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EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT is entered into as of the 25th day of September, 1998,
by and among K B TOY OF MASSACHUSETTS, INC., a Massachusetts corporation ("K B
Toy"), CONSOLIDATED STORES CORPORATION, a Delaware corporation and the ultimate
parent company of K B Toy ("CSC") (K B Toy and CSC are hereinafter jointly
referred to as "Employer"), and Xxxxxxx X. Xxxxxx, an individual residing in
Massachusetts ("Executive").
W I T N E S S E T H:
WHEREAS, Employer and Executive desire to enter into this Employment Agreement
to insure to Employer and Employer's direct and indirect subsidiaries the
services of Executive and to set forth the rights and duties of the parties
thereto; and
WHEREAS, Employer desires to utilize Employee's services and responsibilities in
a manner that will cause Employee to develop confidential and proprietary
information, strategies and practices, the disclosure or use of which by anyone
for the benefit of any person or entity other than Employer would cause
substantial and irreparable harm to Employer; and
WHEREAS, Employer and Employee acknowledge the need for certain restrictions
upon Employee's conduct subsequent to a termination of his employment with
Employer in order to protect Employer from such harm; and
WHEREAS, Employee desires to accept the nature and scope of services and
responsibilities, together with the compensation and other benefits described in
this Employment Agreement, in exchange for, among other things, the restrictions
described in this Employment Agreement which restrict Employee's conduct and
employment with other persons or entities subsequent to a termination of his
employment with Employer.
NOW, THEREFORE, in consideration of the mutual promises herein contained, the
parties agree as follows:
1. EMPLOYMENT; DUTIES.
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(a) EMPLOYMENT. Employer hereby employs Executive and appoints him Chief
Executive Officer and President of CSC's group of affiliated K B Toy
entities commonly referred to internally as the "K B Toy Division,"
the financial aspects of which are included in CSC's annual report to
stockholders as the "Toy Division," as well as the Chief Executive
Officer and President of K B Toy (collectively, "President, Toy
Division"), with such duties as may from time to time be prescribed
by the Board of Directors of K B Toy and CSC and the Chief Executive
Officer of CSC, and Executive hereby accepts such employment, on the
terms and conditions hereinafter set forth.
(b) DUTIES. During the term of this Employment Agreement, Executive shall
devote his entire business time and attention to his employment and
perform diligently such duties as are customarily performed by a
divisional President of a company the size and structure of CSC and
its subsidiaries, together with, as of the date hereof, such other
duties as may be reasonably requested from time to time by the Chief
Executive Officer or the Board of Directors of CSC, which duties
shall be consistent with his position as set forth above and in
Paragraph 2 of this Employment Agreement. Executive shall cooperate
and work with all committees formed by the Board of Directors of CSC
including, but not limited to, the Audit Committee, the Compensation
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Committee, and the Nominating Committee. As President, Toy Division,
Executive shall have the authority to implement the policies and
decisions of the Board of Directors of CSC and K B Toy and to assist
the Chief Executive Officer of CSC in directing Employer's business
strategy, development and operations. So long as Executive shall
serve as President, Toy Division, Executive shall report only to the
Board of Directors of each of CSC and K B Toy as well as the Chief
Executive Officer of CSC, and shall not be subject to the authority,
direction or discretion of any officer, whether in a position now
existing or hereafter created or appointed. If there shall occur,
with respect to the Executive, any of the following events: (i) any
diminution of duties or diminution in authority, title or office;
(ii) any assignment of duties inconsistent with his position as
President, Toy Division; (iii) any change in title to a title of
lesser authority; (iv) a material withdrawal of administrative
support, or a permanent assignment to office space inconsistent with
the position of President, Toy Division; (v) any reduction in
compensation not consistent with and equitably proportionate to
general reductions made in compensation of other executive officers
of CSC or K B Toy; or (vi) removal from the Board of Directors of
CSC, or the failure of management to renominate Executive for
membership on CSC's Board of Directors in connection with a meeting
of shareholders, then any such event shall be considered to be a
Change in Control of Employer and shall entitle Executive, in
addition to any other rights he may have, to the rights and remedies
provided in Paragraph 7(d) hereof; PROVIDED, HOWEVER, that Executive
shall notify Employer in writing of any such alleged event or events,
specifying the same, and Employer shall have a period of fifteen (15)
days after such notice to cure, remedy or rescind the actions,
circumstances or conditions causing or giving rise to such event or
events before Executive shall be entitled to exercise any such rights
and remedies. The right of Employer to cure any such alleged event or
events as set forth in the immediately preceding sentence shall be
applicable only in the event that a "Change in Control" shall have
occurred solely by reason of such modification or diminution of
duties or authority and shall not be applicable following the
occurrence of any Change in Control as defined in Paragraph 7(f)
below.
