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 Agreementreplaces and supersedes any and all prior discussions, offers, communications or agreements of anysort whatsoever, existing between the Company and Executive, of whatsoever nature.     NOW THEREFORE,     In consideration of the mutual covenants contained herein and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, the parties heretoagree as follows:     1. Employment.          (a) The Company shall employ Executive, and Executive hereby accepts employment with theCompany, upon the terms and conditions set forth in this Agreement for the period beginning on July24, 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 bestinterests of the Company and its shareholders to assure that the Company will have the continueddedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change ofControl (as defined in Appendix I to this Agreement) of the Company. The Board believes it isimperative to diminish the inevitable distraction of the Executive by virtue of the personaluncertainties and risks created by a pending or threatened Change of Control and to encourage theExecutive’s full attention and dedication to the Company currently and in the event of anythreatened or pending Change of Control, and to provide the Executive with compensation andbenefits arrangements upon a Change of Control which ensure that the compensation and benefitsexpectations of the Executive will be satisfied and which are competitive with those of othercorporations. 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1 through 4 of this Agreement (except paragraphs 3(c), 3(d), 3(e) and 3(f) which shallcontinue) shall be superseded by Appendix I.     2. Position and Duties.          (a) During the Employment Term, Executive shall serve as Vice President and General Counsel ofthe Company. Executive shall report directly to the Chief Executive Officer of the Company andshall have such duties and responsibilities as is customary for general counsel for companies oflike size and type.          (b) Executive shall devote Executive’s best efforts and Executive’s full business time andattention (except for permitted vacation periods and reasonableperiods of illness or other incapacity) to the business and affairs of the Company and itsSubsidiaries (as defined below); provided that Executive shall, with the prior written approval ofthe 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 notcompeting with the Company or any of its Subsidiaries so long as such duties do not materiallyinterfere 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 ofExecutive’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 andresponsibilities under this Agreement.          (d) For purposes of this Agreement, “Subsidiaries” shall mean any entity of which thesecurities having a majority of the voting power in electing directors or managers are, at the timeof 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 tothe following compensation and benefits during the Employment Term:          (a) Initially, Executive’s base salary shall be $175,200 per year (the “Base Salary”), whichsalary shall be payable in regular installments in accordance with the Company’s general payrollpractices. Executive’s Base Salary shall be reviewed at least annually by the CompensationCommittee of the Board and shall be subject to increase, as it shall determine based on among otherthings, market practice and performance.          (b) During each calendar year of the Company in which Executive continues to be employed bythe Company pursuant to this Agreement, Executive shall be entitled to participate in the Company’sannual 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 situatedofficers of the Company.          (c) Executive shall be entitled to paid vacation in accordance with the Company’s generalpayroll practices for officers of the Company.          (d) The Company shall reimburse Executive for all reasonable expenses incurred by Executive inthe course of performing Executive’s duties under this Agreement which are consistent with theCompany’s policies in effect from time to time with respect to travel, entertainment and otherbusiness expenses, subject to the Company’s requirements with respect to reporting anddocumentation of such expenses.          (e) Executive will be entitled to all benefits as are, from time to time, maintained forofficers of the Company, including without limitation: medical and other insurance plans, andretirement benefits.          (f) Pursuant and subject to the terms and conditions of the Company’s 2002 Stock Option Planor any successor plan:
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               (1) On July 24, 2006, upon the approval of the Board of Directors, Executive shall be granteda non-qualified option to purchase 12,500 shares of common stock of the Company (the “InitialOption”).               (2) For each calendar year after December 31, 2006 that Executive continues to be employed bythe Company pursuant to this Agreement, on the day of each such calendar year that the Boardotherwise grants options to management of the Company, Executive shall be granted a non-qualifiedoption to purchase shares of common stock of the Company (each an “Annual Option”). The number ofshares of the Company’s common stock subject to each Annual Option shall be a number not lower thanthe 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 OptionAgreement pursuant to the 2002 Stock Option Plan.               (3) In the event that the Company adopts a new equity compensation plan or program, Executiveshall be entitled to receive grants of stock options, restricted stock or other equity relatedawards pursuant to such new plan or program, subject to the terms and conditions thereof, atamounts 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) monthanniversary of such date; provided that (i) the Employment Term shall be extended for successiveperiods of one (1) year each (each of which is referred to as an “extension term” of the EmploymentTerm) in the event that written notice of termination hereof is not given by one party hereof tothe other at least sixty (60) days prior to the end of the Employment Term or the then applicableextension term, as the case may be; provided further that, and notwithstanding anything to thecontrary in this Agreement, (ii) the Employment Term or the then applicable extension term shallterminate prior to such date (A) upon Executive’s death or permanent disability or incapacity (asdetermined by the Board in its good faith judgment), (B) upon the mutual agreement of the Companyand Executive, (C) by the Company’s termination of this Agreement for Cause (as defined below) orwithout Cause or (D) by Executive’s termination of this Agreement for Good Reason (as definedbelow) or without Good Reason.          (b) If the Employment Term or any extension term is terminated by the Company without Cause oris terminated by the Executive for Good Reason, Executive (and Executive’s family with respect toclause (iii) of this paragraph 4(b)) shall be entitled to receive (i) Executive’s Base Salarythrough the twelfth month anniversary of such termination and Executive’s Pro Rata Bonus (asdefined in paragraph (h) below), if and only if Executive has not breached the provisions ofparagraphs 5, 6 and 7 hereof, and (ii) vested and earned (in accordance with the Company’sapplicable plan or program) but unpaid amounts under incentive plans, health and welfare plans, andother employer programs (other than deferred compensation plans the payments under which shall bedetermined in the plan of reference) of the Company in which Executive is then participating (otherthan 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 ofeach month during the said twelve month period. No payment of any sum nor the receipt of anybenefit shall be due to Executive under this paragraph 4(b) unless and until Executive shall haveexecuted and delivered to the Company a release of any and all claims against the Company and itsSubsidiaries (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 formand substance as provided by counsel to the Company (the “Release”) and any waiting period orrevocation period provided by law for the effectiveness of such Release shall have expired withoutExecutive’s having revoked such Release. In the event Executive shall decline or fail for anyreason to execute and deliver such Release, the Executive shall be entitled to receive only thoseamounts provided pursuant to paragraph 4(c) provided for an Executive whose employment isterminated 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 bythe Executive without Good Reason, Executive shall be entitled to receive (i) Executive’s BaseSalary through the date of such termination and (ii) vested and earned (in accordance with theCompany’s applicable plan or program) but unpaid amounts under health plans of the Company whichExecutive participates; provided, however, that Executive shall not be entitled to payment of a ProRata Bonus.          (d) If the Employment Term or any extension term is terminated upon Executive’s death orpermanent 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 unpaidamounts under incentive plans, health and welfare plans, and other employer programs (other thandeferred 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 withthe Company’s normal payment policies.          (e) Except as otherwise provided herein, fringe benefits and bonuses (if any) which accrue orbecome payable after the termination of the Employment Term or any extension term shall cease uponsuch termination.          (f) For purposes of this Agreement, “Cause” shall mean:               (i) the failure of the Executive to perform substantially theExecutive’s duties with the Company or one of its affiliates (other than any such failure resultingfrom incapacity due to physical or mental illness), after a written demand for substantialperformance is delivered to the Executive by the Chief Executive Officer which specificallyidentifies the manner in which the Chief Executive Officer believes that the Executive has notsubstantially performed the Executive’s duties; provided however, that Executive shall have oneopportunity 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 theCompany’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 theBoard or upon the instructions of the Chief Executive Officer or based upon the advice of counselfor the Company shall be conclusively presumed to be done, or omitted to be done, by the Executivein good faith and in the best interests of the Company. The cessation of employment of theExecutive shall not be deemed to be for Cause unless and until there shall have been delivered tothe Executive a written notice from the Chief Executive Officer, a copy of which notice has beenpreviously delivered to the Board of Directors, finding that, in the good faith opinion of theChief 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 anyother 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 inadvertentaction not taken in bad faith and which is remedied by the Company promptly after receipt of noticethereof given by the Executive;               (ii) any failure by the Company to comply with any of the provisions of paragraph 3 of thisAgreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faithand which is remedied by the Company promptly after receipt of notice thereof given by theExecutive;               (iii) the Company’s requiring the Executive to be based at any location other than as providedin paragraph 2(c) hereof; or               (iv) any purported termination by the Company of the Executive’s employment otherwise than asexpressly 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 annualbonus 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 whileemployed 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 forExecutive’s own purposes any Confidential Information without the prior written consent of theBoard, unless and to the extent that the aforementioned matters become generally known to andavailable for use by the public other than as a result of Executive’s acts or omissions not withinthe ordinary course of business of the Company. Executive shall deliver to the Company at thetermination of the Employment Term or any extension term, or at any other time the Company mayrequest, all memoranda, notes, plans, records, reports, computer tapes, printouts and software andother documents and data (and copies thereof) in any form or medium relating to the ConfidentialInformation, 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’scontrol.     