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Exhibit 10.17
EMPLOYMENT AGREEMENT
This Employment Agreement is made as of the 23rd day of March, 1999
(the "Agreement") by and between Service Merchandise Company, Inc., a Tennessee
corporation (the "Company"), and Xxxxxxx Xxxxxx (the "Executive").
RECITALS
WHEREAS, the Executive is currently employed by the Company;
WHEREAS, the Company desires to provide for the employment of the
Executive in accordance with the terms and conditions provided herein;
WHEREAS, the Executive wishes to perform services for the Company in
accordance with the terms and conditions provided herein; and
WHEREAS, this Agreement shall supersede the Agreement dated December
21, 1998 between the Executive and the Company (the "Prior Agreement").
NOW, THEREFORE, in consideration of the premises hereof and of the
mutual promises and agreements contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and
the Executive hereby agrees to perform services for the Company, on the terms
and conditions set forth herein.
2. Term. The term of employment of the Executive by the Company
hereunder will commence effective as of March 23, 1999 (the "Effective Date"),
and shall end on March 23, 2002, unless further extended or sooner terminated as
hereinafter provided. Commencing on March 23, 2003, and on each anniversary
thereafter (each such date, an "Anniversary Date"), the term of the Executive's
employment shall automatically be extended for one additional year unless, not
later than the December 31 immediately preceding an Anniversary Date, either
party shall have given notice to the other party that it does not wish to extend
this Agreement (a "Notice of Non-Renewal"). References herein to the "Term" of
this Agreement shall refer to both the initial term and any extended term of the
Executive's employment hereunder. Notwithstanding the foregoing, if a Change of
Control (as defined in Section 6) occurs during the Term, in no event shall the
Term end prior to the end of the twenty-fourth (24th) month following the month
in which such Change of Control occurs.
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3. Position and Duties.
(a) The Executive shall serve as President and Chief Operating
Officer of the Company and shall have such responsibilities, duties and
authority as are generally consistent and customary with such positions. The
Executive shall report solely to the Chief Executive Officer and the Board of
Directors (the "Board") of the Company. The Executive shall also serve, if
requested by the Board, as a director or officer of any of the Company's present
or future direct or indirect subsidiaries. During the Term, the Company shall
cause the Executive to be included in the slate of persons nominated to serve as
directors on the Board and shall use its best efforts (including, without
limitation, the solicitation of proxies). The Executive shall, during the Term,
be a member of both the Executive Committee and the Operating Committee.
(b) During the Term, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive shall devote
reasonable attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive under this Agreement, use the
Executive's reasonable best efforts to carry out such responsibilities fairly
and efficiently. It shall not be considered a violation of the foregoing for the
Executive to serve on corporate, industry, civic or charitable boards or
committees, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement.
(c) The Executive shall be based primarily and reside in the general
area of Nashville, Tennessee, except for such reasonable travel obligations as
do not materially exceed the Executive's travel obligations immediately prior to
the Effective Date.
4. Compensation.
(a) Base Salary. During the Term, the Executive shall receive an
annual base salary ("Annual Base Salary") of $500,000. The Annual Base Salary
shall be payable in accordance with the Company's regular payroll practice for
its senior executives, as in effect from time to time. During the Term, the
Annual Base Salary shall be reviewed by the Compensation Committee of the Board
for possible increase at least annually. Any increase in the Annual Base Salary
shall not limit or reduce any other obligation of the Company under this
Agreement. The Annual Base Salary shall not be reduced after any such increase,
and the term "Annual Base Salary" shall hereafter refer to the Annual Base
Salary as so increased.
(b) Bonuses; Special Bonus. On each of March 26, 1999 and April 23,
1999, Executive shall be paid a special bonus in the amount of $250,000 (such
bonuses referred to herein collectively as the "Special Bonus"). During the
Term, the Executive shall be entitled to receive an annual bonus ("Annual
Bonus") pursuant to the Company's annual bonus plan as in effect from time to
time, offset by the Special Bonus; provided, however, that any such offset shall
not exceed in any one year an amount equal to one-third of the Special Bonus;
provided further that in no event shall
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the Executive be required to remit to the Company any amount(s) of the Special
Bonus which has been previously paid.
