Exhibit 10.18
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AMENDED EMPLOYMENT AGREEMENT
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This Amended Agreement ("Agreement"), which is made and
entered into this 29th day of August, 2003, by and between Xxxxx Xxxxxx,
residing at 00 Xxxxx Xxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx 00000 ("Employee"), and
Xxxxxx'x Trading Company, Inc., an Indiana corporation ("Company"), amends and
restates the Employment Agreement entered into between Employee and Company,
dated May 28, 2003, including all Exhibits thereto.
1. TERM OF EMPLOYMENT: Subject to the terms of this Agreement,
Company hereby agrees to employ Employee, and Employee hereby agrees to accept
such employment, for the period beginning September 2, 2003 (the "Commencement
Date") and ending at the close of business on the third anniversary of the
Commencement Date or on such earlier date upon which this Agreement is
terminated in accordance with the provisions set forth herein (the "Initial
Term"). Commencing on the second anniversary of the Commencement Date, the term
of this Agreement shall automatically be extended each day by one day, until a
date (the "Termination Date") which is one (1) year following the first date on
which either party delivers written notice of termination to the other. The
"Term" of this Agreement shall include any automatic extensions pursuant to the
preceding sentence.
2. POSITION AND DUTIES:
(a) General Duties; Performance: At all times during the
Term, Employee (i) shall serve as President and Chief Operating Officer of
Company and, in such capacity, shall perform such duties and have such
responsibilities not materially inconsistent with the foregoing as may from time
to time be assigned or delegated to him by the Chief Executive Officer of
Company or the Board of Directors of Company (the "Board"), (ii) shall
diligently and conscientiously devote his full and exclusive business time,
energy and ability to his duties and the business of Company, (iii) shall serve
as a member of the Board, (iv) shall perform his duties as set forth herein
faithfully and efficiently, subject to the direction of the Chief Executive
Officer and the Board, and (v) shall observe and comply with all directions,
policies and regulations given or promulgated by the Board. It is understood and
agreed that Employee shall initially have primary responsibility for the
following areas of Company's business: Finance, Systems, Culture, Planning and
Allocation, Operations and Stores, as such areas are defined by Company's
current practice. The provisions of this Agreement, however, shall not be
construed to preclude service by Employee as a non-employee director of entities
not in competition with the business of Company, provided that Employee shall
not be a director of more than two other companies (public or private).
(b) Non-Contravention; Indemnification: Employee
represents and warrants that (i) he has the full right and authority to enter
into this Agreement and to render the services as required under this Agreement,
(ii) as of the date Employee executes this Agreement he is not in breach of any
obligation owed by him to Bloomingdale's, Inc. ("Bloomingdale's"), including,
but not limited to the obligations regarding trade secrets and confidential
information set forth in Section 2.2 of his employment agreement dated as of
April 1, 2002 with Bloomingdale's (the "Bloomingdale's Agreement"), (iii) that
he has provided Company with a true and correct copy of the Bloomingdale's
Agreement and that he has no contractual obligations to Bloomingdale's other
than those set out in the Bloomingdale's Agreement, (iv) by signing this
Agreement and rendering the services as required herein he is not breaching any
other contract or other legal obligation (exclusive of the Bloomingdale's
Agreement) he owes to any third party, and (v) he is not party to any other
agreement with Company or any other party providing for the performance by him
of services or, in the case of Company and its subsidiaries, for any
compensation to be paid to him. Provided that Employee has made no
misrepresentation in respect of the preceding sentence, and further provided
that Employee has given ninety (90) days advance written notice to
Bloomingdale's that Employee is terminating his employment with Bloomingdale's,
as provided for in Exhibit A to the Bloomingdale's Agreement, prior to his
termination of employment with Bloomingdale's, Company agrees to indemnify,
defend and hold harmless Employee from any claim, action or proceeding brought
by Bloomingdale's in respect of the Bloomingdale's Agreement. Employee shall
give Company written notice of any such claim, action or proceeding within five
(5) days of receipt by Employee. Company shall have the right to take over
Employee's defense of any such claim, action, or proceeding through counsel
selected by Company and reasonably acceptable to Employee, to compromise and/or
settle the same and to prosecute any available appeals or reviews of any adverse
judgment or ruling that may be entered therein; provided, however, that if
Company elects not to assume such defense, or counsel for Employee or Company
reasonably advises Employee or Company, respectively, that there are issues
which raise conflicts of interests between Company and Employee, Employee may
retain counsel reasonably satisfactory to him and acceptable to Company after
consultation with Company, and Company shall pay the reasonable fees and
expenses of such counsel. Employee and Company shall cooperate with respect to
the investigation, defense, and resolution of all such matters.
