exv10w25



 





Exhibit 10.25




EMPLOYMENT AGREEMENT




     THIS AGREEMENT is dated July 24, 2006 (the “Agreement”) between A.C. Moore Arts & Crafts,
Inc., a Pennsylvania corporation (the “Company”), and Amy Rhoades (“Executive”). This Agreement
replaces and supersedes any and all prior discussions, offers, communications or agreements of any
sort whatsoever, existing between the Company and Executive, of whatsoever nature.



     NOW THEREFORE,



     In consideration of the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:



     1. Employment.



          (a) The Company shall employ Executive, and Executive hereby accepts employment with the
Company, upon the terms and conditions set forth in this Agreement for the period beginning on July
24, 2006 and ending as provided in paragraph 4 hereof (the “Employment Term”).




          (b) The Board of Directors of the Company (the “Board”) has determined that it is in the best
interests of the Company and its shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of
Control (as defined in Appendix I to this Agreement) of the Company. The Board believes it is
imperative to diminish the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and to encourage the
Executive’s full attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with compensation and
benefits arrangements upon a Change of Control which ensure that the compensation and benefits
expectations of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives if a Change of Control occurs,
paragraphs 1 through 4 of this Agreement (except paragraphs 3(c), 3(d), 3(e) and 3(f) which shall
continue) shall be superseded by Appendix I.




     2. Position and Duties.



          (a) During the Employment Term, Executive shall serve as Vice President and General Counsel of
the Company. Executive shall report directly to the Chief Executive Officer of the Company and
shall have such duties and responsibilities as is customary for general counsel for companies of
like size and type.




          (b) Executive shall devote Executive’s best efforts and Executive’s full business time and
attention (except for permitted vacation periods and reasonable
periods of illness or other incapacity) to the business and affairs of the Company and its
Subsidiaries (as defined below); provided that Executive shall, with the prior written approval of
the Board, be





 









 







allowed to serve as (i) a director or officer of any non-profit organization including trade,
civic, educational or charitable organizations, or (ii) a director of any corporation which is not
competing with the Company or any of its Subsidiaries so long as such duties do not materially
interfere with the performance of Executive’s duties or responsibilities under this Agreement.
Executive shall perform Executive’s duties and responsibilities under this Agreement to the best of
Executive’s abilities in a diligent, trustworthy, businesslike and efficient manner.




          (c) Executive shall be based at or in the vicinity of the Company’s headquarters in Berlin,
New Jersey, but may be required to travel as necessary to perform Executive’s duties and
responsibilities under this Agreement.




          (d) For purposes of this Agreement, “Subsidiaries” shall mean any entity of which the
securities having a majority of the voting power in electing directors or managers are, at the time
of determination, owned by the Company, directly or through one or more Subsidiaries.




     3. Base Salary, Bonus, Options, Equity Compensation and Benefits.



          Subject to the provisions of paragraph 4, which shall control, Executive shall be entitled to
the following compensation and benefits during the Employment Term:




          (a) Initially, Executive’s base salary shall be $175,200 per year (the “Base Salary”), which
salary shall be payable in regular installments in accordance with the Company’s general payroll
practices. Executive’s Base Salary shall be reviewed at least annually by the Compensation
Committee of the Board and shall be subject to increase, as it shall determine based on among other
things, market practice and performance.




          (b) During each calendar year of the Company in which Executive continues to be employed by
the Company pursuant to this Agreement, Executive shall be entitled to participate in the Company’s
annual bonus plan as administered by the Compensation Committee of the Board of Directors.
Executive shall be entitled to participate in any bonus plan available to similarly situated
officers of the Company.




          (c) Executive shall be entitled to paid vacation in accordance with the Company’s general
payroll practices for officers of the Company.




          (d) The Company shall reimburse Executive for all reasonable expenses incurred by Executive in
the course of performing Executive’s duties under this Agreement which are consistent with the
Company’s policies in effect from time to time with respect to travel, entertainment and other
business expenses, subject to the Company’s requirements with respect to reporting and
documentation of such expenses.




          (e) Executive will be entitled to all benefits as are, from time to time, maintained for
officers of the Company, including without limitation: medical and other insurance plans, and
retirement benefits.