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 notpatentable) that relate to the Company’s or any of its Subsidiaries’ actual or anticipatedbusiness, research and development or existing or future products or services and that areconceived, developed or made by Executive while employed by the Company (“Work Product”) belong tothe Company or such Subsidiary. Executive shall promptly disclose such Work Product to theCompany’s Chief Executive Officer or Chairman of the Board and perform all actions reasonablyrequested by the Chief Executive Officer or Board, as applicable (whether during or after theEmployment Term or any extension term) to establish and confirm such ownership (including, withoutlimitation, 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, Executiveacknowledges that in the course of Executive’s employment with the Company Executive shall becomefamiliar with the Company’s trade secrets and with other Confidential Information concerning theCompany and its Subsidiaries and that Executive’s services shall be of special, unique andextraordinary value to the Company and its Subsidiaries. Therefore, Executive agrees that, duringthe Employment Term or any extension term and for a period of twelve (12) months thereafter (asapplicable, the “Noncompete Period”), Executive shall not directly or indirectly own any interestin, manage, control, participate in, consult with, render services for, or in any manner engage inany business competing with the businesses of the Company or its Subsidiaries, as such businessesexist or are in process on the date of the termination of Executive’s employment, within anygeographical area in which the Company or its Subsidiaries engage or actively plan to engage insuch businesses. Nothing herein shall prohibit Executive from being a passive owner of not morethan 2% of the outstanding stock of any class of a corporation which is publicly traded, so long asExecutive 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 anotherperson or entity (i) induce or attempt to induce any employee of the Company or any Subsidiary toleave the employ of the Company or such Subsidiary, or in any way interfere with the relationshipbetween the Company or any Subsidiary and any employee thereof, (ii) hire an employee of theCompany 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 doingbusiness with the Company or such Subsidiary, or in any way interfere with the relationship betweenany such customer, supplier, licensee, licensor, franchisee, or business relation and the Companyor any Subsidiary (including, without limitation, making any negative statements or communicationsabout 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 thelaw in the state in which Executive resides or is employed at the time of the enforcement of theprovision. If, at the time of enforcement of this paragraph 7, a court shall hold that theduration, scope or area restrictions stated herein are unreasonable under circumstances thenexisting, the parties agree that the maximum duration, scope or area reasonable under suchcircumstances shall be substituted for the stated duration, scope or area and that the court shallbe allowed to revise the restrictions contained herein to cover the maximum period, scope and areapermitted by law. Executive agrees that the restrictions contained in this paragraph 7 arereasonable.          (d) In the event of the breach or a threatened breach by Executive of any of the provisions ofthis paragraph 7, the Company, in addition and supplementary to other rights and remedies existingin its favor, may apply to any court of law or equity of competent jurisdiction for specificperformance and/or injunctive or other relief in order to enforce or prevent any violations of theprovisions hereof (without posting a bond or other security). In addition, in the event of analleged breach or violation by Executive of this paragraph 7, the Noncompete Period shall be tolleduntil 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 andperformance of this Agreement by Executive do not and shall not conflict with, breach, violate orcause a default under any contract, agreement, instrument, order, judgment or decree to whichExecutive is a party or by which Executive is bound, (ii) Executive is not a party to or bound byany employment agreement, noncompete agreement or confidentiality agreement with any other personor entity and (iii) upon the execution and delivery of this Agreement by the Company, thisAgreement shall be the valid and binding obligation of Executive, enforceable in accordance withits terms. Executive hereby acknowledges and represents that Executive has had an opportunity toconsult with independent legal counsel regarding Executive’s rights and obligations under thisAgreement 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 inaccordance with their terms notwithstanding any termination of the Employment Term or any extensionterm.     10. Notices.          Any notice provided for in this Agreement shall be in writing and shall be either personallydelivered, or mailed by certified first class mail, return receipt requested, to the recipient atthe 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