EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of
the 19th day of May 1997, by and between XxXxx'x, Inc. (the
"Company"), and Xxxx Xxxxxxxxx ("Executive").
Company and Executive agree as follows:
1. Employment. Company hereby agrees to employ Executive as
President and Chief Executive Officer of Company or in such other
comparable capacity with Company and its affiliates as mutually
agreeable by Company and Executive. Executive's first date of
employment ("Start Date") will be the earlier of: (a) May 1, 1998,
(b) the day after the May Company terminates or otherwise releases
Executive from her current employment, (c) the date a court of
competent jurisdiction determines that Executive may lawfully work
for Company or (d) the date that Company's General Counsel informs
Executive in writing that she may work for Company without
violating her agreement with her current employer.
2. Duties. During her employment, Executive shall devote
substantially all of her working time, energies, and skills to the
benefit of Company's business. Executive shall have duties,
responsibilities and authority commensurate with those of a
president and chief executive officer of a similarly sized company.
Executive agrees to follow the legal and ethical policies and
directions of Company's Board of Directors. The foregoing shall not
prevent Executive from participating in charitable, community or
industry affairs or from managing her passive personal investments
provided that those activities do not materially interfere with her
obligations under this Agreement.
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 not less than $375,000 per
year. Executive's Base Salary shall be paid in installments in
accordance with Company's normal payment schedule for its senior
management. Executive's Base Salary shall be subject to annual
review by the Xxxxxxxx'x, Inc. Board of Directors (the "Xxxxxxxx'x
Board") and may be increased, but not decreased, from time to time.
All payments shall be subject to the deduction of payroll taxes and
similar assessments as required by law.
(b) Cash and Stock Bonus. In addition to the Base
Salary, Executive shall be eligible, as long as she holds the
position stated in Section 1, for a yearly cash bonus of up to 50%
of Base Salary based upon her performance in accordance with
specific annual objectives, set in advance, all as approved by the
Board of Directors of Xxxxxxxx'x, Inc. or its Human Resources
Committee. Executive shall also be eligible during the term of
this Agreement to earn a yearly stock-grant bonus of up to three
thousand (3,000) restricted shares of Xxxxxxxx'x common stock,
which will vest and no longer be subject to restrictions in equal
one-third segments (one-third on the award date, one-third on the
first anniversary of the award date, and one-third on the second
anniversary of the award date); provided, however, that Executive
must continue to be employed by Company on the relevant vesting
date for the unvested shares to vest. Xxxxxxxx'x, Inc.'s Board of
Directors shall have complete discretion to award or not to award
such bonus shares in light or predetermined objectives.
Notwithstanding the foregoing, in the event of the termination of
Executive's employment during, at the end of, or after the Term, by
Company without Cause, by Executive for Good Reason, or due to
Executive's death or Disability, any restricted shares of common
stock that would have vested during the twelve (12) month period
immediately following the date of such termination shall
immediately vest.
(c) Initial Bonus. Company shall as soon as practicable
after the Start Date, but in no event later than twenty (20) days
thereafter, pay Executive $155,000 and award Executive 3,000
shares of restricted Xxxxxxxx'x common stock, which will vest and
no longer be subject to restrictions in equal one-third segments
(one-third on the award date, one-third on the first anniversary of
the award date, and one-third on the second anniversary of the
award date); provided, however, that Executive must be employed
by Company on the relevant vesting date for the unvested shares to
vest. Notwithstanding the foregoing, in the event of termination
of Executive's employment during, at the end of, of after the Term,
by Company without Cause, by Executive for Good Reason, or due to
Executive's death or disability, any restricted shares of common
stock that would have vested during the twelve (12) month period
immediately following the date of such termination shall
immediately vest.
(d) Incentive Compensation. Executive shall be granted
a non-qualified option ("Option") to purchase forty thousand
(40,000) shares of Xxxxxxxx'x common stock at an option price equal
to the closing price of the stock on the Start Date (or if the
market was not open on that date, the closing price on the last day
the market was open), as reported in the Wall Street Journal;
provided, however, Xxxxxxxx'x Board of Directors' Human Resources
Committee shall retain its discretion to grant or not to grant such
Option The Option will be granted pursuant to either the
Xxxxxxxx'x 1994 Long-Term Incentive Plan or the Xxxxxxxx'x 1997
Stock-Based Incentive Plan , and shall be subject to the terms and
conditions thereof as well as the terms of this Agreement. The
Option shall be exercisable on or after Executive's first day of
employment (the "Grant Date") to the extent of 20% of the shares
covered thereby; exercisable to the extent of an additional 20% of
the shares covered thereby on and after the first anniversary of
the Grant Date; exercisable to the extent of an additional 20% of
the shares covered thereby on and after the second anniversary of
the Grant Date; exercisable to the extent of an additional 20% of
the shares covered thereby on an after the third anniversary of the
Grant Date; and exercisable to the extent of any remaining shares
covered thereby on and after the fourth anniversary of the Grant
Date; provided, however, that no portion of the Option shall be
exercisable any earlier than six months from the Grant Date. The
Option may be exercised up to ten (10) years from the Grant Date.
