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EXHIBIT 10.5
XXXXXXXX'X, INC.
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
June 12, 0000
Xx. Xxxxxx X. Xxxxxxxx
XXX, Ltd.
000 Xxxx Xxxxxxxx
Xxxxx Xxxx, Xxxxxxxxx 00000
Dear Xx. Xxxxxxxx:
In recognition of your contribution to the growth and success of
Xxxxxxxx'x, Inc. and its related companies (the "Company"), we are pleased to
offer to retain you ("Consultant") as a consultant to the Company, subject to
the following terms of this letter agreement (the "Agreement").
1. Term and Duties. The term of this agreement shall commence on the
date hereof and expire on the seventh anniversary of the date hereof (the
"Term"). During the Term, Consultant shall provide consulting services and
advice to the Company, with regard to the purchasing and marketing of
merchandise, leasing, store selection and location, operations, internal
management, and such other areas as may be mutually agreed between the Company
and Consultant, as shall be directed from time to time by the Company's Board of
Directors or the President of the Company (the "Consulting Services"). Any
out-of-town travel required in connection with the performance of the Consulting
Services shall be scheduled so as not to interfere with other scheduled
obligations of Consultant.
2. Independent Contractor Status. Nothing herein shall be construed
as evidence of an employment relationship between the Company and Consultant.
Consultant shall be treated as an independent contractor for all purposes,
including without limitation, federal, state and local withholding, employment
and payroll tax purposes.
3. Consulting Fee. The Company shall pay Consultant, and Consultant
hereby agrees to accept, as compensation for the Consulting Services rendered
hereunder, an annual consulting fee during the Term of $679,000 (the "Consulting
Fee") commencing on the date hereof. The Consulting Fee shall be payable in
annual installments of $679,000 on April 15 of each year during the Term (each,
a "Consulting Payment"). The first Consulting Payment,
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payable on April 15, 1997, shall be equal to a prorated portion of $679,000
based on the number of days between the date hereof and April 15, 1997.
4. Expenses. The Company shall reimburse Consultant for all
pre-approved expenses incurred in connection with the performance of the
Consulting Services.
5. Confidential Information. Consultant agrees that, during and after
the Term, Consultant shall keep secret and retain in strictest confidence, and
shall not use for Consultant's benefit or the benefit of others any proprietary,
confidential or secret matters relating to the Company including, without
limitation, financial information, trade secrets, customer lists, details of
client or consultant contracts, pricing policies, operational methods, marketing
plans or strategies, product development techniques or plans, business
acquisition plans, new personnel acquisition plans, methods of manufacture,
technical processes, designs and design projects, inventions and research
projects of the Company, its affiliates or any other entity which may hereafter
become an affiliate thereof, learned, acquired or developed by Consultant while
retained by the Company.
6. Termination.
6.1. Change in Control, etc. Upon the occurrence of a Change in
Control, Qualified Public Offering, Sale or Refinancing (such terms being used
herein as they are defined in the Recapitalization Agreement dated April 26,
1996 among the Company, Kirkland Holdings L.L.C. and the Company's former
majority shareholders, including Consultant (the "Recapitalization Agreement"))
during the Term, this Agreement shall terminate and Consultant shall be paid a
pro-rated portion of the applicable Consulting Payment through such termination
date.
6.2. Death or Disability. In recognition of Consultant's past
services to the Company, the Consulting Payments provided for hereunder shall
continue to be made to Consultant or his estate notwithstanding the death or
disability of Consultant during the Term, subject to early termination as
provided in Section 6.1.
6.3. Continuing Obligation. The Company's obligation to pay the
compensation to Consultant under this Agreement may be terminated only as
provided in Section 6.1, and shall not be terminated for any other reason.
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7. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the Company and Consultant and their respective
successors, executors, administrators, heirs and/or permitted assigns; provided,
however, that neither Consultant nor the Company may make any assignments of
this Agreement or any interest herein, by operation of law or otherwise, without
the prior written consent of the other party, except that, without such consent,
the Company may assign this Agreement to any successor to all or substantially
all of its assets and business by means of liquidation, dissolution, merger,
consolidation, transfer of assets, or otherwise.
8. Subordination. The obligations of the Company set forth in this
letter agreement with respect to the Consulting Fee are intended to be and are
subordinated in all respects to the Bank Debt and Mezzanine Debt, as such terms
are defined in the Recapitalization Agreement. In the event that any payment of
the Annual Salary is deferred by reason of this Section 8, payment shall be made
to Consultant as soon as allowable under the terms of the Bank Debt and
Mezzanine Debt and the payment shall be increased by nine percent (9%) per
annum, compounded semi-annually from the date originally due until the date
paid. Except as otherwise required by law, the Company agrees not to treat the
Consultant for any purpose as having received any payment of compensation any
earlier than the date actually paid to the Consultant by cash or check if the
Consultant's compensation is reduced because of subordination under this Section
8 or because of any other reason whatsoever.
9. Notice. Any notice or communication required or permitted under
this Agreement shall be made in writing and (i) sent by overnight courier, (ii)
mailed by certified or registered mail, return receipt requested or (iii) sent
by telecopier, addressed to the addresses of the parties set forth herein (and,
in the case of the Company, with a copy to Pepper, Xxxxxxxx & Xxxxxxx, 3000 Two
Xxxxx Square, 00xx xxx Xxxx Xxxxxxx, Xxxxxxxxxxxx, XX 00000, Attention: Xxxx X.
Xxxxxxxx, Esquire); or to such other address as either party may from time to
time duly specify by notice given to the other party in the manner specified
above.
10. Entire Agreement; Amendments. This Agreement contains the entire
agreement and understanding of the parties hereto relating to the subject matter
hereof, and merges and supersedes all prior and contemporaneous discussions,
agreements and understandings of every nature between the parties hereto
relating to the terms of this Agreement. This Agreement may not be changed or
modified, except by an Agreement in writing signed by each of the parties
hereto.
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11. Waiver. The waiver of the breach of any term or provision of this
Agreement shall not operate as or be construed to be a waiver of any other or
subsequent breach of this Agreement.
12. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Tennessee. This provision shall survive
the termination of the Agreement.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
Please indicate your acceptance of this offer and your agreement
to render Consulting Services to the Company subject to the terms set forth
above by executing and returning the enclosed copy of this letter.
Sincerely,
ATTEST: XXXXXXXX'X, INC.
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx Xxxxxxxx
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Title: VP/Sec Name:
Title: President
Agreed to and Accepted:
/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx Xxxxxxxx
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