EXHIBIT 10.1
EMPLOYMENT AGREEMENT
BY AND AMONG
BIG LOTS, INC.,
BIG LOTS STORES, INC.
AND
XXXXXXX X. XXXXXX
This employment agreement ("Agreement") by and among Big Lots, Inc. ("BLI"), Big
Lots Stores, Inc. ("Big Lots") and their affiliates, predecessor, successor,
subsidiaries and other related companies (collectively the "Company") and
Xxxxxxx X. Xxxxxx (the "Executive"), collectively, the "Parties," is effective
as of the date signed ("Effective Date") and supersedes and replaces any other
oral or written employment-related agreement between the Executive and the
Company, including, except as specifically provided, the employment agreement
dated June 26, 2000 between the Executive and the Company's predecessor ("Prior
Agreement").
The Executive has been employed by the Company since 1991 and has served as the
Company's Chairman, Chief Executive Officer and President since 2000. It is the
Executive's desire, in a modified capacity, to continue to provide services to
the Company and the Company's desire to benefit from the continuation of the
Executive's future services. It is the expectation of the Parties that the
Executive will continue to serve as the Company's Chief Executive Officer until
a successor is appointed, and serve thereafter as the Company's Chief Strategy
Officer. The Parties further intend for the Executive to continue to serve as a
board member of BLI.
1.00 DURATION
This Agreement will remain in effect from the Effective Date until the earlier
of [1] the date it terminates as provided in Section 5.00 or [2] the last day of
the twenty-fourth complete calendar month beginning on or immediately after the
beginning of the CSO Period (as defined in Section 2.01[2]) and for any
subsequent period (and subject to the terms) agreed upon by Big Lots and the
Executive ("Term"). Any notice of termination required to be given under this
Agreement must be given as provided in Section 6.00 and will be effective on the
date prescribed in Section 5.00.
2.00 EXECUTIVE'S EMPLOYMENT FUNCTION
2.01 POSITION. The Executive agrees:
[1] Subject to Section 2.01[2] to [a] serve as the Company's Chief
Executive Officer with the authority and duties customarily associated
with this position and [b] assist BLI's Board of Directors in its search
for a successor Chief Executive Officer. The period required to discharge
the duties described in this subsection is referred to as the "CEO
Period."
[2] At the conclusion of the CEO Period (which will terminate upon the
employment of a successor Chief Executive Officer) and for the balance of
the Term, to [a] assist the
successor Chief Executive Officer to transition into his or her new
position and [b] serve as the Company's Chief Strategy Officer performing
the services as may be reasonably requested by, and solely under the
direction of, BLI's Board of Directors. The period described in this
subsection is referred to as the "CSO Period."
The Executive agrees at all times to observe and be bound by all Company rules,
policies, practices, procedures and resolutions which apply to Company employees
and which do not conflict with the specific terms of this Agreement.
2.02 BUSINESS DECISIONS. The Executive shall have no liability to the Company
for any act or omission undertaken during the Term of this Agreement in his good
faith business judgment in furtherance of his duties as prescribed in or under
this Agreement.
2.03 PLACE OF PERFORMANCE. During the CEO Period, the Executive's duties will
principally be performed in Columbus, Ohio, except for required travel on the
Company's business. During the CSO Period, the Executive agrees to be reasonably
available to perform the duties described in Section 2.01[2]; provided, however,
that the Company recognizes that the Executive will be relocating from the
Columbus, Ohio area and will maintain an office at his new residence.
3.00 COMPENSATION
The Company will pay the Executive the amounts described in this Section 3.00 as
compensation for the services described in this Agreement and in exchange for
the duties and responsibilities described in Section 4.00.
3.01 BASE SALARY. The Company will pay to the Executive:
[1] During the CEO Period, an annualized base salary of $765,000 ("CEO
Base Salary"); and
[2] During the CSO Period, an annualized base salary of $382,500 ("CSO
Base Salary").
Except as otherwise provided in this Agreement, the Executive's CEO Base Salary
and CSO Base Salary (collectively, "Base Salary") will be paid in installments
that correspond with the Company's normal payroll practices. The Base Salary may
be adjusted from time to time in a manner that is consistent with the Company's
compensation policies in effect for executives in the same or similar job
classification at the discretion of the Company, but will not be adjusted to any
amount lower than, as appropriate, the CEO Base Salary during the CEO Period or
the CSO Base Salary during the CSO Period.
3.02 BONUS.
[1] AMOUNT OF BONUS.
[a] During the CEO Period, the Executive shall be eligible to
receive bonus compensation equal to the CEO Base Salary at the end
of the CEO Period multiplied by the Bonus Payout percentage as
determined by the Bonus Program
Initials _______ Date ________
2
set each fiscal year by the Compensation Committee of BLI's Board of
Directors. Also (and subject to Section 5.00), if either [i] the CEO
Period or [ii] the Term ends before the end of a fiscal year ("Bonus
Termination Date"), the amount calculated under the preceding
sentence will be multiplied by the number of whole and partial
months between the beginning of that fiscal year and the Bonus
Termination Date and divided by 12. The Bonus Program is based upon
the achievement of the Company's annual financial plan. The target
bonus for the Executive is 100% of CEO Base Salary and the Stretch
Bonus for the Executive is 200% of CEO Base Salary, both of which
are defined in the Bonus Program and are subject to adjustment by
BLI's Board of Directors; provided, however, the Executive's target
bonus during the CEO Period shall never fall below 100% of CEO Base
Salary and, during the CEO Period, the Executive's Stretch Bonus
shall never fall below 200% of CEO Base Salary.
[b] During the CSO Period, the Executive will not be entitled to
receive any bonus unless otherwise determined by the Compensation
Committee of the BLI Board of Directors.
[2] PAYMENT. Any bonuses described herein will be paid at a time
consistent with payment of bonuses to other of the Company's executive
officers.
[3] CONTINUOUS EMPLOYMENT. Subject to Section 5.00, in order to receive
any bonus as provided herein, Executive must remain continuously employed
by the Company pursuant to the terms and conditions of this Agreement
through the end of the CEO Period.
