EXHIBIT 10.22
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of August 15, 2002 by and between
The Limited, Inc., a Delaware corporation (the "Company") and Xxxx Xxxxxx (the
"Executive") (hereinafter referred to as "the parties").
WHEREAS, the Executive is employed as the Senior Vice President and
Chief Stores Officer and is experienced in all phases of the Company's business
and possesses an intimate knowledge of the business and affairs of the Company
and its policies, procedures, methods, and personnel; and
WHEREAS, the Company has determined that it is essential and in its
best interests to retain the services of key management personnel and to ensure
their continued dedication and efforts; and
WHEREAS, the Compensation Committee of the Board of Directors of the
Company (the "Board") has determined that it is in the best interests of the
Company to secure the services and employment of the Executive, and the
Executive is willing to render such services on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and the respective
agreements of the parties contained herein, the parties hereby agree as follows:
1. Term. The initial term of employment under this Agreement shall be
for the period commencing on August 15 2002 (the "Commencement Date") and ending
on the sixth anniversary of the Commencement Date (the "Initial Term");
provided, however, that thereafter this Agreement shall be automatically renewed
from year to year, unless either the Company or the Executive shall have given
written notice to the other at least six (6) months prior thereto that the term
of this Agreement shall not be so renewed.
2. Employment.
(a) Position. The Executive shall be employed as Senior Vice
President and Chief Stores Officer or such other position of reasonably
comparable or greater status and responsibilities, as may be determined by the
Board of Directors. The Executive shall perform the duties, undertake the
responsibilities, and exercise the authority customarily performed, undertaken,
and exercised by persons employed in a similar executive capacity. The Executive
shall report to the Executive Vice President & Chief Operating Officer of The
Limited, Inc.
(b) Obligations. The Executive agrees to devote his full business
time and attention to the business and affairs of the Company. The foregoing,
however, shall not preclude the Executive from serving on corporate, civic, or
charitable boards or committees or managing personal investments, so long as
such activities do not interfere with the performance of the Executive's
responsibilities hereunder.
3. Base Salary. The Company agrees to pay or cause to be paid to the
Executive during the term of this Agreement an annual base salary at the rate of
$525,000, less applicable withholding. This base salary will be subject to
annual review and may be increased from time to time by the Board considering
factors such as the
Executive's responsibilities, compensation of similar executives within the
Company and in other companies, performance of the Executive, and other
pertinent factors (hereinafter referred to as the "Base Salary"). Such Base
Salary shall be payable in accordance with the Company's customary practices
applicable to its executives.
4. Equity Compensation. The Executive shall be entitled to receive
annual stock option grants or other stock awards based on the performance of the
Executive as determined by the Board.
5. Employee Benefits. The Executive shall be entitled to participate
in all employee benefit plans, practices, and programs maintained by the Company
and made available to senior executives generally and as may be in effect from
time to time. The Executive's participation in such plans, practices and
programs shall be on the same basis and terms as are applicable to senior
executives of the Company generally.
6. Bonus. The Executive shall be entitled to participate in the
Company's applicable incentive compensation plan on such terms and conditions as
may be determined from time to time by the Board. In addition, the Company
agrees to guarantee the Executive's minimum incentive compensation for Spring
2002 and Fall 2002 at the target level of sixty percent (60%) of the Executive's
Base Salary. Further, the Executive will receive any actual incentive
compensation payout earned in excess of the target level.
7. Other Benefits.
(a) Expenses. Subject to applicable Company policies, the
Executive shall be entitled to receive prompt reimbursement of all expenses
reasonably incurred by his in connection with the performance of his duties
hereunder or for promoting, pursuing, or otherwise furthering the business or
interests of the Company.
(b) Office and Facilities. The Executive shall be provided with
appropriate offices and with such secretarial and other support facilities as
are commensurate with the Executive's status with the Company and adequate for
the performance of his duties hereunder.
8. Paid Time Off (PTO) Program. The Executive shall be entitled to
paid time off in accordance with the policies as periodically established by the
Board for similarly situated executives of the Company.
