EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of
the 16th day of June 1997, by and between Xxxxxxxx'x, Inc.
(collectively the "Company"), and Xxxx Xxxxxxx ("Executive").
Company and Executive agree as follows:
1. Employment. Company hereby employs Executive as President
and Chief Executive Officer of its Younkers Division or in such
other capacity with Company and its subsidiaries as Company's Board
of Directors shall designate.
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 $440,000 per year.
Executive's Base Salary shall be paid in installments in accordance
with Company's normal payment schedule for its senior management.
All payments shall be subject to the deduction of payroll taxes and
similar assessments as required by law.
(b) Cash and Stock Bonus. In addition to the Base
Salary, Executive shall be eligible, as long as he holds the
position stated in paragraph 1, for a yearly cash bonus of up to
50% of Base Salary based upon his performance in accordance with
specific annual objectives, set in advance, all as approved by the
Board of Directors. Executive shall also be eligible during the
term of this Agreement to earn a yearly stock-grant bonus of up to
4,500 shares, which will vest in equal one-third segments
(one-third on the award date, one-third on the first anniversary of
the award, and one-third on the second anniversary of the award);
provided, however, that Executive must continue to be employed by
Company for the shares to vest. The Company's Board of Directors
shall have complete discretion to award or not to award such bonus
shares in light or predetermined objectives.
(c) Initial Bonus. Company shall as soon as practicable
after Executive's first date of employment award Executive 5,000
shares of Company common stock and $100,000 as an initial bonus to
begin employment with the Company.
(d) Incentive Compensation. Executive shall be granted
a non-qualified option ("Option") to purchase fifty thousand
(50,000) shares of Company common stock at an option price equal to
the closing price of the stock on the Executive's first date of
employment, as reported in the Wall Street Journal. The Option is
granted pursuant to either the Company's 1994 Long-Term Incentive
Plan or the Company's 1997 Stock-Based Incentive Plan ("1997
Plan"), and shall be subject to the terms and conditions thereof.
The Option shall be exercisable on or after Executive's first day
of employment (the "Grant Date") to the extent of 20% of the shares
covered thereby; exercisable to the extent of an additional 20% of
the shares covered thereby on and after the first anniversary of
the Grant Date; exercisable to the extent of an additional 20% of
the shares covered thereby on and after the second anniversary of
the Grant Date; exercisable to the extent of an additional 20% of
the shares covered thereby on an after the third anniversary of the
Grant Date; and exercisable to the extent of any remaining shares
on and after the fourth anniversary of the Grant Date; provided,
however, that no portion of the Option shall be exercisable any
earlier than six months from the Grant Date. The Option may be
exercised up to ten (10) years from the Grant Date. Any portion of
the Option not exercised within said ten (10) year period shall
expire.
(e) Effect of Change of Control on Options. In the
event of a Change of Control (as defined in the Company's 1997
Plan), any Options granted to Executive prior to such Change of
Control shall immediately vest.
(f) Service Grant. Company shall award Executive 5,000
shares of common stock at the end of three continuous and
uninterrupted years of service, with 2,500 payable immediately on
the Executive's third anniversary of employment, and 2,500 payable
in the following calendar year.
4. Insurance 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.
5. Term. The term of this Agreement shall be for three
years, provided, however, that Company may terminate this Agreement
at any time upon thirty (30) days' prior written notice (at which
time this Agreement shall terminate except for Section 9, which
shall continue in effect as set forth in Section 9). In the event
of such termination by Company, Executive shall be entitled to
receive his Base Salary (at the rate in effect at the time of
termination) through the end of the term of this Agreement. Such
Base Salary shall be paid thereafter in regular payroll
installments. Notwithstanding the foregoing, if Company terminates
Executive's employment without cause (as defined below) within the
last year of this Agreement, or while Executive is employed without
an employment agreement, then Company shall pay Executive one
year's Base Salary as severance.
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, (b) other entitlements under this contract
that expressly survive death, and (c) any rights which Executive's
estate or dependents may have under COBRA or any other federal or
state law or which are derived independent of this Agreement by
reason of his participation in any plan maintained by Company.
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. Termination for cause shall be
effective immediately upon notice sent or given to Executive. For
purposes of this Agreement, the term "cause" shall mean and be
strictly limited to: (i) conviction of Executive, after all
applicable rights of appeal have been exhausted or waived, for any
crime that materially discredits Company or is materially
detrimental to the reputation or goodwill of Company; (ii)
commission of any material act of fraud or dishonesty by Executive
against Company or commission of an immoral or unethical act that
materially reflects negatively on Company, provided that Executive
shall first be provided with written notice of the claim and with
an opportunity to contest said claim before the Board of Directors;
or (iii) Executive's material breach of his obligations under
paragraph 2 of the Agreement, as so determined by the Board of
Directors.
