EXHIBIT 10.2
April 30, 2002
Xx. Xxxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxx Xxx, XX 00000
Dear Xxxx:
This letter agreement is intended to reflect our agreement concerning
your termination of employment with ShopKo Stores, Inc. (the "Company") and all
related matters. This letter agreement will not be effective until you have
signed this letter agreement and the Mutual Release in the form attached hereto
as Exhibit A, and not rescinded the Mutual Release during the applicable
rescission period.
1. Termination. In accordance with Section 10(b) hereof, you resigned
as President and Chief Executive Officer of the Company on April 8, 2002. Your
employment with the Company will otherwise terminate on November 30, 2002 or
such earlier date as you commence employment with another employer (the
"Termination Date").
2. Interim Employment. Until the Termination Date, you will continue to
perform such duties as the Company's Chairman directs including, but not limited
to, assisting in the transition of your work. During the period from April 8,
2002 until the Termination Date, your compensation will consist of (a) salary
continuation of $62,500 per month, prorated for any partial month of employment,
payable in accordance with the Company's regular payroll practices, and (b)
continued participation in the Company's health and dental insurance plans to
the same extent and on the same terms that you currently participate therein in
accordance with your status as a full-time employee of the Company until the
Termination Date. Except as provided above, all other benefits and perquisites
will cease as of April 8, 2002. Further, you will not be entitled to any bonus
or other incentive compensation for the Company's 2002 fiscal year. Pay for
vacation days and other personal time-off days in the amount of 4 weeks and 2
days will be made after the rescission period referenced at the end of this
letter agreement expires. There will be no further accrual of vacation or
personal time-off days during your employment with the Company.
3. Vesting and Exercise of Stock Options. Stock options for Company
stock held by you will continue to be outstanding and to vest until the
Termination Date in accordance with your status as an employee until the
Termination Date. In accordance with their terms, the stock options will remain
exercisable for three months after the Termination Date; at the expiration of
this three-month period, the stock options will expire.
4. Severance Benefits Upon Termination of Employment. The Company will
pay and/or provide you with the following in connection with the termination of
your employment with the Company, however none of the payments or benefits
provided for in this letter agreement will commence until you have signed the
Mutual Release attached hereto as Exhibit A, and the rescission period for the
Mutual Release has expired.
(a) The Company will continue your monthly salary of $62, 500
from the Termination Date until April 8, 2004, prorated for any partial
month (the "Severance Period"). These amounts will be paid without
mitigation or reduction for any compensation earned by you from any
other employment or self-employment.
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(b) If you elect continuation of health and dental insurance
coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended ("COBRA") in a timely manner for the period
beginning with the Termination Date, the Company will contribute a
monthly dollar amount toward payment for such COBRA coverage in the
same dollar amount as for active employees participating in the same
plan until April 8, 2004. You agree to enroll in any future employer's
health and dental plans for which you are eligible. If you thereafter
continue your COBRA coverage, it will be secondary. The Company shall
provide all necessary COBRA continuation forms to you upon execution of
this Agreement. Your eligibility for COBRA coverage will commence on
the Termination Date and expire in accordance with the provisions of
COBRA.
None of the payments under this Section 4 shall be included as compensation for
purposes of any retirement, deferred compensation or welfare benefit plans or
programs of the Company. During the time you are receiving these salary
continuation payments, you agree you are not eligible for, and will not apply
for, unemployment compensation benefits. The payments and severance benefits
provided to you pursuant to this letter agreement are to be paid and provided in
lieu of any severance payments, severance benefits and severance protections
provided in any other plan or policy of the Company.
5. Nondisclosure.
(a) From the date of this letter agreement until April 8, 2004
(the "Restricted Period"), you shall not make any Unauthorized
Disclosure. For purposes of this Agreement, "Unauthorized Disclosure"
shall mean your use or disclosure, without the consent of the Board of
Directors of the Company, to any person, other than use or disclosure
that may be legally required (provided the provisions of Section 5(c)
hereof are complied with), of any confidential information obtained by
you while in the employ of the Company, including, but not limited to,
confidential information with respect to any of the Company's
customers, suppliers, contractors, methods of operation, services,
products, mechanisms, databases, processes, programs and access codes
(the "Confidential Information"); provided, however, that Confidential
Information shall not include any information which was or becomes
generally available to the public (i) other than as a result of a
wrongful disclosure by you or (ii) any information compelled to be
disclosed by applicable law or administrative regulation; provided that
you, to the extent not prohibited from doing so by applicable law or
administrative regulation, shall give the Company written notice of the
information to be so disclosed pursuant to clause (ii) of this sentence
as far in advance of its disclosure as is practicable. Nothing herein
shall limit your confidentiality obligation as regards any information
which is a trade secret as defined in Section 134.90 of the Wisconsin
Statutes, or any successor thereto.