          (f) Pursuant and subject to the terms and conditions of the Company’s 2002 Stock Option Plan
or any successor plan:





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               (1) On July 24, 2006, upon the approval of the Board of Directors, Executive shall be granted
a non-qualified option to purchase 12,500 shares of common stock of the Company (the “Initial
Option”).



               (2) For each calendar year after December 31, 2006 that Executive continues to be employed by
the Company pursuant to this Agreement, on the day of each such calendar year that the Board
otherwise grants options to management of the Company, Executive shall be granted a non-qualified
option to purchase shares of common stock of the Company (each an “Annual Option”). The number of
shares of the Company’s common stock subject to each Annual Option shall be a number not lower than
the highest number established for any vice president of the Company.


The grant of the Initial Option and each Annual Option shall be evidenced by a Stock Option
Agreement pursuant to the 2002 Stock Option Plan.




               (3) In the event that the Company adopts a new equity compensation plan or program, Executive
shall be entitled to receive grants of stock options, restricted stock or other equity related
awards pursuant to such new plan or program, subject to the terms and conditions thereof, at
amounts no lower than the highest amount established for any vice president of the Company.



     4. Term.



          (a) The Employment Term shall begin on July 24, 2006 and end on the twelfth (12th) month
anniversary of such date; provided that (i) the Employment Term shall be extended for successive
periods of one (1) year each (each of which is referred to as an “extension term” of the Employment
Term) in the event that written notice of termination hereof is not given by one party hereof to
the other at least sixty (60) days prior to the end of the Employment Term or the then applicable
extension term, as the case may be; provided further that, and notwithstanding anything to the
contrary in this Agreement, (ii) the Employment Term or the then applicable extension term shall
terminate prior to such date (A) upon Executive’s death or permanent disability or incapacity (as
determined by the Board in its good faith judgment), (B) upon the mutual agreement of the Company
and Executive, (C) by the Company’s termination of this Agreement for Cause (as defined below) or
without Cause or (D) by Executive’s termination of this Agreement for Good Reason (as defined
below) or without Good Reason.




          (b) If the Employment Term or any extension term is terminated by the Company without Cause or
is terminated by the Executive for Good Reason, Executive (and Executive’s family with respect to
clause (iii) of this paragraph 4(b)) shall be entitled to receive (i) Executive’s Base Salary
through the twelfth month anniversary of such termination and Executive’s Pro Rata Bonus (as
defined in paragraph (h) below), if and only if Executive has not breached the provisions of
paragraphs 5, 6 and 7 hereof, and (ii) vested and earned (in accordance with the Company’s
applicable plan or program) but unpaid amounts under incentive plans, health and welfare plans, and
other employer programs (other than deferred compensation plans the payments under which shall be
determined in the plan of reference) of the Company in which Executive is then participating (other
than the Pro Rata Bonus). The amounts payable




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pursuant to paragraph 4(b)(i) and (ii) shall be payable in equal installments on the first day of
each month during the said twelve month period. No payment of any sum nor the receipt of any
benefit shall be due to Executive under this paragraph 4(b) unless and until Executive shall have
executed and delivered to the Company a release of any and all claims against the Company and its
Subsidiaries (and their respective present and former officers, directors, employees and agents –
collectively the “Released Parties”) and a covenant not to sue the Released Parties, all in form
and substance as provided by counsel to the Company (the “Release”) and any waiting period or
revocation period provided by law for the effectiveness of such Release shall have expired without
Executive’s having revoked such Release. In the event Executive shall decline or fail for any
reason to execute and deliver such Release, the Executive shall be entitled to receive only those
amounts provided pursuant to paragraph 4(c) provided for an Executive whose employment is
terminated by the Company for Cause or by Executive without Good Reason.




          (c) If the Employment Term or any extension term is terminated by the Company for Cause or by
the Executive without Good Reason, Executive shall be entitled to receive (i) Executive’s Base
Salary through the date of such termination and (ii) vested and earned (in accordance with the
Company’s applicable plan or program) but unpaid amounts under health plans of the Company which
Executive participates; provided, however, that Executive shall not be entitled to payment of a Pro
Rata Bonus.