(c) FULL TIME AND ATTENTION. Except as expressly permitted herein,
Executive shall not, without the prior written consent of Employer,
directly or indirectly during the term of this Employment Agreement,
render services of a business, professional or commercial nature to
any other person or firm, whether for compensation or otherwise. So
long as it does not interfere with his full time employment
hereunder, Executive may (i) attend to outside investments and serve
as a director, trustee or officer of or otherwise participate in
educational, welfare, social, religious and civic organizations and
(ii) serve as a director of not more than two (2) public corporations
that are not engaged in the Company Business (as defined in Paragraph
9(a) hereof).
(d) BUSINESS DECISIONS. Executive shall have no liability to Employer for
any act or omission undertaken during the term of this Employment
Agreement in his good faith business judgment in furtherance of his
duties as prescribed in or under this Employment Agreement.
2. TERM AND POSITIONS.
(a) TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Employment Agreement shall begin on May
19, 1998 and shall continue thereafter until Executive's employment
is terminated as provided in Paragraph 7. This Employment Agreement
supersedes and replaces the May 8, 1995 Employment Agreement between
CONSOLIDATED STORES CORPORATION, an Ohio corporation
("Consolidated"), CSC and Executive.
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(b) POSITIONS. Executive shall, without any compensation in addition to
that which is specifically provided in this Employment Agreement,
serve as an officer of K B Toy and in such substitute or further
offices or positions with Employer or any subsidiary of Employer as
shall from time to time be reasonably requested by the Chief
Executive Officer or Board of Directors of CSC. Each office and
position with Employer or any subsidiary of Employer in which
Executive may serve or to which he may be appointed shall be
consistent in title and duties with Executive's position as a
divisional President of Employer. For service as a director or
officer of CSC, K B Toy or any subsidiary of either of them, which
service shall in each instance be deemed to be at the request of CSC
and its Board of Directors, Executive shall be entitled to the
protection of the applicable indemnification provisions of the
charter and by-laws of CSC, K B Toy and any such subsidiary, as well
as the protection afforded by that certain Indemnification Agreement
between CSC and Executive dated June 11, 1991, and Employer agrees to
indemnify and hold harmless Executive from and against any claims,
liabilities, damages or expenses incurred by Executive in or arising
out of the status, capacities and activities as an officer or
director of CSC, K B Toy and any subsidiary of either to the maximum
extent permitted by law. For purposes of this Employment Agreement,
all references herein to subsidiaries of CSC and/or K B Toy shall be
deemed to include references to subsidiaries now or hereafter
existing.
3. COMPENSATION.
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(a) SALARY. For all services he may render to CSC and K B Toy (and any
subsidiary of either of them) during the term of this Employment
Agreement, as determined by the Compensation Committee of the CSC
Board of Directors on February 23, 1998, Employer shall pay to
Executive, commencing on February 1, 1998, a salary at the rate (the
"Salary Rate") of Six Hundred and Thirty Thousand Dollars
($630,000.00) per annum, subject to adjustment by the Board of
Directors of CSC, payable in those installments customarily used in
payment of salaries to Employer's executives (but in no event less
frequently than monthly).
(b) BONUS. In addition to the salary compensation as above stated,
Employer shall pay to Executive bonus compensation during the term of
this Employment Agreement in amounts to be determined and paid as
follows:
(i) Beginning February 1, 1998 for each fiscal year of Employer
completed during the term of this Employment Agreement, an
amount equal to the Salary Rate at the end of such fiscal year
multiplied by the Bonus Payout percentage as determined by the
Bonus Program set each fiscal year by the Compensation
Committee of the CSC Board of Directors. The Bonus Program is
based upon the achievement of Employer's annual financial plan.
The Target Bonus for Executive is 100% of base salary and the
Stretch Bonus for Executive is 200% of base salary, both of
which are defined in the Bonus Program and are subject to
adjustment by the Board of Directors of CSC.
(ii) Any bonus paid for a fiscal year under Paragraph 3(b)(i) shall
be paid within forty-five (45) days after Employer's
independent auditor has delivered its opinion with respect to
the financial statements of Employer for such fiscal year
(whether or not Executive is then in the employ of Employer).
Employer shall use all reasonable efforts to cause such auditor
to deliver such opinion within ninety (90) days after the close
of such fiscal year.
(iii) For purposes of this Employment Agreement, the term "fiscal
year" shall mean with respect to any year, the period
commencing on the Sunday next following the Saturday closest to
January 31 in a calendar year and ending in the next following
calendar year on the Saturday closest to January 31.
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4. TERMINATION IN THE EVENT OF DEATH OR PERMANENT DISABILITY. In the
event of a termination of employment as a consequence of Employee's
death or "permanent disability" (as defined below) during the term of
this Employment Agreement:
(a) Executive or his estate, as the case may be, shall be entitled to
receive a pro rata portion of the bonus applicable to the fiscal
year in which such death or permanent disability occurs, as such
bonus is determined under Paragraph 3(b) of this Employment
Agreement. Such pro rata portion shall be determined by multiplying
a fraction, the numerator of which shall be the number of days in
the applicable fiscal year elapsed prior to the date of death or
permanent disability, as the case may be, and the denominator of
which shall be 365, by the amount of bonus that would have been
payable, if any, pursuant to such Paragraph 3(b), if Executive had
remained employed under this Employment Agreement for the entire
applicable fiscal year. The bonus shall be paid when and as provided
in Paragraph 3(b)(ii) of this Employment Agreement.
