EMPLOYMENT AGREEMENT
AGREEMENT, made and entered into as of the 2nd day of November, 1995 by and
between Melville Corporation, a New York corporation (together with its
successors and assigns permitted under this Agreement, the "Company"), and Xx.
Xxxxxx Xxxxxxxxx (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to employ the Executive pursuant to an
agreement embodying the terms of such employment (this "Agreement") and the
Executive desires to enter into this Agreement and to accept such employment,
subject to the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:
1. Definitions.
(a) "Base Salary" shall have the meaning set forth in Section 4 below.
(b) "Board" shall have the meaning set forth in Section 4 below.
(c) "Cause" shall have the meaning set forth in Section 10(b) below.
(d) "Confidential Information" shall have the meaning set forth in Section
11 below.
(e) "Constructive Termination Without Cause" shall have the meaning set
forth in Section 10(c) below.
(f) "Effective Date" shall have the meaning set forth in Section 2 below.
(g) "ICP" shall have the meaning set forth in Section 7 below.
(h) "Non-renewal Severance Period" shall have the meaning set forth in
Section 10(d) below.
(i) "Original Term of Employment" shall have the meaning set forth in
Section 2 below.
(j) "MIP" shall have the meaning set forth in Section 5 below.
(k) "Renewal Term" shall have the meaning set forth in Section 2 below.
(l) "Restriction Period" shall have the meaning set forth in Section 12
below.
(m) "SERP I" shall have the meaning set forth in Section 7 below.
(n) "Severance Period" shall have the meaning set forth in Section
10(c)(ii) below.
(o) "Subsidiary" shall have the meaning set forth in Section 11 below.
(p) "Term of Employment" shall have the meaning set forth in Section 2
below.
(q) "Termination Without Cause" shall have the meaning set forth in Section
10 (c) below.
2. Term of Employment.
(a) The term of the Executive's employment under this Agreement shall
commence immediately upon the execution of this Agreement (the "Effective Date")
and end on the third anniversary of such date (the "Original Term of
Employment"). The Original Term of Employment shall be automatically renewed for
successive one-year terms (the "Renewal Terms") unless at least 180 days prior
to the expiration of the Original Term of Employment or any Renewal Term, either
Party notifies the other Party in writing that he or it is electing to terminate
this Agreement at the expiration of the then current Term of Employment. "Term
of Employment" shall mean the Original Term of Employment and all Renewal Terms.
(b) In the event that this Agreement is not renewed because the Company has
given the 180-day notice prescribed in the preceding paragraph on or before the
expiration of the Original Term of Employment or any Renewal Term, such
non-renewal shall be treated as a termination following non-renewal pursuant to
Section 10 (d) below.
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(c) Notwithstanding anything in this Agreement to the contrary, at least
one year prior to the expiration of the Original Term of Employment, the Parties
shall meet to discuss this Agreement and may agree in writing to modify any of
the terms of this Agreement.
3. Position, Duties and Responsibilities.
(a) Commencing on the Effective Date, the Executive is currently employed
as the President and Chief Operating Officer of the Company and shall report to
the Chairman of the Board, and will continue to be employed as a senior
executive of the Company, reporting to the Chairman of the Board for the
remainder of the Term of Employment, unless the Parties otherwise agree.
(b) Anything herein to the contrary notwithstanding, nothing in this
Agreement shall preclude the Executive from (i) serving on the boards of
directors of a reasonable number of other corporations or the boards of a
reasonable number of trade associations and/or charitable organizations, (ii)
engaging in charitable activities and community affairs, and (iii) managing his
personal investments and affairs, provided that such activities do not
materially interfere with the proper performance of his duties and
responsibilities under this Agreement.
4. Base Salary.
The Executive shall be paid an annualized salary, payable in accordance
with the regular payroll practices of the Company, of not less than $800,000,
subject to annual review for increase at the discretion of the Compensation
Committee of the Board.
5. Annual Incentive Awards.
The Executive shall participate in the Company's Profit Incentive Plan
("MIP") with a target bonus opportunity of no less than 50% of Base Salary or in
a successor plan to MIP with an equivalent opportunity. Payment of annual
incentive awards shall be made at the same time that other senior-level
executives receive their incentive awards.
