Exhibit 10
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of July 31, 2003 ("Commencement
Date") by and between Limited Brands, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxxxxxxxx (the "Executive") (hereinafter
collectively referred to as "the parties").
WHEREAS, the Executive has been employed as the Vice Chairman and Chief
Operating Officer and is experienced in various phases of the Company's business
and possesses an intimate knowledge of the business and affairs of the Company
and its policies, procedures, methods and personnel;
WHEREAS, the Compensation Committee of the Board of Directors of the
Company (the "Board") has determined that it is in the best interests of the
Company to secure the services and employment of the Executive, and the
Executive is willing to render such services on the terms and conditions set
forth herein.
WHEREAS, this Agreement supersedes in its entirety the Employment
Agreement that the parties entered into as of October 1, 1999 (the "Prior
Agreement"); provided, however, that nothing in this Employment Agreement shall
cancel or modify any previous grant of stock options or restrictive stock which
was previously granted to the Executive or any rights to repurchase shares
represented by such grants, including any grant that the Executive received as a
Director of the Board of Directors of the Company.
NOW, THEREFORE, in consideration of the foregoing and the respective
agreements of the parties contained herein, the parties hereby agree as follows:
1. Term. Executive shall be employed by the Company for the period
commencing on the Commencement Date and, subject to earlier termination as
provided herein, ending on February 6, 2009 (the "Employment Term"). On February
6, 2009 and each February 6 thereafter, the Employment Term shall automatically
be extended for one additional year unless not later than ninety (90) days prior
to such date the Company or Executive shall have given written notice of its or
his intention not so to extend the Employment Term.
2. Employment.
(a) Position. The Executive shall be employed as the Vice
Chairman and Chief Operating Officer of the Company or such other position of
greater status and responsibility as may be determined by the Company. The
Executive shall perform the duties, undertake the responsibilities and exercise
the authority customarily performed, undertaken and exercised by persons
employed in a similar executive capacity for the Company. The Executive shall
report to the Chief Executive Officer of Limited Brands, Inc.
(b) Obligations. The Executive agrees to devote his full business
time and attention to the business and affairs of the Company. The foregoing,
however, shall not preclude the Executive from serving on corporate, civic or
charitable boards or committees or managing personal investments, so long as
such activities do not materially interfere with the performance of the
Executive's responsibilities hereunder as determined by the Board.
3. Base Salary. The Company agrees to pay or cause to be paid to the
Executive an annual base salary at the rate of One Million Dollars ($1,000,000)
less applicable withholdings.
This base salary will be subject to annual review and may be increased from time
to time by the Board considering factors such as the Executive's
responsibilities, compensation of similar executives within the Company and in
other companies, performance of the Executive, and other pertinent factors
(hereinafter referred to as the "Base Salary"). Such Base Salary shall be
payable in accordance with the Company's customary practices applicable to its
executives.
4. Equity Compensation.
Effective March 14, 2003, the Compensation Committee of the Board of
Directors granted to Executive options to acquire 250,000 shares of the
Company's common stock and 200,000 restricted shares and 200,000 restrictive
stock units of the Company's common stock.
Subject to the terms and conditions of the Company's Stock Option and
Performance Incentive Plan ("SOPIP") the Company shall use its best efforts to
cause the grant to Executive, during each year of the Employment Term, of
additional options to acquire 125,000 shares of the Company's common stock on
the first business day of such fiscal year. The annual grant of options may be
modified consistent with changes to annual grants to other senior executives
under the SOPIP. If the annual grant of options is modified the Company agrees
to provide the Executive with comparable compensation as the Compensation
Committee in good faith may determine.
5. Employee Benefits. The Executive shall be entitled to participate
in all employee benefit plans, practices, and programs maintained by the Company
and made available to senior executives generally and as may be in effect from
time to time. The Executive's participation in such plans, practices and
programs shall be on the same basis and terms as are applicable to senior
executives of the Company generally.
6. Bonus.
The Executive shall be entitled to participate in the Company's
applicable incentive compensation plan with a target level opportunity of One
Hundred Thirty Percent (130%) of the Executive's Base Salary on such terms and
conditions as may be determined from time to time by the Board.
In addition, the Company has paid Executive a promotion bonus of One
Million Dollars ($1,000,000), less applicable withholdings, on or before June 1,
2003.
7. Other Benefits.
(a) Life Insurance.