[4] FISCAL YEAR. The term "fiscal year" shall mean the period commencing
on the Sunday next following the Saturday closest to January 31st in a
calendar year and ending the next following calendar year on the Saturday
closest to January 31st.
3.03 BENEFIT PLANS. Subject to their terms, the Executive may participate in (or
continue to participate in) any Company-sponsored employee pension or benefit
plans (other than the bonus plan as described in Section 3.02) at a level
commensurate with the Executive's title and position. However (and except as
specifically provided), this Agreement will not affect any compensatory stock
option or equity grants the Executive has received.
3.04 VACATION AND SICK LEAVE. The Executive shall, during both the CEO Period
and the CSO Period, be entitled to such periods of vacation and sick leave each
year which shall not be less than as provided under the Company's vacation and
sick leave policy at a level commensurate with the Executive's title and
position.
3.05 EXPENSES. The Executive is entitled to receive reimbursement for all normal
and reasonable expenses incurred while performing services under this Agreement,
including reasonable travel expenses. Reimbursement for these expenses will be
made as soon as administratively feasible after the date the Executive submits
appropriate evidence of the expenditure and otherwise complies with the
Company's business expense reimbursement policies.
Initials _______ Date ________
3
3.06 TRANSPORTATION. During the Term, the Company will provide the Executive
with a current luxury model automobile purchased or leased by the Company, in
accordance with the Company's applicable policies. The Company shall pay all
maintenance and repair expenses with respect to the automobile, procure and
maintain in force at the Company's expense collision, comprehensive, and
liability insurance coverage with respect to the automobile, and pay operating
expenses with respect to the automobile to the extent such operating expenses
are incurred in the conduct of the Company's business. The Executive shall be
entitled to a similar vehicle every three years or 36,000 miles, whichever
occurs first.
3.07 TERMINATION BENEFITS. The Company will provide the Executive with only
those termination benefits described in Section 5.00.
4.00 EXECUTIVE'S OBLIGATIONS
The amounts described in Sections 3.00 and 5.00 of this Agreement are provided
by the Company in exchange for (and have a value to the Company equivalent to)
the Executive's performance of the obligations described in this Agreement,
including performance of the duties and the covenants made and entered into by
and between the Executive and the Company in this Agreement.
4.01 SCOPE OF DUTIES. The Executive will:
[1] During the CEO Period, devote all available business time, best
efforts and undivided attention to the Company's business and affairs.
During the CSO Period, the Executive shall report to BLI's Board of
Directors and devote the time, effort and attention necessary to complete
the services reasonably requested by the BLI Board of Directors; and
[2] During the CEO Period, refrain from engaging in any other business
activity, whether for gain, profit or other pecuniary benefit. During the
CSO Period, the Executive shall refrain from engaging in any business
activity which would prevent him from devoting the time, effort and
attention necessary to complete the services reasonably requested by BLI's
Board of Directors.
[3] However, the restriction described in Sections 4.01[1] and [2] will
not preclude the Executive from:
[a] Making or holding passive investments in outstanding shares in
the securities of publicly-owned companies or other businesses; or
[b] Serving on corporate, civic, religious, educational and/or
charitable boards or committees but only if this activity does not
interfere with the performance of duties under this Agreement and
only after the Executive has provided the Company with notice of his
intention to serve.
Initials _______ Date ________
4
4.02 CONFIDENTIAL INFORMATION.
[1] OBLIGATION TO PROTECT CONFIDENTIAL INFORMATION. The Executive
acknowledges that the Company, its parent, affiliates, predecessor,
successor, subsidiaries and other related companies (collectively, "Group"
and separately, "Group Member") have a legitimate and continuing
proprietary interest in the protection of Confidential Information (as
defined in Section 4.02[2]) and have invested, and will continue to
invest, substantial sums of money to develop, maintain and protect
Confidential Information. The Executive agrees [a] during and after
employment with the Company and as to all Group Members [i] that any
Confidential Information will be held in confidence and treated as
proprietary to the Group, [ii] not to use or disclose any Confidential
Information except to promote and advance the Group's business interests
and [b] immediately upon termination for any reason from employment with
the Company, to return to the Company any Confidential Information.
[2] DEFINITION OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, Confidential Information includes any confidential data,
figures, projections, estimates, pricing data, customer lists, buying
manuals or procedures, distribution manuals or procedures, other policy
and procedure manuals or handbooks, supplier information, tax records,
personnel histories and records, information regarding sales, information
regarding properties and any other Confidential Information regarding the
business, operations, properties or personnel of the Company or the Group
(or any Group Member) which are disclosed to or learned by the Executive
as a result of employment with the Company, but will not include [a] the
Executive's personal personnel records or [b] any information that [i] the
Executive possessed before the date of initial employment (including
periods before the Effective Date) with the Company that was a matter of
public knowledge, [ii] became or becomes a matter of public knowledge
through sources independent of the Executive, [iii] has been or is
disclosed by any Group Member without restriction on its use or [iv] has
been or is required to be disclosed by law or governmental order or
regulation. The Executive also agrees that, if there is any reasonable
doubt whether an item is public knowledge, to not regard the item as
public knowledge until and unless the Company's General Counsel confirms
to the Executive that the information is public knowledge or an
arbitrator, acting under Section 9.00, finally decides that the
information is public knowledge.
[3] INTELLECTUAL PROPERTY. The Executive expressly acknowledges that all
right, title and interest to all inventions, designs, discoveries, works
of authorship, and ideas conceived, produced, created, discovered,
authored, or reduced to practice during the Executive's performance of
services under this Agreement, whether individually or jointly with the
Company or any Group Member (the "Intellectual Property") shall be owned
solely by the Company or the Group, and shall be subject to the
restrictions set forth in Section 4.02[1] above. All Intellectual Property
which constitutes copyrightable subject matter under the copyright laws of
the United States shall, from the inception of creation, be deemed to be a
"work made for hire" under the United States copyright laws and all right,
title and interest in and to such copyrightable works shall vest in the
Company or the Group. All right, title and interest in and to all
Intellectual Property developed or produced under this Agreement by the
Executive, whether constituting
Initials _______ Date ________
5
patentable subject matter or copyrightable subject matter (to the extent
deemed not to be a "work made for hire") or otherwise, shall be assigned
and is hereby irrevocably assigned to the Company or the Group by the
Executive. The Executive shall, without any additional consideration,
execute all documents and take all other actions needed to convey the
Executive's complete ownership interest in any Intellectual Property to
the Company or the Group or the Executive is directed so that the Company
or the Group may own and protect such Intellectual Property and obtain
patent, copyright and trademark registrations for it. The Executive agrees
that any Group Member may alter or modify the Intellectual Property at the
Group Member's sole discretion, and the Executive waives all right to
claim or disclaim authorship.