6. Long-Term Stock Incentive Programs.
(a) General. The Executive shall be eligible to participate in and to
receive stock incentive awards under the current long-term stock incentive
programs of the Company and any successor programs.
(b) Stock Option Award. As part of the award approved by the Compensation
Committee of the Board on April 11, 1995, the Company has granted the Executive
an option pursuant to the terms and conditions set forth in the attached Exhibit
A to purchase
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350,000 shares of common stock of the Company at an exercise price equal to the
fair market value of the shares on the date of grant, contingent on the
execution of this Agreement.
7. Employee Benefit Programs.
(a) General Benefits. During the Term of Employment, the Executive shall be
entitled to participate in such employee pension and welfare benefit plans and
programs of the Company as are made available to the Company's senior-level
executives or to its employees generally, as such plans or programs may be in
effect from time to time, including, without limitation, Future Fund, health,
medical, dental, salary continuation program, long-term disability, travel
accident and life insurance plans. In addition, the Executive shall be entitled
to 4 weeks of paid vacation per year.
(b) Designated Benefits. During the Term of Employment, the Executive shall
be entitled to participate in the Income Continuation Policy for Select Senior
Executives of the Company ("ICP") (which provides benefits to the Executive in
the event of a change in control of the Company), the Deferred Compensation Plan
and the Supplemental Retirement Plan I for Select Senior Management of the
Company ("SERP I"). For the purposes of SERP I, the Executive's SERP Incentive
Target shall be 50% of Base Salary. In addition, during the Term of Employment,
the Company shall, effective 1996, provide the Executive, in accordance with the
terms adopted by the Company, with personal financial and tax planning.
8. Disability.
(a) During the Term of Employment, as well as during the Severance Period,
the Executive shall be entitled to disability coverage as described in this
Section 8(a). In the event the Executive becomes disabled, as that term is
defined under the Company's Long-Term Disability Plan, the Executive shall be
entitled to receive, in place of his Base Salary, an amount equal to 60% of his
Base Salary, at the annual rate in effect at the commencement date of his
Company long-term disability benefit ("Commencement Date") for a period
beginning on the Commencement Date and ending with the earlier to occur of (A)
the Executive's attainment of age 65 or (B) the Executive's commencement of
benefits under SERP I upon his election to receive such benefits. If, when the
Executive ceases to be disabled, his position is then vacant and the Company
requests in writing that he resume such position, he may elect to resume such
position by written notice to the Company within 15 days after the Company
delivers its request. If he resumes such position, he shall thereafter be
entitled to his Base Salary at the annual rate in effect at the Commencement
Date and, for the year he resumes his position, a pro rata annual incentive
award. If he ceases to be disabled and does not resume his position in
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accordance with the preceding sentence, he shall be treated as if he voluntarily
terminated his employment pursuant to Section 10 (e) as of the date the
Executive ceases to be disabled. If the Executive is not offered a position
after he ceases to be disabled, he shall be treated as if his employment was
terminated Without Cause pursuant to Section 10(c) as of the date the Executive
ceases to be disabled.
(b) The Executive shall be entitled to a pro rata annual incentive award
for the year in which the Commencement Date occurs based on 50% of Base Salary
paid to him during such year prior to the Commencement Date, payable in a lump
sum promptly after the Commencement Date. The Executive shall not be entitled to
any annual incentive award with respect to the period following the Commencement
Date.
(c) During the period the Executive is receiving disability benefits
pursuant to Section 8(a) above, he shall continue to be treated as an employee
for purposes of all employee benefits and entitlements in which he was
participating on the Commencement Date, including without limitation, the
benefits and entitlements referred to in Sections 6, 7(a) and 7(b) above, except
that the Executive shall not be entitled to receive any annual salary increases
or any new stock incentive awards following the Commencement Date.
9. Reimbursement of Business and Other Expenses; Perquisites.
(a) The Executive is authorized to incur reasonable expenses in carrying
out his duties and responsibilities under this Agreement and the Company shall
promptly reimburse him for all business expenses incurred in connection
therewith, subject to documentation in accordance with the Company's policy.
(b) The Company shall pay all reasonable legal expenses up to $10,000
incurred by the Executive in connection with the negotiation of this Agreement.
(c) The Executive will be provided with a leased automobile and driver.