(1) During the term of the Agreement, the Company shall
maintain life insurance coverage on the life of the Executive in the amount of
$5,000,000 under the same terms as provided to other senior executives, the
proceeds of which shall be payable to the beneficiary or beneficiaries
designated by the Executive. The Executive agrees to undergo any reasonable
physical examination and other procedures as may be necessary to maintain such
policy. Further, the policy shall be assignable to the Executive, at his
discretion, to the extent allowed pursuant to the terms and conditions of the
policy.
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(2) During the term of this Agreement, the Company shall be
entitled to maintain a "key person" term life insurance policy on the life of
the Executive, the proceeds of which shall be payable to the Company or its
designees. The Executive agrees to undergo any reasonable physical examination
and other procedures as may be necessary to maintain such policy.
(b) Expenses. Subject to applicable Company policies, the
Executive shall be entitled to receive prompt reimbursement of all documented
expenses reasonably incurred by him in connection with the performance of his
duties hereunder or for promoting, pursuing or otherwise furthering the business
or interests of the Company.
(c) Office and Facilities. The Executive shall be provided with
appropriate offices and with such secretarial and other support facilities as
are commensurate with the Executive's status with the Company and adequate for
the performance of his duties hereunder.
8. Paid Time Off. The Executive shall be entitled to annual paid time
off in accordance with the policies periodically established for similarly
situated executives of the Company.
9. Termination. The Executive's employment hereunder is subject to the
following terms and conditions:
(a) Disability. The Company shall be entitled to terminate the
Executive's employment after having established the Executive's total and
permanent Disability. For purposes of this Agreement, "Disability" means a
physical or mental infirmity which impairs the Executive's ability to
substantially perform his duties under this Agreement for a period of at least
six (6) months in any 12 month calendar period as determined in accordance with
the Company's Long-Term Disability Plan.
(b) Cause. The Company shall be entitled to terminate the
Executive's employment for "Cause" without any written notice prior to a Notice
of Termination. For purposes of this Agreement, "Cause" shall mean that the
Executive (1) willfully failed to perform his duties with the Company (other
than a failure resulting from the Executive's incapacity due to physical or
mental illness); or (2) has plead "guilty" or "no contest" to or has been
convicted of an act which is defined as a felony under federal or state law; or
(3) engaged in willful misconduct in bad faith which could reasonably be
expected to materially harm the Company's business or its reputation.
The Executive shall be given written notice by the Board of
termination for Cause, stating in detail the particular act or acts or failure
or failures to act that constitute the grounds on which the proposed termination
for Cause is based. The Executive shall be entitled to a hearing before the
Board or a committee thereof established for such purpose and to be accompanied
by his counsel. Such hearing shall be held within thirty (30) days after notice
to the Company by the Executive, provided he requests such hearing within thirty
(30) days of the written notice from the Board of the termination for Cause.
This provision shall not abrogate Executive's right to arbitration as provided
for in Section 16 hereof.
(c) Termination by the Executive for Good Reason. The Executive
may terminate employment hereunder for "Good Reason" by delivering to the
Company (1) a Preliminary Notice of Good Reason (as defined below), and (2) not
earlier than thirty (30) days
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from the delivery of such Preliminary Notice, a Notice of Termination. For
purposes of this Agreement, "Good Reason" means (i) the failure to continue the
Executive as Vice Chairman and Chief Operating Officer or in another capacity
contemplated by Section 2 hereof; (ii) the assignment to the Executive of any
duties materially inconsistent, or the failure to assign to the Executive duties
materially consistent with, the Executive's positions, duties, authority,
responsibilities and reporting requirements as set forth in Section 2 hereof;
(iii) a reduction in or a material delay in payment of any of the Executive's
total cash and equity compensation and benefits from those required to be
provided in accordance with the provisions of this Agreement; (iv) the Company,
the Board or any person controlling the Company requires the Executive to be
based outside the United States; or (v) the failure of the Company to obtain the
assumption in writing of its obligation to perform this Agreement by any
successor to all or substantially all of the assets of the Company within
fifteen (15) days after a merger, consolidation, sale or similar transaction;
provided, however, that "Good Reason" shall not include (A) acts not taken in
bad faith which are cured by the Company in all respects not later than thirty
(30) days from the date of receipt by the Company of a written notice from the
Executive identifying in reasonable detail the act or acts constituting "Good
Reason" (a "Preliminary Notice of Good Reason") or (B) acts taken by the Company
by reason of the Executive's physical or mental infirmity which impairs the
Executive's ability to substantially perform his duties under this Agreement. A
Preliminary Notice of Good Reason shall not, by itself, constitute a Notice of
Termination.
