SIXTH AMENDED AND RESTATED
SIXTH AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Sixth Amended and Restated Employment Agreement ("Agreement")
is entered into as of the 1st day of March 2000, by and between
Saks Incorporated ("Company"), and R. Xxxx Xxxxxx ("Executive").
Company and Executive agree as follows:
1. Employment. Company hereby employs Executive as Chief Executive
Officer of Company. It is anticipated that Executive will be elected Chairman of
the Board.
2. Duties. During his employment, Executive shall devote substantially
all of his working time, energies, and skills to the benefit of Company's business.
Executive agrees to serve Company diligently and to the best of his ability and to
use his best efforts to follow the policies and directions of Company's Board of
Directors.
3. Compensation. Executive's compensation and benefits under this Agreement shall be as
follows:
(a) Base Salary. Company shall pay Executive a base salary ("Base Salary") at a
rate of no less than $950,000 per year. In addition, the Board of Directors of Company shall, in good
faith, consider granting increases in such Base Salary based upon such factors as Executive's performance
and the growth and/or profitability of Company. Executive's Base Salary shall be paid in installments in
accordance with Company's normal payment schedule for its senior management. All payments
(b) Bonus. In addition to the Base Salary, Executive shall be eligible pursuant
to the 1998 Senior Executive Bonus Plan for a yearly cash bonus with a maximum potential of 150% ("Maximum
Bonus Potential") of Base Salary based upon his performance, in accordance with specific annual objectives,
set in advance, all as approved by the Board of Directors.
(c) End of Five-Years Service Stock Grants. In accordance with Executive's
prior employment agreements, Company shall issue to Executive fifty thousand (50,000) shares of common stock
as soon as possible after October 11, 2001, provided Executive has served the Company continuously for five
years following October 11, 1996, the date of Executive's Second Amended and Restated Employment Agreement.
In the event of Executive's death prior to October 11, 2001, Executive's estate s
(d) Annual Stock Grant Bonus. Pursuant to the 1998 Senior Executive Bonus
Plan, an amount up to twenty thousand (20,000) shares of Company common stock may be issued to Executive as
soon as possible after the end of each fiscal year of Company, based upon annual targeted growth in
intrinsic value of the Company or other factors, as determined by the Human Resources Committee of the Board
of Directors. The Human Resources Committee, subject to approval from the Board of Directo
(e) Second Annual Stock Grant Bonus. Pursuant to the 1998 Senior Executive Bonus
Plan, Company shall award Executive a bonus of up to 20,000 (twenty thousand) shares of Company common stock
on the basis of growth in earnings per share with the Human Resources Committee of the Board of Directors
setting the objectives in advance. The Human Resources Committee shall have sole and exclusive discretion
to determine whether that objective has been met, and the Committee may consider
(f)New Option Grant. Executive is granted a non-qualified option ("Option") to
purchase 500,000 shares of Company common stock at an option price equal to the closing price of the stock
at the close of business on February 18, 2000 (the "Grant Date"), as reported in the Wall Street
Journal. The Option is granted pursuant to the Company's 1994 Amended and Restated Long-Term Incentive
Plan ("1994 LTIP"), and shall be subject to the terms and conditions thereof. The Option s
(g) New Restricted Stock Grant. Executive is granted 100,000 share of Company
common stock to vest 100% on February 18, 2003.
(h)Effect of Change In Control on Options and Restricted Stock. In the event of a
Change in Control (as defined in the Company's 1994 LTIP), any Options and restricted stock granted to
Executive prior to such Change In Control shall immediately vest.
(i) Forgiveness of Loan. Company shall continue to forgive the original $500,000
interest-free loan due January 31, 1999, in $100,000 increments, at the end of each fiscal year; provided,
however, that Executive must continue to be employed by Company for any portion of the loan to be forgiven,
and provided further that Executive must repay any outstanding balance if he terminates employment.
(j) Company Aircraft. Company requires Executive to use Company aircraft for
personal or family use, whenever possible. Such use is important for the safety of Executive and so that
Executive may remain in communications with other Company officials as necessary. Executive may use Company
aircraft or charter aircraft for such uses without further reimbursement to Company.
Upon Executives termination of employment for any reason, Executive shall be entitled to use at his
discretion and without cost to Executive, an aircraft, comparable in size and quality to the aircraft he is
using as of this date, for 250 hours a year for three years.