10. Termination of Employment.
(a) Termination Due to Death. In the event the Executive's employment is
terminated due to his death, his estate or his beneficiaries, as the case may
be, shall be entitled to:
(i) Base Salary through the date of death;
(ii) pro rata annual incentive award for the year in which the
Executive's death occurs based on 50% of Base Salary for such year, payable in a
lump sum promptly after his death;
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(iii) lapse of all restrictions on any restricted stock award
(including any performance-based restricted stock) outstanding at the time of
his death;
(iv) Company common stock, issued without restrictions, equal to any
outstanding award of contingent shares as of the date of death;
(v) the right to exercise any stock option vested at the time of his
death for a period of one year following death or for the remainder of the
exercise period, if less;
(vi) the balance of any incentive awards earned as of December 31 of
the prior year (but not yet paid);
(vii) in the event that the Executive's death occurs before he has met
the age and service requirements of SERP I, the Company will provide his spouse
with an annuity pursuant to Section 3.03 of SERP I as if he had met such age and
service requirements at the time of his death;
(viii) any amounts earned, accrued or owing to the Executive but not
yet paid under Section 7, 8 or 9 above; and
(ix) other or additional benefits then due or earned in accordance
with applicable plans and programs of the Company including but not limited to
SERP I.
(b) Termination by the Company for Cause.
(i) "Cause" shall mean:
(A) the Executive is convicted of a felony involving moral
turpitude; or
(B) the Executive engages in conduct that constitutes willful
gross neglect or willful gross misconduct in carrying out his duties under this
Agreement, resulting, in either case, in material harm to the financial
condition or reputation of the Company.
(ii) A termination for Cause shall not take effect unless the
provisions of this paragraph (ii) are complied with. The Executive shall be
given written notice by the Company of its intention to terminate him for Cause,
such notice (A) to state in detail the particular act or acts or failure or
failures to act that constitute the grounds on which the proposed termination
for Cause is based and (B) to be given within three months of the Company's
learning of such act or acts or failure or failures to act. The Executive shall
have 10 days after the date that such
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written notice has been given to him in which to cure such conduct, to the
extent such cure is possible. If he fails to cure such conduct, the Executive
shall then be entitled to a hearing before the Compensation Committee of the
Board at which the Executive is entitled to appear. Such hearing shall be held
within 15 days of such notice to the Executive, provided he requests such
hearing within 10 days of the written notice from the Company of the intention
to terminate him for Cause. If, within five days following such hearing, the
Executive is furnished written notice by the Board confirming that, in its
judgment, grounds for Cause on the basis of the original notice exist, he shall
thereupon be terminated for Cause. Such hearing shall not limit any other review
as set forth in this Agreement on a de novo basis.
(iii) In the event the Company terminates the Executive's employment
for Cause, he shall be entitled to:
(A) Base Salary through the date of the termination of his
employment for Cause;
(B) any incentive awards earned as of December 31 of the prior
year (but not yet paid);
(C) any amounts earned, accrued or owing to the Executive but not
yet paid under Section 7, 8 or 9 above; and
(D) other or additional benefits then due or earned in accordance
with applicable plans or programs of the Company including but not limited to
SERP I.
