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Exhibit 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made as of November 22, 1998 among EAGLE
HARDWARE & GARDEN, INC., a Washington corporation (the "Company"), XXXX'X
COMPANIES, INC. ("Lowe's") and XXXXXXX XXXXXX ("Executive").
WHEREAS, the Company and Executive wish to enter into an agreement to
provide for the employment of Executive on certain terms and conditions; and
WHEREAS, Mariner Merger Corporation and Lowe's are willing to enter into
an Agreement and Plan of Merger By and Among the Company, Mariner Merger
Corporation and Lowe's (the "Merger Agreement") upon the condition that
Executive enter into the Agreement set forth herein;
NOW THEREFORE, in consideration of the foregoing and the mutual promises
and undertakings hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT. The Company agrees to employ Executive, and Executive
agrees to accept employment with the Company, on the terms and conditions
hereinafter set forth.
2. TERM. Subject always to the respective rights of the Company and
Executive to terminate his employment, the Company shall employ Executive for a
term of two years commencing on the effective date of the transactions
contemplated by the Merger Agreement (the "Term") as President and Chief
Operating Officer. In consideration of the benefits granted under this
Agreement, Executive agrees that during the Term he will render services to the
Company that are commensurate with his position as President and Chief Operating
Officer of the Company, reporting to the Chairman and Chief Executive Officer of
Moby, Inc., and that he will fully comply with the requirements of Sections 8
and 9.
3. DUTIES. Executive shall serve as President and Chief Operating
Officer of the Company and shall have such other powers and duties (not
inconsistent with his positions and status) as may be prescribed from time to
time by the Board of Directors of the Company (the "Board"). During his
employment hereunder, Executive shall devote his full time to the business and
affairs of the Company during normal working hours and shall use his best
efforts to achieve the best interests of the Company and its affiliates at all
times.
4. PLACE OF PERFORMANCE. Executive shall perform his duties hereunder in
the vicinity of Seattle, Washington or such other place as may be agreed upon by
the Company and Executive. Notwithstanding the foregoing, Executive may be
required to travel in reasonable amounts and render services in different
locations from time to time in the performance of such duties.
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5. COMPENSATION, BENEFITS, ETC..
(a) The Company shall pay to Executive during the period of his
employment hereunder a salary ("Salary") equal to $325,000 per annum. The
Salary, less applicable income tax, employment tax and other required or
authorized withholdings, shall be paid to Executive in accordance with the
Company's regular payroll procedures.
(b) During the Term Executive will be eligible to earn an annual
bonus of up to 150% of the Salary as provided in the following sentences
of this Section 5(b). During each fiscal quarter of the Term, Executive
will be eligible to earn a portion of such bonus of up to 15% of the
Salary upon the satisfaction of such "target" goals and objectives as may
be agreed upon by the Company and Executive. The goals and objectives
shall be based on the Company's performance on a quarterly basis; amounts
that are not earned for a quarter may be earned based on the cumulative
performance of the Company in later quarters of the same fiscal year.
Executive will also be eligible to earn up to an additional 90% of the
Salary to the extent that Lowe's consolidated performance for the year
exceeds the "target" goals and objectives established under the Lowe's
management incentive plan. The bonus payments, if any, shall be reduced by
applicable income tax, employment tax and other required or authorized
withholdings.
(c) As of the Effective Time (as defined in the Merger
Agreement), Executive will be granted an option to purchase up to 70,000
shares of Lowe's common stock pursuant to the Xxxx'x Companies, Inc. 1997
Incentive Plan. The terms of such option shall be as set forth in the
attached Exhibit A.
(d) Executive will be eligible to participate in all benefit,
incentive, savings, retirement, welfare, fringe and other programs that
are available to other senior officers of the Company.
(e) Notwithstanding the foregoing and except as provided in
Section 7, Executive shall not be entitled to receive any additional
Salary or bonus (other than accrued but unpaid Salary and previously
earned but unpaid bonuses) after Executive's employment with the Company
and affiliates ends for any reason. The rights of Executive and his
beneficiaries, if any, under retirement, welfare, fringe and other benefit
programs of the Company after Executive's termination of employment shall
be determined in accordance with the terms of such program.
(f) The Company will pay Executive an additional payment of
$100,000 (less applicable income tax, employment tax and other required or
authorized withholdings), immediately before the consummation of the
transactions contemplated by the Merger Agreement.
(g) Executive shall be entitled to the number of paid vacation
days per year to which he is entitled under the Company's vacation policy
as in effect on the date of this Agreement.
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6. EXPENSES. The Company shall reimburse Executive for all reasonable
travel, entertainment and other expenses properly incurred in the performance of
his duties hereunder, upon receipt of proper accounting therefor from Executive
in accordance with the Company's policies relating to expense accounts.
