EXHIBIT 10.6
HILLS STORES COMPANY
HILLS DEPARTMENT STORE COMPANY
00 Xxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
October 27, 1998
Xx. Xxxxxxx X. Xxxxx
00 Xxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Dear Xxxxxxx:
This letter sets forth our agreement with respect to your resignation as
President and Chief Executive Officer of Hills Stores Company and, its
subsidiary, Hills Department Store Company (collectively, the "Companies").
Capitalized terms used and not defined herein shall have the meanings given
such terms in the Employment Agreement, dated as of February 7, 1996, among the
Companies and you (the "Employment Agreement").
1. RESIGNATION. By your execution and delivery hereof, you hereby
resign, effective immediately, from all positions with the Companies and any
subsidiaries thereof, including, without limitation, as (i) a director of each
of the Companies and (ii) President and Chief Executive Officer of each of the
Companies.
2. SEVERANCE.
(a) The Companies hereby agree to pay you as severance a
payment in cash of $1,400,000, of which $1,120,000 will be paid on or before
October 30, 1998 and $280,000 will be paid on February 1, 1999. The Companies
agree to make such payments by wire-transfer to your bank account pursuant to
such instructions as you shall provide. These payments and all other payments
and benefits to you under this letter agreement are in exchange for your release
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October 27, 1998
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of your rights under the Employment Agreement, your surrender of options
pursuant to paragraph 3(a) hereof, your agreement to continue in effect section
8 and 9 of your Employment Agreement, your execution of the release contained in
paragraph 5 hereof, and your resignation three months prior to the expiration of
the term of your employment provided in the Employment Agreement.
(b) The Companies will reimburse you for your heretofore
unreimbursed travel and other business expenses reasonably incurred by you prior
to the date hereof in the performance of your duties on behalf of the Companies
upon submission of the required supporting documentation.
(c) In the event that either of the Companies consummates on
or before January 31, 1999 a transaction that would constitute a "Change of
Control" under the Employment Agreement, the Companies will pay you the
additional sum of $250,000 in cash promptly following the consummation of the
constituting the "Change of Control."
(d) The Companies will continue for a period of one year
from the date hereof the benefits under Sections 4(c) and 4(h) of the Employment
Agreement, provided that such benefits will include only medical benefits,
dental benefits, life insurance, short term and long term disability benefits
and car allowance all as in effect on the date of this letter agreement.
(e) The Companies will pay the fee, not to exceed $25,000
per year, to provide you with outplacement services by the firm of your choosing
until the earlier of (i) the first anniversary of the date of this letter
agreement and (ii) the date on which you accept employment with another
employer.
(f) You understand and agree that, except as expressly set
forth in this letter agreement, you will receive no payments, compensation,
benefits, perquisites, remuneration or bonuses, including severance, to which
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October 27, 1998
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you otherwise might be entitled under any understanding or agreement with the
Companies or any of their subsidiaries; provided, however, that you will be
entitled to receive your accrued base salary through and including October 28,
1998 and payment on account of accrued vacation through the date of this letter
agreement.
(g) The Companies may withhold or cause to be withheld from
any amounts payable under this letter agreement such amounts as shall be
required to be withheld pursuant to any applicable law or regulation. The
Companies agree that any amounts payable hereunder shall be subject to
withholding at a rate of 28% for federal income tax purposes.
3. OPTIONS AND RESTRICTED SHARES. (a) You hereby surrender for
cancellation, without consideration, all options to purchase shares of common
stock of the Company that were previously granted to you by the Company. Such
options (and any option grant agreements related thereto) are hereby terminated.
(b) You will be issued 100,000 restricted shares of Common
Stock granted to you under the Employment Agreement, and all restrictions on
such shares will lapse as of the date hereof.
4. CONTINUING OBLIGATIONS.
(a) The provisions of Sections 8 and 9 of the Employment
Agreement will continue in full force and effect.
(b) Except as expressly provided in this letter agreement,
the obligations of each of the parties under the Employment Agreement are hereby
terminated.
5. RELEASE BY RAVEN.
(a) You hereby represent that you do not have any claim,
action or proceeding pending against Hills. For purposes of this paragraph 5
and paragraph 6(a), the term "Hills" refers to the Companies, each of their
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October 27, 1998
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respective subsidiaries, divisions and affiliates, and each of their respective
officers, directors, agents, employees and assigns.
(b) Except as necessary to enforce the terms of this letter
agreement, and in exchange for and in consideration of the payments, promises,
covenants and agreements set forth in this letter agreement, you hereby release
Hills from any and all manner of claims, demands, causes of action, obligations,
damages or liabilities whatsoever of every kind and nature, at law or in equity,
known or unknown, and whether or not discoverable, which you have or may have
for any period prior to and including the date of the execution of this letter
agreement, including, but not limited to, any claim of wrongful discharge,
breach of an express or implied contract, breach of any covenant of good faith
and fair dealing, any tort and any federal, state or local law or regulation
(except to the extent such claim cannot be released by law), and any claim for
attorney's fees or costs.