3. COMPENSATION, BENEFITS AND EXPENSES: During the Term, Company
shall compensate Employee for his services as follows:
(a) Salary and Expenses: Company shall pay Employee a
base salary at an annual rate of $600,000 for Company's 2003 fiscal year (i.e.,
Company's fiscal year beginning in 2003) (such amount reduced pro rata based
upon the date Employee commences his daily duties and responsibilities as
President and Chief Operating Officer of Company), $650,000 for Company's 2004
fiscal year, and $700,000 for Company's 2005 fiscal year, in each case less
standard income and payroll tax withholding and other authorized deductions.
Such salary shall be earned and payable in regular installments in accordance
with Company's normal payroll practices. Employee shall also be entitled to
reimbursement for reasonable business expenses in accordance with Company policy
and shall, in the initial year of this Agreement, also be entitled to
reimbursement (to a maximum of $20,000) of expenses for legal, tax and financial
advice related to his employment by Company.
(b) Health Insurance: Employee and his dependents shall
be eligible to participate in Company's group health plan as in effect from time
to time for employees of Company.
(c) Bonus: Employee shall be eligible to receive an
annual bonus in accordance with Company's existing bonus program, with such
bonus to be determined based on Company achieving its targeted operating income
for the applicable fiscal year (the "Target Income") as set forth in Company's
annual budget for such fiscal year prepared by management and approved by the
Board. Employee's "Target Bonus" for a Company fiscal year shall be equal to 75%
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of his base salary rate for such fiscal year (or $450,000 for Company's 2003
fiscal year, $487,500 for Company's 2004 fiscal year, and $525,000 for Company's
2005 fiscal year) and may be increased by an uncapped, additional amount of
Target Bonus pursuant to the schedule for incremental Target Bonus increases
approved by the Board from time to time. The amount of annual bonus actually
paid to Employee shall be a percentage of the Target Bonus determined in
accordance with Company's existing bonus program as it may be approved from time
to time by the Board. Company shall pay the annual bonus (less standard income
and payroll tax withholding and other authorized deductions) to Employee at such
time or times as are consistent with the administration of Company's bonus
program. Notwithstanding anything to the contrary herein, Employee shall receive
from Company a minimum guaranteed bonus of not less than $225,000 for Company's
2003 fiscal year, provided that Employee shall have (i) entered into this
Agreement and (ii) commenced employment with Company no later than September 2,
2003; and provided further that, if Employee shall not have satisfied the
foregoing conditions by September 2, 2003, his guaranteed bonus for Company's
2003 fiscal year shall be reduced pro rata. If Employee's annual bonus for
Company's 2003 fiscal year exceeds the minimum guaranteed bonus of $225,000,
such annual bonus for Company's 2003 fiscal year shall have no maximum (other
than as may be imposed by the Board) and shall not be subject to pro rata
reduction, regardless of whether Employee shall have entered into this Agreement
and commenced employment with Company by September 2, 2003.
(d) Company Stock/Options. Company shall grant to
Employee (i) a restricted stock grant of 100,000 shares of unregistered common
stock of Company (the "Common Stock"), effective as of the date Employee
commences employment with Company, pursuant to an Agreement in substantially the
form attached hereto as Exhibit A, and shall endeavor to cause such shares to be
registered within a reasonable period after the commencement of Employee's
employment, (ii) provided that Employee has entered into this Agreement and
commenced employment with Company by September 2, 2003, (A) 100,000 options
pursuant to Company's 1999 Stock Option Plan, as amended (the "Option Plan"),
and (B) 200,000 additional options (the 300,000 options together referred to as
the "Options"), with a per share exercise price equal to the closing price of
Company's Common Stock on the first date on which Employee performs services for
Company. Company shall endeavor to cause the Options referred to in clause
(ii)(B) of the preceding sentence to be registered within a reasonable period
after commencement of Employee's employment. The grant of restricted Common
Stock shall become vested as follows: forty percent (40%) (or 40,000 shares) on
Employee's actual start date of employment with Company; and twenty percent
(20%) (or 20,000 shares) on each of Employee's first anniversary, second
anniversary, and third anniversary with Company, provided Employee is employed
by Company on such anniversary date. The Options shall become vested in
one-third increments (or 100,000 options each) on Employee's first anniversary,
second anniversary, and third anniversary with Company, provided Employee is
employed by Company on such anniversary date. The Options issued pursuant to the
Option Plan shall be governed by and subject to the terms and conditions of such
Plan and Employee's Stock Option Agreement in substantially the form attached
hereto as Exhibit B. The 200,000 Options issued outside of the Plan shall be
governed by and subject to the terms of Employee's Stock Option Agreement in
substantially the form attached hereto as Exhibit C.