(b) Except as otherwise provided in Paragraphs 5, 6 and 8 of this
Employment Agreement, Executive shall be entitled to no further
compensation or other benefits under this Employment Agreement,
except as to that portion of any unpaid salary and other benefits
accrued and earned by him hereunder up to and including the date of
such death or permanent disability, as the case may be.
(c) For the purposes of this Employment Agreement, Executive's "permanent
disability" occurrence and benefits shall be determined in the same
manner as are other such occurrences and benefits under Employer's
Disability Policy in effect at the date of the occurrence.
5. TRANSPORTATION. During the term of this Employment Agreement,
Employer shall provide Executive with a current luxury model
automobile purchased or leased by Employer, in accordance with
applicable policies of Employer. Employer shall pay all maintenance
and repair expenses with respect to the automobile, procure and
maintain in force at Employer's expense collision, comprehensive, and
liability insurance coverage with respect to the automobile, and pay
operating expenses with respect to the automobile to the extent such
operating expenses are incurred in the conduct of Employer's
business. ~~
6. LIFE INSURANCE AND OTHER BENEFITS.
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(a) Vacation and Sick Leave. Executive shall be entitled to such periods
of vacation and sick leave allowance each year which shall not be
less than as provided under Employer's Vacation and Sick Leave Policy
for executive officers.
(b) Group Plans, Etc. Executive (and his family if their participation is
permitted under the terms of the subject plan) shall be entitled to
participate in any group life, hospitalization, or disability
insurance plan, health program, or other executive benefit plan
(other than bonus compensation or performance plans to the extent
that such plans, in the case of Executive, are in lieu of the bonus
plan set forth in Paragraph 3(b) above) that is generally available
to similarly titled executive officers of K B Toy. Executive's
participation in and benefits under any such plan shall be on the
terms and subject to the conditions specified in the governing
document of the particular plan. Executive shall be entitled to 100%
reimbursement of his medical and dental expenses incurred during the
term of this Employment Agreement.
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7. TERMINATION AND FURTHER COMPENSATION.
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(a) The employment of Executive under this Employment Agreement and the
term hereof may be terminated:
(i) by Employer or Executive at any time upon thirty (30) days
notice to the other party of such termination, or
(ii) by Employer on death or permanent disability of Executive, or
(iii) By Employer for cause at any time. For purposes hereof, the
term "cause" shall mean:
(A) Executive's conviction of fraud or a felony or any crime
involving moral turpitude or Executive's commission of
acts of embezzlement or theft in connection with his
duties or in the course of his employment with Employer
or any subsidiary;
(B) Executive's willful breach of any material provision of
this Employment Agreement which failure has not been
cured in all substantial respects within ten (10) days
after Employer gives notice thereof to Executive; or
(C) Executive's willful, wrongful engagement in any
Competitive Activity (as that term is hereinafter
defined).
Any termination of Executive for "cause" shall not be
effective until all the following shall have taken place:
(i) The Secretary of CSC pursuant to resolution of the Board
of Directors of CSC, shall have given written notice to
Executive that, in the opinion of the Board of
Directors, Executive may be terminated for cause,
specifying the details;
(ii) Executive shall have been given a reasonable opportunity
to appear before the Board of Directors prior to the
determination of the Board evidenced by such resolution;
(iii) With respect to any matters other than Executive's
conviction of fraud or a felony or a crime involving
moral turpitude, Executive shall neither have ceased to
engage in the activity giving rise to the proposed
determination for cause within thirty (30) days after
his receipt of such notice nor diligently taken all
reasonable steps to that end during such thirty (30) day
period and thereafter;
(iv) After complying with the procedures set forth in
subparagraphs (i) through (iii) above, Executive shall
have been delivered a certified copy of a resolution of
the Board of Directors of CSC adopted by the affirmative
vote of not less than three-fourths (3/4) of the entire
membership of the Board of Directors finding that
Executive was guilty of the conduct giving rise to the
termination for cause.
Any termination by reason of the foregoing shall not be in
limitation of any other right or remedy Employer may have
under this Employment Agreement, at law, in equity or
otherwise. On any
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termination of this Employment Agreement, Executive shall be
deemed to have resigned from all offices and directorships
held by Executive in Employer and any subsidiaries of
Employer.
The term "Competitive Activity" shall mean Executive's
participation, without the written consent of the Board of
Directors of CSC, in the management of any business operation
of any enterprise if such operation (a "Competitive
Operation") engages in substantial and direct competition with
Employer or any subsidiary. For purposes of this Employment
Agreement, a business enterprise shall be considered in
substantial and direct competition with Employer or any
subsidiary if such business operation's retail sales of toy
merchandise amount to ten percent (10%) or more of such
business operation's total sales. "Competitive Activity" shall
not include (i) the mere ownership of securities in any
publicly traded enterprise and the exercise of rights
appurtenant thereto or (ii) participation in management of any
publicly traded enterprise or business operation thereof other
than in connection with the Competitive Operation of such
enterprise.
