EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of the 1st day of March, 2000, by and
between Saks Incorporated (the "Company"), and Xxxxxx X. Xxxxx ("Executive").
Company and Executive agree as follows:
1. Employment. Company hereby employs Executive as President of Merchandising and Chief
Operating Officer, as well as Chief Executive Officer of Xxxxxxxx'x Merchandising Group, or in such other
capacity with Company and its subsidiaries as Company's Board of Directors shall designate.
2. Duties. During his employment, Executive shall devote substantially all of his working
time, energies, and skills to the benefit of Company's business. Executive agrees to serve Company
diligently and to the best of his ability and to use his best efforts to follow the policies and directions
of Company's Board of Directors.
3. Compensation. Executive's compensation and benefits under this Agreement shall be as
follows:
(a) Base Salary. Company shall pay Executive a base salary ("Base Salary") at a
rate of no less than $750,000 per year. Executive's Base Salary shall be paid in installments in accordance
with Company's normal payment schedule for its senior management. All payments shall be subject to the
deduction of payroll taxes and similar assessments as required by law.
(b) Bonus. In addition to the Base Salary, Executive shall be eligible, as
long as he holds the position stated in paragraph 1, for a yearly cash bonus with a maximum target of 70% of
Base Salary based upon his performance in accordance with specific annual objectives, set in advance, all as
approved by the Board of Directors.
(c) Effect of Change of Control on Options. In the event of a Change of Control
(as defined in the Company's 1994 Plan), any Options granted to Executive prior to such Change of Control
shall immediately vest.
4. Insurance and Benefits. Company shall allow Executive to participate in each employee
benefit plan and to receive each executive benefit that Company provides for senior executives at the level
of Executive's position.
5. Term. The term of this Agreement shall be for three years, provided, however, that
Company may terminate this Agreement at any time upon thirty (30) days' prior written notice (at which time
this Agreement shall terminate except for Section 9, which shall continue in effect as set forth in Section
9). In the event of such termination by Company without Cause, as defined below, Executive shall be
entitled to receive his Base Salary (at the rate in effect at the time of termination) thr
of the term of this Agreement. Such Base Salary shall be paid in one lump sum.
In addition, this Agreement shall terminate upon the death of Executive, except as to: (a)
Executive's estate's right to exercise any unexercised stock options pursuant to Company's stock option plan
then in effect, (b) other entitlements under this contract that expressly survive death, and (c) any rights
which Executive's estate or dependents may have under COBRA or any other federal or state law or which are
derived independent of this Agreement by reason of his participation in any employee b
ement or plan maintained by Company.
6. Termination by Company for Cause. (a) Company shall have the right to terminate
Executive's employment under this Agreement for Cause, in which event no salary or bonus shall be paid after
termination for cause. Termination for Cause shall be effective immediately upon notice sent or given to
Executive. For purposes of this Agreement, the term "Cause" shall mean and be strictly limited to: (i)
conviction of Executive, after all applicable rights of appeal have been exhausted or wa
crime that materially discredits Company or is materially detrimental to the reputation or goodwill of
Company; (ii) commission of any material act of fraud or dishonesty by Executive against Company or
commission of an immoral or unethical act that materially reflects negatively on Company, provided that
Executive shall first be provided with written notice of the claim and with an opportunity to contest said
claim before the Board of Directors; or (iii) Executive's willful and continual material breach o
ions under paragraph 2 of the Agreement, as so determined by the Board of Directors.
(b) In the event that Executive's employment is terminated, Executive agrees to resign as
an officer and/or director of Company (or any of its subsidiaries or affiliates), effective as of the date
of such termination, and Executive agrees to return to Company upon such termination any of the following
which contain confidential information: all documents, instruments, papers, facsimiles, and computerized
information which are the property of Company or such subsidiary or affiliate.
