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EXHIBIT 10-K
EMPLOYMENT AGREEMENT
This Agreement is made and entered into between Xxxxxx & Company
("Xxxxxx") and Xxxxx X. Xxxxx ("Employee") as of the 16th day of November, 1995.
1. POSITION
Xxxxxx hereby employs Employee as an employee and officer during the
term of this Agreement and Employee hereby accepts such employment upon the
terms and conditions hereinafter set forth and agrees to devote his full time,
energy and talents exclusively to the benefit of Xxxxxx in connection therewith.
2. DUTIES
The duties and responsibilities of the Employee shall include all of
those duties and responsibilities assigned to the position held by him,
together with such additional duties as may be assigned to him from time to
time by the Chief Executive Officer ("CEO") or the Board of Directors of Xxxxxx.
3. TERM
The initial term of this Agreement shall begin on December 1, 1995 and
shall terminate on December 1, 1997, unless terminated earlier by reason of the
Employee's resignation, death, retirement or termination for cause pursuant to
Section 5.3 hereof. Provided the Employee is attending to and performing his
duties on a regular daily basis as of the last day of any term hereof, the
Agreement shall automatically be extended for an additional term of two (2)
years following the expiration of the term, unless either Xxxxxx or the
Employee shall have delivered written notice to the other party hereto, not
less than sixty (60) days prior to such expiration, of its or his intention to
terminate the Agreement at the end of any term, in which case the Agreement
shall not be extended beyond December 1, 1997 or any two year term thereafter.
4. COMPENSATION
4.1 CASH AND BONUS. Employee shall receive at a minimum such annual
salary in effect with respect to Employee as of the date hereof. Such salary
shall be paid to Employee in accordance with Xxxxxx'x customary payroll
practices. Xxxxxx shall cause Employee's salary hereunder to be reviewed once
during each of the calendar years this Agreement is in effect with respect to
the amount of such salary to be paid to Employee in each of those years.
Employee shall also continue to participate in Xxxxxx'x Management Incentive
Program ("MIP") and Long Term Incentive Compensation Program for Executive
Management ("LTICP"), or any substitute bonus program, designated by the CEO,
for so long as such programs are
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in effect during any term of this Agreement. In no event shall Employee's
salary, MIP, or LTICP eligibility percentages be reduced during the term of
this Agreement. Notwithstanding anything herein to the contrary, the payment of
salary hereunder shall be suspended during any period Employee is not working
and is receiving short or long-term disability, or any other income
continuation benefits under any Xxxxxx benefit plan, and MIP and LTICP bonuses
shall only accrue during the first six months of any such period.
4.2 BENEFITS. During any term hereof, employee shall be entitled to
participate in Xxxxxx'x health, life insurance, disability, pension,
supplemental retirement, vacation and other benefit programs, whether financial
or quality of life in nature, to the same extent as other employees of Xxxxxx
in comparable executive positions.
5. TERMINATION
5.1 VOLUNTARY. Employee may at any time terminate this Agreement upon
sixty (60) days written notice. In that event, the payment to Employee of
salary through the period of delivery of the notice and termination, together
with any accrued vacation pay, shall constitute payment in full for all
compensation, including MIP and LTICP payments Employee may have accrued and
which might otherwise be entitled to be paid for the calendar year in which
Employee terminates, due to Employee.
5.2 BY COMPANY, FOR DISABILITY (INCLUDING SUBSTANCE ABUSE). Xxxxxx,
at its option, may dismiss Employee from its employment and terminate this
Agreement at any time after it shall have been determined by competent medical
authority that Employee has become physically or mentally incapacitated or has
become addicted to the use of alcohol or narcotics to such an extent that (s)he
is prevented by reason of such incapacity or addiction from properly performing
duties hereunder. The foregoing sentence shall not be construed to relieve
Xxxxxx of any obligations it would otherwise have under the Americans with
Disabilities Act of 1990 or applicable state statutes. In the event of any such
termination of this Agreement, Employee shall be paid whatever portion of
salary, vacation and bonuses, if any, under the terms of the Agreement, as
shall have accrued to him to the date of termination, and the payment to
Employee of any such salary, vacation pay, and bonus pay shall constitute
payment in full for all compensation due to Employee.
5.3 BY COMPANY, FOR CAUSE, INCLUDING MISCONDUCT, FRAUD OR OTHER
DISHONESTY. Xxxxxx, at its option, may dismiss Employee from its employment
and terminate this Agreement and all obligations hereunder at any time for
"Cause," which shall consist of the following:
(i) theft, fraud, or embezzlement, or conviction of any
felony; or
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(ii) Employee's breach of any provision of this Agreement; or
(iii) Employee's breach of any fiduciary or other duty of loyalty
to Xxxxxx (including divulging any information or business
material property of Xxxxxx described in Section 6.2), as
determined by Xxxxxx'x CEO (after Employee has been given
the opportunity to explain to the CEO his actions (or
failure to act) concerning such alleged breach).