(e) Annual Stock Option Grant. Subject to the provisions
of this Section 3(e), beginning with the 2004 fiscal year, Employee shall be
eligible to receive an annual grant of options commensurate with Employee's
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position and responsibilities, subject to a minimum of 50,000 shares, pursuant
to the Option Plan (the "Annual Options"), with an exercise price equal to the
closing price of the Common Stock on the grant date; provided, however, Company
shall not be required to issue Annual Options to Employee after such time as it
has discontinued the issuance of options to other senior management employees,
using instead another form of incentive compensation, provided that Employee
receives incentive compensation in the same form as other senior management
employees. The Annual Options granted during a fiscal year shall be granted not
later than the end of the fourth full month of that fiscal year and shall be
contingent on Employee being employed by Company on the grant date and Company
having achieved its Target Income for the immediately preceding fiscal year. The
Annual Options shall be governed by and subject to the terms and conditions of
the Option Plan and Employee's Stock Option Agreement in substantially the form
attached hereto as Exhibit B.
(f) Vacation: Employee shall be entitled to annual paid
vacation in accordance with Company's policies as in effect from time to time
for similarly situated executive employees of Company, but not less than four
weeks of paid vacation per year.
(g) Retirement Plan: Employee shall be eligible to
participate in Company's retirement plans applicable to Employee in accordance
with the terms of such plans. Employee understands that the Board monitors such
plans or arrangements and may, from time to time, add benefits to or delete
benefits from the plans or arrangements, or modify or terminate existing plans
or arrangements, provided that no such modification or termination shall
decrease the retirement benefits accrued by Employee prior to the modification
or termination without the written consent of Employee, such consent not to be
unreasonably withheld.
(h) Moving Expenses: Company shall reimburse Employee for
(i) reasonable expenses incurred in connection with Employee's relocation to
Indiana (including the relocation of Employee's family and pets), (ii) the
reasonable commuting and temporary living costs for a period of eight months
from the date hereof, including, without limitation, airfare and ground
transportation between Newark, New Jersey and Indianapolis, Indiana every other
week during such eight-month period, car rental in Indianapolis, Indiana during
such eight-month period, house hunting and relocation trips to Indianapolis,
Indiana for Employee's wife during such eight-month period and (iii) up to two
(2) points associated with the purchase of a residence in the greater
Indianapolis area, in each case upon the provision to Company of receipts
evidencing such expenses. In addition, Company shall provide Employee with third
party assistance (including a guaranteed buy-out offer, if needed) in connection
with the sale of Employee's current home in Bernardsville, New Jersey, in
accordance with Company's home buy-out relocation policy as in effect on the
date of this Agreement. Company agrees to indemnify Employee against any
incremental income tax liability incurred as a result of the payment of his
temporary living costs and any other non-deductible relocation costs by Company.
(i) Financial Planning Services: Company shall pay for
financial planning services for Employee from the firm of Xxxxxxxx, Xxxxxx
Xxxxxxxx, and Company and shall indemnify Employee against any incremental
income tax liability incurred as a result of Company's payment for such
services.
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(j) Repayment of Certain Benefits Upon Early Resignation:
In the event that Employee terminates employment hereunder for other than "Good
Reason" (as defined in Section 4(e) below) before his first anniversary date
with Company, Employee shall pay to the Company (i) the amount of any moving,
relocation or other expenses paid or reimbursed by Company to Employee pursuant
to Section 3(h), and (ii) an amount equal to the value of the restricted Common
Stock (40,000 shares) granted to Employee pursuant to Section 3(d) and becoming
vested on his employment commencement date, based on the closing price of
Company's Common Stock on the date of the grant.
4. TERMINATION: Employee's employment with Company during the
Term may be terminated by Company or by Employee under the circumstances
described in this Section 4, and subject to the provisions of Section 5:
(a) Termination by Company for Cause: Company may
immediately terminate Employee's employment for Cause by giving written notice
to Employee identifying in reasonable detail the act or acts said to constitute
"Cause." For purposes of this Agreement, "Cause" means Employee's (i)
intentional act of fraud, embezzlement, theft, or other material violation of
the law in connection with or in the course of his employment, (ii) intentional
illegal act that is likely to materially injure the reputation, business, or a
business relationship of Company; (iii) intentional wrongful damage to material
assets of Company; (iv) intentional wrongful disclosure of material confidential
information of Company; (v) intentional wrongful competitive activity in
material breach of Employee's duty of loyalty; or (vi) breach of any material
term of any stated material employment policy of Company; provided Company has
given Employee written notice of such breach, and Employee has failed to cure
such breach within ten (10) days after receipt of such notice. For purposes of
the preceding sentence, no act, or failure to act, on the part of Employee shall
be deemed "intentional" if it was due primarily to an error in judgment or
negligence, but shall be deemed "intentional" only if done, or omitted to be
done, by Employee not in good faith and without reasonable belief that his act
or omission was in or not opposed to the best interest of Company.
