Exhibit 10.5
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement is made as of July 1, 2001, between Spiegel,
Inc., a Delaware corporation ("Spiegel") and Xxxxx X. Xxxxxxxxx, of
_______________ , Illinois ("Xxxxxxxxx").
Spiegel and Xxxxxxxxx hereby agree as follows:
1. EMPLOYMENT
-------------
Spiegel agrees to employ Xxxxxxxxx in the greater Chicago metropolitan
area until the effective date of the termination of the employment period,
as hereinafter provided, and Xxxxxxxxx agrees to continue such employment.
Xxxxxxxxx will serve faithfully and to the best of his ability as Executive
Vice President and Chief Financial Officer of Spiegel, reporting to and
directed by the Chief Executive Officer of Spiegel. Xxxxxxxxx will have
financial management responsibility for Spiegel.
2. BEST EFFORTS
---------------
During the employment period, Xxxxxxxxx will devote his best efforts and
all his business time and attention to the business of Spiegel and will
faithfully perform his duties subject to the direction of the Chief
Executive Officer of Spiegel and generally subject to the employment
policies of Spiegel as may be promulgated from time to time.
3. TERM OF EMPLOYMENT
---------------------
The term of this Employment Agreement shall be a period of three (3) years
(Initial Term) commencing July 1, 2001, and terminating June 30, 2004,
subject, however, to prior termination as in after provided Section 8
(Termination for Cause) below. This Employment Agreement shall be
automatically renewed and continue in full force and effect for additional
one year terms without limitation, unless either party gives the other
party six (6) months' written notice of its or his election to terminate
this Employment Agreement at the end of the
1
then current calendar year. If Spiegel elects to terminate this Employment
Agreement in accordance with this Paragraph 3, then Spiegel will pay
Xxxxxxxxx at time of termination an amount equal to Cannataro's entire
compensation and benefit package (including pro-rated Annual and Long Term
Incentives) then in effect as provided on Schedule A and Schedule B and
Paragraph 6 herein calculated for a period of twenty-four (24) months but
shall not exceed Three Million and 00/100 Dollars ($3,000,000.00). No
payment under this paragraph shall be due if termination is after
Cannataro's 62nd birthday.
4. COMPENSATION
---------------
Spiegel shall pay Xxxxxxxxx an annual base salary in accordance with
Schedule A payable in the manner as is done in the ordinary course of
business for upper level executives of Spiegel. The Board of Directors or
its designee shall review this base salary annually and shall have the
right to increase it at any time during the employment period. An increase
in base salary shall be evidenced by the Board of Directors or its designee
approving an amended Schedule A to this Employment Agreement, which shall
give the amount of the increase in base salary, the new total base salary
and the period for which the increase shall be effective.
5. BONUS
---------
Xxxxxxxxx shall be entitled to an annual cash bonus no later than February
28th of each year based upon the performance of Spiegel for the most
recently ended calendar year. The bonus will be in accordance with Schedule
A. The bonus opportunity shall be determined based upon performance
criteria mutually and reasonably developed by Spiegel or its designee and
Xxxxxxxxx and agreed to by the Board of Directors with the understanding
that such criteria will provide a fair and professionally challenging
achievement rewarding good performance. The predetermined performance
criteria, and any changes mutually agreed upon by Spiegel or its designee
and Xxxxxxxxx and agreed to by the Board of Directors shall be as set forth
in Schedule B, attached to this Agreement.
2
6. BENEFITS
-----------
Xxxxxxxxx shall be eligible for all medical and dental benefits, disability
benefits, long term incentive plans, stock options, profit sharing, savings
plans, automobile allowance, paid vacation, split dollar life insurance
policies then in effect, and other benefits which are or shall be adopted
by Spiegel covering its senior executive management staff, provided he
meets the qualification requirements for such benefits. Additional
benefits may be added during the term of this Agreement by Spiegel.