          (d) If the Employment Term or any extension term is terminated upon Executive’s death or
permanent disability or incapacity (as determined by the Board in its good faith judgment),
Executive, or Executive’s estate if applicable, shall be entitled to receive the sum of (i)
Executive’s Base Salary through the date of such termination and Executive’s Pro Rata Bonus and
(ii) vested and earned (in accordance with the Company’s applicable plan or program) but unpaid
amounts under incentive plans, health and welfare plans, and other employer programs (other than
deferred compensation as determined in such plans) of the Company in which Executive participates.
The amounts payable pursuant to this paragraph 4(d) shall be payable, in any manner consistent with
the Company’s normal payment policies.




          (e) Except as otherwise provided herein, fringe benefits and bonuses (if any) which accrue or
become payable after the termination of the Employment Term or any extension term shall cease upon
such termination.




          (f) For purposes of this Agreement, “Cause” shall mean:




               (i) the failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Chief Executive Officer which specifically
identifies the manner in which the Chief Executive Officer believes that the Executive has not
substantially performed the Executive’s duties; provided however, that Executive shall have one
opportunity to cure the failure so identified for sixty (60) days from the written demand, or



               (ii) the engaging by the Executive in illegal conduct or gross misconduct in violation of the
Company’s Code of Business Ethics and Conflict of Interest Policy.



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Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Chief Executive Officer or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive
in good faith and in the best interests of the Company. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until there shall have been delivered to
the Executive a written notice from the Chief Executive Officer, a copy of which notice has been
previously delivered to the Board of Directors, finding that, in the good faith opinion of the
Chief Executive Officer, the Executive is guilty of the conduct described in subparagraph (i) or
(ii) above, and specifying the particulars thereof in detail.




          (g) For purposes of this Agreement, “Good Reason” shall mean:




               (i) the assignment to the Executive of any duties inconsistent with the Executive’s position,
authority, duties or responsibilities as contemplated by paragraph 2 of this Agreement, or any
other action by the Company which results in a material diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;



               (ii) any failure by the Company to comply with any of the provisions of paragraph 3 of this
Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company promptly after receipt of notice thereof given by the
Executive;



               (iii) the Company’s requiring the Executive to be based at any location other than as provided
in paragraph 2(c) hereof; or



               (iv) any purported termination by the Company of the Executive’s employment otherwise than as
expressly permitted by this Agreement.



          (h) For purposes of this Agreement, “Pro Rata Bonus” shall mean the pro rata portion
(calculated as if the “target” amount under such plan has been reached) under any current annual
bonus plan from January 1 of the year of termination through the date of termination.




     5. Confidential Information.



          Executive acknowledges that the information, observations and data obtained by Executive while
employed by the Company concerning the business or affairs of the Company or any Subsidiary
(“Confidential Information”) are the property of the Company or such Subsidiary. Therefore,
Executive agrees that Executive shall not disclose to any unauthorized person or use for
Executive’s own purposes any Confidential Information without the prior written consent of the
Board, unless and to the extent that the aforementioned matters become generally known to and
available for use by the public other than as a result of Executive’s acts or omissions not within
the ordinary course of business of the Company. Executive shall deliver to the Company at the
termination of the Employment Term or any extension term, or at any other time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes, printouts and software and
other documents and data (and copies thereof) in any form or medium relating to the Confidential
Information, Work Product (as defined below) or the




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business of the Company or any Subsidiary that Executive may then possess or have under Executive’s
control.




     6. Inventions and Patents.



          Executive acknowledges that all inventions, innovations, improvements, developments, methods,
designs, analyses, drawings, reports and all similar or related information (whether or not
patentable) that relate to the Company’s or any of its Subsidiaries’ actual or anticipated
business, research and development or existing or future products or services and that are
conceived, developed or made by Executive while employed by the Company (“Work Product”) belong to
the Company or such Subsidiary. Executive shall promptly disclose such Work Product to the
Company’s Chief Executive Officer or Chairman of the Board and perform all actions reasonably
requested by the Chief Executive Officer or Board, as applicable (whether during or after the
Employment Term or any extension term) to establish and confirm such ownership (including, without
limitation, assignments, consents, powers of attorney and other instruments).