(b) Termination by Company for Other than Cause, Death,
or Disability: Company may immediately terminate Employee's employment for any
reason other than Cause, death, or Disability by giving ten (10) days written
notice to Employee.
(c) Death: Employee's employment shall automatically
terminate upon his death.
(d) Disability: Employee shall not be considered in
breach of this Agreement, if he fails to perform the material duties of his
employment because of a physical or mental condition that renders him unable to
perform such services (hereafter referred to as "Disability"). If for a
continuous period of twelve (12) months during the Term, Employee fails to
perform the material duties of his employment because of Disability, his
employment shall terminate on the first anniversary of the beginning of his
Disability. If there is any dispute as to whether Employee has a Disability,
this issue shall be settled by the opinion of an impartial reputable physician
qualified to make the determination agreed upon for the purpose by Employee and
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Company, or failing such agreement within fourteen (14) days of a written
request therefor by either party to the other, by an impartial reputable
physician qualified to make the determination who is selected by agreement of a
reputable physician selected by Company and a reputable physician selected by
Employee.
(e) Termination by Employee for Good Reason. Employee may
terminate employment during the Term for "Good Reason" by delivering to Company
(i) a Preliminary Notice of Good Reason (as defined below), and (ii) not earlier
than thirty (30) days and not later than three (3) months from the delivery of
such Preliminary Notice of Good Reason, a Notice of Termination. For purposes of
this Agreement, "Good Reason" means (i) the assignment (without the express
written consent of Employee) to Employee of a materially lower position in the
organization in terms of his responsibility, authority and status, any material
reduction in Employee's authority or status, or requiring Employee to perform
services not commensurate with Employee's ability, experience and
qualifications; (ii) requiring Employee (without his consent) to relocate his
primary work location more than fifty (50) miles away from the current principal
office of Company in Plainfield, Indiana; (iii) any reduction in Employee's base
salary or bonus opportunity; (iv) any material breach by Company of the terms of
this Agreement; (v) failure to elect Employee to the Board; or (vi) failure of
any successor of the Company to assume this Agreement; provided that "Good
Reason" shall not include (A) acts not taken in bad faith which are cured by
Company in all respects not later than twenty (20) days from the receipt by
Company of a written notice from Employee identifying in reasonable detail the
act or acts constituting "Good Reason" (a "Preliminary Notice of Good Reason")
or (B) acts taken by Company as a result of grounds for termination of
employment for Cause pursuant to Section 4(a). A Preliminary Notice of Good
Reason shall not, by itself, constitute a Notice of Termination.
(f) Special Resignation by Employee: In the event that
the employment of Company's current Chief Executive Officer, Xxxxxx Xxxx (the
"Current CEO"), terminates before the third anniversary of the Commencement
Date, Employee shall have a one-time additional right to resign, if Employee has
not been appointed by the Board as Company's CEO prior to the end of the ninth
(9th) month following the termination of the Current CEO's employment, such
resignation to be on ninety (90) days notice exercisable only after such ninth
(9th) month and prior to the first anniversary of the Current CEO's termination
of employment.
5. OBLIGATIONS UPON TERMINATION:
(a) Termination by Company for Cause: If Company
terminates Employee for Cause at any time during the Term, Employee will receive
his base salary and other compensation and benefits earned under this Agreement
but not yet paid or delivered to Employee as of the date of termination,
including retirement benefits accrued through the date of such termination and
payable under the terms of such plans, but excluding any bonus.
(b) Termination by Company for Other Than Cause,
Disability, Death, or by Employee for Good Reason: If Company terminates
Employee's employment for any reason other than Cause, Disability, or death at
any time during the Term, or if Employee terminates employment for Good Reason
pursuant to Section 4(e) during the Term, Employee shall receive, subject to the
limitations set forth below, (i) his base salary and other compensation and
benefits earned under this Agreement but not yet paid or delivered to Employee
as of the date of his termination, including any bonus owed for the immediately
preceding fiscal year and retirement benefits accrued through the date of such
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termination and payable under the terms of such plans, (ii) a lump sum payment
equal to Employee's Target Bonus for the fiscal year of termination, (iii) a
lump sum equal to then-current base salary, less standard income and payroll tax
withholding and other authorized deductions, from the date of termination until
the later of the date that is (A) the first anniversary of the date of his
termination or (B) the third anniversary of the date hereof (such period
hereafter referred to as the "Severance Period); (iv) if Employee's termination
of employment occurs after October 31 of the fiscal year of termination, the
annual bonus, if any, for the fiscal year in which Employee's employment
terminates, based on Company's actual performance for such fiscal year and
payable at such time as is consistent with the administration of Company's bonus
program, (v) continued health coverage for the Severance Period, and (vi) a lump
sum equal to the benefits that absent termination of employment would have
accrued under Company's tax-qualified and non-qualified retirement plans (which
benefits shall be deemed fully vested) until the end of the Severance Period.
