|
Exhibit 10.1
THIS EMPLOYMENT AGREEMENT is effective as of the 31st day
of December, 2008 (the "Effective Date") by and between Trans World
Entertainment Corporation, a New York corporation (the "Company"),
and Robert J. Higgins ("Higgins").
Background
WHEREAS, Higgins and the Company executed an employment
agreement effective as of May 1, 2003, which expired on April 30,
2008 (the "2003 Employment Agreement"); and
WHEREAS, the Company desires to revise and extend the terms
of the 2003 Employment Agreement to assure the Company of Higgins'
continued services in a leadership capacity and to compensate him
therefor; and
WHEREAS, Higgins is willing to commit to continue serving
the Company on the terms and conditions provided in this
Agreement.
NOW THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and intending to
be legally bound hereby, the parties agree as follows:
SECTION 1. CAPACITY AND DUTIES
1.1 Employment. The Company hereby employs Higgins
and Higgins hereby accepts employment by the Company upon the terms
and conditions hereinafter set forth for a term commencing on the
date hereof and expiring on the third anniversary of the Effective
Date (unless Higgins' service is sooner terminated as set forth
below) (the "Contract Period"). The initial three-year term of this
Employment Agreement is subject to automatic one year extensions
starting on the second anniversary of the Effective Date and on
each subsequent anniversary date, unless, at least 30 days before
any such anniversary date, Executive or the Company cancels the
automatic extension by giving written notice to the other party of
its election to cancel such extension, in which case the term of
Executive’s employment hereunder shall terminate one year
following such anniversary date.
1.2 Capacity and Duties.
1.2.1 Higgins shall be employed by the Company
as its Chief Executive Officer and shall have the executive
authority, consistent with such position, as may from time to time
be specified by the Board of Directors of the Company or any duly
authorized committee thereof (the "Board").
1.2.2 Higgins shall devote his full working
time, energy, skill and best efforts to the performance of his
duties hereunder, in a manner that will faithfully and diligently
serve the business and interest of the Company and its affiliates
(as defined below),
1
provided that Higgins may devote
such time as is reasonably required for charitable and other
personal activities in accordance with the Company's practices and
policies.
1.2.3 For the purposes of this Agreement, an "affiliate" of
the Company means any person or entity that controls the Company,
is controlled by the Company, or which is under common control with
the Company. For the purposes of this definition of "affiliate",
"control" means the power to direct the management and policies of
a person or entity, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" shall have correlative
meanings; provided that any person or entity who owns beneficially,
either directly or though one or more intermediaries, more than 20%
of the ownership interests in a specified entity shall be presumed
to control such entity for the purposes of this
Agreement.
SECTION 2. COMPENSATION
2.1 Base Compensation. As compensation for Higgins'
services hereunder, the Company shall pay Higgins a base salary at
the annual rate of $1,000,000. This base salary shall be payable in
installments in accordance with the Company's regular payroll
practices in effect from time to time. The annual base salary of
Higgins shall not be decreased at any time during the Contract
Period from the amount then in effect, unless Higgins otherwise
agrees in writing. Participation in deferred compensation,
discretionary bonus, retirement and other employee benefit plans
and in fringe benefits shall not reduce the annual base salary
payable to Higgins under this Section 2.1.
2.2 Benefits.
2.2.1 During the Contract Period, Higgins (and
his covered dependents, if applicable) shall be entitled to
participate in all incentive, savings, retirement, welfare and
other employee benefit plans, practices, policies and programs that
the Company may provide for the benefit of its executive employees
generally (together with the fringe benefits described below,
"Employee Benefits"). Higgins shall also be entitled to participate
in any other fringe benefits which may be or become applicable to
the Company's executive employees, including the payment of
reasonable expenses for attending annual and periodic meetings of
trade associations and any other benefits that are commensurate
with the duties and responsibilities to be performed by Higgins
under this Agreement.
2.2.2 If Higgins becomes a participant in any
employee benefit plan, practice or policy of the Company or its
affiliates, Higgins shall be given credit under such plan for all
service in the employ of the Company and any predecessors thereto
or affiliates thereof prior to the date hereof, for purposes of
eligibility and vesting, benefit accrual and for all other purposes
for which such service is either taken into account or recognized
under the terms as such plan, practice or policy.