(b) All memoranda, notes, records, papers, financial models,
mechanisms, programs, flow charts, work papers, source codes, computer
codes, designs, software, data and other documents and all copies
thereof relating to the operations or business of the Company, some of
which may be prepared by you, and all objects associated therewith
(such as samples) in any way obtained by you in connection with the
performance of your duties hereunder shall be the exclusive property of
the Company. You shall not copy or duplicate any of the aforementioned,
not remove them from the Company's facilities, nor use any information
concerning them. You will deliver the original and all copies of all of
the aforementioned that may be in your possession to the Company on
termination of your employment.
(c) If you are requested or become legally required or
compelled (by oral questions, interrogatories, requests for information
or documents, subpoena, civil or criminal investigative demand, or
similar process) or are required by a governmental body to make any
disclosure that is prohibited or otherwise constrained by this letter
agreement, you will provide the
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Company with prompt notice of such request so that it may seek an
appropriate protective order or other appropriate remedy. Subject to
the foregoing, you may furnish that portion (and only that portion) of
the Confidential Information that you are legally compelled or are
otherwise required to disclose or else stand liable for contempt or
suffer other material censure or material penalty.
6. Nonsolicitation and Nondisparagement. In consideration for the
Company entering into this letter agreement, during the Restricted Period:
(a) You will not, directly or indirectly, induce, solicit,
entice or procure any person who is a management or exempt employee of
the Company, or has been such a management or exempt employee within
the one year period preceding such contact by you, to terminate his or
her employment with the Company or to accept employment with any
person, company, business entity, or other organization whatsoever.
(b) You, except as may be required by legal process, will
refrain from making any written or oral statement, publicly or
privately, which disparages the Company or its current or former
directors or officers.
(c) The Company (by and through its executive officers and
directors), except as may be required by law or by the rules of any
stock exchange on which the Company's securities trade, will refrain
from making any written or oral statement, publicly or privately, which
disparages you.
7. Noncompetition. In consideration for the Company entering into this
letter agreement, during the Restricted Period, you will not, directly or
indirectly, act as an officer, director, partner, principal, employee, agent,
representative, advisor, consultant or independent contractor of, or in any way
assist, whether or not for consideration, the following companies or any of
their affiliates: Wal-Mart Stores, Inc., Target Corporation, Kmart Corporation,
Rite Aid Corporation, Walgreen Co., Xxxxxxxxx'x Inc. (which includes Osco Drug),
Bi-Mart, Xxxxxxxx-ALCO Stores, Inc. You acknowledge that the scope of this
limitation is reasonable in that, among other things, providing any such
services or assistance during the Restricted Period would permit you to use
unfairly your close identification with the Company and the supplier contacts
you developed while employed by the Company and would involve the use or
disclosure of Confidential Information pertaining to the Company.
8. Enforcement and Survival of Covenants. You recognize that
irreparable and incalculable injury will result to the Company, its businesses
or properties in the event of his breach of any of the restrictions imposed by
Sections 5, 6 and 7, above. In the event of any such actual, impending or
threatened breach, the Company will be entitled, in addition to any other
remedies and damages, to stop payment under Sections 2 and 4 hereof and to
temporary and permanent injunctive relief (without the necessity of posting a
bond or other security) restraining the violation, or further violation, of such
restrictions by you and by any other person or entity for whom you may be acting
or who is acting for you or in concert with you. You specifically agree that
Sections 5, 6 and 7 shall survive the termination or reduction in any payments
to you under Sections 2 and 4 hereof.
9. Notice to Prospective Employers and the Company. You agree to give
written notice and a copy of this letter agreement to any future prospective
employer prior to accepting any such employment if the position will commence
prior to the expiration of the Restricted Period. You also agree to give written
notice to the Company of your intention to accept a position with any future
prospective employer if the position will commence prior to the expiration of
the Restricted Period. The latter notice shall include the name and address of
the prospective employer and the name of the person(s) to whom you will report.