(d) Notice of Termination. Any purported termination by the
Company for Cause or for Good Reason by the Executive shall be communicated by a
written Notice of Termination to the other fifteen (15) days prior to the
Termination Date (as defined below). For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which indicates the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. Any termination by the
Company other than for Cause or by the Executive without Good Reason shall be
communicated by a written Notice of Termination to the other party thirty (30)
days prior to the termination date. However, the Company may elect to pay the
Executive in lieu of thirty (30) days written notice. For purposes of this
Agreement, no such purported termination of employment by the Company for Cause,
or by the Executive for Good Reason shall be effective without such Notice of
Termination.
(e) Termination Date, Etc. "Termination Date" shall mean in the
case of the Executive's death, the date of death, or in all other cases, the
date specified in the Notice of Termination; provided, however, that if the
Executive's employment is terminated by the Company due to Disability, the date
specified in the Notice of Termination shall be at least thirty (30) days from
the date the Notice of Termination is given to the Executive.
10. Compensation Upon Certain Terminations by the Company not Following
a Change in Control.
(a) If during the Employment, Term, whether or not following a
Change in Control (as defined below), the Executive's employment is terminated
by the Company for Cause or by reason of the Executive's death or if the
Executive resigns without Good Reason or gives written notice not to extend the
term of this Agreement, the Company's sole obligations hereunder shall be to pay
the Executive the following amounts earned hereunder but not paid as of the
Termination Date: (i) Base Salary, (ii) reimbursement for any and all monies
advanced or expenses incurred pursuant to Section 7(b) through the Termination
Date, and (iii) any earned compensation which the Executive had previously
deferred (including any interest earned or
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credited thereon) (collectively, "Accrued Compensation"), provided however, that
if the Executive gives written notice not to extend the Employment Term pursuant
to Section 1, the Company shall continue to pay the premiums provided for in
Section 7(a)(1) through the end of the calendar year in which the Executive's
termination occurs. The Executive's entitlement to any other benefits shall be
determined in accordance with the Company's employee benefit plans then in
effect.
(b) If the Executive's employment is terminated by the Company
other than for Cause or by the Executive for Good Reason, in each case other
than during the 24-month period immediately following a Change in Control, then
except to the extent set forth in Section 10(g) the Company's sole obligations
hereunder shall be as follows:
(i) the Company shall pay the Executive the Accrued
Compensation;
(ii) the Company shall continue to pay the Executive the
Base Salary for a period of one (1) year following the Termination Date;
(iii) in consideration of the Executive signing a General
Release the Company shall (A) pay the Executive any incentive compensation under
Section 6 that the Executive would have received if he had remained employed
with the Company for a period of one (1) year after the Termination Date; and
(B) pay the Executive his Base Salary for one additional year after payments
have ended under Section 10(b)(ii);
(iv) the Company shall continue to pay the premiums provided
for in Section 7(a)(1) hereof through the end of the calendar year in which such
termination occurs; and -
(v) in the event Executive becomes entitled to any payments
under Section 10(g) the Company's obligations to Executive under Section 10
shall thereafter be determined solely under Section 10(g).
(c) If the Executive's employment is terminated by the Company by
reason of the Executive's Disability, the Company's sole obligations hereunder
shall be as follows:
(i) the Company shall pay the Executive the Accrued
Compensation;
(ii) the Company shall continue to pay the Executive 100% of
the Base Salary for the first twelve months following the Termination Date, 80%
of the Base Salary for the second twelve months following the Termination Date,
and 60% of the Base Salary for the third twelve months following the Termination
Date; provided, however, that such Base Salary shall be reduced by the amount of
any benefits the Executive receives by reason of his Disability under the
Company's relevant disability plan or plans;
(iii) if the Executive is disabled beyond thirty-six (36)
months, the Company shall continue to pay the Executive 60% of Base Salary, up
to a maximum payment of $250,000 per year, for the period of the Executive's
Disability, as defined in the Company's relevant disability plans; provided,
however, that such payments shall be reduced by the amount
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of any benefits the Executive receives by reason of his Disability under the
Company's relevant disability plan or plans; and
(iv) the Company shall continue to pay the premiums provided
for in Section 7(a)(1) hereof through the end of the calendar year in which such
termination occurs.