9. Termination. The Executive's employment hereunder is subject to the
following terms and conditions:
(a) Disability. The Company shall be entitled to terminate the
Executive's employment after having established the Executive's Disability. For
purposes of this Agreement, "Disability" means a physical or mental infirmity
which impairs the Executive's ability to substantially perform his duties under
this Agreement for a period of at least six months in any twelve-month calendar
period as determined in accordance with The Limited, Inc. Long-Term Disability
Plan.
(b) Cause. The Company shall be entitled to terminate the
Executive's employment for "Cause." For purposes of this Agreement, "Cause"
shall mean that the Executive (1) willfully failed to perform his duties with
the Company (other than a
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failure resulting from the Executive's incapacity due to physical or mental
illness); or (2) has plead "guilty" or "no contest" to or has been convicted of
an act which is defined as a felony under federal or state law; or (3) engaged
in willful misconduct in bad faith which could reasonably be expected to
materially harm the Company's business or its reputation.
The Executive shall be given written notice by the Board of
termination for Cause, such notice to state in detail the particular act or acts
or failure or failures to act that constitute the grounds on which the proposed
termination for Cause is based. The Executive shall be entitled to a hearing
before the Board or a committee thereof established for such purpose and to be
accompanied by legal counsel. Such hearing shall be held within 15 days of
notice to the Company by the Executive, provided the Executive requests such
hearing within 30 days of the written notice from the Board of the termination
for Cause.
(c) Termination by the Executive. The Executive may terminate
employment hereunder for "Good Reason" by delivering to the Company (1) a
Preliminary Notice of Good Reason (as defined below), and (2) not earlier than
thirty (30) days from the delivery of such Preliminary Notice, a Notice of
Termination. For purposes of this Agreement, "Good Reason" means (i) the failure
to continue the Executive in a capacity contemplated by Section 2 hereof; (ii)
the assignment to the Executive of any duties materially inconsistent with the
Executive's positions, duties, authority, responsibilities, and reporting
requirements as set forth in Section 2 hereof; (iii) a reduction in or a
material delay in payment of the Executive's total cash compensation and
benefits from those required to be provided in accordance with the provisions of
this Agreement; (iv) the Company, the Board or any person controlling the
Company requires the Executive to be based outside of the United States, other
than on travel reasonably required to carry out the Executive's obligations
under the Agreement, or (v) the failure of the Company to obtain the assumption
in writing of its obligation to perform this Agreement by any successor to all
or substantially all of the assets of the Company within 15 days after a merger,
consolidation, sale, or similar transaction; provided, however, that "Good
Reason" shall not include (A) acts not taken in bad faith which are cured by the
Company in all respects not later than thirty (30) days from the date of receipt
by the Company of a written notice from the Executive identifying in reasonable
detail the act or acts constituting "Good Reason" (a "Preliminary Notice of Good
Reason") or (B) acts taken by the Company by reason of the Executive's physical
or mental infirmity which impairs the Executive's ability to substantially
perform his duties under this Agreement. A Preliminary Notice of Good Reason
shall not, by itself, constitute a Notice of Termination.
(d) Notice of Termination. Any purported termination for Cause by
the Company or for Good Reason by the Executive shall be communicated by a
written Notice of Termination to the other party two weeks prior to the
Termination Date (as defined below). For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which indicates the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. Any termination by the
Company other than for Cause or by the Executive without Good Reason shall be
communicated by a written Notice of Termination to the other party two (2) weeks
prior to the Termination Date. However, the Company may elect to pay the
Executive in lieu of two (2) weeks written notice. For purposes of this
Agreement, no such purported termination of employment shall be effective
without such Notice of Termination.
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(e) Termination Date, Etc. "Termination Date" shall mean in the
case of the Executive's death, the date of death, or in all other cases, the
date specified in the Notice of Termination; provided, however, that if the
Executive's employment is terminated by the Company due to Disability, the date
specified in the Notice of Termination shall be at least thirty (30) days from
the date the Notice of Termination is given to the Executive.