7. Change in Control. If Executive's employment is terminated by Executive for
"Good Reason" after a Change in Control, or by Company in any way connected with a Change in
Control of Company or a Potential Change in Control of Company, as defined below, Executive shall receive a
sum equal to three times his Base Salary then in effect, continuation in the Company's health plans for
three years at no cost, and vesting in Company's Supplemental Savings Plan at the retirement rate.
"Good Reason" shall mean: (1) a mandatory relocation from the Birmingham, Alabama area, (2) a
reduction in duties or status within the combined company as a result of or after the Change in Control, or
(3) any time during the 13th month after a Change in Control the Executive terminates employment
and deems it to be for Good Reason. If any payment, right or benefit provided for in this Agreement or
otherwise paid to Executive by Company is treated as an "excess parachute payment" unde
(G)(b) of the Internal Revenue Code of 1986, as amended, (the "Code"), Company shall indemnify and hold
harmless and make whole, on an after-tax basis, Executive for any adverse tax consequences, including but
not limited to providing to Executive on an after-tax basis the amount necessary to pay any tax imposed by
Code Section 4999.
As used herein, the term "Change in Control" means the happening of any of the following:
(a) Any person or entity, including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, other than Company, a subsidiary of Company, or any employee
benefit plan of Company or its subsidiaries, becomes the beneficial owner of Company's securities having 25
percent or more of the combined voting power of the then outstanding securities of Company that may be cast
for the election for directors of Company (other than as a result of an issuance of se
iated by Company in the ordinary course of business); or
(b) As the result of, or in connection with, any cash tender or exchange offer, merger or
other business combination, sale of assets or contested election, or any combination of the foregoing
transactions, less than a majority of the combined voting power of the then outstanding securities of
Company or any successor corporation or entity entitled to vote generally in the election of directors of
Company or such other corporation or entity after such transaction, are held in the aggregate
f Company's securities entitled to vote generally in the election of directors of Company immediately prior
to such transactions; or
(c) During any period of two consecutive years, individuals who at the beginning of any
such period constitute the Board of Directors of Company cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for election by Company's stockholders, of each
director of Company first elected during such period was approved by a vote of at least two-thirds of the
directors of Company then still in office who were directors of Company at the beginning o
riod.
As used herein, the term "Potential Change in Control" means the happening of any of the
following:
(a) The approval by stockholders of an agreement by Company, the consummation of which
would result in a Change of Control of Company; or
(b) The acquisition of beneficial ownership, directly or indirectly, by any entity,
person or group (other than Company, a wholly-owned subsidiary thereof or any employee benefit plan of
Company or its subsidiaries (including any trustee of such plan acting as trustee)) of securities of Company
representing 5 percent or more of the combined voting power of Company's outstanding securities and the
adoption by the Board of Directors of Company of a resolution to the effect that a Potential
ntrol of Company has occurred for purposes of this Agreement.
8. Disability. If Executive becomes disabled at any time during the term of this
Agreement, he shall after he becomes disabled continue to receive all payments and benefits provided under
the terms of this Agreement for a period of twelve consecutive months, or for the remaining term of this
Agreement, whichever period is shorter. For purposes of this Agreement, the term "disabled" shall mean the
inability of Executive (as the result of a physical or mental condition) to perform the dut
sition under this Agreement with reasonable accommodation and which inability is reasonably expected to last
at least one (1) full year.
9. Non-competition; Unauthorized Disclosure.
(a) Non-competition. During the period Executive is employed under this Agreement,
and for a period of one year thereafter, Executive:
(i) shall not engage in any activities, whether as employer, proprietor,
partner, stockholder (other than the holder of less than 5% of the stock of a corporation the securities of
which are traded on a national securities exchange or in the over-the-counter market), director, officer,
employee or otherwise, in competition with (i) the businesses conducted at the date hereof by Company or any
subsidiary or affiliate, or (ii) any business in which Company or any subsidiary or affi
tantially engaged at any time during the employment period;
(ii) shall not do business with any vendor that is one of the top 100 vendors of
the businesses conducted by Company or its affiliates at the date hereof or at any time during the term of
this Agreement; and
(iii) shall not induce or attempt to persuade any employee of Company or any of
its divisions, subsidiaries or then present affiliates to terminate his or his employment
relationship.