(b) In the event of termination for any of the reasons set forth in
subparagraph (a)(iii) of this Paragraph 7, except as otherwise
provided in Paragraph 8 of this Employment Agreement, Executive shall
be entitled to no further compensation or other benefits under this
Employment Agreement (other than as provided by law), except as to
that portion of any unpaid salary and other benefits accrued and
earned by him hereunder up to and including the effective date of
such termination, and Executive shall not be entitled to receive any
bonus determined under Paragraph 3 of this Employment Agreement or
otherwise, except for and in respect of completed fiscal years for
which Executive has not then been paid.
(c) In the event of the termination of Executive's employment by Employer
pursuant to subparagraph (a)(i) above or if a Change in Control is
deemed to have occurred pursuant to Paragraph 1(b), Executive shall
be entitled to severance compensation as follows: (x) the
continuation of his compensation for a period of 365 days, including
bonus compensation (as provided below), and (y) all other benefits
and perquisites to which he is entitled hereunder for a period of 365
days following the date of such termination of employment, except
that (i) the benefits and perquisites referred to in clause (y) shall
be sooner reduced and/or terminated (other than as provided by law)
when and to the extent that the Executive is entitled to receive the
same from another employer during such period (but no obligation of
Executive to attempt to mitigate damages under this subparagraph (c)
shall be implied) and (ii) any bonus compensation to be paid to
Executive in respect of such period shall be limited solely to the
pro rata portion thereof earned in the fiscal year of Employer
(determined in the manner provided in Paragraph 3) in which such
termination occurs, except for and in respect of completed fiscal
years for which Executive has not then been paid. Additionally, the
stock options listed on the attached Exhibit A shall all vest and
become exercisable upon the date of termination of Executive's
employment.
(d) If there is a Change in Control (as defined in Section 7(f) hereof)
and Executive's employment is thereupon terminated or terminated
within twenty four (24) months after the effective date thereof,
Executive shall be entitled to the termination benefits set forth in
Section 7(e) hereof. For purposes of this Employment Agreement,
Executive's employment shall be deemed to have been terminated only
if Employer terminates such employment other than for cause (as
defined in Section 7(a)(iii) hereof) or if a Constructive Termination
occurs. "Constructive Termination" shall mean a resignation by
Executive because of any of the following events: (i) any diminution
of duties or diminution in authority, title or office; (ii) any
assignment of duties inconsistent with his position as President, Toy
Division; (iii) any change in title to a title of lesser authority;
(iv) a material withdrawal of administrative support, or a permanent
assignment to office space inconsistent
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with the position of President, Toy Division; (v) any reduction in
compensation not consistent with and equitably proportionate to
general reductions made in compensation of other executive officers
of CSC or K B Toy; or (vi) removal from the Board of Directors of
CSC, or the failure of management to renominate Executive for
membership on CSC's Board of Directors in connection with a meeting
of shareholders (as reasonably determined by Executive in his good
faith discretion).
(e) The benefits payable to Executive pursuant to Section 7(d) hereof are
as follows:
(i) K B Toy shall pay to Executive a lump sum cash payment, net of
any applicable withholding taxes in an amount equal to two
times the annual salary paid or payable to Executive
immediately prior to the effective date of such Change in
Control (the "Lump Sum Payment"); provided, that if there are
fewer than twenty four (24) months remaining from the date of
Executive's termination to Executive's normal retirement date
at age 65, K B Toy shall instead pay Executive the amount
obtained by multiplying the Lump Sum Payment by a fraction, the
numerator of which is the number of months so remaining and the
denominator of which is 24. The applicable amount shall be paid
on the later of (x) the next business day after the day
Executive's employment is terminated, or (y) the next business
day after the effective date of such Change in Control.
(ii) In addition to the payment described in Subsection 7(e)(i)
above, K B Toy shall pay to Executive a lump sum cash payment,
net of any applicable withholding taxes, in an amount equal to
two times the Executive's then current annual Stretch Bonus, as
defined in the Bonus Program described in Subsection 3(b)(i)
above (the "Lump Sum Bonus Payment"); provided, that (A) in the
event the Executive's then current Stretch Bonus is undefined
or is not subject to a maximum payout, the Executive's annual
Stretch Bonus shall be deemed to be 200% of the Executive's
then current base salary and (B) if there are fewer than twenty
four (24) months remaining from the date of Executive's
termination to Executive's normal retirement date at age 65,
K B Toy shall instead pay Executive the amount obtained by
multiplying the Lump Sum Bonus Payment by a fraction, the
numerator of which is the number of months so remaining and the
denominator of which is 24. Executive shall receive the Lump
Sum Bonus Payment at the same time Executive receives the Lump
Sum Payment described in Subsection 7(e)(i) above.
(iii) The stock options listed on the attached Exhibit A shall all
vest and become exercisable upon the date of termination of
Executive's employment.