10. Compensation Upon Termination.
(a) If during the term of this Agreement (including any
extensions thereof), the Executive's employment is terminated by the Company for
Cause, by reason of the Executive's death, or if the Executive gives written
notice not to extend the term of this Agreement, the Company's sole obligation
hereunder shall be to pay the Executive the following amounts earned hereunder
but not paid as of the Termination Date: (i) Base Salary, (ii) reimbursement for
any and all monies advanced or expenses incurred pursuant to Section 7(b)
through the Termination Date, and (iii) any earned compensation which the
Executive had previously deferred (including any interest earned or credited
thereon) (collectively, "Accrued Compensation"). The Executive's entitlement to
any other benefits shall be determined in accordance with the Company's employee
benefit plans then in effect.
(b) If the Executive's employment is terminated by the Company
other than for Cause or by the Executive for Good Reason, the Company's sole
obligation hereunder shall be as follows:
(i) the Company shall pay the Executive the Accrued
Compensation; and
(ii) the Company shall continue to pay the Executive the
Base Salary for a period of one (1) year following the Termination Date.
(c) If the Executive's employment is terminated by the Company by
reason of the Executive's Disability, the Company's sole obligation hereunder
shall be as follows:
(i) the Company shall pay the Executive the Accrued
Compensation;
(ii) the Executive shall be entitled to receive the
applicable benefits available under the Company's Long-Term Disability Plan.
(d) If the Executive's employment is terminated by reason of the
Company's written notice to the Executive of its decision not to extend the term
of this Agreement as contemplated in Section 1 hereof, the Company's sole
obligation hereunder shall be as follows:
(i) the Company shall pay the Executive the Accrued
Compensation; and
(ii) the Company shall continue to pay the Executive the
Base Salary for a period of one (1) year following the expiration of such term.
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(e) During the period the Executive is receiving salary
continuation pursuant to Section 10(b)(ii) or 10(d)(ii) hereof, the Company
shall, at its expense, provide to the Executive and the Executive's
beneficiaries medical and dental benefits substantially similar in the aggregate
to those provided to the Executive immediately prior to the date of the
Executive's termination of employment; provided, however, that the Company's
obligation with respect to the foregoing benefits shall be reduced to the extent
that the Executive or the Executive's beneficiaries obtains any such benefits
pursuant to a subsequent employer's benefit plans.
(f) The Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise, and no such payment shall be offset or reduced by the amount of any
compensation provided to the Executive in any subsequent employment.
11. Employee Covenants.
(a) For the purposes of this Section 11, the term "Company" shall
include The Limited, Inc., Intimate Brands, Inc. and all their subsidiaries and
affiliates thereof.
(b) Confidentiality. The Executive shall not, during the term of
this Agreement and thereafter, make any Unauthorized Disclosure. For purposes of
this Agreement, "Unauthorized Disclosure" shall mean use by the Executive for
his own benefit or disclosure by the Executive to any person other than a person
to whom disclosure is reasonably necessary or appropriate in connection with the
performance by the Executive of duties as an executive of the Company or as may
be legally required, of any confidential information relating to the business or
prospects of the Company (including, but not limited to, any information and
materials pertaining to any Intellectual Property as defined below ; provided,
however, that such term shall not include the use or disclosure by the
Executive, without consent, of any publicly available information (other than
information available as a result of disclosure by the Executive in violation of
this Section 11(b)). This confidentiality covenant has no temporal, geographical
or territorial restriction.
(c) Non-Competition. During the Non-Competition Period described
below, the Executive shall not, directly or indirectly, without the prior
written consent of the Company, own, manage, operate, join, control, be employed
by, consult with or participate in the ownership, management, operation or
control of, or be connected with (as a stockholder, partner, or otherwise), any
business, individual, partner, firm, corporation, or other entity that competes
or plans to compete, directly or indirectly, with the Company, or any of its
products in a market in which the Company is competing; provided, however, that
the "beneficial ownership" by the Executive after termination of employment with
the Company, either individually or as a member of a "group," as such terms are
used in Rule 13d of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), of not more than two
percent (2%) of the voting stock of any publicly held corporation shall not be a
violation of Section 11 of this Agreement.
