AMENDED AND RESTATED INDEPENDENT CONTRACTOR CONSULTANCY AGREEMENT
AMENDED AND RESTATED INDEPENDENT
CONTRACTOR
CONSULTANCY AGREEMENT
CONSULTANCY AGREEMENT
This Amended and Restated Independent
Contractor Consultancy Agreement (the “Agreement”) made and entered into on January 6,
2010 (the “Effective Date”), by
and between Xxxx Stores, Inc. (“Company”), and Xxxxxx X.
Xxxxxx, an individual (“Contractor”), amends and restates the Independent
Contractor Consultancy Agreement entered into by Company and Contractor
effective as of February 1, 2000 and amended through March 19, 2008 (the
“Prior Agreement”).
1. Engagement of Services. Company hereby retains Contractor to
provide consulting services in connection with the management and operation of
Company’s business.
2. Compensation.
2.1 Fees. Company will pay Contractor an annual
fee for services rendered in the amount of $1,100,000, payable in equal monthly
installments on or before the tenth day of each month during the Term (as
defined herein).
2.2 Expenses. Contractor will be reimbursed only for
reasonable expenses incurred in connection with Contractor’s performance of
services to Company under this Agreement, provided that Contractor promptly
provides documentation for expenses as Company may reasonably
request.
2.3 Life Insurance. Company will pay directly to Contractor
the amount necessary to cover the aggregate premium payments for the period from
June 1, 2012 through January 31, 2014 (the “Remaining Insured
Period”) for the
existing life insurance policy on the life of Contractor (the policy issued for
the benefit of the Xxxxxx X. Xxxxxx and Xxxxxx Xxxxxx 2001 Insurance Trust or as
otherwise designated by Contractor), with a death benefit in the amount of
$2,000,000 (the “Policy”). Company acknowledges and agrees that
it has paid all applicable premiums on the Policy through June 1, 2012 and shall
pay amounts each year during the Remaining Insured Period equal to that year’s
premiums on the Policy through January 31, 2014. Each such annual premium
payment by Company shall (a) be paid no later than the last day of the calendar
year in which the premium is due, (b) not be affected by any other expenses that
are eligible for reimbursement in any year and (c) not be subject to liquidation
or exchange for another benefit. In addition to such premium payments, Company
shall pay to Contractor an amount equal to any federal, state and local income
taxes imposed on Contractor as a result of such premium payments by the Company,
including the amount of any additional taxes imposed on Contractor due to the
Company’s payment of the initial taxes imposed on Contractor, which amount will
in no event be paid later
than the end of the calendar year following the calendar year in which such
taxes are paid by Contractor. Contractor shall designate the beneficiaries of the Policy.
3. Independent Contractor
Relationship.
Contractor’s relationship with Company is that of an independent contractor, and
nothing in this Agreement is intended to, or should be construed to, create a
partnership, agency, joint venture or employment relationship. Contractor is not
authorized to make any representation, contract or commitment on behalf of
Company unless specifically
requested or authorized in writing to do so by Company’s Chief Executive Officer
(the “CEO”). Contractor will be solely responsible
for obtaining any business or similar licenses required by any federal, state or
local authority. Contractor is solely responsible for, and will file, on a
timely basis, all tax returns and payments required to be filed with, or made
to, any federal, state or local tax authority with respect to the performance of
services and receipt of fees under this Agreement. Contractor is solely
responsible for, and must maintain adequate records of, expenses incurred in the
course of performing services under this Agreement. No part of Contractor’s
compensation will be subject to withholding by Company for the payment of any
social security, federal, state or any other employee payroll taxes. Company
will regularly report amounts paid to Contractor by filing Form 1099-MISC with
the Internal Revenue Service as required by law.
3.1 Method of Performing Services;
Results. In
accordance with Company’s objectives, Contractor will determine the method,
details and means of performing the services required by this Agreement. Company
shall have no right to, and shall not, control the manner or determine the
method of performing Contractor’s services. Contractor shall perform such
consultancy services as shall be reasonably requested by the CEO.