2
2.2.3 The Company shall pay or reimburse Higgins
for all reasonable expenses (including expenses of travel and
accommodations) incurred or paid by Higgins in connection with the
performance of Higgins' duties hereunder upon receipt of itemized
vouchers therefor and such other supporting information as the
Company shall reasonably require.
2.2.4 During the Contract Period, the Company
shall continue to provide Higgins with an automobile for use by
Higgins consistent with past practices and shall continue to pay or
reimburse Higgins for expenses he reasonable incurs for the
maintenance and operation of such automobile upon receipt of
itemized vouchers therefor and such other supporting information as
the Company shall reasonably require.
2.2.5 During the Contract Period, Higgins shall
be entitled to paid vacations in a manner commensurate with
Higgins' status as the Chief Executive Officer of the Company,
which shall not be less than the annual vacation period which
Higgins is presently entitled.
2.3 Executive Bonus Plan. The Company maintains the
Executive Bonus Plan (the "EBP") to provide performance-based
incentive compensation to Higgins and certain other executives of
the Company. During the Contract Period, Higgins shall be eligible
to earn an annual performance bonus of 0 to 200% of his annual base
salary in effect for that year ("incentive compensation"),
calculated in such fashion and based on the achievement of certain
performance criteria as are approved by the Board or the
Compensation Committee prior to the beginning of such year under
the EBP.
2.4 Insurance. During each calendar year of the
Contract Period (beginning with calendar year 2009), the Company
shall pay or advance for life insurance protection for
Higgins’ designated beneficiary, under an arrangement
selected by Higgins, an amount equal to $150,000.
2.5 Additional Compensation. The Board, although
under no obligation to do so, may determine from time to time to
pay to Higgins compensation in addition to the annual base salary
and incentive compensation required to be paid above. The Board may
grant Higgins options to purchase shares of common stock of the
Company ("Common Stock"), may issue him restricted Common Stock or
may award him stock appreciation rights. In addition to the
foregoing, pursuant to the provisions of the 2005 Long Term
Incentive Plan (the "Plan"), upon effectiveness of this Agreement,
the Employee will be awarded Restricted Share Units, the Common
Stock subject to which will have a fair market value on the date of
grant equal to $1,100,000 (the "Restricted Share Units"), subject
to the terms and conditions of the Plan and those set forth in the
Restricted Stock Unit Agreement.
3
SECTION 3. TERMINATION OF
EMPLOYMENT
3.1 Death or Disability of Higgins.
3.1.1 Higgins' employment hereunder shall
immediately terminate upon his death, upon which the Company shall
pay earned but unpaid base salary through the date of death,
reimbursement for expenses incurred prior to the date of death in
accordance with the Company’s expense reimbursement policy,
payment for accrued but unused vacation time in accordance with
Company policy, and annual bonus for the fiscal year of death in an
amount determined by the Compensation Committee of the Board of
Directors based on the achievement of the performance goals under
the annual bonus plan applicable to Higgins for the entire fiscal
year but prorated based upon the number of days in the fiscal year
through the date of death. The annual bonus amount shall be paid on
the date bonuses for the fiscal year are paid to other executives
but in all events on a date that is after the end of the fiscal
year and within four months after the end of the fiscal year, and
the other amounts payable under this Section 3.1.1 (other than
expense reimbursements, which shall be paid in accordance with the
applicable Company policy) shall be paid within thirty (30) days
after Higgins’ death.