(d) If the Executive's employment is terminated by reason of the
Company's written notice to the Executive of its decision not to extend the
Employment Term pursuant to Section 1 hereof, the Company's sole obligation
hereunder shall be as follows:
(i) the Company shall pay the Executive the Accrued
Compensation;
(ii) the Company shall continue to pay the Executive the
Base Salary for a period of one (1) year following the expiration of such term;
(iii) in consideration of the Executive signing a General
Release the Company shall (A) pay the Executive any incentive compensation under
Section 6 that the Executive would have received if he had remained employed
with the Company for a period of one (1) year after the Termination Date; and
(B) pay the Executive his Base Salary for one additional year after payments
have ended under Section 10(d)(ii); and
(iv) the Company shall continue to pay the premiums provided
for in Section 7(a)(1) hereof through the end of the calendar year in which such
termination occurs.
(e) For up to eighteen (18) months during the period the
Executive is receiving salary continuation pursuant to Section 10(b)(ii),
10(c)(ii) or 10(d)(ii) hereof, the Company shall, at its expense, provide to the
Executive and the Executive's beneficiaries medical and dental benefits
substantially similar in the aggregate to the those provided to the Executive
immediately prior to the date of the Executive's termination of employment;
provided, however, that the Company's obligation to provide such benefits shall
cease upon the expiration of Executive's rights to continue such medical and
dental benefits under COBRA.
(f) Executive shall not be required to mitigate the amount of any
payment provided for in this Section 10 by seeking other employment or otherwise
and no such payment or benefit shall be eliminated, offset or reduced by the
amount of any compensation provided to the Executive in any subsequent
employment, except as provided in Sections 10(e) or 10(f) hereof.
(g) In the event that (x) the Company enters into a binding
agreement that, if consummated, would constitute a Change in Control, (y)
Executive's employment is terminated under the circumstances set forth in
Section 10(b) and (z) a Change in Control of the Company actually occurs
pursuant to the terms of such agreement (or any successor agreement thereto)
involving one or more of the other parties to such agreement, then the Company's
sole obligations hereunder shall be as follows:
(i) the Company shall pay to Executive a lump sum payment
in cash no later than 10 business days after the Change in Control an amount
equal to the sum of (A) and (B), where (A) is the difference between (x) the
Severance Amount (as defined in Section 13(a)(ii)) and (y) the sum of the
payments made to Executive prior to the Change in Control
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pursuant to Section 10(b)(ii), and (B) is the difference between (x) the Bonus
Amount (as defined in the Section 13(a)(iii)) and (y) the payments, if any, made
to Executive prior to the Change in Control pursuant to Section 10(b)(iii)(A);
(ii) the Company shall reimburse Executive for any
documented legal fees and expenses to the extent set forth in Section 13(iv);
(iii) the Company shall pay such premiums as are required by
Section 13(a)(v)(A) to the extent not previously paid pursuant to Section
10(b)(iv) and shall make available to Executive and Executive's beneficiaries
medical and dental benefits to the extent provided in Section 13(a)(v)(B); and
(iv) each of the Company and Executive shall have and be
subject to the rights, duties and obligations set forth in Sections 12(c) and
(d).
(h) In the event that (i) the Company becomes a party to a
binding agreement relating to one or more transactions that, if consummated,
would constitute a Change in Control, (ii) prior to such consummation the
Company terminates Executive's employment under circumstances set forth in
Section 10(b) and (iii) such consummation occurs after the first anniversary of
such termination (collectively, a "Covered Termination"), then the Company shall
pay to Executive upon such consummation an amount in cash, less applicable
withholdings, equal to the product of (x) times (y), where (x) is the amount by
which the per share fair market value of the Company's common stock on the date
of the Change in Control (the "CC Value") exceeds such fair market value on such
first anniversary and (y) equals the number of unvested Options forfeited by
Executive on such first anniversary. In addition, in the event of a Covered
Termination the Company shall pay to Executive upon such consummation an amount
in cash, less applicable withholdings, equal to the product of the CC Value
times the number of restricted shares of Company common stock forfeited by
Executive on such first anniversary.