4.03 SOLICITATION OF EMPLOYEES. The Executive agrees that during employment, and
for two years after terminating employment with the Company [1] not, directly or
indirectly, to solicit any employee of the Company or of any Group Member to
leave employment with the Group, [2] not, directly or indirectly, to employ or
seek to employ any employee of the Company or any Group Member and [3] not to
cause or induce any of the Company's or the Group's (or Group Member's)
competitors to solicit or employ any employee of the Company or any Group
Member.
4.04 SOLICITATION OF THIRD PARTIES. The Executive agrees that during employment,
and for two years after terminating employment with the Company not, directly or
indirectly, to recruit, solicit or otherwise induce or influence any customer,
supplier, sales representative, lender, lessor, lessee or any other person
having a business relationship with the Company or the Group (or any Group
Member) to discontinue or reduce the extent of that relationship except in the
course of discharging the duties described in this Agreement and with the good
faith objective of advancing the Company's or the Group's (or any Group
Member's) business interests.
4.05 NON-COMPETITION. The Executive acknowledges that the principal business of
the Company includes the operation of its Big Lots retail outlets, the
inventories of which are acquired primarily through special purchases such as
overstocks, close-outs, liquidations, bankruptcies, wholesale distribution of
overstock, distress, liquidation and other volume inventories, the operation of
its Big Lots Furniture stores, and its wholesale operations all of which
comprise the Company's business (the "Company Business"); that Company is one of
the limited number of entities which has developed such business; that the
Company Business is national in scope and the Executive's work for the Company
will give him access to the confidential affairs of the Company and the Group as
defined in Section 4.02[2]; and the agreements and covenants of the Executive
contained in Section 4.00 are essential to the business and the good will of the
Company. Accordingly, and in exchange for amounts paid under this Agreement
including the amount described in Section 5.00, the Executive covenants and
agrees that:
[1] During the term of the Executive's employment with the Company and for
a period of two years (the "Restricted Period") following the termination
of his employment in any manner, the Executive shall not in any location
where the Company's retail stores are located throughout the United States
[a] engage in the Company Business for the Executive's own account, [b]
render any services to any person engaged in the Company Business (other
than to the Company); or [c] become employed in any manner
Initials _______ Date ________
6
by, or consult with, Wal-Mart, Sam's Club, Kmart, Target, Dollar General,
Family Dollar, Dollar Tree, Value City/Schottenstein Stores Corporation,
Fred's, 99(cent) Stores, Canned Foods, Tuesday Morning and TJX
Corporation, or any grocery store chain regardless of size. Further, the
Executive agrees to not become employed in any manner or to act as
consultant to any parent or subsidiary of the above-listed entities. In
the event of a change of control as defined in Section 5.07[2] of this
Agreement, the restricted period shall be for a period of six (6) months.
[2] ACKNOWLEDGEMENT. The Executive acknowledges that the non-competition
agreement is reasonable in light of the nature of the Company Business;
that the Company has legitimate business reasons for requiring the
Executive's agreement to all provisions of Section 4.00; and that he
understands the restrictions, has had an opportunity to fully discuss
these restrictions with the Company and accepts the restrictions.
[3] MAXIMUM ENFORCEABLE RESTRICTION. In the event that any or all of the
covenants set forth in this Section 4.05 are determined by a court of
competent jurisdiction to be unenforceable by reason of the temporal
restrictions being too great, the geographic areas covered too great, the
range of activities too great or for any other reason, then the Court is
authorized and shall interpret them to extend over the maximum period of
time, the maximum geographic area and the maximum range of activities or,
as to any provision, in such a manner that all provisions may be given
maximum restrictive effect in accordance with applicable law; provided,
however, that in no event shall a court determine the maximum restrictive
effect to be greater than the original covenants set forth in this Section
4.05.
[4] TOLLING. The Executive agrees that if any of the obligations to the
Company under this Section 4.05 are breached, then the restricted period
shall be extended for the length of time that the Executive failed to
fulfill his obligations under Section 4.05.
4.06 POST-TERMINATION COOPERATION. As is required of the Executive during
employment, the Executive agrees that during and after employment with the
Company and without additional compensation (other than reimbursement for
reasonable associated expenses), to cooperate with the Company in the following
areas:
[1] COOPERATION WITH THE COMPANY. The Executive agrees [a] to be
reasonably available to answer questions for the Company's officers
regarding any matter, project, initiative or effort for which the
Executive was responsible while employed by the Company and [b] to
cooperate with the Company or any Group Member during the course of all
third-party proceedings arising out of the Company Business about which
the Executive has knowledge or information. For purposes of this
Agreement, [c] "proceedings" includes internal investigations,
administrative investigations or proceedings and lawsuits (including
pre-trial discovery and trial testimony) and [d] "cooperation" includes
[i] the Executive's being reasonably available for interviews, meetings,
depositions, hearings and/or trials without the need for subpoena or
assurances by the Company or any Group Member; [ii] providing any and all
documents in the
Initials _______ Date ________
7
Executive's possession that relate to the proceeding; and [iii] providing
assistance in locating any and all relevant notes and/or documents.