(c) Other Benefits. During the Term, the Executive shall be entitled
to participate in other employee benefit plans, programs and arrangements of the
Company, other than Annual Bonus plans (covered by Section 4(b) above) (the
"Benefit Plans"), now or hereinafter in effect, that are applicable to the
Company's employees generally or to its executive officers, as the case may be,
subject to and on a basis consistent with the terms, conditions and overall
administration of the Benefit Plans. During the Term, the Company shall provide
to the Executive all of the fringe benefits and perquisites that are provided to
senior executives of the Company, and the Executive shall be entitled to
participate in and receive any other fringe benefits or perquisites that become
available to the Company's senior executives.
(d) Vacation and Other Leaves. The Executive shall be entitled to
vacation in accordance with the Company's vacation policy (and to compensation
in respect of earned but unused vacation days) and all paid holidays and
personal leave days that are available generally to executive officers of the
Company.
(e) Expenses; Attorneys' Fees. During the Term, the Executive shall
be entitled to receive prompt reimbursement for all reasonable and customary
expenses incurred by the Executive in performing his services hereunder,
including all expenses of travel and accommodations while engaged in business of
the Company, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company. The
Company shall reimburse the Executive for all reasonable legal fees and expenses
incurred in connection with the negotiation and execution of this Agreement.
(f) Services Furnished. The Company shall furnish the Executive with
office space, secretarial and/or administrative assistance, office supplies,
support services and such other facilities and services as shall be suitable to
the Executive's position and adequate for the performance of his duties
hereunder.
(g) Automobile. The Company shall execute a transfer of title to
the company automobile, which is currently assigned to the Executive, in the
Executive's name on the date of this Agreement.
5. Compensation on Termination of Employment (Except Within Two Years
Following a Change of Control). This Section 5 shall apply to termination of the
Executive's employment during the Term and prior to a Change of Control (as
hereinafter defined in Section 6) and to termination of the Executive's
employment more than two (2) years following a Change of Control. This Section 5
shall not apply to termination of Executive's employment during the Change of
Control Period (as hereinafter defined in Section 6):
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(a) Disability. If the Executive's employment with the Company
is terminated by the Executive or the Company due to the Executive's inability
to perform Executive's duties as a result of physical or mental incapacity
("Disability"), the Executive shall be paid such amounts, if any, as the
Executive is entitled to receive under the Company's disability insurance
policies then in effect for Company officers, but shall be entitled to no
further compensation or benefits (unless previously accrued under the Company's
benefit plans).
(b) Other Termination Not Giving Rise to Salary Continuation.
If the Executive's employment shall be terminated for Cause (as hereinafter
defined) or if the Executive dies or if the Executive terminates Executive's
employment for any reason other than for a material breach of this Agreement by
the Company, the Company shall pay the Executive any installments of Executive's
Annual Base Salary as then in effect that would otherwise be due through the
date on which Executive's employment is terminated. The Company shall then have
no further obligations to the Executive under this Agreement except that in the
event of termination by death, the Executive's estate or beneficiaries, as the
case may be, shall be paid such amounts as may be payable to the Executive under
the Company's insurance policies and/or other benefit plans. For the purposes of
this Agreement, the Company shall have "Cause" to terminate the Executive's
employment upon (i) the willful engaging by the Executive in misconduct
materially injurious to the Company, (ii) acts of dishonesty or fraud by the
Executive, or (iii) the willful violation by the Executive of the provisions of
Section 8 or Section 9 hereof.
(c) Termination Giving Rise to Salary Continuation. If the
Company shall terminate the Executive's employment with the Company or shall
provide a Notice of Non-Renewal for any reason other than due to the Executive's
death or Disability or for Cause, or if the Executive terminates this Agreement
because of a material breach of this Agreement by the Company, then, subject to
the compliance by the Executive with the provisions of Sections 8 and 9 hereof,
the Company shall pay, as salary continuation, to the Executive an amount equal
to two (2) times the Executive's maximum Annual Base Salary paid during the
prior five (5) year period (inclusive of the Annual Bonus paid to Executive
during the 12-month period preceding the date of termination or the Annual Bonus
earned by the Executive with respect to the fiscal year immediately preceding
the date of termination, whichever Annual Bonus is higher, but excluding
unearned bonuses negotiated by Executive at the time of the Executive's
employment with the Company), payable in a lump sum, less an amount equal to any
portion of the Special Bonus which has not been previously offset pursuant to
Section 4(b) hereof, but no other compensation or benefits (unless accrued under
the Company's benefit plans prior to the date of termination of employment or as
provided in Section 4(d) hereof) shall be paid to the Executive. For purposes of
this Section 5(c), Executive's Annual Bonus shall be determined without regard
to the proviso set forth in Section 4(b) hereof. In addition, the Company shall
cause all unvested stock options held by the Executive to be fully vested as of
the date of termination under this Section 5(c).