Notwithstanding the foregoing, in the event that the
Executive's employment is terminated under the circumstances set forth in
Section 10(b) and it is reasonably demonstrated that such termination was at the
request of a third party who had taken steps reasonably calculated to effect a
Change in Control or otherwise arose in anticipation of a Change in Control,
then the provisions of this Section 10(g) and 10(h) shall apply to such
termination.
11. Employee Covenants.
(a) For the purposes of this Section 11, the term "Company" shall
include Limited Brands, Inc. and all subsidiaries.
(b) Confidentiality. The Executive shall not, during the term of
this Agreement and thereafter, make any Unauthorized Disclosure. For purposes of
this Agreement, "Unauthorized Disclosure" shall mean use by the Executive or
disclosure by the Executive, without the prior written consent of the Chairman,
to any person other than an employee of the Company or a person to whom
disclosure is reasonably necessary or appropriate in connection with the
performance by the Executive of duties as an executive of the Company or as may
be legally required, of any confidential information relating to the business or
prospects of the Company (including, but not limited to, any information and
materials pertaining to any Intellectual Property as defined below; provided,
however, that such term shall not include the
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use or disclosure by the Executive, without consent, of any publicly available
information (other than information available as a result of disclosure by the
Executive in violation of this Section 11(b)). This confidentiality covenant has
no temporal, geographical or territorial restriction.
(c) Non-Competition. During the Non-Competition Period described
below, the Executive shall not, directly or indirectly, without the prior
written consent of the Company, own, manage, operate, join, control, be employed
by, consult with or participate in the ownership, management, operation or
control of, or be connected with (as a stockholder, partner, or otherwise), any
business, individual, partner, firm, corporation, or other entity that competes,
directly or indirectly, with the Company, or any of its products; provided,
however, that the "beneficial ownership" by the Executive after termination of
employment with the Company, either individually or as a member of a "group," as
such terms are used in Rule 13d of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), of not more
than two percent (2%) of the voting stock of any publicly held corporation shall
not be a violation of Section 11 of this Agreement.
The "Non-Competition Period" means the period the Executive
is employed by the Company plus one (1) year from the Executive's last day of
employment with the Company.
(d) Non-Solicitation. During the No-Raid Period described below,
the Executive shall not directly or indirectly solicit, induce or attempt to
influence any employee to leave the employment of the Company, nor assist anyone
else in doing so. Further, during the No-Raid Period, the Executive shall not,
either directly or indirectly, alone or in conjunction with another party,
interfere with or harm, or attempt to interfere with or harm, the relationship
of the Company, with any person who at any time was an employee, customer or
supplier of the Company, or otherwise had a business relationship with the
Company.
The "No-Raid Period" means the period the Executive is
employed by the Company plus one (1) year from the Executive's last day of
employment with the Company.
(e) Intellectual Property. The Executive agrees that all
inventions, designs and ideas conceived, produced, created, or reduced to
practice, either solely or jointly with others, during his employment with the
Company including those developed on his own time, which relates to or is useful
in the Company's business ("Intellectual Property") shall be owned solely by the
Company. The Executive understands that whether in preliminary or final form,
such Intellectual Property includes, for example, all ideas, inventions,
discoveries, designs, innovations, improvements, trade secrets, and other
intellectual property. All Intellectual Property is either work made for hire
for the Company within the meaning of the United States Copyright Act, or, if
such Intellectual Property is determined not to be work made for hire, then the
Executive irrevocably assigns all rights, titles and interests in and to the
Intellectual Property to the Company, including all copyrights, patents, and/or
trademarks. The Executive agrees that he will, without any additional
consideration, execute all documents and take all other actions needed to convey
his complete ownership of the Intellectual Property to the Company so that the
Company may own and protect such Intellectual Property and obtain patent,
copyright and trademark registrations for it. The Executive also agrees that the
Company may alter or modify the Intellectual Property at the Company's sole
discretion, and the Executive waives all rights to claim or disclaim authorship.
The Executive represents and warrants that any Intellectual Property that he
assigns to the Company, except as otherwise disclosed in writing at the time of
assignment, will be his sole, exclusive, original work. The Executive also
represents that he has
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not previously invented any Intellectual Property or has advised the Company in
writing of any prior inventions or ideas.