[2] COOPERATION WITH THIRD PARTIES. Unless compelled to do so by
lawfully-served subpoena or court order, the Executive agrees not to
communicate with, or give statements or testimony to, any opposing
attorney, opposing attorney's representative (including private
investigator) or current or former employee relating to any matter
(including pending or threatened lawsuits or administrative
investigations) about which the Executive has knowledge or information
(other than knowledge or information that is not Confidential Information
as defined in Section 4.02[2]) except in cooperation with the Company and
Group Members. The Executive also agrees to notify the Company's General
Counsel immediately after being contacted by a third party or receiving a
subpoena or court order to appear and testify with respect to any matter
affected by this section.
[3] COOPERATION WITH MEDIA. The Executive agrees not to communicate with,
or give statements to, any member of the media (including print,
television or radio media) relating to any matter (including pending or
threatened lawsuits or administrative investigations) about which the
Executive has knowledge or information (other than knowledge or
information that is not Confidential Information as defined in Section
4.02[2]) except in cooperation with the Company or any Group Member. The
Executive also agrees to notify the Company's General Counsel immediately
after being contacted by any member of the media with respect to any
matter affected by this section.
4.07 NON-DISPARAGEMENT. The Executive and the Company agree that neither will
make any disparaging remarks about the other and the Executive will not make any
disparaging remarks about the Company, the Company's executives or any Group
Member or their executives. However, this section will not preclude [1] any
remarks that may be made by the Executive under the terms of Section 4.06[2] or
that are required to discharge the duties described in this Agreement or [2] the
Company or Group Members from making (or eliciting from any person) disparaging
remarks about the Executive concerning any conduct that may lead to a
termination for Cause, as defined in Section 5.04[3] (including initiating an
inquiry or investigation that may result in a termination for Cause).
4.08 NOTICE OF SUBSEQUENT EMPLOYMENT. The Executive agrees to notify the Company
of any subsequent employment during the Restricted Period after employment
terminates.
4.09 REMEDIES. The Executive agrees that any breach of any of the terms of this
Section 4.00 would result in irreparable injury and damage to the Company for
which the Company would have no adequate remedy at law; the Executive therefore
also agrees that in the event of a breach or any threat of breach, the Company
shall be entitled to an immediate injunction and restraining order to prevent
such breach and/or threatened breach and/or continued breach by the Executive
and/or any and all persons and/or entities acting for and/or with the Executive,
without having to prove damages. The Executive agrees that no bond shall be
required of the Company and further agrees not to defend any action seeking
injunctive or other equitable relief on the basis that the Company has an
adequate remedy at law in money damages or otherwise. The terms of this Section
4.09 shall not prevent the Company from pursuing any other available remedies
for any
Initials _______ Date ________
8
breach or threatened breach hereof including, but not limited to, the recovery
of damages from the Executive or specific performance. In addition to any other
available remedies, the Company may require the Executive to account for and pay
over to the Company all compensation, profits, accruals, increments or other
benefits derived or received by the Executive as a result of any transaction
constituting a breach of any provision of Section 4.00. The Company may set off
any amounts finally determined by a court of competent jurisdiction to be due
under this section against any amount which may be owed to the Executive under
this Agreement. The Parties agree that any action for breach of any of the
provisions of Section 4.00 and/or injunctive relief shall be venued in the Court
of Common Pleas, Franklin County, Ohio.
4.10 RETURN OF COMPANY PROPERTY. Upon termination of employment, the Executive
agrees to promptly return to the Company all property belonging to the Group or
any Group Member.
4.11 EFFECT OF TERMINATION. The provisions of Section 4.00 shall survive any
termination of this Agreement, and the existence of any claim or cause of action
by the Executive against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
the covenants and agreements of this Section 4.00; provided, however, that this
Section 4.11 shall not, in and of itself, preclude the Executive from defending
himself against the enforceability of the covenants and agreements of Section
4.00.
5.00 TERMINATION AND RELATED BENEFITS
This Agreement can only be terminated upon the occurrence of any of the events
described in this section or upon expiration of the Term.
5.01 RULES OF GENERAL APPLICATION. The following rules apply generally to the
implementation of Section 5.00:
[1] APPLICATION OF PRO RATA. Except as provided in Section 3.02[1], any
pro rata share required to be paid under Section 5.00 will be based on the
number of days between the first day of the fiscal year during which the
Executive terminates employment and the date that the Executive terminates
employment divided by the number of days in the fiscal year during which
the Executive terminates employment.
[2] LIMIT ON TIME AND FORM OF PAYMENT. Subject to Section 409A of the
Internal Revenue Code of 1986, as amended (the "Code"), the payments
described in this section will be made at the time and in the form
described in this section.
5.02 TERMINATION DUE TO EXECUTIVE'S DEATH. This Agreement will terminate
automatically on the date the Executive dies. As of that date, the Company will
make the following payments to the person the Executive designates.
[1] BASE SALARY. The unpaid Base Salary the Executive earned to the date
of termination paid in a lump sum as provided under Big Lots' normal
payroll program.
[2] BONUS. The bonus described in Section 3.02[1] determined as described
in Section 3.02[1] after the close of the fiscal year in which the
termination because of death
Initials _______ Date ________
9
occurs and paid in the form and at the same time other eligible executives
are paid a bonus under the same program for the same period.
[3] OTHER. Any rights accruing to the Executive under any employee benefit
plan, fund or program maintained by the Company will be distributed or
made available as required by the terms of the plan, fund or program or as
required by law.
5.03 TERMINATION DUE TO EXECUTIVE'S DISABILITY. The Company may terminate this
Agreement after ascertaining that the Executive is Disabled (as defined below -
"Disability") by delivering to the Executive a written notice of termination for
Disability that includes the date termination for Disability is to be effective.
If all requirements of this Agreement are met (including those imposed under
Section 7.00), the Company will make the following payments to the Executive:
[1] BASE SALARY. The unpaid Base Salary the Executive earned to the date
of termination paid in a lump sum as provided under Big Lots' normal
payroll program.
[2] BONUS. The bonus described in Section 3.02[1] determined as described
in Section 3.02[1] after the close of the fiscal year in which the
termination because of Disability occurs and paid in the form and at the
same time other eligible executives are paid a bonus under the same
program for the same period.