(d) Healthcare Coverage. If the Executive's employment with
the Company is terminated by the Company for any reason other than due to the
Executive's death or Disability or for Cause, the Company will reimburse the
Executive for the premium paid by the Executive for
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continued coverage for the Executive (and any dependents of the Executive
covered by the Company's healthcare plans at the time the Executive's employment
was terminated) under the Company's healthcare plan pursuant to "COBRA" (or any
other mandatory healthcare continuation law then in effect), such coverage then
being substantially similar to that provided by the Company to its senior
executives and their eligible dependents. The Executive will be entitled to
reimbursement for such coverage for the period commencing with the date of
termination of employment and ending on the earlier of (i) the second
anniversary of termination of employment, or (ii) the date the Executive becomes
eligible to receive any healthcare coverage from another employer of the
Executive or Executive's spouse, or any governmental entity, that does not
contain any exclusion or limitation with respect to any pre-existing condition
of the Executive or Executive's covered dependents. If the Executive (or
Executive's dependents covered at the time of termination of employment) elects
not to continue coverage under COBRA (or any other mandatory healthcare
continuation law then in effect) or is not eligible to continue coverage under
such healthcare continuation law, and is otherwise eligible under this Section
5(d), the Company will reimburse the Executive for the cost of purchasing
substantially similar coverage or a supplement required to achieve substantially
similar coverage under another arrangement approved by the Company for the same
period; however, such reimbursement shall be limited to the then current premium
charged to others by the Company for substantially similar coverage under COBRA
(or other mandatory healthcare continuation law then in effect). Any amount
payable to the Executive shall be subject to withholding of applicable taxes as
provided in Section 13 hereof. In the event of Executive's death following
termination giving rise to the benefit described in this Section 5(d), but
before the expiration of such benefits, Executive's dependents shall be entitled
to such benefits.
(e) Sole Remedy. The Executive hereby agrees that amounts payable
under this Section 5 shall be Executive's sole and exclusive remedy against the
Company on account of termination of employment during the Term and prior to a
Change of Control and on account of termination of employment more than two (2)
years following a Change of Control.
6. Compensation on Termination of Employment Within Two Years Following
A Change of Control. This Section 6 shall apply to termination of Executive's
employment during the "Change of Control Period" (as defined in this Section 6).
This Section 6 shall not apply to termination of Executive's employment prior to
a Change of Control or more than two (2) years following a Change of Control:
(a) Definition of Certain Terms.
(i) "Good Reason" shall mean the occurrence or continuation,
without consent of Executive, after a Change of Control, of any of
the following events within the Change of Control Period:
(A) the assignment to Executive of any duties inconsistent with
the customary powers and duties that Executive held immediately
prior to the Change of Control, or an adverse change in the, status,
position or conditions
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of Executive's employment or the nature of Executive's
responsibilities in effect immediately prior to such Change of
Control, or any removal of Executive from, or any failure to
re-elect Executive to, any of such positions;
(B) a reduction by the Company in Executive's Annual Base Salary
as in effect immediately prior to such Change of Control;
(C) the relocation of Executive's principal office to a location
outside a 35 mile radius from Executive's principal office
immediately prior to such Change of Control except for required
travel on the Company's business to an extent substantially
consistent with Executive's business travel obligations immediately
prior to such Change of Control;
(D) the failure by the Company to continue in effect any benefit
or compensation plan in which Executive participates immediately
prior to the Change of Control which is material to Executive's
total compensation, including but not limited to any stock or
stock option, employee stock ownership, bonus, insurance,
disability and vacation plans which the Company currently has or
any substitute or additional plans adopted prior to the Change of
Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan or plans) has been made with respect
to such plan, or the failure by the Company to continue Executive's
participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the
amount of benefits provided and the level of Executive's
participation relative to other participants, as in existence
immediately prior to such Change of Control; or
(E) the failure of the Company to obtain an agreement from any
successor to assume and agree to perform this Agreement as
contemplated herein.