(c) You promise never to file or participate in a lawsuit,
arbitration or other legal proceeding asserting any claims that are released
pursuant to this paragraph 5, unless you are compelled to testify or otherwise
participate in any lawsuit, arbitration or other legal proceeding by subpoena
or any other legal process, but only to the extent of such compulsion. If you
breach your promise and file or participate in a legal proceeding based on
claims you have released, you agree to pay for all costs incurred by Hills,
including reasonable attorneys' fees, in defending against your claim, and you
shall be required to repay to Hills (and shall forfeit any right to receive)
any monies and benefits paid or payable to you pursuant to this letter
agreement. In addition, Hills shall be entitled to any other relief available
to it at law or in equity.
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October 27, 1998
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(d) In executing this letter agreement, the Companies are
not admitting any liability or wrongdoing, and the considerations exchanged
herein do not constitute an admission by Hills of any liability, error, contract
violation, or violation of any federal, state or local law or regulation.
6. RELEASE BY THE COMPANIES.
(a) Hills hereby represents that it does not have any claim,
action or proceeding pending against you. Except as necessary to enforce the
terms of this letter agreement, and in exchange for and in consideration of the
promises, covenants and agreements set forth in this letter agreement, the
Companies hereby release you from any and all manner of claims, demands, causes
of action, obligations, damages or liabilities whatsoever of every kind and
nature, at law or in equity, known or unknown, and whether or not discoverable
(all of the foregoing being hereafter referred to as "Claims"), which the
Companies have or may have for any period prior to and including the date of the
execution of this letter agreement arising out of or related to your having been
an officer or director of the Companies; provided that the foregoing release
shall not apply to any illegal acts undertaken by you in any capacity with the
Companies.
(b) The Companies promise never to file or participate in a
lawsuit, arbitration or other legal proceeding against you, asserting any claims
that are released pursuant to this paragraph 6, unless the Companies are
compelled to testify or otherwise participate in any lawsuit, arbitration or
other legal proceeding by subpoena or any other legal process, but only to the
extent of such compulsion. If the Companies breach their promise and file or
participate in a legal proceeding against you based on claims they have
released, they agree to pay for all costs incurred by you, including reasonable
attorneys' fees, in defending against their claim. In addition, you shall be
entitled to any other relief available to you at law or in equity.
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October 27, 1998
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(c) In executing this letter agreement, you are not
admitting any liability or wrongdoing, and the considerations exchanged herein
do not constitute an admission by you of any liability, error, contract
violation, or violation of any federal, state or local law or regulation.
7. MISCELLANEOUS.
(a) This letter agreement will be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
executors, heirs, administrators, successors and assigns and, for purposes of
paragraph 6, Hills.
(b) The unenforceability or invalidity of any provision or
provisions of this letter agreement shall not render any other provision or
provisions hereof unenforceable or invalid.
(c) This letter agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and fully
supersedes any and all prior agreements or understandings between us with
respect to such subject matter. This letter agreement may not be altered,
modified or changed, and no provision hereof may be waived, except pursuant to a
written instrument signed by the parties hereto.
(d) This letter agreement and all matters and issues
collateral thereto shall be governed by the laws of the Commonwealth of
Massachusetts applicable to contracts performed entirely therein.
(e) All notices or other communications hereunder shall be
given in writing and shall be deemed given if served personally or mailed by
registered or certified mail, return receipt requested, to the parties at their
respective addresses above indicated, or at such other address or addresses as
the parties may hereafter designate in writing.
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October 27, 1998
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(f) The Companies shall pay to you all costs incurred by you
in any proceeding for the successful enforcement of the terms of this Agreement,
including reasonable costs of investigation and reasonable attorneys' fees and
expenses.
If the foregoing letter correctly sets forth our agreement and under-
standing with respect to the subject matter hereof, please so indicate by
executing and returning to the Companies the enclosed duplicate copy of this
letter, whereupon it shall constitute our legally binding agreement.
Very truly yours,
HILLS STORES COMPANY
HILLS DEPARTMENT STORE COMPANY
By: /s/ Xxxxx X. Xxxxxxxxx
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Chairman
ACCEPTED AND AGREED
AS OF OCTOBER 27th, 1998 By: /s/ Xxxxxxx X. Friend
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/s/ Xxxxxxx X. Xxxxx Xx. Vice President-Secretary
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Xxxxxxx X. Xxxxx