(iv) For a period of one year, Executive (and his family, if their
participation is permitted under the terms of the subject plan)
shall be entitled to participate in any group life,
hospitalization, or disability insurance plan, health program,
or other executive benefit plan (other than bonus compensation
or performance plans to the extent that such plans, in the case
of Executive, are in lieu of the bonus plan set forth in
Subsection 7(e)(ii) above) that is generally available to
similarly titled executive officers of K B Toy; provided, that
Executive's participation in the plans referred to in this
Subsection 7(e)(iv) shall be terminated (other than as provided
by law) when and to the extent that Executive is entitled to
receive the same from another employer during such period.
Executive's participation in and benefits under any such plan
shall be on the terms and subject to the conditions specified
in the governing document of the particular plan, including,
but not limited to, reimbursement of 100% of all medical and
dental expenses incurred during the period of participation in
the plans referred to above.
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(v) If all or any portion of the amount payable to Executive under
this Employment Agreement, either alone or together with other
amounts that Executive is entitled to receive in connection
with a Change in Control, constitutes "excess parachute
payments," within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), or successor
provision, that are subject to the excise tax imposed by
Section 4999 of the Code (or any similar tax or assessment),
the amounts payable hereunder shall be increased to the extent
necessary to place Executive in the same after-tax position as
Executive would have been in had no such excise tax or
assessment been imposed on any such payment paid or payable to
Executive under this Employment Agreement or any other payment
that Executive may receive as a result of such Change in
Control. The determination of the amount of any such tax or
assessment and the resulting amount of incremental payment
required hereby in connection therewith shall be made by the
independent accounting firm employed by K B Toy immediately
prior to the applicable Change in Control, within thirty (30)
calendar days after the payment of the amount payable pursuant
to Subsections (e)(i), (e)(ii) and (e)(iv) hereof, and said
incremental payment shall be made within five (5) business days
after said determination has been made. For purposes of
determining the amount of incremental payment required by this
Subsection, Executive shall be deemed (A) to pay federal income
taxes at the highest marginal rate of federal income taxation
for the calendar year in which the incremental payment is to be
made; (B) to pay any applicable state and local income taxes at
the highest marginal rate of taxation for the calendar year in
which the incremental payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained from
deduction of such state and local taxes if paid in such year
(determined without regard to limitations on deductions based
upon the amount of Executive's adjusted gross income); and (C)
to have otherwise allowable deductions for federal, state, and
local income tax purposes at least equal to those disallowed
because of the inclusion of such incremental payments in
Executive's adjusted gross income.
(vi) If, after the date upon which any payment required under this
Employment Agreement has been made, it is determined (pursuant
to final judgment of a court of competent jurisdiction, or an
agreed upon tax assessment) that the amount of excise or other
similar taxes or assessments payable by Executive is greater
than the amount initially so determined, then K B Toy shall pay
Executive an amount equal to the sum of (i) such additional
excise or other similar taxes, plus (ii) any interest, fines
and penalties resulting from such underpayment, plus (iii) an
amount necessary to reimburse Executive for any income, excise
or other tax or assessment payable by Executive with respect to
the amounts specified in (i) and (ii) above, and the
reimbursement provided by this clause (iii). Payment thereof
shall be made within five (5) business days after the date upon
which such subsequent determination is made.
(f) As used herein, "Change in Control" means any of the following
events: (i) any person or group (as defined for purposes of Section
13(d) of the Securities Exchange Act of 1934) becomes the beneficial
owner of, or has the right to acquire (by contract, option, warrant,
conversion of convertible securities or otherwise), 20% or more of
the outstanding equity securities of CSC entitled to vote for the
election of directors; (ii) a majority of the Board of Directors of
CSC is replaced within any period of two years or less by directors
not nominated and approved by a majority of the directors of CSC in
office at the beginning of such period (or their successors so
nominated and approved), or a majority of the Board of Directors of
CSC at any date consists of persons not so nominated and approved;
(iii) the stockholders of CSC approve an agreement to reorganize,
merge or consolidate with another corporation (other than K B Toy or
an affiliate); or (iv) the stockholders of CSC adopt a plan or
approve an agreement to sell or otherwise dispose of all or
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substantially all of CSC's assets (including without limitation, a
plan of liquidation or dissolution), in a single transaction or
series of related transactions. The effective date of any such Change
in Control shall be the date upon which the last event occurs or last
action taken such that the definition of such Change in Control (as
set forth above) has been met. For purposes of this Employment
Agreement, the term "affiliate" shall mean: (i) any person or entity
qualified as part of an affiliated group which includes K B Toy and
CSC pursuant to Section 1504 of the Code; or (ii) any person or
entity qualified as part of a parent-subsidiary group of trades and
businesses under common control within the meaning of Treasury
Regulation Section 1.414(c)(2)(b). Determination of affiliate shall
be tested as of the date immediately prior to any event constituting
a Change in Control. The other provisions of this Paragraph 7(f)
notwithstanding, the term "Change in Control" shall not mean any
transaction, merger, consolidation, or reorganization in which CSC
exchanges or offers to exchange newly issued or treasury shares in an
amount less than 50% of the then outstanding equity securities of CSC
entitled to vote for the election of directors, for 51% or more of
the outstanding equity securities entitled to vote for the election
of at least the majority of the directors of a corporation other than
Employer or an affiliate thereof (the "Acquired Corporation"), or for
all or substantially all of the assets of the Acquired Corporation.