Any portion of the Option not exercised within said ten (10) year
period shall expire. Notwithstanding the foregoing, in the event
of the termination of Executive's employment during, at the end of,
or after the Term, by Company without Cause, by Executive for Good
Reason, or due to Executive's death or disability, that portion of
the Option that would have become exercisable during the twelve
(12) month period immediately following the date of such
termination shall immediately vest and become exercisable.
(e) Effect of Change of Control on Options And
Restricted Shares. In the event of a Change of Control of
Xxxxxxxx'x or a Change of Control of Company during, at the end of,
or after the Term, any Options granted to Executive prior to such
Change of Control shall immediately vest and become exercisable and
any vesting conditions and restrictions on any shares of Xxxxxxxx'x
common stock granted to Executive prior to such Change of Control
shall immediately lapse.
4. Insurance, Benefits, and Expenses. Company shall allow
Executive to participate in each employee benefit plan and to
receive each executive benefit that Company provides for any senior
executive at the level of Executive's position, including, but not
limited to any life, medical and disability insurance plans and
pension, incentive, profit-sharing, deferred compensation and other
similar plans, practices and policies. In addition, Company shall
reimburse Executive for all reasonable and necessary business
expenses incurred by Executive in connection with her duties and
shall reimburse her for her relocation costs pursuant to Company's
policy as modified by Company's side letter.
5. Term. The term of Executive's employment under this
Agreement shall be for three years commencing at the Start Date
(the "Term"), provided, however, that Company or Executive may
terminate Executive's employment at any time upon thirty (30) days'
prior written notice. In the event of such termination by Company
without Cause, Executive shall be entitled to receive unused
vacation pay and her Base Salary (at the rate in effect at the time
of termination) through the end of the term of this Agreement or
twenty months, whichever is longer. This payment will be made in
a lump sum within ten (10) business days after termination without
Cause. In addition, after termination without Cause, Company shall
pay Executive any earned but unpaid Base Salary, reimbursement of
all incurred business expenses prior to termination, and all
benefits or fringes due under any benefit or fringe plan or
arrangement in accordance with the terms of said plan or
arrangement due for the period prior to such termination
(collective, "Accrued Benefits"). In such case of termination
without Cause, Company shall further offer Executive and her
dependents COBRA coverage under the Company's health plan for
eighteen (18) months without cost to Executive ("COBRA Coverage")
but only so long as Executive or her dependents are eligible for
COBRA Coverage. If Executive continues employment with Company up
to the end of the Term of this Agreement, which is then not
extended or replaced by another employment agreement, and Company
at the end thereof or thereafter terminates her employment without
Cause or Executive terminates her employment for Good Reason,
Company shall pay Executive's Base Salary then in effect for twenty
(20) months, in addition to providing Accrued Benefits and COBRA
Coverage. The preceding sentence shall survive the termination of
this Agreement. Company's obligation to make any payments under
this paragraph shall not be subject to claims or offsets other than
those claims or offsets such as loans or other obligations that are
documented. Executive also shall have no duty to mitigate with
respect to the payments and the amounts shall not be reduced by any
amounts received from other employment. Executive shall also be
entitled to all other rights under this Agreement that survive
termination of employment.
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 and pursuant to the terms of this Agreement,
(b) other entitlements under this contract that expressly survive
death, (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 her
participation in any plan maintained by Company, and (d)
Executive's estate's right to receive Accrued Benefits.
6. Termination.
(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 waived, for any felony 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 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 refusal to attempt to perform her duties
under Section 2 of the Agreement, provided that Executive has at
least fifteen (15) days to cure such failure after receipt of
written notice thereof from the Company, and provided further that
Executive shall be entitled to such notice and opportunity to cure
only once in any twelve (12) month period.