Upon Executives termination of employment for any reason after a Change in Control (as defined in the
1994 LTIP), Executive shall have the option to buy any one Company aircraft at its then book value on the
Companys books. If he exercises this option, Company shall reimburse him for the operating costs of the
aircraft for up to 250 hours per year for three years.
(k) Future Restricted Stock Agreement. Beginning in fiscal year 2001, Company
shall enter into a new restricted stock agreement patterned after Executive's prior restricted stock
agreement entered into in 1998, following the significant terms of the 1998 agreement as it relates to
number of shares and vesting.
(l) Birmingham Expenses. Because Company requires Executive to spend time in
Birmingham, Alabama, Company shall reimburse Executive for the expenses of one Birmingham country club and
one car in Birmingham.
4. Insurance and Other Expenses and Benefits. Company shall allow Executive to
participate in each employee benefit plan and to receive each executive benefit that Company provides for
senior executives at the level of Executive's position.
(a) Company shall pay the reasonable costs for Executive's tax and financial planning,
and shall buy split-dollar life insurance for Executive in accordance with the directions of the Human
Resources Committee of the Board. In addition, Company shall reimburse Executive, as additional
compensation, his share of annual premiums paid for split dollar life insurance.
(b) Company shall provide security for Executive's residences or shall reimburse
Executive for such expenses.
(c) Because Company requires Executive to spend time in New York City, Company shall
provide Executive with a driver for the New York area, and, at Executives request, shall provide a New York
apartment or reimburse Executive for all the costs of such apartment, including but not limited to
utilities, insurance, housekeeping, and capital costs. Executive shall cooperate with Company to determine
the proper method of providing these services or reimbursing the Executive for such expense
(d) Executive shall be entitled to lifetime participation in Companys health plan in the
event that he retires from Company.
5. Term; termination without Cause or for Good Reason. The term of this Agreement
shall be for five (5) years, provided, however, that Company may terminate this Agreement at any time
without Cause, as defined below, upon thirty (30) days' prior written notice and Executive may terminate
this Agreement for Good Reason. Good Reason shall mean a mandatory relocation from the Memphis, Tennessee
area, or at any time Executive chooses to terminate employment within one year after a Change
(a) a sum equal to the Base Salary then in effect plus 25% of Executive's Maximum Bonus
Potential times the longer of 3 years or the balance of the time remaining in the Term, and
(b) immediate vesting of all stock options and restricted stock awards (including service
grants) with the ability to exercise the stock options for the shorter of two years or the original
expiration period of the option, and
(c) participation in Company's health plans, with family coverage, for his life, and
continuation of split-dollar insurance agreements for five years, and
(d) vesting at the retirement rate in Companys Supplemental Savings Plan with no
reduction in the current rate of return, and
(e) if any payment, right or benefit provided for in this Agreement or otherwise paid to
Executive by Company is treated as an "excess parachute payment" under Section 280(G)(b) of the Internal
Revenue Code of 1986, as amended, (the "Code"), Company shall indemnify and hold harmless and make whole, on
an after-tax basis, Executive for any adverse tax consequences, including but not limited to providing to
Executive on an after-tax basis the amount necessary to pay any tax imposed by Code
In addition, this Agreement shall terminate upon the death of Executive, except as to: (a)
Executive's estate's right to exercise any unexercised stock options pursuant to Company's stock option plan
then in effect, with it being understood that Company would follow its traditional policy of vesting all of
Executives stock options upon death, (b) other entitlements under this contract that expressly survive
death, (c) vesting at the retirement rate of benefits under Company's Supplemental Saving
6. Termination by Company for Cause. (a) Company shall have the right to terminate
Executive's employment under this Agreement for Cause, in which event no salary or bonus shall be paid after
termination for Cause except for (i) earned but unpaid wages and benefits, and (ii) Company shall vest a pro
rata fractional portion of Executive's stock options based on the number of days Executive was employed
since the last vesting of such options. Termination for Cause shall be effective i
(b) In the event that Executive's employment is terminated, Executive agrees to resign as
an officer and/or director of Company (or any of its subsidiaries or affiliates), effective as of the date
of such termination, and Executive agrees to return to Company upon such termination any of the following
which contain confidential information: all documents, instruments, papers, facsimiles, and computerized
information which are the property of Company or such subsidiary or affiliate.