[3] OTHER. Any rights accruing to the Executive under any employee benefit
plan, fund or program maintained by the Company will be distributed or
made available as required by the terms of the plan, fund or program or as
required by law; provided, however, that upon Executive's termination for
Disability, Executive shall be entitled to long term disability benefits
under a plan maintained by the Company at a minimum rate of twenty five
thousand dollars ($25,000.00) per month, tax free, until the age of
sixty-five (65).
[4] DEFINITION OF DISABILITY. For these purposes, "Disability" means that,
for more than six consecutive months, the Executive is unable, with a
reasonable accommodation, to perform the duties described in Section 4.01
on a full-time basis due to a physical or mental disability or infirmity.
5.04 TERMINATION FOR CAUSE. The Company may terminate the Executive's employment
for Cause (as defined below - "Cause"). A termination for Cause shall only be
effective after [a] the Company has delivered a written notice to the Executive
stating that in the opinion of BLI's Board of Directors, the Executive may be
terminated for Cause, specifying the details and [b] if the failure or action is
one that can be cured, the Executive does not cure the issue giving rise to the
Cause determination within 30 days after receiving notice. If the Executive is
terminated for Cause and if all requirements of this Agreement are met, the
Company will make the following payments to the Executive:
[1] BASE SALARY. The unpaid Base Salary the Executive earned to the date
of termination paid in a lump sum as provided under Big Lots' normal
payroll program.
Initials _______ Date ________
10
[2] OTHER. Any rights accruing to the Executive under any employee benefit
plan, fund or program maintained by the Company will be distributed or
made available as required by the terms of the plan, fund or program or as
required by law.
[3] DEFINITION OF CAUSE. For these purposes, Cause means the Executive's
[a] failure to comply with Company's policies and procedures which the
Board of Directors of BLI reasonably determines has had or is likely to
have a material adverse effect upon the Company; [b] willful or illegal
misconduct or grossly negligent conduct that is materially injurious to
the Company monetarily or otherwise; [c] violation of laws or regulations
governing the Company or violation of the Company's code of ethics; [d]
breach of any fiduciary duty owed to the Company; [e] misrepresentation or
dishonesty which the Board of Directors of BLI reasonably determines has
had or is likely to have a material adverse effect upon the Company; [f]
breach of any provisions of Sections 4.02 through 4.11 of this Agreement;
[g] involvement in any act of moral turpitude that has a materially
injurious effect on the Company or its reputation; or [h] breach of the
terms of any non-solicitation or confidentiality clauses contained in an
employment agreement(s) with a former employer.
[4] SUBSEQUENT INFORMATION. The terms of Section 5.04 will apply if,
within 24 months after the Executive terminates under any other provision
of Section 5.00, the Company learns of an event that, had it been known
before the Executive terminated employment, would have justified a
termination for Cause. In this case, the Company will be entitled to
recover (and the Executive agrees to repay) any amounts (other than
legally protected benefits) that the Executive received under any other
provision of Section 5.00 reduced by the amount the Executive is entitled
to receive under Section 5.04.
5.05 VOLUNTARY TERMINATION BY EXECUTIVE. The Executive may voluntarily terminate
employment with the Company at any time, in which case the Company will make the
following payments to the Executive:
[1] BASE SALARY. The unpaid Base Salary the Executive earned to the date
of termination paid in a lump sum as provided under Big Lots' normal
payroll program.
[2] OTHER. Any rights accruing to the Executive under any employee benefit
plan, fund or program maintained by the Company will be distributed or
made available as required by the terms of the plan, fund or program or as
required by law.
5.06 INVOLUNTARY TERMINATION WITHOUT CAUSE. Beginning one year after the
Effective Date of this Agreement, the Company may terminate the Executive's
employment at any time Without Cause (as defined below) by delivering to the
Executive a written notice specifying the date termination is to be effective.
If all requirements of this Agreement are met (including those imposed under
Section 7.00), the Company will make the following payments to the Executive:
[1] BASE SALARY. The unpaid Base Salary the Executive earned to the date
of termination paid in a lump sum as provided under Big Lots' normal
payroll program.
Initials _______ Date ________
11
[2] BONUS. The bonus described in Section 3.02[1] determined as described
in Section 3.02[1] after the close of the fiscal year in which the
termination occurs and paid in the form and at the same time other
eligible executives are paid a bonus under the same program for the same
period.
[3] PAYMENT FOR NONCOMPETITION COVENANT. A lump sum amount equal to 200
percent of the CEO Base Salary reduced by any CSO Base Salary earned by
the Executive as payment for the noncompetition covenant described in
Section 4.05 as soon as administratively feasible after termination.
[4] HEALTH CARE. The Company will reimburse the Executive for the cost of
continuing health coverage under COBRA until the last day of the
twenty-fourth complete calendar month after the beginning of the CSO
Period, less the amount the Executive is expected to pay as a regular
employee premium for such coverage. The amounts payable hereunder shall be
increased to reimburse the Executive for federal, state and local income,
employment and wage taxes associated with that reimbursement. Such
reimbursements will cease if the Executive becomes eligible for similar
coverage under another benefit plan.
[5] TRANSPORTATION. The Executive shall be entitled to continue to receive
the transportation benefits described in Section 3.06 until the last day
of the twenty-fourth complete calendar month after the beginning of the
CSO Period.
[6] OTHER. Any rights accruing to the Executive under any employee benefit
plan, fund or program maintained by the Company will be distributed or
made available as required by the terms of the plan, fund or program or as
required by law.
[7] DEFINITION OF WITHOUT CAUSE. For purposes of this Agreement, a
termination "Without Cause" means that in the opinion of BLI's Board of
Directors, the Executive has conducted himself or otherwise acted in a
manner that has resulted in, or continues to be, a material disruption to
the Company. A termination Without Cause shall only be effective after [a]
the Company has delivered a written notice to the Executive describing the
conduct or action giving rise to the Board's determination and [b] the
Executive has not ceased the conduct or action within 30 days after
receiving notice.