(g) Executive shall provide K B Toy with at least forty five (45) days
notice of any election by Executive to terminate his employment,
which shall set forth in detail the grounds upon which any
Constructive Termination of Executive's employment is based, and
shall not be entitled to the benefits available hereunder in
connection therewith unless such notice is timely given.
(h) If any amount due Executive hereunder is not paid when due, then K B
Toy shall pay interest on said amount at an annual rate equal to the
base lending rate of National City Bank, Cleveland, Ohio, or
successor, as in effect from time to time, for the period between the
date on which such payment is due and the date said amount is paid.
(i) K B Toy's obligation to pay Executive the compensation and to make
the arrangements required hereunder shall be absolute and
unconditional and shall not be affected by any circumstance,
including, without limitation, any setoff, counterclaim, recoupment,
defense or other right that K B Toy may have against Executive or
otherwise. All amounts payable by K B Toy under this Employment
Agreement, including, without limitation, legal fees and expenses,
shall be paid without notice or demand and shall be secured by CSC's
unrestricted guarantee of due and punctual payment. Subject to the
proviso in Section 7(h) above, each and every payment made hereunder
by K B Toy shall be final and K B Toy shall not seek to recover all
or any part of such payment from Executive or from whosoever may be
entitled thereto, for any reason whatsoever. Executive shall not be
obligated to seek other employment or compensation or insurance in
mitigation of any amount payable or arrangement made under any
provision of this Employment Agreement, and the obtaining of any such
other employment or compensation or insurance shall in no event
effect any reduction of K B Toy's obligations to make the payments
and arrangements required to be made under this Employment Agreement.
(j) From and after any termination of Executive's employment, Executive
shall retain in confidence and not use for his own benefit or on
behalf of any other person or entity any confidential information
known to him concerning CSC, K B Toy, their respective subsidiaries
or their respective businesses so long as such information is not
publicly disclosed by someone other than Executive.
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(k) In partial consideration of the benefits granted to Executive herein,
Executive agrees that during the six-month period immediately
following Executive's termination, if Executive shall have received
benefits under Section 7(e) above, Executive shall not engage in any
Competitive Activity, as defined in Section 7(a).
(l) Any provision in this Employment Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or
unenforceability without invalidating or affecting the remaining
provision hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
(m) Except as specifically set forth herein, this Employment Agreement
shall not be deemed to negate, supersede or alter any other agreement
or arrangement between Executive and Consolidated, CSC or K B Toy or
any other rights to which Executive may be entitled, and shall be and
remain in effect in addition to any such other agreement or rights,
whether now existing or later created.
8. EXPENSES. Employer shall reimburse Executive during the term of this
Employment Agreement for travel, entertainment and other expenses
reasonably incurred by Executive in the promotion of Employer's
business. Executive shall furnish such documentation with respect to
reimbursement to be paid under this Paragraph 8 as Employer shall
reasonably request.
9. COVENANTS OF EXECUTIVE.
(a) Covenant Against Competition. Executive acknowledges that (i) the
principal businesses of Employer include the operation of its "Odd
Lots", "Big Lots", "MacFrugal's" and "Pic N' Save" discount general
merchandise consumer goods retail outlets, the inventories of which
are acquired primarily through special purchase situations such as
overstocks, closeouts, liquidations, bankruptcies, wholesale
distribution of overstock, distress, liquidation and other volume
inventories, the operation of its K B Toy, K B Toy Works, and K B Toy
Liquidator toy stores, and the operation of its Big Lots Furniture
and Odd Lots Furniture stores (the "Company Business"); (ii) Employer
is one of the limited number of persons who has developed such
business; (iii) the Company Business is national in scope; (iv)
Executive's work for Employer will give him access to the
confidential affairs of Employer; and (v) the agreements and
covenants of Executive contained in this Paragraph 9 are essential to
the business and goodwill of Employer. Accordingly, Executive
covenants and agrees that:
(A) During the term of Executive's employment with Employer and for
a period of two (2) years (the "Restricted Period") following
either the voluntary termination of such employment by
Executive or the termination of such employment for "cause" (as
such terms is defined in Subsection 7(a)(iii) above, Executive
shall not in any location where Employer's retail stores are
located throughout the United States of America, directly or
indirectly, (1) engage in the Company Business for Executive's
own account (other than pursuant to this Employment Agreement),
(2) render any services to any person engaged in such
activities (other than Employer), or (3) or engage in any
Competitive Activity (as defined above), PROVIDED, HOWEVER,
that in the event of a Change in Control the Restricted Period
shall be for a period of six (6) months.
