EXECUTIVE AGREEMENT (WILLIAM E. MAY)

 

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                                                                   EXHIBIT 10.29

 

                               EXECUTIVE AGREEMENT

                                (WILLIAM E. MAY)

 

         THIS IS AN AGREEMENT between TOO, INC., a Delaware corporation (the

"Corporation"), with its principal office located at 8323 Walton Parkway, New

Albany, Ohio 43054, and WILLIAM E. MAY (the "Executive"), effective as of

February 23, 2004.

 

                                    RECITALS:

 

         The Corporation considers the establishment and maintenance of a sound

and vital management to be part of its overall corporate strategy and essential

in protecting and enhancing the interests of the Corporation and its

shareholders. As part of this corporate strategy, the Corporation wishes to act

to retain its well-qualified executive officers notwithstanding any actual or

threatened change in control of the Corporation.

 

         The Executive is a key executive officer of the Corporation and the

Executive's services, experience and knowledge of the affairs of the

Corporation, and reputation and contacts in the industry are extremely valuable

to the Corporation. The Executive's continued dedication, availability, advice,

and counsel to the Corporation are deemed important to the Corporation, its

Board of Directors (the "Board"), and its shareholders. It is, therefore, in the

best interests of the Corporation to secure the continued services of the

Executive notwithstanding any actual or threatened change in control of the

Corporation. Accordingly, the Board has approved this Agreement with the

Executive and authorized its execution and delivery on behalf of the

Corporation.

 

                                   AGREEMENT:

 

         1.        TERM OF AGREEMENT. This Agreement will begin on the date

entered above and will irrevocably continue in effect for a three-year period

through February 23, 2007. On February 23, 2005, and on the anniversary date of

each year thereafter (a "Renewal Date"), the term of this Agreement will be

extended automatically for a period of one (1) year unless, not later than

thirty (30) days prior to such Renewal Date, the Corporation gives written

notice to the Executive that it has elected not to extend this Agreement, in

which situation this Agreement shall terminate at the end of the three-year term

then in progress. Notwithstanding the above, if a "Change in Control" (as

defined herein) of the Corporation occurs during the term of this Agreement, the

term of this Agreement will be for twenty-four (24) months beyond the end of the

month in which any such Change in Control occurs.

 

         2.        DEFINITIONS. The following defined terms shall have the

meanings set forth below, for purposes of this Agreement:

 

                  (a)       ANNUAL AWARD. "Annual Award" means the cash payment

         paid or payable to the Executive with respect to a fiscal year under

         the Corporation's Incentive Compensation Performance Plan.

 

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                  (b)       BASE ANNUAL SALARY. "Base Annual Salary" means the

         greater of (1) the highest annual rate of base salary in effect for the

         Executive during the twelve (12) month period immediately prior to a

         Change in Control, or (2) the annual rate of base salary in effect at

         the time a Notice of Termination is given (or on the date employment is

         terminated if no Notice of Termination is required).

 

                  (c)       CAUSE. "Cause" means any of the following:

 

                           (1)       The Executive shall have (a) been convicted

                  of a felony, or (b) committed an act of intentional gross

                  misconduct, fraud, or gross neglect in connection with the

                  Executive's duties or in the course of the Executive's

                  employment with the Corporation or any Subsidiary, and the

                  Board shall have determined that such act is materially

                  harmful to the Corporation; or

 

                            (2)       The Executive shall have materially breached

                  Section 12 of the Executive's Employment Agreement with the

                  Corporation.