3.2 Workplace, Hours and
Instrumentalities.
Contractor may perform the services required by this Agreement at any place or
location and at such time as Contractor shall determine. Contractor shall
provide consulting services no more than 2-3 days per week and it is understood
that Contractor will not be available for consulting services during
Contractor’s extended vacation periods. Contractor shall provide all tools and
instrumentalities, if any, required to perform the services under this
Agreement.
4. Consulting Services in Connection With a
Business Transaction.
In addition to the fees set forth in Section 2.1 above, upon the consummation of
a Business Transaction (as defined below) and provided that Ross’ Board of
Directors has requested that Xxxxxx provide consulting services in connection
with any such Business Transaction, Ross shall pay to Xxxxxx an additional lump
sum consulting fee in the amount of $1,500,000 (the “Lump Sum Fee”). Xxxxxx shall be
entitled to payment of the Lump Sum Fee with respect to any Business Transaction
for which Xxxxxx provided consulting services, notwithstanding that the
consummation thereof occurred after the expiration or termination of this
Agreement, which Lump Sum Fee shall be paid as soon as practicable following the
consummation of such transaction but in no event later than March 15 of the year
following the year in which such transaction is consummated. If the Lump Sum Fee
is subject to the tax imposed by Section 4999 of the Internal Revenue Code (the
“Excise Tax”), Ross shall reimburse Xxxxxx in an
amount such that, after deduction of any Excise Tax payments paid by Ferber, and
any federal, state or local income tax and Excise Taxes paid as a result of such
reimbursement, the net funds retained by Xxxxxx shall be equal to the Lump Sum
Fee; such amount to be reimbursed as soon as practicable after such taxes are
paid but in no event later
than the end of the calendar year following the calendar year in which such
taxes are paid. For purposes
of this Agreement, a “Business Transaction” shall be deemed to have occurred if:
(a) Any person or group (within the meaning
of Rule 13d-3 of the rules and regulations promulgated under the Securities
Exchange Act of 1934, as amended), shall acquire, in or a series of
transactions, whether through sale of stock or merger, ownership of stock of
Company that possesses more than 30% of the total fair market value or total
voting power of the stock of Company or any successor to Company;
or
(b) A merger in which Company is a party,
after which merger the stockholders of Company do not retain, directly or
indirectly, at least a majority of the beneficial interest in the voting stock
of the surviving company; or
(c) The sale, exchange, or transfer of all or
substantially all of Company’s assets (other than a sale, exchange, or transfer
to one or more corporations where the stockholders of Company before and after
such sale, exchange, or transfer, directly or indirectly, are the beneficial
owners of at least a majority of the voting stock of the corporation(s) to which
the assets were transferred).
5. Confidentiality.
5.1 Confidential Information.
(a) Definition of Confidential
Information.
“Confidential
Information” as used
in this Agreement shall mean any and all technical and non-technical information
including patent, copyright, trade secret, and proprietary information,
techniques, sketches, drawings, models, inventions, know-how, processes,
apparatus, equipment, algorithms, software programs, software source documents,
and formulae related to the current, future and proposed products and services
of Company and Company’s suppliers and customers, and includes, without
limitation, Company innovations, Company property, and Company’s information
concerning research, experimental work, development, design details and
specifications, engineering, financial information, procurement requirements,
purchasing manufacturing, customer lists, business forecasts, sales and
merchandising and marketing plans and information.
(b) Nondisclosure and Nonuse
Obligations. Except
as permitted in this section, Contractor shall neither use nor disclose the
Confidential Information. Contractor may use the Confidential Information solely
to perform services for the benefit of Company. Contractor agrees that
Contractor shall treat all Confidential Information of Company with the same
degree of care as Contractor accords to Contractor’s own Confidential
Information, but in no case less than reasonable care. Contractor agrees not to
communicate any information to Company in violation of the proprietary rights of
any third party. Contractor will immediately give notice to Company of any
unauthorized use or disclosure of the Confidential Information and agrees to
assist Company in remedying any such unauthorized use or disclosure.