3.1.2 If Higgins, in the reasonable opinion of
the Company, is Disabled (as defined below), the Company shall have
the right to terminate Higgins' employment upon 30 days prior
written notice to Higgins at any time after the expiration of the
180 day period referred to below, in which event the Company shall
pay Higgins (v) earned but unpaid base salary through the date of
termination in accordance with normal payroll practices, (w)
reimbursement for expenses incurred prior to the date of
termination in accordance with the Company’s expense
reimbursement policy, (x) payment for accrued but unused vacation
time in accordance with Company policy, such payment to be made
within thirty (30) days after Higgins’ termination of
employment, (y) annual bonus for the fiscal year of termination in
an amount determined by the Compensation Committee of the Board of
Directors based on the achievement of the performance goals under
the annual bonus plan applicable to Higgins for the entire fiscal
year but prorated based upon the number of days in the fiscal year
through the date of termination, and (z) an amount equal to two (2)
times his base salary for the period from the date of termination
until six months following the date of such termination (half of
which represents his bonus for such period at target), such
aggregate amount to be paid, subject to Section 5.1.1 below, in
equal installments over such period in accordance with the regular
payroll practices of the Company. The annual bonus amount set forth
in clause (y) above shall be paid on the date bonuses for the
fiscal year are paid to other executives but in all events on a
date that is after the end of the fiscal year and within four
months after the end of the fiscal year. As used in this Agreement,
the term "Disabled" or "Disability" shall mean the inability of
Higgins to perform substantially Higgins' duties and
responsibilities to the Company by reason of a physical or mental
disability or infirmity for a continuous period of at least 180
days. The date of Disability shall be on the last day of such 180
day period. The determination of whether the Disability has
occurred shall be made by a licensed physician chosen by the
Board.
4
3.2 [RESERVED]
3.3 Date of Termination.
3.3.1 Except as otherwise provided in this
Agreement, the employment of Higgins hereunder shall terminate upon
the earliest to occur of the dates specified below:
3.3.1.1 the end of the Contract
Period;
3.3.1.2 the close of business on the date of
Higgins' death;
3.3.1.3 the close of business on the date on
which the Company delivers to Higgins a written notice of the
Company's election to terminate Higgins' employment for "Cause" (as
defined below);
3.3.1.4 the close of business on the date which
is 30 days after the date on which the Company delivers to Higgins
a written notice of the Company's election to terminate Higgins'
employment because of Disability;
3.3.1.5 the close of business on the date on
which Higgins delivers to the Company a notice of his election to
terminate his employment for "Good Reason" (as defined below),
which may not occur prior to the expiration of the Company’s
cure period set forth below; or
3.3.1.6 the close of business on the date on
which the Company delivers to Higgins a written notice that the
Board has adopted a resolution terminating the Higgins' employment
and such termination is not for death, Cause or
Disability.
3.3.2 Any purported termination by the Company
or by Higgins shall be communicated by written Notice of
Termination to the other. For the purposes of this Agreement, a
"Notice of Termination" shall mean a notice which indicates the
specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Higgins' employment
under the provision so indicated. No such purported termination
shall be effective without delivery of such Notice of Termination.
Termination of employment will not cause a termination of this
Agreement, the terms of which shall survive any termination of
employment in accordance with the express terms hereof.
3.4 Termination for Cause.
3.4.1 In the event Higgins' employment is
terminated (i) by the Company for Cause, or (ii) by Higgins for any
reason other than Good Reason, the Company's remaining obligations
under this Agreement shall terminate as of the date provided in
Section 3.3.
3.4.2 For the purposes of this Agreement, the
term "Cause" shall mean:
5
3.4.2.1 fraud, theft, misappropriation or
embezzlement of the Company's funds;
3.4.2.2 conviction of (i) any felony, or any
crime involving fraud or misrepresentation, or (ii) of any other
crime (whether or not connected with his employment) the effect of
which is likely to adversely affect the Company, except, in the
case of clause (ii) only, if Higgins' actions which result in such
a conviction were taken in good faith and in a manner Higgins
reasonably believed not to be adverse to the interests of the
Company;
3.4.2.3 after a written demand for substantial
performance to Higgins from the Board (mailing of such written
demand having been authorized by a least 60% of the independent
(within the meaning of the NASDAQ Stock Market Rules) directors
then in office) which specifically identifies the manner in which
the Board believes that Higgins has intentionally materially
breached Higgins' duties and provides Higgins with a 30 day period
in which to cure such breach, the willful and continuing
intentional material breach by Higgins and failure substantially to
perform Higgins' duties with the Company (other than any such
failure resulting from Disability); or
3.4.2.4 abuse of alcohol or other drugs which
interferes with the performance by Higgins of his duties, provided
that Higgins has been given 30 days notice
| 