 

                           For purposes of this Agreement, no act or failure to

         act on the part of the Executive shall be deemed "intentional" if it

         was due primarily to an error in judgment or negligence, but shall be

         deemed "intentional" only if done or omitted to be done by the

         Executive not in good faith and without reasonable belief that the

         Executive's action or omission was in the best interest of the

         Corporation. Notwithstanding the foregoing, the Executive shall not be

         deemed to have been terminated for "Cause" under this Agreement unless

         and until there shall have been delivered to the Executive a copy of a

         resolution duly adopted by the affirmative vote of not less than

         three-quarters (3/4) of the Board at a meeting called and held for such

         purposes, after reasonable notice to the Executive and an opportunity

         for the Executive, together with the Executive's counsel (if the

         Executive chooses to have counsel present at such meeting), to be heard

          before the Board, finding that, in the good faith opinion of the Board,

         the Executive had committed an act constituting "Cause" as defined in

         this Agreement and specifying the particulars of the act constituting

         "Cause" in detail. Nothing in this Agreement will limit the right of

         the Executive or the Executive's beneficiaries to contest the validity

         or propriety of any such determination.

 

                  (d)       CHANGE IN CONTROL. "Change in Control" means the

         occurrence of any of the following:

 

(1)       Any "Person" (as such term is used in Sections 13(d) and 14(d) of the

Securities Exchange Act of 1934, as amended (the "Exchange Act")) is or becomes

the "Beneficial Owner" (as defined in Rule 13d-3 under the Exchange Act),

directly or indirectly, of securities of the Corporation representing

twenty-five percent (25%) or more of the combined voting power of the

Corporation's then outstanding securities (a "25% Shareholder") provided

however, that the term 25% Shareholder shall not include any Person if such

Person would not otherwise be a 25% Shareholder but for a reduction in the

number of outstanding voting shares resulting from a stock repurchase program or

other similar plan of the Corporation or from a self-tender offer of the

Corporation, which plan or tender offer commenced on or after the date hereof,

provided, however, that the term "25% Shareholder" shall include such Person

from and after the first date upon which (A) such Person, since the date of the

commencement of such plan or tender offer, shall have acquired Beneficial

Ownership of, in the aggregate, a number of voting shares of the Corporation

equal to one percent (1%) or more of the voting shares of the Corporation then

outstanding, and (B) such Person, together with all affiliates and associates of

such Person, shall Beneficially Own twenty-five percent (25%) or more of the

voting shares of the Corporation then outstanding. In calculating the percentage

of the outstanding voting shares that are Beneficially Owned by a Person for

purposes of this subsection (d)(1), voting shares that are Beneficially Owned by

such Person shall be

 

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deemed outstanding, and voting shares that are not Beneficially Owned by such

Person and that are subject to issuance upon the exercise or conversion of

outstanding conversion rights, exchange rights, rights, warrants or options

shall not be deemed outstanding. Notwithstanding the foregoing, if the Board of

Directors of the Corporation determines in good faith that a Person that would

otherwise be a 25% Shareholder pursuant to the foregoing provisions of this

subsection (d)(1) has become such inadvertently, and such Person (a) promptly

notifies the Board of Directors of such status and (b) as promptly as

practicable thereafter, either divests of a sufficient number of voting shares

so that such Person would no longer be a 25% Shareholder, or causes any other

circumstance, such as the existence of an agreement respecting voting shares, to

be eliminated such that such Person would no longer be a 25% Shareholder as

defined pursuant to this subsection (d)(1), then such Person shall not be deemed

to be a 25% Shareholder for any purposes of this Agreement. Any determination

made by the Board of Directors of the Corporation as to whether any Person is or

is not a 25% Shareholder shall be conclusive and binding; or

 

                           (2)       A change in composition of the Board of

                  Directors of the Corporation occurring any time during a

                  consecutive two-year period as a result of which fewer than a

                  majority of the Board of Directors are Continuing Directors

                  (for purposes of this section, the term "Continuing Director"

                  means a director who was either (A) first elected or appointed

                  as a Director prior to the date of this Agreement; or (B)

                  subsequently elected or appointed as a director if such

                  director was nominated or appointed by at least a majority of

                  the then Continuing Directors); or

 

                           (3)       Any of the following occurs:

 