(c) Exclusions from Nondisclosure and Nonuse
Obligations.
Contractor’s obligations under Section 4.1(b) with respect to any portion of the
Confidential Information shall not apply to any such portion which Contractor
can demonstrate, (i) was in the public domain at or subsequent to the time such
portion was communicated to Contractor by Company through no fault of
Contractor; (ii) was rightfully in Contractor’s possession free of any
obligation of confidence at or subsequent to the time such portion was
communicated to Contractor by Company; or (iii) was developed by Contractor
independently of and without reference to any information communicated to
Contractor by Company. A disclosure of Confidential Information by Contractor,
either (A) in response to a valid order by a court or other governmental body,
(B) otherwise required by law, or (C) necessary to establish the rights of
either party under this Agreement, shall not be considered to be a breach of
this Agreement or a waiver of confidentiality for other purposes; provided, however, that Contractor shall provide prompt
prior written notice thereof to Company to enable Company to seek a protective
order or otherwise prevent such disclosure.
5.2 Ownership and Return of Company
Property. All
materials (including, without limitation, documents, drawings, models,
apparatus, sketches, designs, blueprints, studies, memoranda, specifications,
lists, and all other tangible media of expression) furnished to Contractor by
Company, whether delivered to Contractor by Company or made by Contractor in the
performance of services under this Agreement (collectively, the “Company Property”) are the sole and exclusive property of
Company or Company’s suppliers or customers, and Contractor hereby does and will
assign to Company all rights, title and interest Contractor may have or acquire
in the Company Property. Contractor agrees to keep all Company Property at
Company’s or Contractor’s
premises unless otherwise permitted in writing by Company. At Company’s request
and no later than five (5) days after such request, Contractor shall destroy or
deliver to Company, at Company’s option, (a) all Company Property, (b) all
tangible media of expression in Contractor’s possession or control which
incorporate or in which are fixed any Confidential Information, and (c) written
certification of Contractor’s compliance with Contractor’s obligations under
this sentence.
6. Observance of Company
Rules. At all times
while on Company’s premises, Contractor will observe Company’s rules and regulations with respect to
conduct, health and safety and protection of persons and property.
7. No Conflict of
Interest. Contractor
may perform services for any other person or entity so long as Contractor’s
performance of such services does not interfere, or become incompatible or
inconsistent with Contractor’s obligations to, or the scope of services rendered
for, Company under this Agreement. Contractor warrants that, to the best of
Contractor’s knowledge, there is no other contract or duty on Contractor’s part
that conflicts with or is inconsistent with this Agreement. Contractor agrees
that during the term of this Agreement, Contractor shall not provide any labor,
work, services or assistance (whether as an officer, director, employee,
partner, agent, owner, independent contractor or otherwise) to Burlington Coat
Factory Warehouse Corporation, Xxxxxxx Department Stores, Inc., The Federated
Stores, Filene’s Basement Corp., The TJX Companies, Inc., and/or the May
Department Stores Company, as well as all subsidiaries, divisions and/or the
surviving entity of any of the above that do business in the retail industry in
the event of a merger or acquisition.
8. Term and Termination.
8.1 Term. This Agreement is effective as of the
Effective Date and will continue until January 31, 2014 (such date, the
“Termination Date” and such period, the “Term”). This Agreement is renewable upon the
mutual consent of both parties. The terms of such renewal must be in writing and
signed by both Company and Contractor.
8.2 Termination of Agreement Prior to the
Termination Date.
Other than as provided in Section 8.4 below, Contractor shall receive the full
annual fees specified in Section 2.1 for the duration of this Agreement or any
renewal term, regardless of whether this Agreement terminates prior to the
Termination Date, unless this Agreement is terminated by Company for Cause or by
Contractor without Good Reason. For purposes of this Agreement, “Cause” shall mean Contractor’s breach of
Section 5 or 7, and “Good Reason” shall mean Company’s material breach of
this Agreement.