(B) During the Restricted Period, Executive shall keep secret and
retain in strictest confidence, and shall not use for his
benefit or the benefit of others, all confidential matters
relating to the Company Business hereafter learned by
Executive, and shall not disclose them to anyone except with
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Employer's express written consent and except for information
which (i) is at the time of receipt or thereafter becomes
publicly known through no wrongful act of Executive, or (ii) is
received from a third party not under an obligation to keep
such information confidential and without breach of this
Employment Agreement.
(C) So long as there has not occurred a Change in Control,
Executive shall not, during the Restricted Period, without
Employer's prior written consent, directly or indirectly,
solicit or encourage to leave the employment of Employer or any
of its subsidiaries, any executive of Employer or any of its
subsidiaries.
(D) All memoranda, notes, lists, records and other documents (and
all copies thereof) made or compiled by Executive or made
available to Executive concerning the Company Business shall be
Employer's property and shall be delivered to Employer at any
time on request.
(b) Rights and Remedies Upon Breach. If Executive breaches any of the
provisions of Paragraph 9(a) (the "Restrictive Covenants"), or a
breach thereof is imminent, Employer shall have the following rights
and remedies, each of which rights and remedies shall be independent
of the other and severally enforceable, and all of which rights and
remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to Employer under law or in equity:
(i) The right and remedy to have the Restrictive Covenants
specifically enforced by any court having equity jurisdiction,
including, without limitation, the right to an entry against
Executive of restraining orders and injunctions (preliminary,
temporary or permanent) against violations, threatened or
actual, and whether or not then continuing, of such covenants,
it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to Employer and
that money damage will not provide adequate remedy to Employer;
and
(ii) The right and remedy to require Executive to account for and
pay over to Employer all compensation, profits, monies,
accruals, increments, or other benefits derived or received by
him as the result of any transactions constituting a breach of
the Restrictive Covenants. Employer may set off any amounts
finally determined to be due it under this Paragraph 9(b)
against any amounts owed to Executive.
(c) Severability of Covenants. Executive acknowledges and agrees that the
Restrictive Covenants are reasonable in geographical and temporal
scope, with respect to the activities restricted and in all other
respects. If it is determined that any of the Restrictive Covenants,
or any part thereof, is invalid or unenforceable, the remainder of
the Restrictive Covenants shall not thereby be affected and shall be
given full effect, without regard to the invalid portions.
(d) Blue-Pencilling. If it is determined that any of the Restrictive
Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of such provision, the duration or
scope of such provision, as the case may be, shall be reduced so that
such provision becomes enforceable and, in its reduced form, such
provision shall then be enforceable and shall be enforced.
10. WITHHOLDING TAXES. Except as otherwise provided, all payments to
Executive, including the bonus compensation under this Employment
Agreement, shall be subject to withholding on account of federal,
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EXHIBIT 10
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state, and local taxes as required by law. Any amounts remitted by
Employer to the appropriate taxing authorities as taxes withheld by
Employer from Executive on income realized by Executive shall reduce
the amounts payable by Employer to Executive hereunder. If any
particular payment required hereunder is insufficient to provide the
amount of such taxes required to be withheld, Employer may withhold
such taxes from any other payment due Executive.
11. NO CONFLICTING AGREEMENTS. Executive represents and warrants that he
is not a party to any agreement, contract or understanding, whether
employment or otherwise, which would restrict or would prohibit him
from undertaking or performing employment in accordance with the
terms and conditions of this Employment Agreement.
12. SEVERABLE PROVISIONS. The provisions of this Employment Agreement are
severable, and if any one or more provisions may be determined to be
illegal or otherwise unenforceable, in whole or in part, the
remaining provisions and any partially unenforceable provision to the
extent enforceable in any jurisdiction shall, nevertheless, be
binding and enforceable.
13. BINDING AGREEMENT. Subject to Executive's consent, each of CSC and K
B Toy shall require any successor (whether direct or indirect), by
purchase, merger, consolidation, reorganization or otherwise, to all
or substantially all of the business and/or assets of any of them
expressly to assume and to agree to perform this Employment Agreement
in the same manner and to the same extent that each of them would be
required to perform if no such succession has taken place. This
Employment Agreement shall be binding upon and inure to the benefit
of each of CSC and K B Toy and any successor of any of them,
including without limitation any persons acquiring directly or
indirectly all or substantially all of the business and/or assets of
any of them whether by sale, merger, consolidation, reorganization or
otherwise (and such successor shall thereafter be deemed the
"Employer" for purposes of this Employment Agreement), but shall not
otherwise be assignable or delegatable by CSC or K B Toy. In the
event Executive fails to consent to the assumption of this Employment
Agreement, this Employment Agreement shall be deemed terminated by
Employer pursuant to Paragraph 7(a)(i), effective as of the date such
succession has taken place.
This Employment Agreement shall inure to the benefit of and be
enforceable by Executive and each of Executive's personal or legal
representatives, executive, administrators, successor, heirs,
distributees and/or legatees.
14. NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by
certified, registered or express mail, postage prepaid. Any such
notice shall be deemed given when so delivered personally,
telegraphed, telexed, or sent by facsimile transmission or, if mailed
five (5) days after the date of deposit in the United States mails as
follows:
(i) if to the Employer to: Consolidated Stores Corporation
000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxx X. Xxxx, Esq.
Executive Vice President
with a copy to: Chairman of the Compensation Committee
of the CSC Board of Directors
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(ii) if to the Executive to: Xxxxxxx X. Xxxxxx
c/o Kirkland & Xxxxx
000 Xxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx.
or Xxxx X. Xxxxxxxxxxx
Any such person may by notice given in accordance with this Paragraph
to the other parties hereto, designate another address or person for
receipt by such person of notices hereunder.
15. WAIVER. The failure of either party to enforce any provision or
provisions of this Employment Agreement shall not in any way be
construed as a waiver of any such provision or provisions as to any
future violations thereof, nor prevent that party thereafter from
enforcing each and every other provision of this Employment
Agreement. The rights granted the parties herein are cumulative and
the waiver of any single remedy shall not constitute a waiver of such
party's rights to assert all other legal remedies available to it
under the circumstances.
16. MISCELLANEOUS. This Employment Agreement supersedes all prior
agreements and understandings between the parties and may not be
modified or terminated orally. No modification, termination or
attempted waiver shall be valid unless in writing and signed by the
party against whom the same is sought to be enforced. If Executive is
successful in any proceeding against Employer to collect amounts due
Executive under this Employment Agreement, Employer shall reimburse
Executive for his court costs and reasonable attorneys' fees in
connection therewith.
17. GOVERNING LAW. This Employment Agreement shall be governed by and
constructed according to the laws of the State of Ohio.
18. CAPTIONS AND PARAGRAPHS HEADINGS. Captions and paragraph headings
used herein are for convenience and are not a part of this Employment
Agreement and shall not be used in construing it.
19. INTERPRETATION. Where necessary or appropriate to the meaning hereof,
the singular and plural shall be deemed to include each other, and
the masculine, feminine and neuter shall be deemed to include each
other.
20. AMENDMENTS. Neither CSC nor K B Toy shall amend, terminate, or
suspend this Employment Agreement or any provision hereof without the
written consent of Executive.
21. LEGAL FEES AND EXPENSES. It is the intent of Employer that Executive
not be required to incur the expenses associated with the enforcement
of his rights under this Employment Agreement by litigation or other
legal action because the cost and expense thereof would substantially
detract from the benefits intended to be extended to Executive
hereunder. Accordingly, if it should appear to Executive that
Employer has failed to comply with any of its obligations under this
Employment Agreement, or in the event that Employer or any other
person takes any action to declare this Employment Agreement void
and/or unenforceable, or institutes any litigation designed to deny,
and/or to recover from, Executive the benefits intended to be
provided to Executive hereunder, Employer hereby irrevocably
authorizes Executive from time to
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time to retain counsel of his choice to represent Executive in
connection with the initiation or defense of any litigation and/or
other legal action, whether by or against Employer or any director,
officer, stockholder, or other person affiliated with Employer in any
jurisdiction. K B Toy shall pay Executive's actual expenses for
attorneys' fees and disbursements, together with such additional
payments, if any, as may be necessary so that the net after-tax
payments so made to Executive equal such fees and disbursements;
provided, that Executive shall be responsible for his own fees and
expenses with respect to any lawsuit between Executive and Employer
to enforce rights or obligations under this Employment Agreement in
which Employer is the prevailing party. The fees and expenses
incurred by Executive in instituting or responding to any such
negotiation or legal action shall be paid by K B Toy as they are
incurred, in advance of the final disposition of the action or
proceeding, upon receipt of an undertaking by Executive to repay such
amounts if Employer is ultimately determined to be the prevailing
party. Notwithstanding any existing or prior attorney-client
relationship between Employer and such counsel, Executive may enter
into an attorney-client relationship with such counsel, and in that
connection Employer acknowledges that a confidential relationship
shall exist between Executive and such counsel.
IN WITNESS WHEREOF, the parties have caused this Employment Agreement to be
effective as of the date first listed above.
Attest: CONSOLIDATED STORES CORPORATION,
a Delaware Corporation
By:
----------------------------- ---------------------------------
Asst. Secretary Xxxxxxx X. Xxxxxx, Chairman
and Chief Executive Officer
Attest: K B TOY OF MASSACHUSETTS, INC.,
a Massachusetts Corporation
By:
----------------------------- ---------------------------------
Asst. Secretary Xxxxxx X. Xxxx, Executive Vice President
---------------------------------
XXXXXXX X. XXXXXX
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EXHIBIT A
The stock options evidenced by that certain CONSOLIDATED STORES CORPORATION
NON-QUALIFIED STOCK OPTION PLAN AGREEMENT, as amended by the FIRST AMENDMENT TO
NON-QUALIFIED STOCK OPTION PLAN AGREEMENT, by and between CSC and Executive, the
originals of which are attached hereto as EXHIBIT C-1 and EXHIBIT C-2.
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