                                    (A)       a merger or consolidation of the

                           Corporation, other than a merger or consolidation in

                           which the voting securities of the Corporation

                           immediately prior to the merger or consolidation

                            continue to represent (either by remaining

                           outstanding or being converted into securities of the

                           surviving entity) sixty percent (60%) or more of the

                           combined voting power of the Corporation or surviving

                           entity immediately after the merger or consolidation

                           with another entity;

 

                                    (B)       a sale, exchange, or other

                            disposition (in a single transaction or a series of

                           related transactions) of all or substantially all of

                           the assets of the Corporation which shall include,

                            without limitation, the sale of assets aggregating

                           more than fifty percent (50%) of the assets of the

                           Corporation on a consolidated basis;

 

                                    (C)       a liquidation or dissolution of the

                           Corporation;

 

                                    (D)       a reorganization, reverse stock

                           split, or recapitalization of the Corporation which

                           would result in any of the foregoing; or

 

                                    (E)       a transaction or series of related

                           transactions having, directly or indirectly, the same

                           effect as any of the foregoing.

 

                   (e)       CHANGE YEAR. "Change Year" means the fiscal year in

         which a Change in Control occurs.

 

                  (f)       DISABILITY. "Disability" means "Total Disability" as

         defined in the Too, Inc. Long-Term Disability Program (effective

         October 1, 1999), or any amended or successor plan.

 

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                  (g)       EMPLOYEE BENEFITS. "Employee Benefits" means the

         perquisites, benefits, and service credit for benefits as provided

         under any and all employee retirement income and welfare benefit

         policies, plans, programs, or arrangements in which the Executive is

         entitled to participate, including without limitation any stock option,

         stock purchase, stock appreciation, savings, pension, supplemental

         executive retirement, or other retirement income or welfare benefit,

         deferred compensation, incentive compensation, group or other life,

         health, medical/hospital, or other insurance (whether funded by actual

         insurance or self-insured by the Corporation), disability, salary

         continuation, expense reimbursement, and other employee benefit

         policies, plans, programs, or arrangements that may now exist or any

         equivalent successor policies, plans, programs, or arrangements that

         may be adopted hereafter, providing perquisites, benefits, and service

         credit for benefits at least as great in a monetary equivalent as are

         payable thereunder prior to a Change in Control.

 

                  (h)       EMPLOYMENT AGREEMENT. "Employment Agreement" means an

         executed employment agreement between the Corporation and the

         Executive.

 

                   (i)       GOOD REASON. "Good Reason" means the occurrence of

         any one or more of the following:

 

                           (1)       The assignment to the Executive after a

                  Change in Control of the Corporation of duties which are a

                  significant reduction in the duties, authority,

                  responsibilities, and status of the Executive's position at

                  any time during the twelve (12) month period prior to such

                  Change in Control;

 

(2)       A reduction by the Corporation in the Executive's Base Annual Salary in

effect immediately prior to a Change in Control of the Corporation, or the

failure to grant salary increases and bonus payments on a basis comparable to

those granted to other executives of the Corporation, or a reduction of the

Executive's most recent highest incentive bonus potential prior to such Change

in Control under the Corporation's Incentive Compensation Performance Plan,

Long-Term Incentive Compensation Performance Plan, or similar plans;

 

(3)       A demand by the Corporation that the Executive relocate to a location

in excess of fifty (50) miles from the location where the Executive is currently

based, or in the event of any such relocation with the Executive's express

written consent, the failure of the Corporation or a Subsidiary to pay (or

reimburse the Executive for) all reasonable moving expenses incurred by the

Executive relating to a change of principal residence in connection with such

relocation and to indemnify the Executive against any loss in the sale of the

Executive's principal residence in connection with any such change of residence,

all to the effect that the Executive shall incur no loss on an after tax basis;

 

(4)       The failure of the Corporation to abide by this Agreement or to obtain

a satisfactory agreement from any successor to the Corporation to assume and

agree to perform this Agreement, as contemplated in Section 14 of this

Agreement;

 