(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. Change in Control. If Executive's employment is
terminated primarily as a result of a Change in Control of Company
or a Potential Change in Control of Company, as defined below,
Executive shall receive his Base Salary then in effect for a period
of two years or through the end of the term of this Agreement,
whichever is longer.
As used herein, the term "Change in Control" means the
happening of any of the following:
(a) Any person or entity, including a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, other than Company, a subsidiary of Company, or any
employee benefit plan of Company or its subsidiaries, becomes the
beneficial owner of Company's securities having 25 percent or more
of the combined voting power of the then outstanding securities of
Company that may be cast for the election for directors of Company
(other than as a result of an issuance of securities initiated by
Company in the ordinary course of business); or
(b) As the result of, or in connection with, any cash
tender or exchange offer, merger or other business combination,
sale of assets or contested election, or any combination of the
foregoing transactions, less than a majority of the combined voting
power of the then outstanding securities of Company or any
successor corporation or entity entitled to vote generally in the
election of directors of Company or such other corporation or
entity after such transaction, are held in the aggregate by holders
of Company's securities entitled to vote generally in the election
of directors of Company immediately prior to such transactions; or
(c) During any period of two consecutive years,
individuals who at the beginning of any such period constitute the
Board of Directors of Company cease for any reason to constitute at
least a majority thereof, unless the election, or the nomination
for election by Company's stockholders, of each director of Company
first elected during such period was approved by a vote of at least
two-thirds of the directors of Company then still in office who
were directors of Company at the beginning of any such period.
As used herein, the term "Potential Change in Control" means
the happening of any of the following:
(a) The approval by stockholders of an agreement by
Company, the consummation of which would result in a Change of
Control of Company; or
(b) The acquisition of beneficial ownership, directly or
indirectly, by any entity, person or group (other than Company, a
wholly-owned subsidiary thereof or any employee benefit plan of
Company or its subsidiaries (including any trustee of such plan
acting as trustee)) of securities of Company representing 5 percent
or more of the combined voting power of Company's outstanding
securities and the adoption by the Board of Directors of Company of
a resolution to the effect that a Potential Change in Control of
Company has occurred for purposes of this Agreement.
8. 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. For purposes of this Agreement, the
term "disabled" shall mean the inability of Executive (as the
result of a physical or mental condition) to perform the duties of
his position under this Agreement with reasonable accommodation and
which inability is reasonably expected to last at least one (1)
full year.
9. Non-competition; Unauthorized Disclosure.
(a) Non-competition. During the period Executive is
employed under this Agreement, and for a period of one year
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 affiliate is substantially
engaged at any time during the employment period;
(ii) shall not do business with any vendor that is
one of the top 100 vendors of the businesses conducted by Company
or its affiliates at the date hereof or 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.
(b) Unauthorized Disclosure. During the period
Executive is employed under this Agreement, and for a further
period of one year 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 his duties as an
executive for Company, any confidential information obtained by him
while in the employ of Company; provided, however, that
confidential information shall not include any information now
known or which becomes known generally to the public (other than as
a result of unauthorized disclosure by Executive).
(c) Scope of Covenants; Remedies. The following
provisions shall apply to the covenants of Executive contained in
this Section 9:
(i) the covenants contained in paragraph (i) and
(ii) of Section 9(a) shall apply within all the territories in
which Company or its affiliates or subsidiaries are 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 9, 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; provided, however,
Company shall be entitled to injunctive relief only to protect
itself from unfair competition of the type protected under
Tennessee law.
(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 9, 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 9 shall
survive the conclusion of Executive's employment by Company.
10. General Provisions.
(a) Notices. Any notice to be given hereunder by either
party to the other may be effected by personal delivery, in writing
or by 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 10 (a). Notices shall be deemed communicated as of the
actual receipt or refusal of receipt.
If to Executive: Xxxx Xxxxxxx
Younkers
000 Xxxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
If to Company: Xxxxx X. Xxxxxx
Executive Vice President of Law
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 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 respect to such
employment. Each party to this Agreement acknowledges that no
representations, inducements or agreements, oral or otherwise, that
have not been embodied herein, and no other agreement, statement or
promise not contained in this Agreement, shall be valid or binding.
Any modification of this Agreement will be effective only if it is
in writing signed by the party to be charged.
(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.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
XXXXXXXX'X, INC.
BY: /s/ Xxxxx X. Xxxxxx
_____________________
Xxxxx X. Xxxxxx
Executive Vice President
/s/ Xxxx Xxxxxxx
_____________________
Xxxx Xxxxxxx
Executive