In the event of a dismissal of Employee and termination of this
Agreement for Cause, payment to Employee of whatever portion of Employee's
salary and vacation which shall have accrued to the date of such termination
shall constitute payment in full for all compensation, including MIP and LTICP
payments Employee may have accrued and which might otherwise be entitled to be
paid for the calendar year in which Employee terminates, due to Employee.
5.4 BY COMPANY, WITHOUT CAUSE. In the event that Xxxxxx determines to
terminate the Employee's employment for other than the reasons specified in
Sections 5.2 and 5.3 hereof, the same shall not constitute a breach of this
Agreement. In such event, Xxxxxx shall continue to pay to the Employee on the
regular dates for payment thereof the salary which he would have earned under
this Agreement if his employment had continued for twenty-four (24) months from
the date of such termination. It is the intention of the parties that, by
reason of the foregoing provisions, the Employee shall in all events receive
payments for a period of two (2) years from the date of such termination in the
event of termination of his employment by Xxxxxx during the term of this
Agreement for any reason not specified in Sections 5.2 and 5.3. Such payment
shall be made to Employee, or his estate, subsequent to termination, regardless
of Employee's death or disability.
In addition to the foregoing, Xxxxxx shall pay to Employee an amount equal to
the Employee's target level MIP bonus for the year in which such termination
occurs, and any amount payable under the terms of the LTICP. Upon mutual
agreement between Xxxxxx and Employee, all amounts payable to Employee under
this section may be paid in a lump sum, discounted to the net present value
thereof at the date of payment, which agreement and payment shall be made
within 60 days of Employee's termination. In addition to the foregoing,
Employee shall continue to have available and accrue health and life insurance
benefits available in Section 4.2, through the original or any renewal term of
this Agreement, and Xxxxxx shall provide and pay such benefits as if Employee
were continuously employed until the expiration of the term.
5.5 OUTPLACEMENT SERVICES. In the event that Xxxxxx terminates
Employee's employment for other than the reasons specified in Section 5.2 and
5.3 hereof, Xxxxxx shall make available at its expense the services of a
recognized outplacement agency
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selected by Xxxxxx for the purpose of aiding Employee in seeking other
employment, in an amount equal to that of the customary executive outplacement
service package offered by such agency to executives with salaries and
positions comparable to Employee's.
6. NON-COMPETE COVENANT AND CONFIDENTIAL INFORMATION
6.1 NON-COMPETITION WITH XXXXXX UPON VOLUNTARY TERMINATION OF
EMPLOYMENT. As a further specific condition of his employment by Xxxxxx
hereunder and in further consideration of such employment, the Employee agrees
that, for a period of one (1) year following any voluntary termination by the
Employee of his employment (and, with respect only to clause (c) below, in the
event of involuntary termination of such employment), he will not, in any
State or territory of the United States of America, the District of Columbia,
Puerto Rico or any foreign country in which Xxxxxx has a member store at the
time of such termination of the Employee's employment (a) become associated, by
way of employment or any other type of arrangement, in any business activities
of any franchise, cooperative, or wholesale company with a core business in the
hardware industry, (b) become engaged in the conduct of a consulting or
advisory service for any business activity described in clause (a) above
carried on by any other person, firm or corporation, or (c) hire or engage the
services of any person who is or has been a salaried employee of Xxxxxx at any
time during the two (2) years immediately preceding the date of such
termination.
6.2 NONDISCLOSURE. It is understood and agreed that the method and
system of business used and developed by Xxxxxx involves manufacturing
processes, research and development, marketing programs, pricing procedures,
operational procedures, training procedures, long-range strategic plans,
retailers and customer information, lists of vendors to Xxxxxx, and other
secret and confidential information and/or trade secrets of Xxxxxx, and that
Employee, by virtue of his employment hereunder, necessarily has and will
become acquainted with all such information and trade secrets. Accordingly,
during the terms of this Agreement and for a period of four years following
the expiration or early termination hereof for any reason Employee shall keep
all secret information and trade secrets strictly confidential and shall not
(i) disclose to a third party any such information or trade secrets or any
facts related thereto, (ii) permit any third party to have access to any such
information or trade secrets; or (iii) use any such information or trade
secrets for any purpose other than performing his duties hereunder.