Upon termination of employment governed by this Section 5(b), restricted Common
Stock granted to Employee pursuant to Section 3(d) shall become fully vested (to
the extent not already fully vested as of the termination date).
(c) Special Resignation Right: If Employee resigns
pursuant to Section 4(f), Employee shall be entitled to the compensation payable
pursuant to Section 5(b).
(d) Death or Disability: If Employee's employment
terminates pursuant to Section 4(c) or (d) as a result of his death or
Disability, Employee shall be entitled to the same compensation as provided
under Section 5(a). In addition, Employee (or his estate) shall receive a
payment (at such time as is consistent with the administration of Company's
bonus program) equal to a pro-rata share of the annual bonus he would have
earned (as determined in a manner consistent with Section 3(c)) based on
Company's actual results for the fiscal year, and restricted Common Stock
granted pursuant to Section 3(d) shall become fully vested (to the extent not
already fully vested as of the date of termination), without regard to whether
Employee has completed a full year of employment with Company. For purposes of
the preceding sentence, Employee's pro-rata share shall be a fraction of the
number of days in the fiscal year, the numerator of which shall be the number of
days in the fiscal year prior to Employee's death or termination of employment
pursuant to Section 4(d) and the denominator of which shall be 365.
(e) Exclusive Remedy: Employee acknowledges that, other
than the payments described in this Section 5 and Employee's rights under any
benefit plan of Company in which Employee participates, he shall have no other
claims against, and be entitled to no other payments from, Company or its direct
or indirect parents, subsidiaries, affiliates or related companies upon any
termination or breach by Company of this Agreement.
6. LOYALTY, NON-COMPETITION AND CONFIDENTIALITY: In consideration
of the employment provided by Company, Employee agrees with Company as follows:
(a) Non-Competition: Employee acknowledges that his
position will give him access to confidential and highly sensitive non-public
information of substantial importance to Company, including but not limited to
financial information, identities of distributors, contractors and vendors
utilized in Company's business, non-public forms, contracts and other documents
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used in Company's business, trade secrets used, developed or acquired by
Company, information concerning the manner and details of Company's operation,
organization and management, Company's business plans and strategies, price
information, customer lists and research and development data, and that the
services he will provide to Company are unique. During the "Non-Competition
Period" as defined in Section 6(g) below, Employee agrees that in addition to
any other limitation, he will not directly or indirectly engage in, as an
employee, consultant or otherwise, any business in the United States primarily
engaged in the retail sporting goods or retail sports apparel business, nor will
he accept employment, consult for, or participate, directly or indirectly, in
the ownership or management of any enterprise in the United States engaged in
such a business (such competing businesses currently include Academy Sports,
Bass Pro, REI, Gander Mountain, Cabella's, Sports Authority, Dick's Sporting
Goods, Garts Sports, Modell's, Copeland, Sports Chalet, Hibbett's and Christie
Sports, and any subsidiaries of any of them). Notwithstanding the foregoing,
Employee may invest as the holder of not more than four percent (4%) of the
outstanding shares of any corporation whose stock is listed on any national or
regional securities exchange or reported by the National Association of
Securities Dealers Automated Quotation System or any successor thereto.
(b) Other Employees, Customers: Employee agrees that
during the Non-Competition Period, neither he nor any entity with which he is at
the time affiliated (and which is not affiliated with Company) shall, directly
or indirectly, hire or offer to hire or entice away or in any other manner
persuade or attempt to persuade any officer, employee, agent or customer of
Company or any of its affiliates, or any person who supplies goods or services
or licenses intangible or tangible property to Company or any of its affiliates
to discontinue his, her or its relationship with such entity.