(ii) A "Change of Control" shall be deemed to have taken place
if (i) any person or entity, including a "group" as defined in
Section 13(d)(3) of the Securities and Exchange Act of 1934,
other than Company or a wholly-owned subsidiary thereof or any
employee benefit plan of Company or any of its it subsidiaries,
becomes the beneficial owner of the Company securities having 20%
or more of the combined voting power of the then outstanding
securities of the Company that may be cast for the election of
directors of the Company (other than as a result of an in issuance
of securities initiated by the Company in the ordinary course of
business); or (ii) as the result of, or in connection with, any
cash tender or exchange offer, merger or other business combination,
sale of assets or contested election, or any combination of the
foregoing transactions, less than a majority of the combined
voting power of
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the then outstanding securities of the Company or any successor
corporation or entity entitled to vote generally in the election
of the directors of the Company or such other corporation or
entity after such transaction is held in the aggregate by the
holders of the Company's securities entitled to vote generally in
the election of directors of the Company immediately prior to
such transaction; or (iii) the following individuals cease for
any reason to constitute a majority of the number of directors
then serving: individuals who, as of the Effective Date,
constitute the Board and any new director (other than a director
whose initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to, a
consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or
nomination for election by the Company's shareholders, was approved
or recommended by a vote of at least two-thirds of the directors
of the Company then still in office who were directors of the
Company on the Effective Date or whose appointment, election or
nomination for election was previously so approved or recommended.
(iii) "Change of Control Period" shall mean the two (2)
year period following a Change of Control.
(iv) "Change of Control Severance Benefits shall mean all
of the following payments:
(A) any installments of Executive's Annual Base
Salary through the date of termination of employment at the rate in
effect at the time the Notice of Termination is given,
(B) the Special Termination Payment; and
(C) the Medical Benefits.
(v) "Change of Control Date" shall mean the date on which a
Change of Control occurs.
(vi) "Medical Benefits" shall mean the reimbursement for
continued medical coverage, for Executive and Executive's
dependents described in Section 5(d) hereof.
(vii) "Notice of Termination" shall refer to written notice
described in Section 6(d) indicating the specific termination
provision of this Agreement relied upon, setting forth in
reasonable detail the facts and circumstances claimed to provide
the basis for termination of Executive's
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employment under the provision so indicated and stating
the date of termination.
(viii) "Special Termination Payment" shall
mean an amount payable in a single lump sum equal to the
product of (x) the sum of the Executive's maximum Annual
Base Salary paid during the five (5) year period preceding
the date of termination (inclusive of the Annual Bonus
paid to Executive during the 12-month period preceding the
date of termination or the Annual Bonus earned by the
Executive with respect to the fiscal year immediately
preceding the date of termination, whichever Annual Bonus
is higher, but excluding unearned bonuses negotiated by
Executive at the time of Executive's employment with the
Company), multiplied by (y) the number three (3), less an
amount equal to any portion of the Special Bonus which has
not be previously offset pursuant to Section 4(b) hereof.
For purposes of this Section 6(a)(viii), Executive's
Annual Bonus shall be determined without regard to the
provision set forth in Section 4(b) hereof.
(b) Termination Not Giving Rise To Special Termination
Payments or Medical Benefits. If Executive's employment is terminated during the
Change of Control Period for Cause (as defined in Section 5(b), or on account of
Disability (as defined in Section 5(a)), or if Executive dies during the Change
of Control Period, or if Executive terminates Executive's employment during the
Change of Control Period without Good Reason, the Company shall pay to Executive
any installments of Executive's Annual Base Salary as then in effect that would
otherwise be due through the date on which Executive's employment is terminated.
The Company shall then have no further obligations to the Executive under this
Agreement (unless accrued under the Company's benefit plans) except that in the
event of termination by death, the Executive's estate or beneficiaries, as the
case may be, shall be paid such amounts as may be payable to the Executive under
the Company's insurance policies and/or other benefit plans, and except that in
the event of termination by Disability, the Executive shall be paid such amounts
as Executive is entitled to receive under the Company's disability insurance
policies and plans then in effect covering the Executive.
(c) Termination Giving Rise to Change of Control Severance
Benefits. If the Executive's employment is terminated or a Notice of Non-Renewal
is given by the Company during the Change of Control Period for any reason other
than Cause, death of the Executive or Disability, or if the Executive terminates
his employment during the Change of Control Period for Good Reason, then
Executive shall be entitled to receive the Change of Control Severance Benefits,
all of which (except the Medical Benefits) shall be paid to Executive within ten
(10) days following the date of termination. In addition, the Company shall
cause all unvested stock options held by the Executive to be fully vested as of
the date of termination.