     7. Non-Compete, Non-Solicitation.



          (a) In further consideration of the compensation to be paid to Executive hereunder, Executive
acknowledges that in the course of Executive’s employment with the Company Executive shall become
familiar with the Company’s trade secrets and with other Confidential Information concerning the
Company and its Subsidiaries and that Executive’s services shall be of special, unique and
extraordinary value to the Company and its Subsidiaries. Therefore, Executive agrees that, during
the Employment Term or any extension term and for a period of twelve (12) months thereafter (as
applicable, the “Noncompete Period”), Executive shall not directly or indirectly own any interest
in, manage, control, participate in, consult with, render services for, or in any manner engage in
any business competing with the businesses of the Company or its Subsidiaries, as such businesses
exist or are in process on the date of the termination of Executive’s employment, within any
geographical area in which the Company or its Subsidiaries engage or actively plan to engage in
such businesses. Nothing herein shall prohibit Executive from being a passive owner of not more
than 2% of the outstanding stock of any class of a corporation which is publicly traded, so long as
Executive has no direct or indirect active participation in the business of such corporation.




          (b) During the Noncompete Period, Executive shall not directly or indirectly through another
person or entity (i) induce or attempt to induce any employee of the Company or any Subsidiary to
leave the employ of the Company or such Subsidiary, or in any way interfere with the relationship
between the Company or any Subsidiary and any employee thereof, (ii) hire an employee of the
Company or any Subsidiary, or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee or other business relation of the Company or any Subsidiary to cease doing
business with the Company or such Subsidiary, or in any way interfere with the relationship between
any such customer, supplier, licensee, licensor, franchisee, or business relation and the Company
or any Subsidiary (including, without limitation, making any negative statements or communications
about the Company or its Subsidiaries).




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          (c) The provisions of this paragraph 7 will be enforced to the fullest extent permitted by the
law in the state in which Executive resides or is employed at the time of the enforcement of the
provision. If, at the time of enforcement of this paragraph 7, a court shall hold that the
duration, scope or area restrictions stated herein are unreasonable under circumstances then
existing, the parties agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or area and that the court shall
be allowed to revise the restrictions contained herein to cover the maximum period, scope and area
permitted by law. Executive agrees that the restrictions contained in this paragraph 7 are
reasonable.




          (d) In the event of the breach or a threatened breach by Executive of any of the provisions of
this paragraph 7, the Company, in addition and supplementary to other rights and remedies existing
in its favor, may apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce or prevent any violations of the
provisions hereof (without posting a bond or other security). In addition, in the event of an
alleged breach or violation by Executive of this paragraph 7, the Noncompete Period shall be tolled
until such breach or violation has been duly cured.




     8. Executive’s Representations.



          Executive hereby represents and warrants to the Company that (i) the execution, delivery and
performance of this Agreement by Executive do not and shall not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or decree to which
Executive is a party or by which Executive is bound, (ii) Executive is not a party to or bound by
any employment agreement, noncompete agreement or confidentiality agreement with any other person
or entity and (iii) upon the execution and delivery of this Agreement by the Company, this
Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with
its terms. Executive hereby acknowledges and represents that Executive has had an opportunity to
consult with independent legal counsel regarding Executive’s rights and obligations under this
Agreement and that Executive fully understands the terms and conditions contained herein.




     9. Survival.



          Paragraphs 5, 6 and 7 and paragraphs 9 through 16 shall survive and continue in full force in
accordance with their terms notwithstanding any termination of the Employment Term or any extension
term.




     10. Notices.



          Any notice provided for in this Agreement shall be in writing and shall be either personally
delivered, or mailed by certified first class mail, return receipt requested, to the recipient at
the address below indicated:




          Notices to Executive:




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     Amy Rhoades, at her most recent address as reflected in the employment records of the Company.


Notices to the Company:



130 A.C. Moore Drive

Berlin, NJ 08009

Attention: Chief Executive Officer



or such other address or to the attention of such other person as the recipient party shall have
specified by prior written notice to the sending party. Any notice under this Agreement shall be
deemed to have been given when so delivered or mailed.