(f) Remedies. The Executive agrees that any breach of the terms
of this Section 11 would result in irreparable injury and damage to the Company
for which the Company would have no adequate remedy at law; the Executive
therefore also agrees that in the event of said breach or any threat of breach,
the Company shall be entitled to an immediate injunction and restraining order
to prevent, such breach and/or threatened breach and/or continued breach by the
Executive and/or any and all persons and/or entities acting for and/or with the
Executive, without having to prove damages, and to all costs and expenses,
including reasonable attorneys' fees and costs, in addition to any other
remedies to which the Company may be entitled at law or in equity. The terms of
this paragraph shall not prevent the Company from pursuing any other available
remedies for any breach or threatened breach hereof, including but not limited
to the recovery of damages from the Executive. The Executive and the Company
further agree that the provisions of the covenants not to compete and solicit
are reasonable and that the Company would not have entered into this Agreement
but for the inclusion of such covenants herein. Should a court determine,
however, that any provision of the covenants is unreasonable, either in period
of time, geographical area, or otherwise, the parties hereto agree that the
covenant should be interpreted and enforced to the maximum extent which such
court deems reasonable.
(g) The provisions of this Section 11 shall survive any
termination of the Executive's employment with the Company, and the existence of
any claim or cause of action by the Executive against the Company, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of the covenants and agreements of this Section 11;
provided, however, that this paragraph shall not, in and of itself, preclude the
Executive from defending herself against the enforceability of the covenants and
agreements of this Section 11.
12. Change in Control.
(a) For purposes of this Section 12, "Company" shall mean Limited
Brands, Inc., a Delaware Corporation.
(b) For purposes of this Agreement "Change in Control" means, and
shall be deemed to have occurred upon the first to occur of any of the following
events:
(i) Any Person (other than an Excluded Person) becomes,
together with all "affiliates" and "associates" (each as defined under Rule
12b-2 of the Exchange Act, "beneficial owner" (as defined under Rule 13d-3 of
the Exchange Act) of securities representing 33% or more of the combined voting
power of the Voting Stock then outstanding, unless such Person becomes
"beneficial owner" of 33% or more of the combined voting power of the Voting
Stock then outstanding solely as a result of an acquisition of Voting Stock by
the Company which, by reducing the Voting Stock outstanding, increases the
proportionate Voting Stock beneficially owned by such Person (together with all
"affiliates" and "associates" of such Person) to 33% or more of the combined
voting power of the Voting Stock then outstanding; provided, that if a Person
shall become the "beneficial owner" of 33% or more of the combined voting power
of the Voting Stock then outstanding by reason of such Voting Stock acquisition
by the Company and shall thereafter become the "beneficial owner" of any
additional Voting Stock which causes the proportionate voting power of Voting
Stock beneficially owned by such Person
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to increase to 33% or more of the combined voting power of the Voting Stock then
outstanding, such Person shall, upon becoming the "beneficial owner" of such
additional Voting Stock, be deemed to have become the "beneficial owner" of 33%
or more of the combined voting power of the Voting Stock then outstanding other
than solely as a result of such Voting Stock acquisition by the Company;
(ii) During any period of 24 consecutive months, individuals
who at the beginning of such period constitute the Board (and any new Director,
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the Directors then
still in office who either were Directors at the beginning of the period or
whose election or nomination for election was so approved), cease for any reason
to constitute a majority of Directors then constituting the Board;
(iii) A reorganization, merger or consolidation of the
Company is consummated, in each case, unless, immediately following such
reorganization, merger or consolidation, (i) more than 50% of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners of the Voting Stock outstanding immediately prior to such
reorganization, merger or consolidation, (ii) no Person (but excluding for this
purpose any Excluded Person and any Person beneficially owning, immediately
prior to such reorganization, merger or consolidation, directly or indirectly,
33% or more of the voting power of the outstanding Voting Stock) beneficially
owns, directly or indirectly, 33% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such reorganization,
merger or consolidation or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the election
of directors and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger or
consolidation were members of the Board at the time of the execution of the
initial agreement providing for such reorganization, merger or consolidation;
(iv) The consummation of (i) a complete liquidation or
dissolution of the Company or (ii) the sale or other disposition of all or
substantially all of the assets of the Company, other than to any corporation
with respect to which, immediately following such sale or other disposition, (A)
more than 50% of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial owners
of the Voting Stock outstanding immediately prior to such sale or other
disposition of assets, (B) no Person (but excluding for this purpose any
Excluded Person and any Person beneficially owning, immediately prior to such
sale or other disposition, directly or indirectly, 33% or more of the voting
power of the outstanding Voting Stock) beneficially owns, directly or
indirectly, 33% or more of, respectively, the then outstanding shares of common
stock of such corporation or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the election
of directors and (C) at least a majority of the members of the board of
directors of such corporation were members of the Board at the time of the
execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company; or
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(v) A change in the Chief Executive Officer of Limited
Brands, Inc. to whom Executive reports, unless Executive is named such Chief
Executive Officer.