(c) Termination Without Cause or Constructive Termination Without Cause. In
the event the Executive's employment is terminated without Cause (which
termination shall be effective as of the date specified by the Company in a
written notice to the Executive), other than due to death, or in the event there
is a Constructive Termination Without Cause (as defined below), the Executive
shall be entitled to and his sole remedies under this Agreement shall be:
(i) Base Salary through the date of termination of the Executive's
employment;
(ii) Base Salary, at the annualized rate in effect on the date of
termination of the Executive's employment (or in the event a reduction in Base
Salary is the basis for a Constructive Termination Without Cause, then the Base
Salary in effect immediately prior to such reduction), for a period of 24 months
following such termination (the "Severance Period"); provided that the salary
continuation payment under this Section 10(c)(ii) shall be in lieu of any salary
continuation arrangements under any other severance program of the Company or
any other agreement between the Executive and the Company other than the ICP;
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(iii) pro rata annual incentive award for the year in which
termination occurs based on 50% of Base Salary, payable in a lump sum promptly
following termination;
(iv) an amount equal to 50% of Base Salary multiplied by two, payable
in equal monthly payments over the Severance Period;
(v) lapse of all restrictions on any restricted stock award (including
any performance-based restricted stock) outstanding at the time of such
termination of employment;
(vi) Company common stock, issued without restrictions, equal to any
outstanding award of contingent shares as of the date of termination;
(vii) the right to exercise any stock option held by the Executive at
the date of his termination (with any option not yet exercisable becoming vested
during the Severance Period in accordance with its original schedule, provided
that any option held by the Executive on the date of this Agreement shall become
fully vested on the last day of the Severance Period), such option to remain
exercisable during the Severance Period and for 90 days thereafter or for the
remainder of the exercise period if less, provided, however, that options
granted pursuant to the Company's 1987 Stock Option Plan shall in no event be
exercisable after three years following termination and provided further that
the Executive shall not be entitled to receive any additional stock incentive
awards during the Severance Period;
(viii) the balance of any incentive awards earned as of December 31 of
the prior year (but not yet paid);
(ix) any amounts earned, accrued or owing to the Executive but not yet
paid under Section 7, 8 or 9 above;
(x) in the event that his Termination Without Cause or Constructive
Termination Without Cause occurs before the Executive has met the age and
service requirements of SERP I, the Company will provide the Executive at age 55
with an Annual Benefit under SERP I equal to 25% of Compensation (as such terms
are defined in SERP I);
(xi) continued participation in all medical, dental, health and life
insurance plans and in other employee benefit plans or programs (but excluding
SERP I and Future Fund) at the same benefit level at which he was participating
on the date of the termination of his employment until the earlier of:
(A) the end of the Severance Period; or
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(B) the date, or dates, he receives equivalent coverage and
benefits under the plans and programs of a subsequent employer (such coverage
and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit,
basis);
provided that (x) if the Executive is precluded from continuing his
participation in any employee benefit plan or program as provided in this clause
(xi) of this Section 10(c), he shall receive cash payments equal on an after-tax
basis to the cost to him of obtaining the benefits provided under the plan or
program in which he is unable to participate for the period specified in this
clause (xi) of this Section 10(c), (y) such cost shall be deemed to be the
lowest reasonable cost that would be incurred by the Executive in obtaining such
benefit himself on an individual basis, and (z) payment of such amounts shall be
made quarterly in advance; and
(xii) other or additional benefits then due or earned in accordance
with applicable plans and programs of the Company, including but not limited to
SERP I.
"Termination Without Cause" shall mean the Executive's employment is
terminated by the Company for any reason other than cause (as defined in Section
10 (b)) or due to death.
"Constructive Termination Without Cause" shall mean a termination of
the Executive's employment at his initiative as provided in this Section 10(c)
following the occurrence, without the Executive's written consent, of one or
more of the following events (except as a result of a prior termination):
(A) a reduction in the Executive's then current Base Salary or
his target bonus opportunity under MIP or any successor plan;
(B) the Executive is employed at a location other than the
Company's principal place of business;
(C) a "Benefit Event" as defined in paragraph 4 or 5 of Section
4.02(a) of the ICP, unless within 15 days of such event the Company obtains the
written agreement of any person or entity to which the assets or business
involved in such Benefit Event are transferred to perform all the obligations of
this Agreement, or such person or entity is otherwise bound by operation of law
to perform all the obligations of this Agreement.
(D) reporting to other than the Chairman of the Board,
(E) any other material breach by the Company that it does not
cure within 30 days
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Nothing in this Agreement is intended to terminate any right of the
Executive under the ICP or to provide the Executive with the same benefit or
payment twice--both under the ICP and under this Agreement. The intent is that
the Executive receive the better of the amounts, benefits and rights on a
type-of-payment and type-of-benefit basis and that payments will be made upon
the earlier of the respective payment dates under the ICP and this Agreement.
Accordingly, without limiting the forgoing, notwithstanding the provisions of
this Section 10(c), in the event that the Executive receives a payment under
Section 4.01(b) of the ICP, the amounts due under Sections 10(c)(ii) and (iv)
above shall be reduced by the amount of such payment, such reduction to be
effected by eliminating installments due under Sections 10(c)(ii) and (iv) above
in reverse order. Notwithstanding the elimination of such installments, the
Severance Period shall continue to be 24 months. In the event Executive's title
is changed during the Term of this Agreement, Executive will not receive under
the ICP in the event the ICP becomes applicable, less than a single sum payment
equal to three (3) times his annual Base Salary plus annual incentive award as
set forth in Section 4.01(b) of the ICP. Such payment will be subject to
reduction as set forth above.