7. SEVERANCE BENEFIT. The Company shall pay a severance benefit to
Executive if the Company terminates Executive's employment without Cause (as
hereinafter defined) or Executive terminates following the occurrence of an
event constituting Good Reason (as hereinafter defined) during the Term. The
amount of the severance benefit shall equal the product of (i) two and (ii) the
sum of Executive's Salary and the cash bonus paid to Executive for the calendar
year preceding his date of termination. The severance benefit, if any, shall be
reduced by applicable income tax, employment tax and other required or
authorized withholdings. The severance benefit shall be paid in 24 equal and
consecutive monthly installments beginning with the month following Executive's
termination of employment by the Company (the "Severance Period"). In addition,
the Company will continue to provide (at its cost) health, dental and vision
benefits provided to Executive immediately before his termination of employment
during the period that he is entitled to such coverage under Section 4980B of
the Internal Revenue Code of 1986, as amended and during the Severance Period
will provide (at its cost) Executive life insurance coverage at a level equal to
that in effect immediately before his termination of employment. Executive shall
be under no obligation to seek other employment and there shall be no offset
against any amounts due Executive under this Agreement on account of any
remuneration attributable to any subsequent employment Executive may obtain. For
purposes of this Agreement, the terms (A) "Cause" means (i) Executive's
conviction of a felony, (ii) Executive's failure to fully comply with the
provisions of Section 8 or 9, and (iii) Executive's willful and continued
neglect of his duties to the Company or an affiliate of the Company and (B)
"Good Reason" means (i) any reduction in Executive's Salary or bonus opportunity
or any reduction in benefits (other than a reduction in benefits applicable to
other senior officers of the Company), (ii) any reduction in Executive's
position, duties or status, (iii) any required relocation of Executive (other
than a relocation mutually agreed upon by the parties) or (iv) any material
breach of this Agreement by the Company. Executive agrees that if he violates
the provisions of Section 8 or if he violates Section 9 in a manner that
constitutes a material breach of this Agreement under Section 9(c) (i) Executive
will not be entitled to any additional benefits under this Section 7 and (ii)
Executive will repay any severance benefits previously paid under this Section 7
after Executive's violation of Section 8 or such violation of Section 9.
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8. NONCOMPETITION.
(a) Executive agrees that Executive will not take the actions
described below that would be damaging to the Company's or Lowe's
competitive position. By making this commitment, Executive agrees that
Executive will not take any such actions either directly or indirectly,
either as principal, agent, employee, employer, owner, stockholder
(owning more than 5% of a corporation's shares), partner, contractor,
consultant or in any other individual or representative capacity
whatsoever.
(b) Executive agrees that during Executive's employment with the
Company and for twenty-four (24) months after the termination of his
employment, Executive will not:
(1) solicit or induce any officer, store manager, district
manager, or other employee of the Company or Lowe's (other than
Executive's Administrative Assistant), to leave his or her
employment with the Company or Lowe's;
(2) hire, or cause to be hired, for any employment in a
line of business competitive with that conducted by the Company
or Lowe's, any person who within the preceding twenty-four month
period has been employed as an officer, store manager, district
manager, merchant or buyer of the Company or Lowe's; provided
that this Section 8(b)(2) shall not prohibit the employment of
any person who has been involuntarily terminated by the Company;
or
(3) aid or assist any other person, firm, corporation, or
other entity to do any of the acts described in the previous
subsections (1) and (2) of this Section 8(b).
(c) Executive agrees that during Executive's employment with the
Company Executive will not accept any employment with, ownership
interest in, or engagement as a contractor or consultant to, and will
not render services on behalf of, any Competitor.
(d) Executive agrees that for twenty-four (24) months after the
termination of his employment, Executive will not:
(1) accept employment as an officer, director, manager,
assistant manager or other employee for,
(2) obtain any ownership interest (other than an ownership
interest of less than 1% in a publicly traded company) in,
(3) be engaged as a consultant or contractor for, or
(4) otherwise render services for or on behalf of,
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any Competitor. Executive understands that the business and business
development of the Company and Lowe's and Executive's responsibilities
on behalf of the Company and Lowe's are nationwide in scope.
Accordingly, Executive agrees that this provision will apply throughout
the continental United States.
(e) Executive acknowledges and agrees that any breach of this
Section 8 would constitute a material breach of this Agreement.
(f) Executive acknowledges that after the termination of his
employment, Executive will be reasonably able to earn a livelihood
without violating the terms of this Section 8.
(g) For purposes of this Agreement, the term "Competitor" means
The Home Depot, Inc., Hechinger Investment Company, Inc. (including Home
Quarters, Hechinger's, or Builders Square) or Home Base and/or any
affiliates, parents or subsidiaries of such entities.