                           (5)       The failure of the Corporation to provide

                  the Executive with substantially the same Employee Benefits

                  that were provided to him immediately prior to the Change in

                  Control, or with a package of Employee Benefits that, though

                  one or more of such benefits may vary from those in effect

                  immediately prior to such Change in Control, is substantially

                  comparable in all material respects to such Employee Benefits

                   taken as a whole; or

 

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(6)       Any significant reduction in the Executive's compensation or benefits

or adverse change in the Executive's location or duties, if such significant

reduction or adverse change occurs at any time after the commencement of any

discussion with a third party relating to a possible Change in Control of the

Corporation involving such third party, if such reduction or adverse change is

in contemplation of such possible Change in Control and such Change in Control

is actually consummated within twelve (12) months after the date of such

significant reduction or adverse change.

 

                           The existence of Good Reason shall not be affected by

         the Executive's incapacity due to physical or mental illness. The

         Executive's continued employment shall not constitute a waiver of the

         Executive's rights with respect to any circumstance constituting Good

         Reason under this Agreement. The Executive's determination of Good

         Reason shall be conclusive and binding upon the parties to this

         Agreement provided such determination has been made in good faith.

 

                  (j)       HIGHEST INCENTIVE COMPENSATION. "Highest Incentive

         Compensation" means the greater of the Executive's Potential Annual

         Award for the Executive's Incentive Group for (a) the Termination Year

         or (b) the average of the actual Annual Awards for the three years

         prior to the Termination Year.

 

                  (k)       INCENTIVE COMPENSATION PERFORMANCE PLAN. "Incentive

         Compensation Performance Plan" means the Corporation's 1999 Incentive

         Compensation Performance Plan in effect as of the effective date of

         this Agreement, as well as any amended, successor or similar plan or

         plans.

 

                  (l)       INCENTIVE GROUP. "Incentive Group" means the group or

         category, if any, into which an Executive is placed pursuant to the

          Corporation's Incentive Compensation Performance Plan.

 

                  (m)       LONG-TERM INCENTIVE COMPENSATION PERFORMANCE PLANS

         "Long-Term Incentive Compensation Performance Plans" means the

         Corporation's 1999 Stock Option and Performance Incentive Plan in

         effect as of the effective date of this Agreement, as well as any

         amended, similar or successor, plan or plans.

 

                  (n)       NOTICE OF TERMINATION. "Notice of Termination" means

         a written notice indicating the specific termination provision in this

         Agreement relied upon and setting forth in reasonable detail the facts

         and circumstances claimed to provide a basis for termination of the

         employment under the provision so indicated.

 

                  (o)       POTENTIAL ANNUAL AWARD. "Potential Annual Award"

         means the Annual Award the Executive could receive according to his or

         her Incentive Group pursuant to the Corporation's Incentive

         Compensation Performance Plan assuming that (1) the Corporation met the

         par target (100%) criteria for the Corporation's Incentive Compensation

         Performance Plan for a particular fiscal period or year (whether or not

         such target performance criteria was or could be met); (2) there are no

         adjustments for business unit or individual performance; and (3) the

         Executive's Base Annual Salary is used to determine the Potential

         Annual Award.

 

                  (p)       PRO-RATED BONUS AMOUNT. "Pro-Rated Bonus Amount"

         means any accrued but unpaid bonus for a completed bonus period, plus a

         pro-rated portion of the greater of (i) the average of the Executive's

         semi-annual bonus for the previous two similar seasons or (ii) the

         Executive's par target

 

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         (100%) criteria semi-annual bonus for the current semi-annual season

         calculated as of the Change in Control date. In the case of a

         semi-annual bonus, the portion shall be the amount of semi-annual bonus

         paid or payable to the Executive with respect to the bonus period in

         which the Change in Control occurs, assuming the greater of criteria

          (i) or (ii) applied, pro-rated by multiplying such amount by a

         fraction, the numerator of which is the number of days during the bonus

         period in which the Change in Control occurs prior to the occurrence of

         the Change in Control, and the denominator of