The "Non-Competition Period" means the period the Executive is
employed by the Company plus one (1) year from the Termination Date if the
Executive's employment is terminated (i) by the Company for any reason, or (ii)
by the Executive for any reason.
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(d) Non-Solicitation. During the No-Raid Period described below,
the Executive shall not directly or indirectly solicit, induce or attempt to
influence any employee to leave the employment of the Company, nor assist anyone
else in doing so. Further, during the No-Raid Period, the Executive shall not,
either directly or indirectly, alone or in conjunction with another party,
interfere with or harm, or attempt to interfere with or harm, the relationship
of the Company, with any person who at any time was an employee, customer or
supplier of the Company, or otherwise had a business relationship with the
Company.
The "No-Raid Period" means the period the Executive is employed by the
Company plus one (1) year from the Termination Date if the Executive's
employment is terminated (i) by the Company for any reason, or (ii) by the
Executive for any reason.
(e) Intellectual Property. The Executive agrees that all
inventions, designs and ideas conceived, produced, created, or reduced to
practice, either solely or jointly with others, during his employment with the
Company including those developed on his own time, which relates to or is useful
in the Company's business ("Intellectual Property") shall be owned solely by the
Company. The Executive understands that whether in preliminary or final form,
such Intellectual Property includes, for example, all ideas, inventions,
discoveries, designs, innovations, improvements, trade secrets, and other
intellectual property. All intellectual Property is either work made for hire
for the Company within the meaning of the United States Copyright Act, or, if
such Intellectual Property is determined not to be work made for hire, then the
Executive irrevocably assigns all rights, titles and interests in and to the
Intellectual Property to the Company, including all copyrights, patents, and/or
trademarks. The Executive agrees that he will, without any additional
consideration, execute all documents and take all other actions needed to convey
his complete ownership of the Intellectual Property to the Company so that the
Company may own and protect such Intellectual Property and obtain patent,
copyright and trademark registrations for it. The Executive also agrees that the
Company may alter or modify the Intellectual Property at the Company's sole
discretion, and the Executive waives all right to claim or disclaim authorship.
The Executive represents and warrants that any Intellectual Property that he
assigns to the Company, except as otherwise disclosed in writing at the time of
assignment, will be the Executive's sole, exclusive, original work. The
Executive also represents that he has not previously invented any Intellectual
Property or has advised the Company in writing of any prior inventions or ideas.
(f) Remedies. The Executive agrees that any breach of the terms
of this Section 11 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 said 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, and to all costs and expenses,
including reasonable attorneys' fees and costs, in addition to any other
remedies to which the Company may be entitled at law or in equity. The terms of
this paragraph shall not prevent the Company from pursuing any other available
remedies for any breach or threatened breach hereof, including but not limited
to the recovery of damages from the Executive. The Executive and the Company
further agree that the provisions of the covenants not to compete and solicit
are reasonable and that the Company would not have entered into this Agreement
but for the inclusion of such covenants herein. Should a court determine,
however, that any provision of the covenants
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is unreasonable, either in period of time, geographical area, or otherwise, the
parties hereto agree that the covenant should be interpreted and enforced to the
maximum extent which such court deems reasonable.
The provisions of this Section 11 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 11; provided, however, that this
paragraph shall not, in and of itself, preclude the Executive from defending
himself against the enforceability of the covenants and agreements of this
Section 11.
12. Limitation of Payments.
(a) Gross-Up Payment. In the event it shall be determined that
any payment or distribution of any type to or for the benefit of the Executive,
by the Company, any of its affiliates, any Person who acquires ownership or
effective control of the Company or ownership of a substantial portion of the
Company's assets (within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), and the regulations thereunder) or any
affiliate of such Person, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the "Total
Payments"), would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax, imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Total Payments (not including any Gross-Up Payment).
