Exhibit 10(b)
RETIREMENT AGREEMENT
This Retirement Agreement (the "Agreement") is entered into between
Sears, Xxxxxxx and Co., a New York corporation (the "Company") and Xxxxx
X. Xxxxx, a resident of the State of Illinois (the "Executive") as of
August 9, 1995.
This Agreement is hereby entered in consideration of the following
covenants and mutual promises.
1.Purpose. The Company has reviewed the performance of the Executive
during his employment with the Company and has determined that his
efforts have resulted in significant value to the Company and its
shareholders. Specifically, the Executive assisted the Chairman and
Chief Executive Officer in overseeing the development of the financial
services business, the restructuring of the merchandise business, and
the disposition of non-strategic assets of the Company, culminating in
the highly successful repositioning of the Company through a series of
initial public offerings, spin-offs and sales. In consideration for the
Executive's dedicated service with the Company and his retirement from
the Company on August 9, 1995 (the "Retirement Date"), the Company and
the Executive have agreed to enter into this Agreement.
2.Payments. Following the execution of this Agreement, the Company
shall make the following payments to the Executive:
(a)Continued annual base salary payments through Executive's Retirement
Date, at the rate in effect immediately prior to the Retirement Date.
(b)An amount (the "1995 Annual Bonus"), calculated according to the
Sears, Xxxxxxx and Co. Annual Incentive Compensation Plan (the "Annual
Incentive Compensation Plan"), equal to the amount of the annual
Nondiscretionary Bonus under the Annual Incentive Compen-sation Plan to
which Executive would have been entitled if he had remained employed by
the Company through December 31, 1995. The 1995 Annual Bonus shall be
paid at such time as the Nondiscretionary Bonus would have been paid had
Executive remained employed by the Company.
(c)A lump sum severance payment payable on August 17, 1995, equal to the
sum of:
(i) the amount of annual base salary Executive would have been paid for
1995 at the rate in effect immediately prior to his Retirement Date (in
addition to the amount described in Section 2(a)) if he had remained
employed by the Company through December 31, 1995, and
(ii) 2 times the sum of annual base salary at the rate in effect
immediately prior to the Retirement Date and the amount of the 1995
annual Nondiscretionary Bonus to which Executive would have been
entitled under the Annual Incentive Compensation Plan, assuming the
Company had met the requisite target incentive level in effect
immediately prior to the Executive's Retirement Date("1995 Target
Level").
(d)The award under the Long Term Incentive Plan ("LTIP") for the LTIP
period January 1, 1993 through December 31, 1995 in the amount and at
the time such award would have been paid if Executive had continued
employment in the Company through December 31, 1995 pursuant to the Long
Term Incentive Compensation Plan.
3.Supplemental Retirement Income Plan. Executive's accrued benefit
under the Sears, Xxxxxxx and Co. Supplemental Retirement Income Plan
(the "Supplemental Retirement Income Plan") shall be determined in
accordance with the Supplemental Retirement Income Plan, by calculating
the benefits thereunder based on (a) Executive's actual credited service
plus additional credited service for the period from the Retirement Date
through and including December 31, 1997, plus the additional 5 years of
credited service previously credited to Executive, (b) the assumption
that, in addition to his actual annual salary and bonus, Executive had
earned annual salary (at the rate in effect immediately prior to the
Retirement Date) and bonus (at the 1995 Target Level) from his
Retirement Date through and including December 31, 1997, and (c)
Executive's actual age as of January 1, 1996 plus three years (pursuant
to a prior agreement to add three years to Executive's attained age),
payable as a life annuity in monthly payments commencing January 1,
1996. The present value of such benefit, determined in accordance with
the provisions of the Supplemental Retirement Income Plan (and based on
the Executive's actual age as of January 1, 1996), shall be paid in a
single lump sum payment on January 2, 1996. Such amount shall be in
addition to the benefits to which Executive is entitled under the Sears
Pension Plan.
0.Xxxx Retirement Medical Coverage. As of Executive's Retirement Date,
Executive shall be treated as eligible to receive Retiree Medical
coverage and for all purposes thereunder, shall be treated as having
been covered under a Sears medical option on Executive's Retirement Date
and as having been continuously covered for the ten (10) consecutive
years immediately prior to Executive's Retirement Date.