(b) Executive shall have the right to terminate her
employment for "Good Reason" if such "Good Reason" is not cured
within ten (10) business days after Company receives notice from
Executive. "Good Reason" shall mean only: (i) any material
reduction in Executive's authority, duties or responsibilities,
(ii) any reduction in, or demotion from, Executive's position as,
or title of, Chief Executive Officer of Company, (iii) the
relocation of Executive's principal office to a location more than
fifty (50) miles from Executive's then present location without
Executive's written consent, (iv) Company's non-payment of Base
Salary, (v) failure to grant the Option set forth in Section 3(c),
(vi) Company's material breach of any of its obligations under this
Agreement, or (vii) failure of any successor to Company to assume
this Agreement in writing. If Executive terminates her employment
for Good Reason, she shall be entitled to her then current Base
Salary through then end of the term of this Agreement or twenty
(20) months, whichever is longer, and all other rights under this
Agreement that survive termination of employment for "Good Reason."
This payment will be made in a lump sum within ten (10) business
days after termination for Good Reason. In addition, after
termination for Good Reason, Company shall pay Executive "Accrued
Benefits" and offer Executive COBRA Coverage. Company's obligation
to make any payments under this paragraph shall not be subject to
claims or offsets other than those claims or offsets such as loans
or other obligations that are documented. Executive also shall
have no duty to mitigate with respect to the payments and the
amounts shall not be reduced by any amounts received from other
employment.
(c) 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, provided that
in no event shall Executive be obligated to return her personal
Rolodexes, phone books, calendars, or similar materials
7. Change of Control. If Executive's employment is
terminated during, at the end of, or after the Term by the Company
without Cause or by Executive for Good Reason during the two (2)
year period immediately following the date of a Change of Control
of Xxxxxxxx'x or a Change of Control of Company, each as defined
below, Executive shall receive, in one lump sum payment within ten
(10) days after termination of employment, three times her Base
Salary then in effect, plus Accrued Benefits and Company shall
offer Executive COBRA Coverage. In addition, in the event
Executive is terminated by Company without Cause or Executive
terminates her employment for Good Reason within one hundred twenty
(120) days prior to a Change of Control of Xxxxxxxx'x or a Change
in Control of Company, upon the occurrence of such Change of
Control, Executive shall be entitled to the amounts set forth in
the preceding sentence. The maximum payments under this Section,
however, shall not exceed the maximum amount that could be paid
without imposition of an excise tax under Internal Revenue Code
Section 4999. The determination of this limit and the reduction
of any payments hereunder shall be determined by Company's
Accounting Firm prior to the Change of Control.
(a) As used herein, the term "Change of Control" of
Xxxxxxxx'x means the happening of any of the following:
(i) 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 Xxxxxxxx'x, a subsidiary of Xxxxxxxx'x, or
any employee benefit plan of Xxxxxxxx'x or its subsidiaries,
becoming the beneficial owner of securities having 25 percent or
more of the combined voting power of the then outstanding
securities of Xxxxxxxx'x that may be cast for the election for
directors of Xxxxxxxx'x (other than as a result of an issuance of
securities initiated by Xxxxxxxx'x in the ordinary course of
business); or
(ii) 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
Xxxxxxxx'x or any successor corporation or entity entitled to vote
generally in the election of directors of Xxxxxxxx'x or such other
corporation or entity after such transaction, are held in the
aggregate by holders of Xxxxxxxx'x securities entitled to vote
generally in the election of directors of Xxxxxxxx'x immediately
prior to such transactions in approximately the same proportions;
or
(iii) During any period of two (2) consecutive
years, individuals who at the beginning of any such period
constitute the members of the Xxxxxxxx'x Board of Directors cease
for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election by Xxxxxxxx'x
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 Xxxxxxxx'x then still in office who were directors of
Xxxxxxxx'x at the beginning of any such period, or
(iv) The approval by stockholders of Xxxxxxxx'x of
a plan of complete liquidation or an agreement which would result
in a Change of Control of Xxxxxxxx'x or a Change of Control of
Company.
(b) As used herein, a "Change of Control of Company"
shall occur if Xxxxxxxx'x ceases to directly or indirectly own at
least 51% of the then outstanding voting securities of the Company.
8. Disability. Company shall have the right to terminate
Executive's employment if Executive becomes "Disabled." For
purposes of this Agreement, "Disabled" means Executive's failure to
perform her material duties hereunder by reason of mental or
physical illness or incapacity for a period of ninety (90)
consecutive days. If Executive's employment is terminated during,
at the end of, of after the Term because she is Disabled, she shall
then be entitled to continue to receive her Base Salary and Accrued
Benefits for a period of twelve consecutive months.