(b) All determinations as to whether any of the Total Payments
are "parachute payments" (within the meaning of Section 280G of the Code),
whether a Gross-Up Payment is required, the amount of such Gross-Up Payment and
any amounts relevant to the last sentence of Subsection 12(a), shall be made by
an independent accounting firm selected by the Company from among the largest
five accounting firms in the United States (the "Accounting Firm"). The
Accounting Firm shall provide its determination (the "Determination"), together
with detailed supporting calculations regarding the amount of any Gross-Up
Payment and any other relevant matter, both to the Company and the Executive
within five (5) days of the Termination Date, if applicable, or such earlier
time as is requested by the Company or the Executive (if the Executive
reasonably believes that any of the Total Payments may be subject to the Excise
Tax). Any determination by the Accounting Firm shall be binding upon the Company
and the Executive. As a result of uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that the Company should have made Gross-Up Payments
("Underpayment"), or that Gross-Up Payments will have been made by the Company
which should not have been made ("Overpayments"). In either such event, the
Accounting Firm shall determine the amount of the Underpayment or Overpayment
that has occurred. In the case of an Underpayment, the amount of such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive. In the case of an Overpayment, the Executive shall, at the direction
and expense of the Company, take such steps as are reasonably necessary
(including the filing of returns and claims for refund), follow reasonable
instructions from, and procedures
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established by, the Company, and otherwise reasonably cooperate with the Company
to correct such Overpayment.
13. Employee Representation. The Executive expressly represents and
warrants to the Company that the Executive is not a party to any contract or
agreement and is not otherwise obligated in any way, and is not subject to any
rules or regulations, whether governmentally imposed or otherwise, which will or
may restrict in any way the Executive's ability to fully perform the Executive's
duties and responsibilities under this Agreement.
14. Successors and Assigns.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns, and the Company shall
require any successor or assign to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place. The
term "the Company" as used herein shall include any such successors and assigns
to the Company's business and/or assets. The term "successors and assigns" as
used herein shall mean a corporation or other entity acquiring or otherwise
succeeding to, directly or indirectly, all or substantially all the assets and
business of the Company (including this Agreement) whether by operation of law
or otherwise.
(b) Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, the Executive's
beneficiaries or legal representatives, except by will or by the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
15. Arbitration. Except with respect to the remedies set forth in
Section 11(f) hereof, any controversy or claim between the Company or any of its
affiliates and the Executive arising out of or relating to this Agreement or its
termination shall be settled and determined by binding arbitration. The American
Arbitration Association, under its Commercial Arbitration Rules, shall
administer the binding arbitration. The arbitration shall take place in
Columbus, Ohio. The Company and the Executive shall appoint one person to act as
an arbitrator, and a third arbitrator shall be chosen by the first two
arbitrators (such three arbitrators, the "Panel"). The Panel shall have no
authority to add to, alter, amend, or refuse to enforce any portion of the
disputed agreements. The Company and the Executive each waive any right to a
jury trial or to a petition for stay in any action or proceeding of any kind
arising out of or relating to this Agreement or its termination.
16. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by registered or certified mail, return
receipt requested, postage prepaid, or upon receipt if overnight delivery
service or facsimile is used, addressed as follows:
To the Executive:
Xxxx Xxxxxx
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxxx, Xxxx 00000
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To the Company:
The Limited, Inc.
Three Limited Parkway
Xxxxxxxx, Xxxx 00000
Attn: Secretary
17. Settlement of Claims. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense, or other right which
the Company may have against the Executive or others.
18. Miscellaneous. No provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is agreed
to in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, 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. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
19. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Ohio without giving
effect to the conflict of law principles thereof.
20. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
21. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, if any, understandings and arrangements, oral
or written, between the parties hereto with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
THE LIMITED, INC.
By: /s/ XXXXXX X. XXXXXX
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Name: Xxxxxx X. Xxxxxx
Title: Chairman of the Board
/s/ XXXX XXXXXX
--------------------------------
Xxxx Xxxxxx
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