8.3 Survival. The rights and obligations contained in
Sections 4, 5 and 9 will survive any termination or expiration of this
Agreement.
8.4 Termination Due to
Death. Except as is
specifically provided in Section 4, in the event of Contractor’s death, this
Agreement will immediately terminate and no further fees or payment will by owed
by the Company to Contractor, his heirs or assigns.
9. General Provisions.
9.1 Successors and Assigns. The rights and obligations of Company
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of Company. Contractor may not assign Contractor’s
rights, subcontract or otherwise delegate his obligations under this Agreement
without Company’s prior written consent. This shall not, however, prevent
Contractor from employing employees to assist in Contractor’s rendering of
services to Company under Contractor’s supervision, as deemed necessary by
Contractor.
9.2 Governing Law. This Agreement shall be governed in all
respects by the laws of the United States of America and by the laws of the
State of California, as such laws are applied to agreements entered into and to
be performed entirely within California between California residents. Each of
the parties irrevocably consents to the exclusive personal jurisdiction of the
federal and state courts located in California, as applicable, for any matter
arising out of or relating to this Agreement, except that in actions seeking to
enforce any order or any judgment of such federal or state courts located in
California, such personal jurisdiction shall be nonexclusive.
9.3 Severability. If any provision of this Agreement is
held by a court of law to be illegal, invalid or unenforceable, (a) that
provision shall be deemed amended to achieve as nearly as possible the same
economic effect as the original provision, and (b) the legality, validity and
enforceability of the remaining provisions of this Agreement shall not be
affected or impaired thereby.
9.4 Waiver; Amendment;
Modification. No term
or provision hereof will be considered waived by the parties, and no breach
excused by the parties, unless such waiver or consent is in writing signed by
that party. The waiver by the parties of, or consent by the parties to, a breach
of any provision of this Agreement by the other party, shall not operate or be
construed as a waiver of, consent to, or excuse of any other or subsequent
breach by that party. This Agreement may only be amended or modified by a
writing signed by the parties or their authorized representatives.
9.5 Entire Agreement. This Agreement constitutes the entire
agreement between the parties relating to this subject matter and supersedes all
prior or contemporaneous oral or written agreements concerning such subject
matter, including the Prior Agreement.
9.6 Notices. For purposes of this Agreement,
notices, demands and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
or (unless otherwise specified) mailed by United States registered mail, return
receipt requested, postage prepaid, addressed as follows:
| If to Contractor: | Xxxxxx X. Xxxxxx | |
| 000 Xxxxxxxx Xxxxxx | ||
| Xxxx Xxxx, XX 00000 | ||
| If to Company: | Xxxx Stores, Inc. | |
| 0000 Xxxxxxxx Xxxxx | ||
| Xxxxxxxxxx, XX 00000 | ||
| Attn: General Counsel | ||
9.7 Arbitration. In the event of any dispute or claim
relating to arising out of this Agreement, all such disputes or claims shall be
fully, finally and exclusively be resolved through binding arbitration conducted
by the American Arbitration Association pursuant to its rules and procedures,
with such arbitration conducted in Alameda County, California, to the fullest
extent permitted by law; provided however that the parties shall be entitled to
pursue all provisional remedies allowed by California Code of Civil Procedure
Section 1281.8.
IN WITNESS WHEREOF, the parties have
executed this Restated Agreement on the date first above written.
| Company: | Contractor: | ||
| XXXX STORES, INC. | XXXXXX X. XXXXXX | ||
| By: | /s/ Xxxxxxx Xxxxxxx | /s/ Xxxxxx X. Xxxxxx | |
| Xxxxxxx Xxxxxxx | Chairman of the Board, Xxxx Stores, Inc. | ||
| Vice Chairman and CEO | |||