(d) Termination following Non-renewal. In the event that the Company
notifies the Executive in writing at least 180 days prior to the expiration of
the Original Term of Employment or any Renewal Term that it is electing to
terminate this Agreement at the expiration of the then current Term of
Employment and the Executive's employment terminates upon such expiration, at
the Company's initiative, the Executive shall be entitled to:
(i) Base Salary through the date of termination of the Executive's
employment;
(ii) Base Salary, at the annualized rate in effect on the date of
termination of the Executive's employment, for a period of 24 months following
such termination (the "Non-renewal Severance Period"); provided that the salary
continuation payment under this Section 10(d) (ii) shall be in lieu of any
salary continuation arrangements under any other severance program of the
Company or any other agreement between the Executive and the Company;
(iii) pro rata annual incentive award for the year in which
termination occurs based on 50% of Base Salary, payable in a lump sum promptly
following termination;
(iv) the right to exercise any stock option held by the Executive at
the date of his termination to the extent vested at such date during the
Non-renewal Severance Period and for 90 days
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thereafter or for the remainder of the exercise period if less, provided,
however, that the Executive shall not be entitled to receive any additional
stock incentive awards during the Non-renewal Severance Period;
(v) the balance of any incentive awards earned as of December 31 of
the prior year (but not yet paid);
(vi) any amounts earned, accrued or owing to the Executive but not yet
paid under Section 7, 8 or 9 above;
(vii) continued participation in all medical and dental plans at the
same benefit level at which he was participating on the date of the termination
of his employment until the earlier of:
(A) the end of the Non-renewal Severance Period; or
(B) the date, or dates, he receives equivalent coverage and
benefits under the plans and programs of a subsequent employer (such coverage
and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit,
basis);
provided that (x) if the Executive is precluded from continuing his
participation in any employee benefit plan or program as provided in this clause
(vii) of this Section 10(d), he shall receive cash payments equal on an
after-tax basis to the cost to him of obtaining the benefits provided under the
plan or program in which he is unable to participate for the period specified in
this clause (vii) of this Section 10 (d), (y) such cost shall be deemed to be
the lowest reasonable cost that would be incurred by the Executive in obtaining
such benefit himself on an individual basis, and (z) payment of such amounts
shall be made quarterly in advance; and
(viii) other or additional benefits then due or earned in accordance
with applicable plans and programs of the Company, including but not limited to
SERP I.
(e) Voluntary Termination. In the event of a termination of employment by
the Executive on his own initiative, other than a termination due to death, a
Constructive Termination Without Cause, or agreed upon retirement pursuant to
Section 10 (f) or 10 (g) below, or a non-renewal by the Executive pursuant to
Section 2(a), the Executive shall have the same entitlements as provided in
Section 10(b)(iii) above for a Termination for Cause, provided that at the
Company's election, furnished in writing to the Executive within 30 days
following such notice of termination, the Company shall in addition pay the
Executive 50% of his Base Salary for a period of 18 months following such
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termination in exchange for the Executive not to engage in competition with the
Company or any Subsidiary as set forth in Section 12(a) below. A voluntary
termination under this Section 10(e) shall be effective upon 30 days prior
written notice to the Company or such shorter period as may be determined by the
Company and shall not be deemed a breach of this Agreement.