(c) Confidentiality: Except in the normal and proper
course of his duties hereunder, Employee will not use for his own account or
disclose to anyone else, during or after the Term of this Agreement, any
confidential or proprietary information or material relating in the reasonable
opinion of Company to Company's operations or businesses, including Company's
subsidiaries, which he may obtain from Company, its subsidiaries or their
officers, directors or employees, or otherwise during or by virtue of Employee's
employment by Company. Confidential or proprietary information or material
includes, without limitation, the following types of information or material,
both existing and contemplated, regarding Company, its direct or indirect
parents, subsidiaries, affiliates or related companies: proprietary data
processing systems and software; corporate information, including contractual
arrangements, plans, strategies, tactics, policies, resolutions, patent,
copyright, trademark, and tradename applications, and any litigation or
negotiations; marketing information, including sales or product plans,
strategies, methods, customers, prospects, or market research data; financial
information, including cost and performance data, debt arrangements, equity
structure, investors, and holdings; operational and scientific information,
including trade secrets, technical information, and personnel information,
including personnel lists, resumes, personnel data, organizational structure,
and performance evaluations; provided, however, that confidential or proprietary
information shall not include any information that is generally available to the
public without breach of this Agreement.
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(d) Intangible Property: All right, title and interest of
every kind and nature whatsoever, whether now known or unknown, in and to any
intangible property, including all trade names, unregistered trademarks and
service marks, brand names, patents, copyrights, registered trademarks and
service marks and all trade secrets and confidential know-how (collectively, the
"Intangible Property"), invented, created, written, developed, furnished,
produced or disclosed by Employee in the course of rendering his services to
Company hereunder shall, as between the parties hereto, be and remain the sole
and exclusive property of Company for any and all purposes and uses whatsoever,
and Employee shall have no right, title or interest of any kind or nature in
such Intangible Property, or in or to any results or proceeds therefrom.
Employee will, at the request of Company, execute such assignments, certificates
and other instruments as Company may from time to time deem necessary or
desirable to evidence, establish, maintain, perfect, protect, enforce or defend
its right, title and interest in and to, any of the foregoing.
(e) Return of Documents: Employee agrees that all
documents of any nature pertaining to activities of Company, its direct or
indirect parents, subsidiaries, affiliates and related companies, used,
prepared, or made available to Employee in the course of rendering his services
to Company hereunder, including the information or materials covered by Sections
6(c) and 6(d) hereof, are and shall be the property of Company or, as the case
may be, its direct or indirect parents, subsidiaries, affiliates or related
companies, and that all copies of such documents shall be surrendered to Company
whenever requested by the Company.
(f) Obligations Owed to Bloomingdale's: For as long as
Employee shall be employed by Company, Employee agrees as follows:
(i) Without the consent of the Bloomingdale's,
Employee shall not disclose to anyone any trade secrets or confidential
information relating to the Bloomingdale's business in any way obtained by him
while employed by Bloomingdale's.
(ii) Employee shall comply with all contractual
provisions of the Bloomingdale's Agreement which may be applicable to him
following the expiration of the Term of the Bloomingdale's Agreement (as defined
therein).
(iii) Employee shall not retain or seek to retain
on behalf of Company any employee or employees of Bloomingdale's without
Company's written consent.
(g) Non-Competition Period: "Non-Competition Period"
means the period beginning on the date hereof and ending on the date that is the
first anniversary of the date of termination of Employee's employment with
Company.
(h) Enforcement: Employee acknowledges that irreparable
damage would result to Company or its direct or indirect parents, subsidiaries,
affiliates or related companies if the provisions of this Section 6 are not
specifically enforced, and agrees that Company shall be entitled to any
appropriate legal, equitable, or other remedy, including injunctive relief, in
respect of any failure to comply with the provisions of this Section 6.
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7. CHANGE IN CONTROL:
(a) For purposes of this Section 7, the following terms
shall have the meanings set out below:
(i) "Board" means the Board of directors of the
Company or successor entity described in clause (a)(ii)(C) or (D) below:
(ii) "Change in Control" means the occurrence
during the Term of any of the following events: (A) any acquisition by any
Person or group (as defined in the Securities and Exchange Act of 1934
("Exchange Act")) other than a Permitted Shareholder of beneficial ownership of
more than the greater of (I) thirty percent (30%) of Company's then outstanding
shares of Common Stock and (II) the Common Stock held by Permitted Holders, and
Incumbent Directors cease to constitute more than fifty percent (50%) of the
members of the Board; (B) consummation of a merger, reorganization,
consolidation, or similar transaction (any of the foregoing a "Merger"), unless
the Persons who were the beneficial owners of the Common Stock immediately
before such Merger are the beneficial owners, immediately after such Merger,
directly or indirectly, in the aggregate, of more than sixty percent (60%) of
the common stock and other voting securities of the entity resulting from such
Merger in substantially the same relative proportions as their ownership of the
Common Stock immediately before the Merger; (C) consummation of a sale of all or
substantially all of the assets of the Company (a "Sale"), unless the Persons
who were the beneficial owners of the Common Stock, immediately before such
Sale, are the beneficial owners, directly or indirectly, in the aggregate, of
more than sixty percent (60%) of the common stock and other voting securities of
the entity or entities that own such assets immediately after the Sale; or (D)
approval by the Board or the Company shareholders of a Plan of liquidation of
the Company.