(vi) The occurrence of any transaction or event that the
Board, in its sole discretion, designates a "Change in Control".
Notwithstanding the foregoing, in no event shall a "Change in
Control" be deemed to have occurred (i) as a result of the formation of a
Holding Company, or (ii) with respect to Executive, if Executive is part of a
"group," within the meaning of Section 13(d)(3) of the Exchange Act as in effect
on the Effective Date, which consummates the Change in Control transaction. In
addition, for purposes of the definition of "Change in Control" a Person engaged
in business as an underwriter of securities shall not be deemed to be the
"beneficial owner" of, or to "beneficially own," any securities acquired through
such Person's participation in good faith in a firm commitment underwriting
until the expiration of forty days after the date of such acquisition. Excluded
Person shall mean (i) the Company; (ii) any of the Company's Subsidiaries; (iii)
any Holding Company; (iv) any employee benefit plan of the Company, any of its
Subsidiaries or a Holding Company; or (v) any Person organized, appointed or
established by the Company, any of its Subsidiaries or a Holding Company for or
pursuant to the terms of any plan described in clause (iv) "Person" shall mean
any individual composition, partnership, limited liability company,
associations, trust or other entity or organization. "Holding Company" shall
mean an entity that becomes a holding company for the Company or its businesses
as a part of any reorganization, merger, consolidation or other transaction,
provided that the outstanding shares of common stock of such entity and the
combined voting power of the then outstanding voting securities of such entity
entitled to vote generally in the election of directors is, immediately after
such reorganization, merger, consolidation or other transaction, beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Voting Stock
outstanding immediately prior to such reorganization, merger, consolidation or
other transaction in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger, consolidation or other
transaction, of such outstanding Voting Stock. "Voting Stock" means securities
of the Company entitled to vote generally in the election of members of the
Company's Board of Directors.
(c) Gross-Up Payment. In the event it shall be determined that
any payment or distribution of any type to or for the benefit of the Executive,
by the Company, any of its affiliates, any Person who acquires ownership or
effective control of the Company or ownership of a substantial portion of the
Company's assets (within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), and the regulations thereunder) or any
affiliate of such Person, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the "Total
Payments"), would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax, imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Total Payments. For purposes of the foregoing
determination, the Executive's tax rate will be deemed to be the highest
statutory marginal state and federal tax rate (on a combined basis) then in
effect.
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(d) All determinations as to whether any of the Total Payments
are "parachute payments" (within the meaning of Section 280G of the Code),
whether a Gross-Up Payment is required, the amount of such Gross-Up Payment and
any amounts relevant to the last sentence of Subsection 12(a), shall be made by
an independent accounting firm selected by the Company from among the largest
six accounting firms in the United States (the "Accounting Firm"). The
Accounting Firm shall provide its determination (the "Determination"), together
with detailed supporting calculations regarding the amount of any Gross-Up
Payment and any other relevant matter, both to the Company and the Executive
within five (5) days of the Termination Date, if applicable, or such earlier
time as is requested by the Company or the Executive (if the Executive
reasonably believes that any of the Total Payments may be subject to the Excise
Tax). Any determination by the Accounting Firm shall be binding upon the Company
and the Executive. As a result of uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that the Company should have made Gross-Up Payments
("Underpayment"), or that Gross-Up Payments will have been made by the Company
which should not have been made ("Overpayments"). In either such event, the
Accounting Firm shall determine the amount of the Underpayment or Overpayment
that has occurred. In the case of an Underpayment, the amount of such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive. In the case of an Overpayment, the Executive shall, at the direction
and expense of the Company, take such steps as are reasonably necessary
(including the filing of returns and claims for refund), follow reasonable
instructions from, and procedures established by, the Company, and otherwise
reasonably cooperate with the Company to correct such Overpayment.