0.Xxxx Retirement Life Insurance. As of Executive's Retirement Date,
Executive shall be treated as eligible to receive Retiree Life coverage
in the amount of $100,000 and for all purposes thereunder, shall be
treated as if Executive was a member of Group Life on October 31, 1992,
as having not been off payroll for more than twelve (12) consecutive
months since October 31, 1992 and as having continuous coverage between
August 31, 1987 and October 31, 1992. Executive may also continue Group
Universal Life Insurance coverage after Executive's Retirement Date by
paying any such premiums to the carrier.
6.Equity. Effective August 17, 1995, all stock options and restricted
stock issued to the Executive under any Company-sponsored employee stock
plan will become fully vested and such stock options will remain
exercisable until the earlier of (i) five (5) years after Executive's
Retirement Date for stock options granted February, 1995, and two (2)
years after Executive's Retirement Date for all other stock options, or
(ii) the date the options would otherwise have expired under the terms
of the employee option grant (excluding provisions relating to
termination of employment).
0.Xxxxxx Release. In consideration of the benefits provided under this
Agreement, Executive and the Company have entered into the Mutual
Release which is attached hereto as Exhibit A. This Mutual Release
shall for purposes of this Agreement be treated as incorporated into
this Section 7 in the form attached hereto.
8.Resignation of Officerships, Titles and Directorships. Effective on
the Executive's Retirement Date, the Executive resigns all officerships,
titles, and directorships with the Company, its subsidiaries and
affiliates.
9.Non-Competition, Nonsolicitation and Confidentiality. For the period
beginning on the date hereof and ending on December 31, 1997, the
Executive agrees that he will not (i) directly or indirectly seek to
employ on behalf of Executive or any other person or entity, any person
(except Executive's Senior Executive Secretary as of the date hereof)
who is employed at the time by the Company; (ii) become employed by, be
or become an officer or director of, agree personally to perform
services for, or enter into a consulting arrangement with a Competitor
(as defined below); (iii) acquire an Ownership Interest (as defined
below) in a Competitor; or (iv) solicit any customer of the Company on
behalf of or for the benefit of a Competitor. Notwithstanding the
foregoing and the definition of Competitor, the Executive will not be in
violation of the foregoing sentence solely by reason of Executive's
being an employee, partner, officer, or director of, or investor in, a
Financial Firm (as defined below) that holds an investment in a
Competitor, and the Company approves the Executive's (a) employment by
and partnership in Xxxxxxx Xxxxx Capital Partners Fund V, and (b)
continuing to serve as a director of The Allstate Corporation, unless
there is a change after the date hereof in the business activities or
affiliations of The
Allstate Corporation, which change would itself cause such corporation
to fall within the definition of Competitor. The Executive further
agrees not to disclose, in any manner except to authorized
representatives of the Company or when compelled by legal process after
notice to the Company (if such notice is feasible by a good faith
effort), information about or related to the Company that was obtained
by the Executive during his employment with the Company, other than
information generally available to the public.
For purposes of this Section 10,
(a)"Competitor" means any business organization (including any entity
that controls, is controlled by, or is under common control with such
organization) that Materially Competes with the Company in any line of
business, including but not limited to any business involving the sale
of merchandise and/or merchandise related services at retail, such as a
department, specialty, home improvement, apparel, automotive parts and
accessories, or appliance store;
(b) "Financial Firm" means any firm or fund that makes venture capital
or other investments, or that engages in investment banking, the mutual
fund business, or the securities business;
(c) "Materially Competes" means that the organization in question, as
of the date that the Executive would be in violation of the provisions
of this Section 10 if such organization is a Competitor, received in its
last full fiscal year more than $50 million and more than 10% of its
total revenues from business activities that compete with the Company,
and the Company received in 1994 or 1995 consolidated revenues in excess
of $100 million from such competitive business activities; and
(d) "Ownership Interest" means an equity or voting interest in a
Competitor in excess of five percent (5%) of the total outstanding
equity or voting interests of any class or type that has been issued by
such Competitor, including (for purposes of determining such 5%) any
indirect interest held by the Executive in such Competitor. For
purposes hereof, an "indirect interest" means the Executive's share of
an equity or voting interest in a Competitor represented by his share of
the investment of a Financial Firm in such Competitor.