5.07 TERMINATION AFTER CHANGE OF CONTROL.
[1] TERMINATION OF EMPLOYMENT. If during the CEO Period or during the
first twelve months of the CSO Period there is a Change of Control (as
defined herein), the Executive's employment shall automatically terminate
and the provisions of this section will apply. To the extent that the
provisions of this Section 5.07 are applicable, the Executive shall be
entitled to the following payments and benefits, whether the Change in
Control occurs during the CEO Period or the CSO Period:
[a] BASE SALARY. The unpaid Base Salary the Executive earned to the
date of termination paid in a lump sum as provided under Big Lots'
normal payroll program.
Initials _______ Date ________
12
[b] ADDITIONAL BASE SALARY. A single lump sum payment equal to two
times the CEO Base Salary paid as soon as administratively feasible
after termination.
[c] BONUS. A single lump sum payment equal to 400 percent of the CEO
Base Salary paid as soon as administratively feasible after
termination.
[d] HEALTH CARE. The Company will reimburse the Executive for the
cost of continuing health coverage under COBRA for a period of no
more than 24 months following the date of termination, less the
amount the Executive is expected to pay as a regular employee
premium for such coverage. The amounts payable hereunder shall be
increased to reimburse the Executive for federal, state and local
income, employment and wage taxes associated with that reimbursement
and, if appropriate, will be further adjusted as provided in
Sections 5.07[3] and [4]. Such reimbursements (other than those
provided under Sections 5.07[3] and [4]).will cease if the Executive
becomes eligible for similar coverage under another benefit plan.
[e] OTHER. Any rights accruing to the Executive under any employee
benefit plan, fund or program maintained by the Company arising from
either a Change of Control or termination of employment will be
distributed or made available as required by the terms of the plan,
fund or program or as required by law.
[2] DEFINITION OF CHANGE OF CONTROL. For purposes of this Agreement, the
term "Change of Control" means [a] any person or group [as defined for
purposes of Section 13(d) of the Securities Exchange Act of 1934] that
becomes the beneficial owner of, or has the right to acquire (by contract,
option, warrant, conversion of convertible securities or otherwise), 20%
or more of the outstanding equity securities of BLI entitled to vote for
the election of directors; [b] a majority of the Board of Directors of BLI
is replaced within any period of two years or less by directors not
nominated and approved by a majority of the directors of BLI in office at
the beginning of such period (or their successors so nominated and
approved), or a majority of the Board of Directors of BLI at any date
consists of persons not so nominated and approved; [c] the stockholders of
BLI approve an agreement to reorganize, merge or consolidate with another
corporation (other than Big Lots Stores, Inc. or an affiliate); [d] the
stockholders of BLI adopt a plan or approve an agreement to sell or
otherwise dispose of all or substantially all of BLI's assets (including
without limitation, a plan of liquidation or dissolution), in a single
transaction or series of related transactions. The effective date of any
such Change of Control shall be the date upon which the last event occurs
or last action is taken such that the definition of such Change of Control
(as set forth above) has been met. For purposes of this Agreement, the
term "affiliate" shall mean: [i] any person or entity qualified as part of
an affiliated group which includes BLI pursuant to Section 1504 of the
Code; or [ii] any person or entity qualified as part of a
parent-subsidiary group of trades and businesses under common control
within the meaning of Treasury Regulation Section 1.414(c)(2)(b).
Determination of affiliate shall be tested as of the date immediately
prior to any event constituting a Change of Control. The other provisions
of this Section 5.07 notwithstanding, the term "Change of Control" shall
not mean any transaction, merger, consolidation or reorganization in which
BLI exchanges or offers to exchange newly
Initials _______ Date ________
13
issued or treasury shares in an amount less than 50% of the
then-outstanding equity securities of BLI entitled to vote for the
election of directors, for 51% or more of the outstanding equity
securities entitled to vote for the election of at least the majority of
the directors of a corporation other than BLI or an affiliate thereof (the
"Acquired Corporation"), or for all or substantially all of the assets of
the Acquired Corporation.
[3] TREATMENT OF TAXES. If payments under this Agreement, when combined
with payments and benefits under all other plans and programs maintained
by the Company, constitute "excess" parachute payments as defined in
Section 280G(b) of the Code, the Company will distribute an additional
amount to the Executive sufficient to ensure that, after payment of all
excise taxes arising under Section 4999 of the Code, the Executive will
retain an amount equal to the amount he would have retained had no excise
tax been imposed under Section 4999 of the Code.
[4] EFFECT OF SUBSEQUENT TAX CLAIM. The Company will establish procedures
that will apply to any inquiries regarding the treatment of tax payments
under this Section 5.07. Within 30 days following the termination of the
Executive's employment under Section 5.07, the Company will provide the
Executive with a copy of such procedures. Also, if it subsequently is
established under those procedures that the Executive has received an
"excess" parachute payment as defined in Section 280G of the Code that is
larger than the amount initially calculated under Section 5.07[3], the
Company will distribute an additional amount to the Executive sufficient
to ensure that, after payment of all additional excise taxes arising under
Section 4999 of the Code, the Executive will retain an amount equal to the
amount he would have retained had no additional excise tax been imposed
under Section 4999 of the Code.
5.08 TERMINATION OF AGREEMENT. If the Executive continues to be employed through
the end of the Term, the Executive's employment will terminate automatically on
the last day of the Term; provided, however, that in the event the Executive is
receiving short term disability benefits on the last day of the Term, the
Executive's employment will extend until the earlier of the date the Executive
ceases to qualify for short term disability benefits or six months from the date
the Executive first received short term disability benefits. In the event the
Executive's employment is extended under this Section 5.08 and he receives a
full six months of short term disability benefits, his employment will be
terminated pursuant to the provisions of Section 5.03. If the Executive's
employment is terminated automatically under this Section 5.08 (and not pursuant
to Section 5.03), the Company will make the following payments to the Executive:
[1] BASE SALARY. The unpaid Base Salary the Executive earned to the date
of termination paid in a lump sum as provided under Big Lots' normal
payroll program.
[2] OTHER. Any rights accruing to the Executive under any employee benefit
plan, fund or program maintained by the Company will be distributed or
made available as required by the terms of the plan, fund or program or as
required by law.