(b) Unauthorized Disclosure. During the period Executive is employed under this
Agreement, and for a further period of one year thereafter, Executive shall not, except as required by any
court or administrative agency, without the written consent of the Board of Directors, or a person
authorized thereby, disclose to any person, other than an employee of Company or a person to whom disclosure
is reasonably necessary or appropriate in connection with the performance by Executive of his
executive for Company, any confidential information obtained by him while in the employ of Company;
provided, however, that confidential information shall not include any information now known or which
becomes known generally to the public (other than as a result of unauthorized disclosure by Executive).
(c) Scope of Covenants; Remedies. The following provisions shall apply to the
covenants of Executive contained in this Section 9:
(i) the covenants contained in paragraph (i) and (ii) of Section 9(a) shall apply
within all the territories in which Company or its affiliates or subsidiaries are actively engaged in the
conduct of business while Executive is employed under this Agreement;
(ii) without limiting the right of Company to pursue all other legal and
equitable remedies available for violation by Executive of the covenants contained in this Section 9, it is
expressly agreed by Executive and Company that such other remedies cannot fully compensate Company for any
such violation and that Company shall be entitled to injunctive relief to prevent any such violation or any
continuing violation thereof; provided, however, Company shall be entitled to injunctive
o protect itself from unfair competition of the type protected under Tennessee law.
(iii) each party intends and agrees that if, in any action before any court or
agency legally empowered to enforce the covenants contained in this Section 9, any term, restriction,
covenant or promise contained therein is found to be unreasonable and accordingly unenforceable, then such
term, restriction, covenant or promise shall be deemed modified to the extent necessary to make it
enforceable by such court or agency; and
(iv) the covenants contained in this Section 9 shall survive the conclusion of
Executive's employment by Company.
10. General Provisions.
(a) Notices. Any notice to be given hereunder by either party to the other may
be effected in writing by personal delivery, electronic mail, overnight courier, or facsimile. Notices
shall be addressed to the parties at the addresses set forth below, but each party may change his or its
address by written notice in accordance with this Section 10 (a). Notices shall be deemed communicated as
of the actual receipt or refusal of receipt.
If to Executive: Xxxxxx X. Xxxxx
000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
If to Company: General Counsel
Saks Incorporated
000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
(b) Partial Invalidity. If any provision in this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall, nevertheless,
continue in full force and without being impaired or invalidated in any way.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Tennessee.
(d) Entire Agreement. Except for any prior grants of options, restricted stock,
or other forms of incentive compensation evidenced by a written instrument or by an action of the Board or
Directors, this Agreement supersedes any and all other agreements, either oral or in writing, between the
parties hereto with respect to employment of Executive by Company and contains all of the covenants and
agreements between the parties with respect to such employment. Each party to this Agr
ledges that no representations, inducements or agreements, oral or otherwise, that have not been embodied
herein, and no other agreement, statement or promise not contained in this Agreement, shall be valid or
binding. Any modification of this Agreement will be effective only if it is in writing signed by the party
to be charged.
(e) No Conflicting Agreement. By signing this Agreement, Executive warrants
that he is not a party to any restrictive covenant, agreement or contract which limits the performance of
his duties and responsibilities under this Agreement or under which such performance would constitute a
breach.
(f) Headings. The Section, paragraph, and subparagraph headings are for
convenience or reference only and shall not define or limit the provisions hereof.
(g) Attorneys Fees. If Executive brings any action to enforce his purported
rights under this Agreement after a Change in Control, Company shall reimburse Executive for his reasonable
costs, including attorneys fees, incurred. Company shall reimburse Executive as the costs are incurred and
without regard to the outcome of the action.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.
SAKS INCORPORATED
BY: _____________________
Xxxxx X. Xxxxxx
Executive Vice President
_____________________
Xxxxxx X. Xxxxx
Executive