(f) Agreed Upon Retirement In First Two Years. In the event the Executive
decides to retire within the first two years of the Term of Employment and the
Company approves such decision in writing, which approval after the first year
shall not be unreasonably withheld, the Executive shall be entitled to:
(i) Base Salary through the date of termination of the Executive's
employment;
(ii) Base Salary, at the annualized rate in effect on the date of
termination of the Executive's employment, for a period of 12 months following
such termination (the "Agreed Upon Retirement Severance Period"); provided that
the salary continuation payment under this Section 10(f) (ii) shall be in lieu
of any salary continuation arrangements under any other severance program of the
Company or any other agreement between the Executive and the Company;
(iii) pro rata annual incentive award for the year in which
termination occurs based on 50% of Base Salary, payable in a lump sum promptly
following termination;
(iv) continued vesting and exercisability of stock options as provided
in Section 10 (h) below;
(v) the balance of any incentive awards earned as of December 31 of
the prior year (but not yet paid);
(vi) any amounts earned, accrued or owing to the Executive but not yet
paid under Section 7, 8 or 9 above;
(vii) in the event that his agreed upon retirement occurs before the
Executive has met the age and service requirements of SERP I, the Company will
provide the Executive at age 55, with an Annual Benefit equal to 25% of
Compensation (as such terms are defined in SERP I);
(viii) continued participation in all medical and dental plans at the
same benefit level at which he was participating on the date of the termination
of his employment until the earlier of:
(A) the end of the Agreed Upon Retirement Severance Period; or
(B) the date, or dates, he receives equivalent coverage and
benefits under the plans and programs of a
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subsequent employer (such coverage and benefits to be determined on a
coverage-by-coverage, or benefit-by-benefit, basis);
provided that (x) if the Executive is precluded from continuing his
participation in any employee benefit plan or program as provided in this clause
(viii) of this Section 10(f), he shall receive cash payments equal on an
after-tax basis to the cost to him of obtaining the benefits provided under the
plan or program in which he is unable to participate for the period specified in
this clause (viii) of this Section 10 (f), (y) such cost shall be deemed to be
the lowest reasonable cost that would be incurred by the Executive in obtaining
such benefit himself on an individual basis, and (z) payment of such amounts
shall be made quarterly in advance; and
(ix) other or additional benefits then due or earned in accordance
with applicable plans and programs of the Company, including but not limited to
SERP I.
(g) Agreed Upon Retirement In Third Year. In the event the Executive
decides to retire in the third year of the Term of Employment and the Company
approves such decision in writing, which approval shall not be unreasonably
withheld, the Executive shall have the same entitlements as provided in Section
10(b) (iii) above for Termination For Cause and in addition, shall be entitled
to the following which shall be in lieu of any salary continuation arrangements
under any other severance program of the Company or any other agreement between
the Executive and the Company:
(i) continued vesting and exercisability of stock options as provided
in Section 10 (h) below; and
(ii) the Company will provide the Executive with an Annual Benefit
under SERP I at age 55 or at his retirement, whichever is later, equal to at
least 30% of Compensation (as such terms are defined in SERP I) whether or not
he has met the age and service requirements of SERP I at the time of his
retirement.
(h) Retirement. Notwithstanding anything to the contrary in this Section
10, in the event of any termination of employment under this Section 10, other
than a termination for Cause, after the Executive becomes eligible to be
classified as a Retiree under SERP I, or his termination constitutes an agreed
upon retirement pursuant to Section 10 (f) or 10 (g), subject to approval of the
Compensation Committee of the Board, any stock option held by the Executive at
the time of such termination shall continue to vest in accordance with its
original schedule for a period of four years following such termination and, to
the extent so vested, shall remain exercisable during such four-year period or
for the remainder of the exercise period, if less, provided, however, that
options granted pursuant to the Company's 1987 Stock Option Plan shall in no
event be exercisable after three years following termination.
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(i) No Mitigation; No Offset. In the event of any termination of employment
under this Section 10, the Executive shall be under no obligation to seek other
employment; amounts due the Executive under this Agreement shall not be offset
by any remuneration attributable to any subsequent employment that he may
obtain.
(j) Nature of Payments. Any amounts due under this Section 10 are in the
nature of severance payments considered to be reasonable by the Company and are
not in the nature of a penalty.
(k) Exclusivity of Severance Payments. Upon termination of the Executive's
employment during the Term of Employment, he shall not be entitled to any
severance payments or severance benefits from the Company or any payments by the
Company on account of any claim by him of wrongful termination, including claims
under any federal, state or local human and civil rights or labor laws, other
than the payments and benefits provided in this Section 10.
11. Confidentiality.
(a) During the Term of Employment and thereafter, the Executive shall not,
without the prior written consent of the Company, disclose to anyone except in
good faith in the ordinary course of business to a person who will be advised by
the Executive to keep such information confidential or make use of any
Confidential Information, except when required to do so by legal process, by any
governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) that requires him to divulge, disclose or make accessible such
information. In the event that the Executive is so ordered, he shall give prompt
written notice to the Company in order to allow the Company the opportunity to
object to or otherwise resist such order.