     11. Severability.



          Whenever possible, each provision of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.




     12. Complete Agreement.



          This Agreement and Appendix I hereto and those documents expressly referred to herein and
therein, embody the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the parties, written or
oral, which may have related to the subject matter hereof in any way.




     13. No Strict Construction.



          The language used in this Agreement shall be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict construction shall be applied against
any party.




     14. Counterparts.



          This Agreement may be executed in separate counterparts, each of which is deemed to be an
original and all of which taken together constitute one and the same agreement.




     15. Successors and Assigns.



          This Agreement is intended to bind and inure to the benefit of and be enforceable by
Executive, the Company and their respective heirs, successors and assigns, except that Executive
may not assign Executive’s rights or delegate Executive’s obligations hereunder without the prior
written consent of the Company.




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     16. Choice of Law.



          All issues and questions concerning the construction, validity, enforcement and interpretation
of this Agreement and Appendix I hereto shall be governed by, and construed in accordance with, the
laws of the State of New Jersey, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of New Jersey or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New Jersey.




     17. Amendment and Waiver.



          The provisions of this Agreement may be amended or waived only with the prior written consent
of the Company and Executive, and no course of conduct or
failure or delay in enforcing the provisions of this Agreement shall affect the validity,
binding effect or enforceability of this Agreement.




     18. Arbitration Provisions.



          Except as to the right of the Company to resort to any court of competent jurisdiction to
obtain injunctive relief or specific enforcement of the Executive’s obligations of confidentiality,
non-solicitation and non-competition under this Employment Agreement (or otherwise), any dispute or
controversy between the Company and Executive arising out of or relating to Executive’s employment
or termination of employment, this Agreement or the breach of this Agreement, including but not
limited to disputes involving discrimination arising under common law, and/or federal, state and
local laws, shall be settled by arbitration administered by the American Arbitration Association
(“AAA”) in accordance with its National Rules for the Resolution of Employment Disputes then in
effect, and judgment on the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. Any arbitration shall be held before a single arbitrator who shall be
selected by the mutual agreement of the Company and Executive, unless the parties are unable to
agree to an arbitrator, in which case the arbitrator will be selected under the procedures of the
AAA. The arbitrator shall have the authority to award any remedy or relief that a court of
competent jurisdiction could order or grant, including, without limitation, the issuance of an
injunction. Executive agrees to abide by and accept the final decision of the arbitrator as to the
ultimate resolution of any and all covered disputes and understands that arbitration replaces any
right to trial by a judge or jury. However, either party may, without inconsistency with this
arbitration provision, apply to any court otherwise having jurisdiction over such dispute or
controversy and seek interim provisional, injunctive or other equitable relief until the
arbitration award is rendered or the controversy is otherwise resolved. Except as necessary in
court proceedings to enforce this arbitration provision or an award rendered hereunder, or to
obtain interim relief, or as may otherwise be required by law, neither a party nor an arbitrator
may disclose the existence, content or results of any arbitration hereunder without the prior
written consent of the Company and Executive. The Company and Executive acknowledge that this
Agreement evidences a transaction involving interstate commerce. Notwithstanding any choice of law
provision included in this Agreement, the United States Federal Arbitration Act shall govern the
interpretation and enforcement of this arbitration provision. The arbitration proceeding shall be
conducted in Camden County, New Jersey unless




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the parties mutually agree to another location. The Company shall pay the costs of any arbitrator
appointed hereunder.




     19. Withholding.



          The Company may withhold any amounts payable under this Agreement for such Federal, state,
local or foreign taxes as shall be required to be withheld pursuant to any applicable law or
regulation.