(iii) "Incumbent Director" means an individual who
is a member of the Board and who (i) is a member of the Board immediately before
(i) the change in ownership described in Section 7(a)(ii)(A) or, (ii) if a
change in the composition of the Board is made before the change in ownership
described in clause (i) pursuant to an agreement with the purchasing Person or
group described in Section 7(a)(ii)(A), the change pursuant to such agreement.
(iv) "Permitted Holder" means Xxxxxxx, Spogli &
Co., Inc. or Limited Brands, Inc., and "Permitted Holders" means Xxxxxxx, Spogli
& Co., Inc. and Limited Brands, Inc. The term "Permitted Holder" also includes
any affiliate of an entity described in the preceding sentence.
(v) "Person" means an individual, corporation,
partnership, joint venture, association, limited liability company, joint-stock
company, trust, or unincorporated organization, or a governmental agency,
officer, department, commission, board, bureau, or instrumentality thereof.
(b) If a Change in Control shall occur on or prior to the
Termination Date or such earlier date upon which this Agreement is terminated in
accordance with the provisions set forth herein, restricted Common Stock and
Options granted to Employee pursuant to Section 3(d) shall become fully vested
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on the date of such Change in Control to the extent not already vested. In
addition, if a Change in Control occurs as provided in the preceding sentence,
and Company or its successor terminates Employee's employment for a reason other
than Cause, Disability, or death within one year following such Change in
Control, or Employee resigns for Good Reason within one year following such
Change in Control, Employee shall be entitled to benefits pursuant to this
Section instead of the benefits due to him pursuant to the applicable provisions
of Section 5. Upon termination of Employee's employment, Company or its
successor shall pay Employee a lump sum payment equal to the sum of (i)
Employee's base salary annual salary at the rate in effect on the date of
termination and (ii) Employee's Target Bonus for the fiscal year in which the
termination occurs, multiplied by 2.5; plus an amount equal to the excise tax
payable by Employee under the Code Section 4999 or its successor as a result of
excess parachute payments to Employee resulting from the Change in Control,
disregarding however, any excise tax payable on the reimbursement pursuant to
this proviso. By way of example, if excess parachute payments of $1,000,000 are
made before reimbursement for excise taxes, and the 20% rate under Code Section
4999 remains in effect, Company shall make an excise tax reimbursement of
$200,000 but shall not make any further payment to reimburse Employee for excise
taxes resulting from its payment of the $200,000.
(c) If a Change in Control shall occur after the date on
which this Agreement is signed by Employee and before the Commencement Date, and
Company terminates this Agreement without Cause before the Commencement Date, or
Employee terminates this Agreement for Good Reason before the Commencement Date,
Employee shall be entitled to a cash payment equal to the increase in the value
of a share of the Common Stock from the date on which the parties sign this
Agreement to the Change in Control date, multiplied by 300,000, reduced by
applicable tax withholding. The cash payment referred to in the preceding
sentence shall be in place of the Options referred to in Section 3(d). Except as
provided in the preceding sentence, in determining Employee's rights pursuant to
this Section 7, Employee shall be treated as if he had commenced employment
pursuant to the Agreement on the day immediately preceding termination of the
Agreement. As a result, Employee shall be granted the restricted Common Stock
referred to in Section 3(d) as of the day preceding the date of such
termination, and Employee's interest in such restricted Common Stock shall be
fully vested. In addition, Employee shall be entitled to the lump sum payment
described in Subsection (b).
(d) If a Change in Control shall occur after the date on
which this Agreement is signed by Employee and before the Commencement Date, and
Employee commences employment with the Company on or before the Commencement
Date, Employee's rights hereunder shall be determined as if the Change in
Control had occurred on the first day of Employee's employment. Thus, restricted
Common Stock and Options granted to Employee pursuant to Section 3(d) shall be
fully vested on the Commencement Date, and Employee's right to a lump sum
payment pursuant to Subsection (b) shall be determined as if the Change in
Control occurred on the Commencement Date.
8. ENTIRE AGREEMENT: This Agreement, including such other
agreements, Company policies and plans as are referenced herein, contains the
entire understanding between Company and Employee concerning Employee's
employment with Company, and supersedes all prior negotiations, term sheets, and
agreements between them.