(d) Notice of Termination. Any termination of Executive's
employment by the Company or by Executive pursuant to this Section 6 shall be
communicated by written notice of termination (the "Notice of Termination") to
the other party hereto, which shall indicate the specific
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termination provision in the Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment and shall state the date of termination.
(e) Sole Remedy. The Executive hereby agrees that the Change
of Control Severance Benefits shall be Executive's sole and exclusive remedy
against the Company or any successor on account of termination of employment
during the Change of Control Period.
7. Certain Reduction in Payments by the Company.
(a) Definition of Certain Terms.
(i) A "Payment" shall mean any payment or distribution in the
nature of compensation to or for the benefit of Executive,
whether paid or payable pursuant to this Agreement or otherwise.
(ii) An "Agreement Payment" shall mean a Payment paid or payable
on account of termination of employment during the Change in
Control Period pursuant to Section 6 of this Agreement (disregarding
the reduction provided by Section 7(b)).
(iii) "Net After Tax Receipt" shall mean the Present Value (as
defined below) of all Payments that are contingent on a Change of
Control within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), net of all taxes
imposed on Executive with respect thereto under Sections 1 and
4999 of the Code, determined by applying the highest marginal rate
under Section 1 of the Code which applied to Executive's taxable
income for the immediately preceding taxable year.
(iv) "Present Value" shall mean such value determined in
accordance with Section 280G(d)(4) of the Code.
(b) Limitation on Agreement Payments. It is intended due all
Agreement Payments hereunder, together with all other Payments to Executive
contingent upon or in connection with a Change of Control, are reasonable
compensation for Executive's service to Company and its subsidiaries.
Notwithstanding the foregoing, should Company determine, based upon the opinion
of the independent accounting advisors of Company immediately prior to the
Change of Control ("Accounting Firm"), that the Agreement Payments and other
Payments, together with any other amounts received by Employee that must be
included in such determination, would result in the payment of an "excess
parachute payment" as defined in Section 280G of the Code, then Company will
reduce the Agreement Payments to the minimum extent necessary so that no portion
of the aggregate Payments would result in the payment of an "excess parachute
payment;" provided, however, that such reduction will be made if, but only if,
the value of all such Payments (without
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regard to the foregoing reduction) would result in Net After Tax Receipts which
are less than the Net After Tax Receipts that would result after taking into
account any such reduction.
(c) Opinion of Accounting Firm. Company may reduce the Agreement
Payments pursuant to this Section 7 only if within thirty (30) days of
Executive's termination it provides Executive with an opinion of the Accounting
Firm that Executive will be considered to have received "excess parachute
payments" as defined in Section 280G of the Code if Executive were to receive
the full amounts owing pursuant to the terms of this Agreement and that the
reduced amount proposed to be paid by the Company will result in Net After Tax
Receipts that are equal to or greater than the Net After Tax Receipts which
would result from reduction in the Agreement Payments by any other amount.
8. Unauthorized Disclosure.
(a) During the period in which the Executive is employed by
the Company, the Executive shall not, without the prior written consent of the
Board, or a person authorized thereby, disclose to any person, other than a
person to whom disclosure is necessary or appropriate in connection with the
performance by the Executive of Executive's duties as an officer of the Company,
or its subsidiaries or its affiliates, any confidential information obtained by
Executive while in the employ of the Company with respect to any of the
Company's products, improvements, formulae, design or styles, processes,
customers, methods of marketing or distribution, systems, procedures, plans,
proposals, policies or methods of manufacture, the disclosure of which Executive
knows, or should have reason to know, will be damaging to the Company or its
subsidiaries or its affiliates, nor shall Executive make any false statements
regarding the Company or its subsidiaries or its affiliates or take any other
action which Executive knows, or should have reason to know, will be damaging to
the Company or its subsidiaries or its affiliates; provided, however, that
confidential information shall not include any information known generally to
the public (other than as a result of unauthorized disclosures by the Executive)
or any information of a type not otherwise considered confidential by persons
engaged in the same business or a business similar to that conducted by the
Company. Following the termination of the Executive's employment with the
Company for any reason, the Executive shall not disclose any confidential
information of the type described above or take any action of type described
above except as may be required in the opinion of the Executive's counsel in
connection with any judicial or administrative proceeding or inquiry. The
provisions of this Section 8 shall be binding upon the Executive's heirs,
successors and legal representatives.