7. DISABILITY OF XXXXXXXXX.
---------------------------
If, during the term of this Employment Agreement, Xxxxxxxxx shall become
disabled by accident, illness, or otherwise, and such disability shall
continue for a period of six (6) successive months following which he is
unable to resume his duties hereunder, Spiegel shall have the right to
terminate the employment period by giving written notice to Xxxxxxxxx of
its intention to do so at least thirty (30) days prior to the effective
date of such termination, provided, however, Spiegel agrees to pay a lump
sum at the time of termination in an amount equal to the fair value of his
entire compensation and benefits package in place at that time calculated
for a period of six (6) months commencing from the effective date of such
termination in lieu of continuing to provide such benefits in periodic
amounts. Any dispute as to whether such a disability has occurred shall be
resolved by a physician reasonably satisfactory to both parties, whose
determination shall be final and binding on both parties.
8. TERMINATION FOR CAUSE
------------------------
Spiegel may terminate the employment period for cause for the following
reasons other than innocent acts: repetitive and offensive public
intoxication, a felony conviction, the intentional perpetration of a
dishonest act or fraud against Spiegel or an affiliate or subsidiary
thereof, which is significantly injurious in a material respect to the
financial condition, business or reputation of Spiegel or any of its
affiliates or subsidiaries. Spiegel shall have the right to terminate the
employment period for any above reason by giving written notice to
Xxxxxxxxx of its intention to do so and specifying therein the reason and
the effective date of
3
termination. In this case a severance payment will be reasonably
appropriate to the reason for termination, and this Agreement will have no
further effect.
9. OTHER EMPLOYMENT
-------------------
Xxxxxxxxx covenants and agrees that during the employment period, he will
not directly or indirectly (except with the written consent of Spiegel)
become engaged in, be employed by, render services to or for, or permit his
name to be used in connection with any business other than the business of
Spiegel and its subsidiaries and affiliates, whether such other business
is or is not competitive with that business. After termination of this
Agreement, Xxxxxxxxx agrees that for a period of one year he will not
solicit for engagement or as an employee any person who has been employed
by the Company within the preceding twelve months as a senior level
executive.
10. TRADE SECRETS
-----------------
Xxxxxxxxx shall not at any time while this Employment Agreement is in
force, and for a period of two (2) years after its termination, unless
authorized by Spiegel, divulge or disclose to any person or corporation any
confidential or proprietary information relating to the business of Spiegel
or its subsidiaries and affiliates including, but not in limitation,
customer list, supplier lists, prices of products, services or operational
processes. A breach of this confidentiality clause will result in no
compensation and benefits being paid at the time of termination.
11. TOTAL AGREEMENT
-------------------
This contract contains the complete agreement concerning the employment
arrangement between the parties and, as of the effective date of this
agreement, supersedes all other agreements, whether oral or in writing,
between the parties. This agreement may be modified or added to only if
evidenced in writing signed by the party to be liable.
4
12. GENERAL
-----------
The headings of all the sections are inserted for convenience of reference
only and will not affect the construction or interpretation of this
agreement.
13. GOVERNING LAW
-----------------
This agreement shall be governed by the laws of the State of Illinois
without regard to principles of conflicts of laws.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
______________
SPIEGEL, INC.
_________________________ __________________________
President, CEO Xxxxx X. Xxxxxxxxx
5
EMPLOYMENT AGREEMENT
SCHEDULE B
----------
This Schedule B is made part of the Employment Agreement between Spiegel, Inc.
and Xxxxx X. Xxxxxxxxx dated ___________________
Bonus is determined by the Executive Committee and the Board of Directors each
year.
The bonus opportunity will be calculated on the weighted average of bonus
achievement of the Company's major businesses as follows:
Xxxxx Xxxxx 30%
Spiegel Catalog 25%
FCNB 25%
Newport News 20%
--
100%
Dated: _________________________
__________________________________ __________________________
Spiegel, Inc. Xxxxx X. Xxxxxxxxx
EMPLOYMENT AGREEMENT
SCHEDULE A
----------
This Schedule A is made a part of the Employment Agreement between Spiegel, Inc.
and Xxxxx X. Xxxxxxxxx dated ________________________.
Annual compensation effective ______________________will be Four Hundred Ten
Thousand Dollars ($410,000.00).
Bonus opportunity for each year of this contract shall be 75 % of base salary.
---
Dated: ______________________
_____________________________ __________________________
Spiegel, Inc. Xxxxx X. Xxxxxxxxx