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9. ENFORCEMENT:
(a) Legal Fees: If Employee incurs reasonable legal,
accounting, expert witness or other fees and expenses (collectively, "Legal
Fees") in an effort to establish, in connection with any dispute with Company,
Employee's entitlement to compensation or benefits under this Agreement, and
prevails on the material issues in such dispute, Company shall reimburse
Employee for such Legal Fees and pay Employee an additional amount such that
after payment of all taxes on such additional amount there remains a balance
sufficient to pay the taxes on the Legal Fees being reimbursed.
(b) Interest: If Company fails to pay any amount or
benefit provided under this Agreement when due, Company shall pay interest on
such amount or benefit at a rate equal to the rate of interest on Company's
revolving credit charged by Company's principal lender, or in the absence of any
revolving credit, prime rate.
10. MODIFICATION: No provision of this Agreement may be amended,
modified, or waived except by written agreement signed by both Company and
Employee.
11. GOVERNING LAW: The provisions of this Agreement shall be
construed in accordance with, and governed by, the laws of the State of Indiana
without regard to principles of conflict of laws.
12. SAVINGS CLAUSE: If any provision of this Agreement or the
application thereof is held invalid, the invalidity shall not affect other
provisions or applications of the Agreement which can be given effect without
the invalid provisions or applications and to this end the provisions of this
Agreement are declared to be severable.
13. SUCCESSORS; NO ASSIGNMENT OF AGREEMENT: Except as otherwise
provided herein, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective legal representatives, heirs,
successors and assigns. Employee acknowledges that his services are unique and
personal. Accordingly, Employee may not assign his rights or delegate his duties
or obligations under this Agreement to any person or entity.
14. ADDITIONAL REPRESENTATIONS: Employee represents and warrants
to Company that he is knowledgeable and sophisticated as to business matters,
including the subject matter of this Agreement, that he has read this Agreement
and that he understands its terms. Employee acknowledges that, prior to
assenting to the terms of this Agreement, he had been given a reasonable time to
review it, to consult with counsel of his choice, and to negotiate at
arm's-length with Company as to its contents. Company and Employee agree that
the language used in this Agreement is the language chosen by the parties to
express their mutual intent, and that Employee has entered into this Agreement
freely and voluntarily and without pressure or coercion from anyone.
15. RIGHTS AND WAIVERS: All rights and remedies of the parties
hereto are separate and cumulative, and no one of them, whether exercised or
not, shall be deemed to be to the exclusion of any other rights or remedies or
shall be deemed to limit or prejudice any other legal or equitable rights or
remedies which either of the parties hereto may have. No party to this Agreement
shall be deemed to waive any rights or remedies under this Agreement unless such
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waiver is in writing and signed by such party. No delay or omission on the part
of either party in exercising any right or remedy shall operate as a waiver of
such right or remedy or any other rights or remedies. A waiver on any one
occasion shall not be construed as a bar to or a waiver of any right or remedy
on any future occasion.
16. SURVIVABILITY: The expiration or termination of this Agreement
shall not operate to affect such of the provisions hereof as are expressed to
remain in full force and effect notwithstanding such termination.
17. CAPTIONS: The captions of this Agreement are for descriptive
purposes only and are not part of the provisions hereof and shall have no force
or effect.
18. NOTICES: All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows (or to such other party or address as Company or Employee
may designate in notice duly delivered to the other pursuant to this paragraph):
If to Employee, to him at his address set forth in the
preamble hereto, with a copy to:
Xxxxx Xxxxx
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
Sears Tower, Suite 8000, 000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
If to Company, to it at:
0000 X. Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: General Counsel
19. WITHHOLDING: Company may withhold from any amounts payable
under this Agreement such federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation. Company agrees that if
any tax owed by Employee is required to be withheld from Employee with respect
to the granting of Common Stock or Options or Annual Options provided for in
Section 3 of this Agreement, Company shall withhold and pay to the United States
Treasury, when due, such tax withheld. In no event will Company indemnify
Employee against any incremental tax liability incurred as a result of the
granting of Common Stock or Options or Annual Options provided for in Section 3
or with respect to any other benefit provided for in this Agreement unless such
indemnification obligation is specifically set forth herein.
20. NO DUTY TO MITIGATE: Payments due to Employee following his
termination of employment are not conditioned on Employee's attempting to
mitigate his losses by seeking other employment or taking other action, and
Employee shall be under no obligation to do so.
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IN WITNESS WHEREOF, Company and Employee, intending to be
legally bound, have executed this Agreement on the day and year first above
written.
EMPLOYEE: COMPANY:
XXXXXX'X TRADING COMPANY, INC.
/s/ XXXXX XXXXXX By: /s/ XXXXXX X. XXXX
----------------------------------- -----------------------------------
Xxxxx Xxxxxx Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
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