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10. Other Agreements. In exchange for the benefits provided to you in
Sections 2 and 4, above, you hereby agree as follows:
(a) You acknowledge that you and the Company have agreed on
the form of press release announcing your termination of employment and
the related communication plan.
(b) You resigned as an officer and director of the Company and
any of the Company's Affiliates, as defined below, effective as of 5:00
p.m., Green Bay time, on April 8, 2002. For purposes of this Section,
"Affiliate" shall mean any corporation, partnership, limited liability
company or other business entity which, directly or indirectly through
one or more intermediaries, is controlled by the Company. The term
"control" means the power, directly or indirectly, to vote 50% or more
of the securities which have ordinary voting power in the election of
directors (or individuals filling any analogous positions). This letter
confirms that resignation.
(c) You agree to execute a second Mutual Release in the form
attached hereto as Exhibit A after the Termination Date. If you fail to
sign the Mutual Release, or rescind it, the payments provided for in
Section 4 hereof shall end.
11. Agreement Regarding Litigation/Investigation. You agree to
cooperate with and assist the Company (a) in defense of any litigation involving
the Company, and (b) in connection with any inquiry or investigation of the
Company or its business or affairs by any stock exchange, governmental or
regulatory authority, or by the Company itself. You shall provide such
cooperation and assistance regardless of whether such litigation, investigation
or inquiry was initiated prior to or after the Termination Date. The Company
agrees to reimburse you for all reasonable out-of-pocket expenses you incur in
connection with the performance of your duties under this Section 11; provided,
however, that the Company, except as otherwise provided in any agreement between
you and the Company or its affiliates, or By-laws of the Company or its
affiliates, providing for indemnification to you, will not be under any
obligation and will not pay you any attorney's fees, wages, witness fees or
other amounts for the services you provide pursuant to this Section 11. Nothing
herein shall impose upon you any obligation respecting the substance of the
testimony you provide in any legal proceeding, and the Company expects you to
testify truthfully in any legal proceeding. This Section 11 will survive the
termination of this letter and the reduction or termination of the payments to
you pursuant to Sections 2 and 4 hereof. Failure to comply with the provisions
of this Section 11 will result in termination of any remaining payments to you
under Sections 2 and 4 hereof.
12.Consents, Approvals and Authorizations. The Company warrants and
represents to you that all consents, approvals and authorizations required for
the Company to execute, deliver and perform this letter agreement and the Mutual
Release (the "Agreements") have been obtained and are in full force and effect
as of the date hereof, and the Agreements are valid, binding and enforceable
obligations of the Company in accordance with their terms.
13. Miscellaneous. Should you accept the terms of the Company's
proposal, the following will apply:
(a) The Agreements constitute the complete understanding
between you and the Company concerning all matters affecting your
employment with the Company and the termination thereof. If you accept
this proposal, the Agreements supersede, as of the date of your
consent, all prior agreements, understandings and practices, concerning
such matters, including, but not limited to, the Change of Control
Agreement between you and the Company, or any successor thereto, and
any personnel documents, handbooks, or policies and any prior
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customs or practices of the Company; provided, however, that the
Agreements shall not affect any indemnification agreement between you
and the Company.
(b) The Agreements and their interpretation shall be governed
and construed in accordance with the laws of Wisconsin without regard
to their principles of conflicts of laws and shall be binding upon the
parties hereto and their respective successors and assigns.
(c) The sections, subsections, paragraphs and subparagraphs of
this letter agreement are severable, and in the event any such section,
subsection, paragraph or subparagraph may be held to be invalid by such
court, this letter agreement shall be interpreted as if any such
invalid section, subsection, paragraph or subparagraph were not
contained in this letter agreement.
You may accept this letter agreement by signing it in the space
provided below and the Mutual Release Agreement and returning one original of
each to Corporate Secretary, ShopKo Stores, Inc., 000 Xxxxxxx Xxx, Xxxxx Xxx, XX
00000. If you rescind the Mutual Release during the applicable rescission
period, the payments pursuant to Sections 2 and 4 of this letter agreement and
the vesting provided in Section 3 of this letter agreement shall cease.
Very truly yours,
SHOPKO STORES, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Xxxx X. Xxxxxxx, Chairman
I agree with and accept the above-mentioned terms contained in this letter
agreement and agree to be bound by them.
Dated as of this 30th day of April, 2002.
/s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx
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