Exhibit 10.1
April 25, 2005
To: Jamie Austin
Re: Separation
Agreement and Release and Waiver
Dear Jamie:
The purpose of this letter agreement, sometimes referred to as the
"Agreement," is to put into writing our mutual agreement related to the
termination of your employment with Hancock
Fabrics, Inc., sometimes referred to
as the "Company". It also describes the separation pay and certain other
benefits, sometimes referred to as the
"Separation Package",
the Company will
provide you in consideration of your release of any and all legal
claims you
might have against the Company arising out of or related to your
employment and
termination of your employment with the
Company.
This
Agreement sets forth
the pay and benefits which you will receive upon
this Agreement becoming effective. In
return for the Release and Waiver executed
by you, the Separation Package the Company is offering
you exceeds any benefits
the Company is required to provide
terminated employees.
You are
encouraged,
of course,
to consult
with such persons as you may
choose before you sign this Agreement,
including your
financial, legal or other
advisors.
<PAGE>
After you have
signed this Agreement and it becomes effective as described
below, in consideration for your Release and Waiver,
the Company will
provide
you with the following Separation
Package:
1.
Upon the effective
date of this
Agreement, you will be
placed on
paid separation
leave that will extend through July 24, 2005, during which
time you will
receive your regular pay, less withholding required by state
and federal laws (as is the current practice with your pay checks).
Furthermore,
the period of paid
separation
leave will be extended
beyond
July 24,
2005, until such time as you have secured other employment;
provided that in
no event shall the total period of paid separation leave
under this
subparagraph (1) (the
"Separation
Leave") extend past
October
23, 2005. The
Company will also maintain you on its medical insurance plans
during the
Separation Leave at
the present level of employee contribution
to the premium,
but you will not be
entitled to any other fringe benefits
except as
expressly provided by this Agreement.
2. Any restricted
stock subject to vesting will continue to vest
during the Separation
Leave, and any stock
options otherwise
exercisable
will remain
exercisable during the Separation Leave.
3. The Company's
personnel records will
reflect that you voluntarily
resigned your
employment
in good standing effective the last day of the
Separation
Leave.
4. You will be allowed to keep your Company car during the
Separation
Leave and after
termination of your
employment.
The Company will
arrange
for transfer of
the title to your name upon termination of your employment.
In order to
receive the Separation
Package described in this Agreement,
you: (i) must return all Company property
upon the Company's request except your
Company car; (ii) agree to abide by the
disparagement
agreement set forth later
<PAGE>
in this letter; (iii) agree to the limited non-competition restrictions
contained in Attachment A to this Agreement, and (iv) agree not to seek
re-employment with the Company in the
future.
By accepting
this Agreement, you understand and agree that on
behalf of
yourself, your heirs, assigns and other representatives, you hereby fully
release Hancock Fabrics, Inc. and its past,
present and future owners, parents,
subsidiaries, affiliates, predecessors, successors, assigns, officers,
directors, stockholders, employees, former employees, and agents from
any and
all claims and waive all rights,
known or unknown, you
may now have or claim to
have arising out of or related to your
employment
or the termination of your
employment with the Company arising before the date on which you sign this
Agreement, including but not limited to any
and all claims, losses, liabilities,