(b) During the Term of Employment and thereafter, Executive shall not
disclose the existence or contents of this Agreement beyond what is disclosed in
the proxy statement or documents filed with the government unless and to the
extent such disclosure is required by law, by a governmental agency, or in a
document required by law to be filed with a governmental agency or in connection
with enforcement of his rights under this Agreement. In the event that
disclosure is so required, the Executive shall give prompt written notice to the
Company in order to allow the Company the opportunity to object to or otherwise
resist such requirement. This restriction shall not apply to such disclosure by
him to members of his immediate family, his tax, legal or financial advisors,
any lender, or tax authorities, or to potential future employers to the extent
necessary, each of whom shall be advised not to disclose such information.
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(c) "Confidential Information" shall mean all information that is not known
or available to the public concerning the business of the Company or any
Subsidiary relating to any of their products, product development, trade
secrets, customers, suppliers, finances, and business plans and strategies. For
this purpose, information known or available generally within the trade or
industry of the Company or any Subsidiary shall be deemed to be known or
available to the public. Confidential Information shall include information that
is, or becomes, known to the public as a result of a breach by the Executive of
the provisions of Section 11(a) above.
(d) "Subsidiary" shall mean any corporation controlled directly or
indirectly by the Company and any affiliate of the Company.
12. Non-competition.
(a) During the Restriction Period (as defined in Section 12(b) below), the
Executive shall not engage in Competition with the Company or any Subsidiary.
"Competition" shall mean engaging in any activity, except as provided below, for
a Competitor of the Company or any Subsidiary, whether as an employee,
consultant, principal, agent, officer, director, partner, shareholder (except as
a less than one percent shareholder of a publicly traded company or except in
connection with the Executive's permitted employment, compensatory stock options
or grants in any entity) or otherwise. A "Competitor" shall mean (i) Walgreens,
Thrifty, PayLess, Eckerd, American Drug Stores, Rite Aid, Revco, Longs Drug
Stores, Shoppers Drug Mart, Phar-Mor, Thrift Drug and (ii) the portion of any
other corporation or other entity or start-up corporation or entity that is
engaged in the Chain Drug Business within fifty (50) miles of any Chain Drug
Business outlet in the United States of the Company or any Subsidiary, provided
that a corporation or entity described in clause (ii) above shall not be deemed
to be a Competitor if the Executive shall not either directly or indirectly
oversee or manage the activities of such corporation or entity's division or
unit engaged in the Chain Drug Business. All determinations shall be made at the
time of the activity by the Executive provided, if the Executive commences
employment or becomes a consultant, principal, agent, officer, director,
partner, shareholder or acquires stock in any entity that is not a Competitor at
the time the Executive initially becomes employed or becomes a consultant,
principal, agent, officer, director, partner, shareholder by the entity or
acquires the stock of such entity, future activities of such entity shall not
result in a violation of this provision unless (x) such activities were
contemplated at the time the Executive initially became employed or becomes a
consultant, principal, agent, officer, director, partner, shareholder or
acquired stock (and the contemplation of such activities was known to the
Executive) or (y) the Executive commences directly or indirectly overseeing or
managing the activities which are competitive with the activities of the Company
or Subsidiary. The Executive shall not be deemed indirectly overseeing or
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managing the activities which are competitive with the activities of the Company
or Subsidiary so long as he does not participate in discussions with regard to
the competing business.
For purposes of the foregoing, "Chain Drug Business" shall mean a group of
four or more stores which either (x) fills prescriptions or (y) primarily sells
health and beauty aids.
