/ Michael Rayden
 
Michael Rayden    
 
  Title:   Chairman and Chief Executive Officer    
 
                EXECUTIVE    
 
                /s/ Kenneth T. Stevens                   Kenneth T. Stevens