[3] PAYMENT FOR NONCOMPETITION COVENANT. A lump sum amount equal to 100
percent of the CEO Base Salary in payment for the noncompetition covenant
described in Section 4.05 as soon as administratively feasible after
termination.
Initials _______ Date ________
14
6.00 NOTICE
6.01 HOW GIVEN. Any notice permitted or required to be given under this
Agreement must be given in writing and delivered in person or by registered,
U.S. mail, return receipt requested, postage prepaid; or through Federal
Express, UPS, DHL or any other reputable professional delivery service that
maintains a confirmation of delivery system. Any delivery must be addressed to
the chairman of the Big Lots' Board of Directors and its General Counsel (and,
during the CSO Period, with a copy to the Company's Chief Executive Officer) at
the Company's then-current corporate offices and to the Executive at the
Executive's address as contained in the Executive's personnel file.
6.02 EFFECTIVE DATE. Any notice permitted or required to be given under this
Agreement will be effective on the date it is delivered, in the event of
personal delivery, or on the date its receipt is acknowledged, in the event of
delivery by registered mail or through a professional delivery service described
in Section 6.01.
7.00 EXECUTION OF RELEASE
The Executive agrees that as a condition of receiving any post-termination
benefit as set forth in Section 5.00 except for earned but unpaid Base Salary to
the date of termination, along with any accrued rights the Executive has under
any employee benefit plan of the Company, he must execute a comprehensive
release in the form as may be determined from time to time by the Company in its
sole discretion. Generally, the release will require the Executive and the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, legatees and assigns to release and
forever discharge the Company (and all Group Members) and its executives,
officers, directors, agents, attorneys, successors and assigns from any and all
claims, suits and/or causes of action that grow out of or are in any way related
to the Executive's recruitment to or employment with the Company, other than any
claim that the Company has breached this Agreement. This release will include,
but not be limited to, any claim that the Company violated the Employee
Retirement Income Security Act of 1974; the Age Discrimination in Employment
Act; the Older Worker's Benefit Protection Act; the Americans with Disabilities
Act; Title VII of the Civil Rights Act of 1964 (as amended); the Family and
Medical Leave Act; any state, federal law or local ordinance prohibiting
discrimination, harassment or retaliation in employment; any claim for wrongful
discharge in violation of public policy, claims of promissory estoppel or
detrimental reliance, defamation, intentional infliction of emotional distress;
or the public policy of any state; or any federal, state or local law. Upon
termination, the Executive will be presented with a release and if the Executive
fails to execute the release, the Executive agrees to forego any payment from
the Company other than payments as if the Executive had terminated employment
voluntarily under Section 5.05. The Executive acknowledges that the Executive is
an experienced senior executive knowledgeable about the claims that might arise
in the course of employment with the Company and knowingly agrees that the
payments upon termination (except those payable in accordance with Sections
5.02, 5.04 and 5.05) provided for in this Agreement are satisfactory additional
consideration for the release of all possible claims.
Initials _______ Date ________
15
8.00 INSURANCE
To the extent permitted by law and its organizational documents, the Company
will include the Executive under any liability insurance policy the Company
maintains for employees of comparable status. The level of coverage will be at
least as favorable to the Executive (in amount and each other material respect)
as the coverage of other employees of comparable status. This obligation to
provide insurance for the Executive will survive termination of this Agreement
with respect to proceedings or threatened proceedings based on acts or omissions
occurring during the Executive's employment with the Company or with any Group
Member.
9.00 ARBITRATION
9.01 ACKNOWLEDGEMENT OF ARBITRATION. Unless stated otherwise in this Agreement,
the Parties agree that arbitration is the sole and exclusive remedy for each of
them to resolve and redress any dispute, claim or controversy involving the
interpretation of this Agreement or the terms, conditions or termination of this
Agreement or the terms, conditions or termination of the Executive's employment
with the Company, including any claims for any tort, breach of contract,
violation of public policy or discrimination, whether such claim arises under
federal or state law.
9.02 SCOPE OF ARBITRATION. The Executive expressly understands and agrees that
claims subject to arbitration under this section include asserted violations of
the Employee Retirement Income Security Act of 1974; the Age Discrimination in
Employment Act; the Older Worker's Benefit Protection Act; the Americans with
Disabilities Act; Title VII of the Civil Rights Act of 1964 (as amended); the
Family and Medical Leave Act; any law prohibiting discrimination, harassment or
retaliation in employment; any claim of promissory estoppel or detrimental
reliance, defamation, intentional infliction of emotional distress; or the
public policy of any state, or any federal, state or local law.
9.03 EFFECT OF ARBITRATION. The Parties intend that any arbitration award
relating to any matter described in Section 9.00 will be final and binding on
them and that a judgment on the award may be entered in any court of competent
jurisdiction, and enforcement may be had according to the terms of that award.
This section will survive the termination or expiration of this Agreement.
9.04 LOCATION OF ARBITRATION. Arbitration will be held in Columbus, Ohio, and
will be conducted by a retired federal judge or other qualified arbitrator. The
arbitrator will be mutually agreed upon by the Parties and the arbitration will
be conducted in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association. The Parties will
have the right to conduct discovery pursuant to the Federal Rules of Civil
Procedure; provided, however, that the arbitrator will have the authority to
establish an expedited discovery schedule and cutoff and to resolve any
discovery disputes. The arbitrator will have no jurisdiction or authority to
change any provision of this Agreement by alterations of, additions to or
subtractions from the terms of this Agreement. The arbitrator's sole authority
will be to interpret or apply any provision(s) of this Agreement or any public
law alleged to have been violated. The arbitrator has the authority to award
damages and such other relief as expressly provided by law.