9. CONFIDENTIALITY.
(a) During Executive's employment with the Company Executive may
learn (and during any previous employment with the Company may have
already learned), information that is confidential to the Company or
Lowe's ("Confidential Information"). Such Confidential Information
includes, but is not limited to: trade secrets; acquisition, merger, or
business development plans or strategies; plans for opening stores and
plans for relocating stores; distribution information; purchasing and
product information; advertising and promotional programs and plans;
research or developmental projects; financial or statistical data; sales
and account information, customer information, including but not limited
to demographic information, and information relating to product
preference; sales and marketing plans and strategies; pricing strategies
and reports; legal documents and records; inventions, techniques,
designs, processes, and machinery; personnel information; and any other
information of a similar nature that is not known or made available to
the public or to competitors of the Company or Lowe's, which, if misused
or disclosed, could adversely affect the business of the Company or
Lowe's. Confidential Information includes any such information that
Executive may prepare or create during Executive's employment with the
Company, as well as such information that has been or may be prepared or
created by others.
(b) Executive agrees that Executive will not disclose any
Confidential Information to any person (including any Company employee
who does not need to know such Confidential Information), agency,
institution, company or other entity, and will not use any Confidential
Information in any way, except as required by Executive's duties with
the Company or by law, unless Executive first obtains written consent of
an officer of Lowe's.
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(c) Executive acknowledges and agrees that Executive's duties and
obligations under this Section 9 will continue for as long as such
Confidential Information remains confidential to the Company or Lowe's,
including after the termination of his employment. Executive further
acknowledges and agrees that a willful disclosure of significant
Confidential Information in violation of this Section 9 would be a
material breach of this Agreement.
10. LEGAL FEES. The Company shall reimburse Executive for Executive's
reasonable attorneys fees incurred in any dispute concerning the enforceability
of Section 8 if (i) Executive obtains a judgment from a court of competent
jurisdiction, and no appeal is taken by the Company or the final appeal affirms
the judgment and (ii) the judgment is that Section 8 is unenforceable because
Executive is not receiving compensation from the Company during the twenty-four
month period described in Section 8.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the Company and any successor to the Company, and
any such successor to the Company shall be deemed substituted for the Company
under this Agreement. The obligations of Executive hereunder are expressly
declared to be nonassignable and nontransferable. Effective with the
consummation of the transactions contemplated by the Merger Agreement, Lowe's
agrees to guarantee payment of any amounts due Executive under Section 7.
12. NOTICES. Any notice given to the Company pursuant to this Agreement
may be served by personal delivery or by sending the same by first-class mail
addressed to the Company's principal executive office at the time. Any notice
given to Executive pursuant to this Agreement may be served by personal delivery
or by sending the same by first-class mail addressed to Executive at his address
on the records on the Company.
13. AMENDMENT. No modification, amendment or waiver of any of the
provisions of this Agreement shall be effective unless in writing specifically
referring hereto and signed by the Company and Executive.
14. ENTIRE AGREEMENT. This instrument constitutes the entire agreement
of the parties hereto with respect to the duties and obligations of the Company
and Executive and Executive's compensation therefor. The Company and Executive
acknowledge that they negotiated the terms of this Agreement, including Sections
8 and 9, with the assistance of counsel and Executive further acknowledges that
he understands the terms of this Agreement.
15. NO WAIVER. The failure to enforce at any time any provision of this
Agreement, or to require at any time performance of the other party of any
provision hereof, shall in no way be construed as a waiver of such provision or
to affect either the validity of this Agreement or the obligations of either
party hereto, or the right of either party thereafter to enforce each and every
such provision in accordance with the terms of this Agreement.
16. GOVERNING LAW. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed in
accordance with and governed by the
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substantive laws of the State of Washington without regard to choice of law
provisions. Any dispute arising between the parties related to or involving this
Agreement will be litigated in a federal or state court in the State of
Washington.
17. SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions of this
Agreement, which shall be construed in all respects as if such invalid or
unenforceable provision was omitted. While the restrictions set forth above are
considered by the parties to be fair and reasonable in all circumstances, it is
agreed that if any such restrictions shall be adjudged to be void or ineffective
for whatever reason, but would be adjudged to be valid and effective if part of
the wording thereof was deleted or the periods or geographical scope thereof
reduced, the said restriction shall apply with such modifications as may be
necessary to make it valid and effective.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
EAGLE HARDWARE & GARDEN, INC.
By: /s/ XXXXX XXXXXXXXXXXXX
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Name: Xxxxx Xxxxxxxxxxxxx
Title: Chairman of the Board
XXXXXXX X. XXXXXX
/s/ XXXXXXX X. XXXXXX
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XXXX'X COMPANIES, INC.
By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and Chief
Financial Officer
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