     20. Section 409A.



          In the event that an amount becomes payable to the Executive after her termination of
employment, the Company shall determine whether such payment is subject to the requirements of
Section 409A (a) (2)(A)(i) and Section 409A (a)(2)(B)(i) of the Internal Revenue Code of 1986, as
amended (hereinafter referred to as the “Specified Employee Rule”). The Company shall make such
determination and provide written notice thereof to the Executive prior to the earlier of the date
that any such amounts would be paid to the Executive without regard to Code Section 409A or within
30 days after her termination of employment. Upon the request of the Executive, the Company agrees
to promptly provide to her such information that the Executive may reasonably request with regard
to its determination. In the event that the Company determines that an amount payable to the
Executive after her termination of employment is subject to the Specified Employee Rule, then no
distribution of such amount shall be made to the Executive on account of her separation from
service before the date which is six (6) months after the date of her separation from service (or
if earlier, the date of death of the Executive). The aggregate amount that would have been payable
to the Executive but for the restrictions imposed by Section 409A shall be paid to the Executive as
soon as permitted by Section 409A.




* * *




     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.



	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	A.C. MOORE ARTS & CRAFTS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Rick A. Lepley	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Rick A. Lepley	 	 
	 

	 	 	 	Its: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Amy Rhoades	 	 
	 	 	 	 	 
	 	 	Name: Amy Rhoades	 	 







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APPENDIX I




CHANGE OF CONTROL PROVISIONS

To Employment Agreement Of Amy Rhoades




     If a Change of Control (as defined in this Appendix I ) of the Company occurs, paragraphs 1
through 4 of the Agreement (except paragraphs 3(c), 3(d), 3(e) and 3(f) which shall continue) shall
be superseded by this Appendix I.



     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:



     1. Effective Date. 



          For the purpose of this Appendix I, the “Effective Date” shall mean the date on which a Change
of Control (as defined in Section 2 of this Appendix I) occurs. Anything in the Agreement to the
contrary notwithstanding, if a Change of Control occurs and if the Executive’s employment with the
Company is terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment (i) was at the request
of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii)
otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of
the Agreement and this Appendix I, the “Effective Date” shall mean the date immediately prior to
the date of such termination of employment.




     2. Change of Control. For the purpose of this Agreement, a “Change of Control” shall
mean:



          (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
more than 50% of either (i) the then-outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (ii) the combined voting power of the then-outstanding
voting securities of the Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection
(a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or




          (b) Individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office occurs as a result of an
actual or threatened




 









 








election contest with respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Board; or



          (c) Consummation of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company (a “Business Combination”), in each case,
unless, following such Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common
stock and the combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business Combination, or the combined voting power of
the then-outstanding voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or




          (d) Approval by the shareholders of the Company of a complete liquidation or dissolution of
the Company.




     3. Employment Term. The Company hereby agrees to continue the Executive in its employ,
and the Executive hereby agrees to remain in the employ of the Company subject to the terms and
conditions of this Agreement, for the period commencing on the Effective Date and ending on the
twelfth month anniversary of such date (the “Employment Term”). Such period may be extended in
writing by the mutual agreement of the Company and Executive at any time prior to such anniversary.



     4. Terms of Employment.



          (a) Position and Duties.




               (i) During the Employment Term, (A) the Executive’s position, authority, duties and
responsibilities shall be at least commensurate in all material respects with the most significant
of those held, exercised and assigned to her at any time during the 120-day period immediately
preceding the Effective Date and (B) the Executive’s services shall be performed at the location
where the Executive was employed immediately preceding the Effective Date or any office or location
less than 35 miles from such location.



 









 





               (ii) During the Employment Term, and excluding any periods of vacation and sick leave to which
the Executive is entitled, the Executive agrees to devote Executive’s best efforts and Executive’s
full business time and attention to the business and affairs of the Company and its Subsidiaries.
During the Employment Term it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions, and (C) manage personal investments, so
long as such activities do not significantly interfere with the performance of the Executive’s
responsibilities as an employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive’s responsibilities to the
Company.



          (b) Compensation.




               (i) Base Salary. During the Employment Term, the Executive shall receive an annual
base salary (“Annual Base Salary”), which shall be paid at a monthly rate, at least equal to twelve
times the highest monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the Effective Date occurs. During the
Employment Term, the Annual Base Salary shall be reviewed no more than 12 months after the last
salary increase awarded to the Executive prior to the Effective Date and thereafter at least
annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any
such increase and the term Annual Base Salary as utilized in this Agreement shall refer to Annual
Base Salary as so increased. As used in this Appendix I, the term “affiliated companies” shall
include any company controlled by, controlling or under common control with the Company.