13. Compensation Upon Certain Terminations During the 24-Month Period
Following a Change in Control
a) If the Executive's employment is terminated by the Company
other than for Cause or by the Executive for Good Reason, in each case during
the 24 month-consecutive month period immediately following a Change in Control,
the Company's sole obligations hereunder subject to the Executive's execution of
a General Release, shall be as follows:
(i) the Company shall pay the Executive the Accrued
Compensation;
(ii) the Company shall pay the Executive a lump sum payment
in cash no later than ten business days after the termination date an amount
equal to two times Executive's Base Salary (the "Severance Amount");
(iii) the Company shall pay the Executive a lump sum payment
in cash no later than ten (10) business days after the date of termination an
amount equal to the sum of the last four (4) bonus payments the Executive
received under the Company's incentive compensation plan described in Section 6
and an pro-rata amount equal to the number of days the Executive was employed
during the season (the "Bonus Amount");
(iv) the Company shall reimburse the Executive for all
documented legal fees and expenses reasonably incurred by the Executive in
seeking to obtain or enforce any right or benefit provided by this section; and
(v) the Company (A) shall pay the premiums provided for in
Section 7(a)(1) hereof through the end of the calendar year in which such
termination occurs, and (B)
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shall provide the Executive and Executive's beneficiaries medical and dental
benefits substantially similar to those which the Executive was receiving
immediately prior to the date of termination for a period of eighteen (18)
months after the termination date; provided however, that the Company's
obligation with respect to the foregoing medical and dental benefits shall cease
upon the expiration of Executive's rights to continue such medical and dental
benefits under COBRA.
b) Except as provided in Section 13(a)(v)(B), the Executive
shall not be required to mitigate the amount of any payment provided for in this
Section 13 by seeking other employment or otherwise, nor shall the amount of any
payment or benefit provided for in this Section 13 be reduced by an compensation
earned by the Executive as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by the
Executive to the Company, or otherwise.
14. Employee Representation. The Executive expressly represents and
warrants to the Company that the Executive is not a party to any contract or
agreement and is not otherwise obligated in any way, and is not subject to any
rules or regulations, whether governmentally imposed or otherwise, which will or
may restrict in any way the Executive's ability to fully perform the Executive's
duties and responsibilities under this Agreement.
15. Successors and Assigns.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns, and the Company shall
require any successor or assign to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place. The
term "the Company" as used herein shall include any such successors and assigns
to the Company's business and/or assets. The term "successors and assigns" as
used herein shall mean a corporation or other entity acquiring or otherwise
succeeding to, directly or indirectly, all or substantially all the assets and
business of the Company (including this Agreement) whether by operation of law
or otherwise.
(b) Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, the Executive's
beneficiaries or legal representatives, except by will or by the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
16. Arbitration. Except with respect to the remedies set forth in
Section 11(f) hereof, any controversy or claim between the Company or any of its
affiliates and the Executive arising out of or relating to this Agreement or its
termination, shall be settled and determined by binding arbitration. The
American Arbitration Association, under its Commercial Arbitration Rules shall
administer the binding arbitration. The arbitration shall take place in
Columbus, Ohio. The Arbitrator shall have no authority to award punitive damages
against the Company or the Executive. The Arbitrator shall have no authority to
add to, alter, amend or refuse to enforce any portion of the disputed
agreements. The Company and the Executive each waive any right to a jury trial
or to a petition for stay in any action or proceeding of any kind arising out of
or relating to this Agreement or its termination. The Company shall pay the
costs of such arbitration; provided that each party shall be responsible for
such parties legal and other fees and costs incurred in connection with such
arbitration.
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17. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by registered or certified mail, return
receipt requested, postage prepaid, or upon receipt if overnight delivery
service or facsimile is used, addressed as follows:
To the Executive:
Xxxxxxx X. Xxxxxxxxxxx
00 Xxxx xx Xxxxx
Xxx Xxxxxx, Xxxx 00000
To the Company:
Limited Brands, Inc.
0 Xxxxxxx Xxxxxxx
Xxxxxxxx, Xxxx 00000
Attn: Secretary
18. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
19. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
20. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Ohio without giving
effect to the conflict of law principles thereof.
21. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
22. Entire Agreement. This Agreement including all of its recitals
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
LIMITED BRANDS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxxxxx
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