10.D & O Insurance Coverage. The Company shall cause Executive to be
covered under such director and officer liability insurance policies as
the Company shall from time to time have in effect for its then-active
officers and directors to the same extent, with respect to acts, errors
or omissions which shall have occurred on or before Executive's
Retirement Date, as available thereunder to the then-active officers and
directors.
11.Beneficiary. If the Executive should die prior to receiving all of
the benefits payable under this Agreement, any remaining benefits will
be paid to the beneficiary which is designated in writing by the
Executive. If no such beneficiary is designated, any payments shall be
paid to the Executive's estate at the time or times and in the manner as
would otherwise be due to the Executive.
12.Withholding. The Company's obligation to pay amounts under this
Agreement are subject to its withholding obligations under applicable
federal, state and local tax laws.
13.Severability. If all or any part of this Agreement is declared by
any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not invalidate any other portion of
this Agreement. Any section or a part of a section declared to be
unlawful or invalid shall, if possible, be construed in a manner which
will give effect to the terms of the section to the fullest extent
possible while remaining lawful and valid.
14.Amendment. This Agreement shall not be altered, amended, or modified
except by written instrument executed by the Company and the Executive.
A waiver of any portion of this Agreement shall not be deemed a waiver
of any other portion of this Agreement.
15.Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all
of which together will constitute one and the same instrument.
16.Applicable Law. The provisions of this Agreement shall be
interpreted and construed in accordance with the laws of the State of
Illinois without regard to its choice of law principles.
SEARS, XXXXXXX AND CO.
By: /s/ XXXXX XXXXX
Its: Senior Vice President
ATTEST:
Xxxxxxxx X. Xxxxxxxx
Assistant Secretary
EXECUTIVE:
/s/XXXXX X. XXXXX
EXHIBIT A
Mutual Release
In consideration of the benefits provided under that certain Retirement
Agreement dated as of August 9, 1995 (the "Agreement") by and between
Sears, Xxxxxxx and Co. (the "Company") and the undersigned Executive,
Executive and the Company, and any person acting by, through, or under
the Executive or the Company, hereby release, waive, and forever
discharge each other, their agents, subsidiaries, affiliates, employees,
officers, shareholders, successors, and assigns (if any) from any and
all liability, actions, charges, causes of action, demands, damages, or
claims for relief or remuneration of any kind whatsoever, whether known
or unknown at this time, arising out of, or connected with, Executive's
employment with the Company (other than indemnification to which the
Executive may be entitled under the Company's bylaws, policies or
agreements (now or hereafter maintained) with regard to the
indemnification of its executive officers or directors), Executive's
decision to retire, and/or the termination of the Executive's
employment, including, but not limited to, all matters in law, in
equity, in contract, or in tort, or pursuant to statute, including any
claim by Executive for age or other types of discrimination under the
Age Discrimination in Employment Act, Title VII of the Civil Rights Act
of 1964, the Americans With Disabilities Act, or any other federal,
state, or local law or ordinance (the foregoing is sometimes hereinafter
referred to as the "Waiver"). The Waiver does not apply to any rights
or claims that may arise under the Age Discrimination in Employment Act
after the date that Executive signs this Agreement. Executive
acknowledges that he has read the Waiver and is voluntarily executing
the Waiver and the Agreement.
Executive acknowledges that he has been advised to consult with an
attorney prior to signing the Waiver, and was given at least twenty one
(21) days within which to consider the Agreement, including the Waiver,
before signing the Waiver and the Agreement. Executive also
acknowledges that he understands that if he signs the Waiver, he may
revoke the Waiver and the Agreement within seven (7) days after signing
the Waiver. The Agreement and the Waiver will therefore not be
effective until seven (7) days after the Waiver is signed.
The Waiver does not apply to any benefits provided in the Agreement or
any benefits to which the Executive may be entitled under a Company-
sponsored benefit plan.
Executed: August 9, 1995
SEARS, XXXXXXX AND CO.
By: /s/ XXXXX XXXXX
Its: Senior Vice President
ATTEST:
Xxxxxxxx X. Xxxxxxxx
Assistant Secretary
EXECUTIVE:
/s/ XXXXX X. XXXXX