               (ii) Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded,
for each calendar year ending during the Employment Term, an annual bonus (the “Annual Bonus”) in
cash at least equal to the Executive’s bonus under the Company’s annual bonus plans or any
comparable bonus under any predecessor or successor plan or plans, for the last full calendar year
prior to the Effective Date (annualized in the event that the Executive was not employed by the
Company for
the whole of such calendar year). Each such Annual Bonus shall be paid no later than March
15th of the calendar year next following the calendar year for which the Annual Bonus is
awarded.



     5. Termination of Employment. 



          (a) Death or Disability. The Executive’s employment shall terminate automatically upon
the Executive’s death during the Employment Term. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Term (pursuant to the definition of
Disability set forth below), it may give to the Executive written notice in accordance with the
Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s
employment with the Company shall




 









 








terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability
Effective Date”), provided that, within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive’s duties. For purposes of this Agreement,
“Disability” shall mean the absence of the Executive from the Executive’s duties with the Company
on a full-time basis for 90 consecutive days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive’s legal representative.



          (b) Cause. The Company may terminate the Executive’s employment during the Employment
Term for Cause. For purposes of this Agreement, “Cause” shall mean:




               (i) the failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Chief Executive Officer which specifically
identifies the manner in which the Chief Executive Officer believes that the Executive has not
substantially performed the Executive’s duties; provided however, that Executive shall have one
opportunity to cure the failure so identified for sixty days from the written demand, or



               (ii) the engaging by the Executive in illegal conduct or gross misconduct in violation of the
Company’s Code of Ethics and Conflict of Interest Policy.



Any act, or failure to act, based upon authority given pursuant to a resolution duty adopted by the
Board or upon the instructions of the Chief Executive Officer or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive
in good faith and in the best interests of the Company. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until there shall have been delivered to
the Executive a written notice from the Chief Executive Officer, a copy of which notice has been
previously delivered to the Board of Directors, finding that, in the good faith opinion of the
Chief Executive
Officer, the Executive is guilty of the conduct described in subsection 5(b)(i) or (ii) above, and
specifying the particulars thereof in detail.



          (c) Good Reason. The Executive’s employment may be terminated by the Executive for
Good Reason. For purposes of this Agreement, “Good Reason” shall mean:




               (i) the assignment to the Executive of any duties inconsistent in any respect with the
Executive’s position, authority, duties or responsibilities as contemplated by Section 4(a) of this
Appendix I, or any other action by the Company which results in a material diminution in such
position, authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;



               (ii) any failure by the Company to comply with any of the provisions of Section 4(b) of this
Appendix I, other than an isolated, insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company promptly after receipt of notice thereof given by the
Executive;



 









 






               (iii) the Company’s requiring the Executive to be based at any office or location other than
as provided in Section 4(a)(i)(B) of this Appendix I;



               (iv) any purported termination by the Company of the Executive’s employment otherwise than as
expressly permitted by this Appendix I; or



               (v) any failure by the Company to 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 Company to assume expressly and agree to perform the Agreement (including without
limitation this Appendix I) in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.



          (d) Date of Termination. “Date of Termination” means (i) if the Executive’s employment
is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of
the notice of termination, (ii) if the Executive’s employment is terminated by the Company other
than for Cause or Disability, the date on which the Company notifies the Executive of such
termination and (iii) if the Executive’s employment is terminated by reason of death or Disability,
the date of death of the Executive or the Disability Effective Date, as the case may be.