(b) Company agrees to refrain from making derogatory or defamatory
statements about or concerning Executive.
9. Non-Competition. During the period in which the Executive is
employed by the Company and for a period of one (1) year following any
termination giving rise to salary continuation payments pursuant to Section 5(c)
or to Change of Control Severance Benefits pursuant to Section 6(c), the
Executive will not (a) directly or indirectly own, manage, operate, control or
participate in the ownership, management, operation or control of, or be
connected as an officer,
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employee, partner, director or otherwise with, or have any financial interest
in, or aid or assist anyone else in the conduct of, any business which is in
substantial competition with any business conducted by the Company or by any
group, division or subsidiary of the Company in any area where such business is
being conducted at the time of such termination (provided that ownership of five
percent (5%) or less of the voting stock of any publicly held corporation shall
not constitute a violation hereof) or (b) directly or indirectly employ, solicit
for employment or advise or recommend to any other persons that they employ or
solicit for employment, any employee of the Company or any of its subsidiaries
or affiliates.
10. Specific Performance. The Executive acknowledges and agrees that,
in the event of a breach of Section 8 or Section 9 hereof by the Executive, the
Company would be irreparably harmed and that monetary damages would be an
inadequate remedy in favor of the Company. Accordingly, the Executive and the
Company agree that in the event of such a breach, the Company shall be entitled
to injunctive relief against the Executive.
11. Binding Agreement. This, Agreement and all obligations of the
Company hereunder shall be binding upon the successors and assigns of the
Company. This Agreement and all rights of the Executive hereunder shall inure to
the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
12. Notice. For the purposes of this Agreement notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Xx. Xxxxxxx Xxxxxx
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
If to the Company:
Service Merchandise Company, Inc.
7100 Service Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: General Counsel
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
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13. Withholding of Taxes. The Company may withhold from any amounts
payable under this Agreement, all federal, state, city or other taxes as shall
be required pursuant to any law or government regulation or ruling.
14. Governing Law. This Agreement shall be construed according to the
laws of Tennessee, without giving effect to the principles of conflicts of laws
of such State.
15. Amendment, Modification, Waiver. This Agreement may not be amended
except by the written agreement of the parties hereto. No provisions of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing signed by Executive and the Company. No
waiver by either party hereto at any time of any breach by the other party
hereto or compliance with any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
However, notwithstanding anything in this Agreement to the contrary, if in the
opinion of the Company's accountants, any provision of this Agreement would
preclude the use of "pooling of interest" accounting treatment for a Change of
Control transaction that (i) would otherwise qualify for such accounting
treatment and (ii) is contingent upon qualifying for such accounting treatment,
then to the extent any provision of this Agreement disqualifies the transaction
as a "pooling of interest" transaction (including, if applicable, the entire
Agreement), such provision(s) shall be null and void as of the date hereof.
16. Binding Effect. This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided for herein. Without limiting the generality of the foregoing,
Executive's right to receive payments hereunder shall not be assignable,
transferable or delegable, whether by pledge, creation of a security interest or
otherwise, other than by a transfer by his will or by the laws of descent and
distribution and, in the event of any attempted assignment or transfer contrary
to this paragraph, the Company shall have no liability to pay any amount so
attempted to be assigned, transferred or delegated.
17. Entire Contract. This Agreement constitutes the entire agreement
and supersedes all other prior agreements, employment contracts and
understandings, both written and oral, express or implied with respect to the
subject matter of this Agreement, including, without limitation, the Prior
Agreement and any employment agreement or any severance or indemnification, by
and between the Company and the Executive, all of such agreements being rendered
null and void by this Agreement.
18. Termination. This Agreement shall be terminable only upon the
occurrence of any one of the following events: (a) expiration of the Term
without Executive's employment having been previously terminated; (b) the
termination of Executive with payment in full of all the payments/benefits
described in Sections 5 or 6 hereof as appropriate; or (c) the Company (or its
successor in interest) and Executive so agree in writing; provided, however,
that the provisions of Sections 8 and 9 hereof shall survive without limitation.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SERVICE MERCHANDISE COMPANY, INC.
By: /s/ C. Xxxxxx Xxxxx
-------------------------------------
Accepted and Agreed:
/s/ Xxxxxxx Xxxxxx
-----------------------------------
Xxxxxxx Xxxxxx
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