6.3 REMEDIES. In the event of a breach or threatened breach of the
provisions of Section 6.2, Xxxxxx shall be entitled to terminate this Agreement
and all obligations to Employee hereunder or in connection herewith pursuant to
Section 5.3 and to an injunction restraining Employee from so disclosing any
such trade secrets or confidential information. Nothing contained herein shall
be construed as prohibiting
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Xxxxxx from pursuing any other remedies available to Xxxxxx for such breach or
threatened breach, including the recovery of damages from Employee.
6.4 LIMITATION ON OUTSIDE BUSINESS ACTIVITIES. During any term
hereof, Employee shall devote his entire business time, attention and energies
in normal and, as required, extended work hours, to the business of Xxxxxx and
shall not engage in any other business activity, whether or not such business
activity is pursued for gain or profit, except that Employee may devote a
reasonable portion of time during business hours to professional, civic,
community or charitable activities, and, with the approval of Xxxxxx'x CEO, to
other activities not expressly mentioned herein.
7. MISCELLANEOUS
7.1 AMENDMENTS. Any amendments or modifications to this Agreement
shall be in writing and shall be signed by both parties. Any increase in salary
granted to Employee by Xxxxxx pursuant to the salary review provisions of
Section 4 shall not require the signatures of both parties, however, and this
Agreement shall be deemed to have been amended with respect to any such salary
increase by the CEO authorizing such increase and by Employee's continuing
thereafter to perform the services hereunder.
7.2 ASSIGNMENT. This Agreement shall not be assignable by either
party, but will be binding upon any successor company or organization to Xxxxxx,
including any company which Xxxxxx merges with, or forms a business combination
with. Employee acknowledges that in the event of such an assignment Xxxxxx shall
have no further obligations hereunder, but the Purchaser shall assume all such
obligations.
7.3 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with reference to the employment of Employee by Xxxxxx and
the compensation to be paid to Employee for or with respect to such employment.
All agreements, contracts, understanding or arrangements which may have been
heretofore made or had with reference to the employment of Employee by Xxxxxx
are hereby wholly abrogated, discharged and annulled, with the exception of any
existing rights of Employee under Xxxxxx'x employee benefit plans now maintained
by Xxxxxx and in which Employee is a participant. Xxxxxx further agrees that any
new or improved benefits provided generally to or made generally available to
Xxxxxx'x Employee employees will be provided or made available on the same basis
to Employee.
7.4 SURVIVAL. The parties' respective rights and obligations under
Section 4.5 and 6 shall survive the expiration or early termination of this
Agreement.
7.5 SEVERABILITY. Xxxxxx and the Employee recognize that the laws and
public policies of the various States of the United States and its territories,
the District
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of Columbia, Puerto Rico or any foreign country may differ as to the validity
and enforceability of certain provisions contained in agreements similar to
this Agreement. It is the intention of Xxxxxx and the Employee that the
provisions of this Agreement shall be enforced to the fullest extent
permissible under the laws and public policies of the State of Illinois, but
that the unenforceability (or the modification to conform with such laws or
public policies) of any provision or provisions hereof shall not render
unenforceable or impair the validity of the remainder of this Agreement.
Accordingly, if any provision of this Agreement shall be determined by a court
of competent jurisdiction to be invalid or unenforceable, either in whole or in
part, this Agreement shall be deemed amended to delete or modify, as necessary,
the offending provisions and to alter the balance of this Agreement in order to
render the same valid and enforceable to the fullest extent permissible as
aforesaid.
7.6 ARBITRATION. Any dispute over the provisions of this Agreement
shall be resolved through Arbitration at the American Arbitration Association
office in Chicago, or the office nearest to Employee's residence at the time a
claim is filed, pursuant to the applicable rules for arbitration of the
Association. The foregoing to the contrary notwithstanding, nothing contained
herein shall limit or restrict Xxxxxx'x right to seek equitable relief from any
court of competent jurisdiction in the event of any breach or threatened breach
of Sections 6.1 or 6.2 hereof.
7.7 ADVICE OF COUNSEL. Employee has been advised to consult with his
own counsel with respect to this Agreement and acknowledges that he has done
so, is entering into this Agreement of his own free will, intending to be
legally bound hereby.
IN WITNESS WHEREOF, Xxxxxx and Employee have executed this Agreement as
of the date first above written.
XXXXXX: EMPLOYEE
Xxxxxx & Company
/s/ XXXXX X. XXXXX
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By /s/ Xxxxxx X. Xxxxxx Xxxxx X. Xxxxx
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Xxxxxx X. Xxxxxx
Its President & CEO
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