9. Non-competition; Unauthorized Disclosure.
(a) Non-competition. During Executive's employment by
Company and for a period of one (1) year thereafter, Executive:
(i) shall not engage in any supervisory or
managerial activities with or for any of the companies designated
on Exhibit A hereto specifically (rather than incidental to broader
responsibilities) with respect to any of their operations or
activities in the states of Alabama, Mississippi, Louisiana, or the
northern Florida area.; and
(ii) 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 her employment relationship.
Notwithstanding the foregoing, if requested by any entity with
which Executive is not affiliated, Executive may serve as a
reference for any person who at the time of the request is not an
employee of the Company.
(b) Unauthorized Disclosure. During Executive's
employment by Company 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 her duties as an executive for Company
as so determined in her good faith judgment, 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) 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.
(ii) 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
(iii) the covenants contained in this Section 9
shall survive the conclusion of Executive's employment by Company.
10. Indemnification; D&O Insurance. The Company shall
indemnify and hold harmless Executive to the full extent permitted
by law with regard to her activities as an officer or director of
Company and in other capacities pursuant to which Company may
indemnify Executive. Company shall cover Executive under directors
and officers liability insurance both during and, while potential
liability exists, after Executive's employment by Company in the
same amount and to the same extent, if any, as Company covers its
other officers and directors, including coverage with regard to
matters involving predecessor entities. The obligations of this
Section shall survive any termination of employment or this
Agreement with regard to the Executive's actions or inactions taken
while an officer or director.
11. Additional Indemnification. The Company agrees to
indemnify Executive and hold her harmless with respect to any
liability, cost, damage or expense (including reasonable attorneys'
fees and any loss of compensation Executive would have earned
prior to the Start Date from the May Company under her prior
employment agreement with May Company, less any amounts paid by May
Company or its affiliates) arising from or relating to any claim
against Executive by the May Company or its affiliates: (i) as a
result of her entering into this Agreement; or (ii) in connection
with claims under the noncompetition provision in the Executive's
prior employment agreement with the May Company or its affiliates
as a result of Executive commencing employment with Company,
provided that Executive gives Company prompt notice of any such
claim and the opportunity to assume and control the defense of any
such claim (including settlement of any such claim), at Company's
expense and through counsel of its choice. Executive and Company
consent to joint representation by Proskauer Xxxx Xxxxx and
Xxxxxxxxxx LLP in the event such a claim is asserted.
12. General Provisions.
(a) Notices. Any notice to be given hereunder by either
party to the other may be effected by personal delivery, in writing
or by mail, registered or certified, postage prepaid with return
receipt requested. Mailed notices shall be addressed to the
parties at the addresses set forth below, but each party may change
her or its address by written notice in accordance with this
Section 12 (a). Notices shall be deemed communicated as of the
actual receipt or refusal of receipt.
If to Executive: Xxxx Xxxxxxxxx
XxXxx'x
0000 Xxxxxxx 00 Xxxx
Xxxxxxx, XX 00000
If to Company: Xxxxx X. Xxxxxx
Executive Vice President of Law
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
Mississippi without regard to rules relating to conflicts of law.
(d) Headings. The Section, paragraph, and subparagraph
headings are for convenience or reference only and shall not define
or limit the provisions hereof.
(e) Entire Agreement. This Agreement and the side
letter constitute the entire agreement with respect to employment
or retention of the Executive by Company. It cannot be change or
terminated orally, but only by a writing executed by the party to
be charged.
(f) Legal Fees. If Executive asserts her rights under
this Agreement in a legal proceeding and Executive prevails, then
Company shall reimburse Executive's reasonable costs of bringing
that action, including reasonable legal fees and expenses.
(g) Assignment. This Agreement shall not be assignable
by Executive. This Agreement shall be assignable by Company only
with all or substantially all of the assets of Company, provided
that any such assignee shall assume this Agreement in a writing
delivered to Executive. This Agreement shall inure to the benefit
and be binding upon the personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees, legatees and permitted assignees of the parties hereto.
(h) Waiver. The waiver of any breach of any term or
condition of this Agreement shall not be deemed to constitute the
waiver of any other breach of the same or any other term or
xxxxxxxxx.XX WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
XXXXX'X, INC.
BY: /s/ Xxxxx X. Xxxxxx
_____________________
Xxxxx X. Xxxxxx
Executive Vice President
/s/ Xxxx Xxxxxxxxx
_____________________
Xxxx Xxxxxxxxx
Executive
Exhibit A -- Competitive Companies
The Gayfers and Caster Xxxxx Divisions of Mercantile Department Stores
Xxxxxxx Department Stores
The Macy's East and Rich's Divisions of Federated Department Stores