     6. Obligations of the Company upon Termination. 



          (a) Good
Reason; Other Than for Cause, Death or Disability. If, during the Employment Term,
the Company shall terminate the Executive’s employment
other than for Cause, death or Disability or the Executive shall terminate Executive’s
employment for Good Reason:




               (i) the Company shall pay to the Executive in a single lump sum payment in cash within 30 days
after the Date of Termination the aggregate of the following amounts:



                    (A) the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to the
extent not theretofore paid, plus (2) the product of (I) the target Annual Bonus paid or payable,
for the most recently completed calendar year during the Employment Term and (II) a fraction, the
numerator of which is the number of days in the current calendar year through the Date of
Termination, and the denominator of which is 365, plus (3) any compensation previously deferred by
the Executive and not theretofore previously paid shall be paid in accordance with the terms of the
plan pursuant to which deferral was made, plus (4) an amount equal to the Executive’s Annual Base
Salary through the twelfth month anniversary of the Date of Termination.



               (ii) The Company shall provide all benefits as are, from time to time, maintained for officers
of the Company, including without limitation, medical and other insurance plans to the Executive
through the twelfth month anniversary of the Date of Termination of Executive’s employment pursuant
to or, if not pursuant to, which are substantially equal to the Company’s insurance programs in
effect and to the extent Executive participated immediately prior to the date of such termination,
provided that if the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) applies to the
provision of health insurance benefits for



 









 





any part of the period of benefit continuation provided for by this paragraph, Executive will make
all necessary elections and such benefits will run concurrently with and satisfy the continuation
coverage requirements of this paragraph for the period to which COBRA applies.



               (iii) all options to purchase common stock in the Company previously granted to Executive and
all options to purchase common stock in the Company to which Executive would be entitled to be
granted on the last day of the calendar year if Date of Termination had not occurred in such year,
shall immediately be deemed granted, vested and become exercisable on the Date of Termination.



No payment of any sum nor the receipt of any benefit shall be due to Executive under this Section
6(a) unless and until Executive shall have executed and delivered to the Company a release of any
and all claims against the Company and its Subsidiaries (and their respective present and former
officers, directors, employees and agents – collectively the “Released Parties”) and a covenant not
to sue the Released Parties, all in form and substance as provided by counsel to the Company (the
“Release”) and any waiting period or revocation period provided by law for the effectiveness of
such Release shall have expired without Executive’s having revoked such Release. In the event
Executive shall decline or fail for any reason to execute and deliver such Release, the
Executive shall be entitled to receive only those amounts provided pursuant to Section 6(d)
provided for an Executive whose employment is terminated by the Company for Cause or by Executive
without Good Reason.



          (b) Death. If the Executive’s employment is terminated by reason of the Executive’s
death during the Employment Term, this Agreement shall terminate without further obligations to the
Executive’s legal representatives under this Agreement, except that Executive, or Executive’s
estate if applicable, shall be entitled to receive the sum of (i) Executive’s Annual Base Salary
through the Date of Termination and (ii) Executive’s Pro Rata Bonus (as defined below) and the
timely payment or provision of any other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive under any plan, program, policy or practice or contract
or agreement of the Company and its affiliated companies. The amounts set forth in Section 6(b)(i)
and (ii) shall be paid to the Executive’s estate, as applicable, in a lump sum in cash within 30
days of the Date of Termination. For purposes of this Appendix I, “Pro Rata Bonus” shall mean the
pro rata portion (calculated as if the “target” amount under such plan has been reached) under any
current annual bonus plan from the beginning of the year of termination through the date of
termination.




          (c) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Term, this Agreement shall terminate without further
obligations to the Executive, except that Executive shall be entitled to receive the sum of (i)
Executive’s Annual Base Salary through the Disability Effective Date and (ii) Executive’s Pro Rata
Bonus (as defined in Section 6(b)) and the timely payment or provision of disability and other
benefits required to be paid or provided or which the Executive is eligible to receive under any
plan, program, practices and policies relating to disability of the Company and its affiliated
companies.




          (d) Cause; Other than for Good Reason. If the Executive’s employment shall be
terminated for Cause or Executive voluntarily terminates employment without Good Reason




 









 








during the Employment Term, this Agreement shall terminate without further obligations to the
Executive other than for the Executive’s Annual Base Salary through the Date of Termination and
timely payment or provision of other benefits , in each case to the extent theretofore unpaid.



     7. Nonexclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive’s continuing or future participation in any plan, program, policy
or practice provided by the Company or any of its affiliated companies and amounts
which are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the date of termination
of employment shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this Agreement.