Initials _______ Date ________
16
9.05 TIME FOR INITIATING ARBITRATION. Any claim or controversy not sought to be
submitted to arbitration, in writing, within 60 days of the date the Party
asserting the claim knew, or through reasonable diligence should have known, of
the facts giving rise to that Party's claim, will be deemed waived and the Party
asserting the claim will have no further right to seek arbitration or recovery
with respect to that claim or controversy. Both Parties agree to strictly comply
with the time limitation specified in Section 9.00. For purposes of this
section, a claim or controversy is sought to be submitted to arbitration on the
date the complaining Party gives written notice to the other that [1] an issue
has arisen or is likely to arise that, unless resolved otherwise, may be
resolved through arbitration under Section 9.00 and [2] unless the issue is
resolved otherwise, the complaining Party intends to submit the matter to
arbitration under the terms of Section 9.00.
9.06 COSTS OF ARBITRATION AND ATTORNEY'S FEES. The Company will bear the
arbitrator's fee and other costs associated with any arbitration, unless the
arbitrator, acting under Federal Rule of Civil Procedure 54(d)(1), elects to
award these fees to the Company. Attorney's fees may be awarded to the
prevailing party if expressly authorized by statute, or otherwise each party
shall bear its own attorney's fees and costs.
9.07 ARBITRATION EXCLUSIVE REMEDY. The Parties acknowledge that, because
arbitration is the exclusive remedy for resolving issues arising under this
Agreement, neither Party may resort to any federal, state or local court or
administrative agency concerning breaches of this Agreement or any other matter
subject to arbitration under Section 9.00, except as otherwise provided in this
Agreement, and that the decision of the arbitrator will be a complete defense to
any suit, action or proceeding instituted in any federal, state or local court
before any administrative agency with respect to any arbitrable claim or
controversy.
9.08 WAIVER OF JURY. The Executive and the Company each waive the right to have
a claim or dispute with one another decided in a judicial forum or by a jury,
except as otherwise provided in this Agreement.
10.00 GENERAL PROVISIONS
10.01 REPRESENTATION OF EXECUTIVE. The Executive represents and warrants that
the Executive is not under any contractual or legal restraint that prevents or
prohibits the Executive from entering into this Agreement or performing the
duties and obligations described in this Agreement.
10.02 MODIFICATION OR WAIVER; ENTIRE AGREEMENT. No provision of this Agreement
may be modified or waived except in a document signed by the Executive, the
Chairman of the Compensation Committee of BLI's Board of Directors and an
officer of the Company designated by the Company's Board of Directors. This
Agreement, and any attachments referenced in the Agreement, constitute the
entire agreement between the Parties regarding the employment relationship
described in this Agreement, and any other agreements are terminated and of no
further force or legal effect. No agreements or representations, oral or
otherwise, with respect to the Executive's employment relationship with the
Company have been made or relied upon by either Party which are not set forth
expressly in this Agreement.
Initials _______ Date ________
17
10.03 GOVERNING LAW; SEVERABILITY. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any provision of this Agreement, or the
application of any provision of this Agreement to any person or circumstance,
is, for any reason and to any extent, held invalid or unenforceable, such
invalidity and unenforceability will not affect the remaining provisions of this
Agreement of its application to other persons or circumstances, all of which
will be enforced to the greatest extent permitted by law and the Executive and
the Company agree that the arbitrator (or judge) is authorized to reform the
invalid or enforceable provision [1] to the extent needed to avoid the
invalidity or unenforceability and [2] in a manner that is as similar as
possible to the intent (as described in this Agreement). The validity,
construction and interpretation of this Agreement and the rights and duties of
the Parties will be governed by the laws of the State of Ohio, without reference
to the Ohio choice of law rules.
10.04 NO WAIVER. Except as otherwise provided in Section 9.05, failure to insist
upon strict compliance with any term of this Agreement will not be considered a
waiver of any such term.
10.05 WITHHOLDING. All payments made to the Executive under this Agreement will
be reduced by any amount:
[1] That the Company is required to withhold in advance payment of the
Executive's federal, state and local income, wage and employment tax
liability; and
[2] To the extent allowed by law, that the Executive owes (or, after
employment is deemed to owe) to the Company.
However, application of Section 10.05[2] will not extinguish the Company's right
to seek additional amounts from the Executive (or to pursue other appropriate
remedies) to the extent that the amount that may be recovered by application of
Section 10.05[2] does not fully discharge the amount the Executive owes to the
Company and does not preclude the Company from proceeding directly against the
Executive without first exhausting its right of recovery under Section 10.05[2].
10.06 SURVIVAL. The Parties agree that the covenants and promises set forth in
this Agreement will survive the termination of this Agreement and continue in
full force and effect.
10.07 MISCELLANEOUS.
[1] The Executive may not assign any right or interest to, or in, any
payments payable under this Agreement; provided, however, that this
prohibition does not preclude the Executive from designating in writing
one or more beneficiaries to receive any amount that may be payable after
the Executive's death and does not preclude the legal representative of
the Executive's estate from assigning any right under this Agreement to
the person or persons entitled to it.
[2] This Agreement will be binding upon and will inure to the benefit of
the Executive, the Executive's heirs and legal representatives and the
Company and its successors.
Initials _______ Date ________
18
[3] The headings in this Agreement are inserted for convenience of
reference only and will not be a part of or control or affect the meaning
of any provision of the Agreement.
10.08 SUCCESSORS TO COMPANY. This Agreement may and will be assigned or
transferred to, and will be binding upon and will inure to the benefit of, any
successor of the Company, and any successor will be substituted for the Company
under the terms of this Agreement. As used in this Agreement, the term
"successor" means any person, firm, corporation or business entity which at any
time, whether by merger, purchase or otherwise, acquires all or essentially all
of the assets of the business of the Company. Notwithstanding any assignment,
the Company will remain, with any successor, jointly and severally liable for
all its obligations under this Agreement.
[Balance of Page intentionally left blank]
Initials _______ Date ________
19
IN WITNESS WHEREOF, the Parties have duly executed and delivered this
Agreement, which includes an arbitration provision, and consists of 20 pages.
BIG LOTS, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Signed: January 6, 2005
BIG LOTS STORES, INC.
By: /s/ Xxxx X. Xxxxx
----------------------------
Signed: January 6, 2005
XXXXXXX X. XXXXXX
/s/ Xxxxxxx X. Xxxxxx
-------------------------------
Signed: January 6, 2005
Initials _______ Date ________
20