7. Disability. If Executive becomes disabled at any time during the term of this
Agreement, he shall after he becomes disabled continue to receive all payments and benefits provided under
the terms of this Agreement for a period of twelve consecutive months, or for the remaining term of this
Agreement, whichever period is shorter. In the event that Executive is disabled for more than twelve
consecutive months during the term of this Agreement, Executive shall, at the expiration of t
8. Non-competition; Unauthorized Disclosure.
(a) Non-competition. During the period Executive is employed under this
Agreement, and for a period of two years thereafter, Executive:
(i) shall not engage in any activities, whether as employer, proprietor, partner,
stockholder (other than the holder of less than 5% of the stock of a corporation the securities of which are
traded on a national securities exchange or in the over-the-counter market), director, officer, employee or
otherwise, in competition with (i) the businesses conducted at the date hereof by Company or any subsidiary
or affiliate, or (ii) any business in which Company or any subsidiary or affiliat
(ii) shall not solicit, in competition with Company, any person who is a customer of
the businesses conducted by Company at the date hereof or of any business in which Company is substantially
engaged at any time during the term of this Agreement; and
(iii) shall not induce or attempt to persuade any employee of Company or any of its
divisions, subsidiaries or then present affiliates to terminate his or her employment relationship in order
to enter into competitive employment.
(b) Unauthorized Disclosure. During the period Executive is employed under this
Agreement, and for a further period of two years thereafter, Executive shall not, except as required by any
court or administrative agency, without the written consent of the Board of Directors, or a person
authorized thereby, disclose to any person, other than an employee of Company or a person to whom disclosure
is reasonably necessary or appropriate in connection with the performance by Executive of
(c) Scope of Covenants; Remedies. The following provisions shall apply to the
covenants of Executive contained in this Section 8:
(i) the covenants contained in paragraph (i) and (ii) of Section 8(a) shall apply
within all the territories in which Company is actively engaged in the conduct of business while Executive
is employed under this Agreement, including, without limitation, the territories in which customers are then
being solicited;
(ii) without limiting the right of Company to pursue all other legal and equitable
remedies available for violation by Executive of the covenants contained in this Section 8, it is expressly
agreed by Executive and Company that such other remedies cannot fully compensate Company for any such
violation and that Company shall be entitled to injunctive relief to prevent any such violation or any
continuing violation thereof;
(iii) each party intends and agrees that if, in any action before any court or agency
legally empowered to enforce the covenants contained in this Section 8, any term, restriction, covenant or
promise contained therein is found to be unreasonable and accordingly unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent necessary to make it enforceable by
such court or agency; and
(iv) the covenants contained in this Section 8 shall survive the conclusion of
Executive's employment by Company.
9. General Provisions.
(a) Notices. Any notice to be given hereunder by either party to the other may
be effected by personal delivery, facsimile, electronic mail or U.S. mail, registered or certified, postage
prepaid with return receipt requested. Mailed notices shall be addressed to the parties at the addresses
set forth below, but each party may change his or its address by written notice in accordance with this
Section 9(a). Notices shall be deemed communicated as of the actual receipt or refusal
If to Executive:R. Xxxx Xxxxxx
0000 Xxxxxx Xxxx
Xxxxxxx, XX 00000
If to Company:Saks Incorporated
000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
(b) Partial Invalidity. If any provision in this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall, nevertheless,
continue in full force and without being impaired or invalidated in any way.
(c) Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Tennessee.
(d) Entire Agreement. Except for any prior grants of options, restricted stock, or other
forms of incentive compensation evidenced by a written instrument -- some of which are attached hereto as
Exhibit A -- or by an action of the Board or Directors, this Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect to employment of Executive by
Company and contains all of the covenants and agreements between the parties with respec
(e) No Conflicting Agreement. By signing this Agreement, Executive warrants that he is
not a party to any restrictive covenant, agreement or contract which limits the performance of his duties
and responsibilities under this Agreement or under which such performance would constitute a breach.
(f) Headings. The Section, paragraph, and subparagraph headings are for convenience or
reference only and shall not define or limit the provisions hereof.
(g) Attorneys Fees. If any case is brought to enforce any right or provision set out in
this Agreement, Company shall reimburse Executive for reasonable costs incurred (including attorneys' fees)
by Executive: (i) in the case of termination of employment that occurs prior to a Change in Control only if
the Executive substantially prevails, and (ii) in the case of termination of employment after a Change in
Control regardless of the outcome of the action with reimbursement being made as e
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
SAKS INCORPORATED
BY: _____________________
Xxxxx X. Xxxxxx
President and CAO
____________________
Xxxxx X. Xxxxxx
General Counsel
__________________
R. Xxxx Xxxxxx
Executive