(b) For the purposes of this Section 12 and Section 13 below, "Restriction
Period" shall mean the period beginning with the Effective Date and ending with
(i) in the case of a termination of the Executive's employment without
Cause or a Constructive Termination Without Cause, the end of the Severance
Period;
(ii) in the case of a termination of the Executive's employment for
Cause, the first anniversary of such termination;
(iii) in the case of a termination of the Executive's employment upon
the expiration of the Original Term of Employment or any Renewal Term that
results in the commencement of the Non-renewal Severance Period pursuant to
Section 10(d) above, the end of the Non-renewal Severance Period;
(iv) in the case of a voluntary termination of the Executive's
employment pursuant to Section 10(e) above followed by the Company's election to
pay the Executive such 50% of Base Salary, as provided in Section 10 (e) above,
the end of the 18-month period following such termination; or
(v) in the case of a voluntary termination of the Executive's
employment pursuant to Section 10 (e) above which is not followed by the
Company's election to pay the Executive such 50% of Base Salary, the date of
such termination.
(vi) in the case of agreed upon retirement of the Executive's
employment during the Term of Employment pursuant to Section 10(f) and (g)
above, the remainder of the Term of Employment.
13. Non-solicitation of Employees.
During the portion of the Restriction Period following the termination of
the Executive's employment, the Executive shall not induce employees of the
Company with the exception of Executive's Administrative Assistant, or any
Subsidiary to terminate their employment. During the portion of the Restriction
Period following the termination of the Executive's employment, the Executive
shall not directly or indirectly hire any employee of the Company with the
exception of Executive's Administrative Assistant, or any Subsidiary or any
person who was employed by the Company within 180 days of such hiring.
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14. Remedies.
In addition to whatever other rights and remedies the Company may have at
equity or in law, if the Executive breaches any of the provisions contained in
Section 11, 12 or 13 above, the Company (a) shall have the right to immediately
terminate all payments and benefits due under this Agreement and (b) shall have
the right to seek injunctive relief. The Executive acknowledges that such a
breach would cause irreparable injury and that money damages would not provide
an adequate remedy for the Company.
15. Resolution of Disputes.
Any disputes arising under or in connection with this Agreement, other than
seeking injunctive relief under Section 14, shall be resolved by binding
arbitration, to be held at an office closest to the Company's principal offices
in accordance with the rules and procedures of the American Arbitration
Association, except that disputes arising under or in connection with Section
11, 12 and 13 above shall be submitted to the federal or state courts in the
State of New York. Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. Each Party shall bear his or
its own costs of the arbitration or litigation, including, without limitation,
attorneys' fees. Pending the resolution of any arbitration or court proceeding,
the Company shall continue payment of all amounts and benefits due the Executive
under this Agreement.
16. Indemnification.
(a) The Company agrees that if the Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact that he is or was a director, officer or employee of the Company or any
Subsidiary or is or was serving at the request of the Company or any Subsidiary
as a director, officer, member, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether or not the basis of such Proceeding
is the Executive's alleged action in an official capacity while serving as a
director, officer, member, employee or agent, the Executive shall be indemnified
and held harmless by the Company to the fullest extent legally permitted or
authorized by the Company's certificate of incorporation or bylaws or
resolutions of the Company's Board of Directors or, if greater, by the laws of
the State of New York, against all cost, expense, liability and loss (including,
without limitation, attorney's fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by the Executive in connection therewith, and such indemnification
shall continue as to the Executive even if he has ceased to be a director,
member, officer, employee or agent of the Company or other entity and shall
inure to the benefit of the Executive's heirs, executors and administrators. The
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Company shall advance to the Executive all reasonable costs and expenses
incurred by him in connection with a Proceeding within 20 days after receipt by
the Company of a written request for such advance. Such request shall include an
undertaking by the Executive to repay the amount of such advance if it shall
ultimately be determined that he is not entitled to be indemnified against such
costs and expenses.
(b) Neither the failure of the Company (including its board of directors,
independent legal counsel or stockholders) to have made a determination prior to
the commencement of any proceeding concerning payment of amounts claimed by the
Executive under Section 16(a) above that indemnification of the Executive is
proper because he has met the applicable standard of conduct, nor a
determination by the Company (including its board of directors, independent
legal counsel or stockholders) that the Executive has not met such applicable
standard of conduct, shall create a presumption that the Executive has not met
the applicable standard of conduct.
(c) The Company agrees to continue and maintain a directors and officers'
liability insurance policy covering the Executive to the extent the Company
provides such coverage for its other executive officers.
17. Effect of Agreement on Other Benefits.
Except as specifically provided in this Agreement, the existence of this
Agreement shall not be interpreted to preclude, prohibit or restrict the
Executive's participation in any other employee benefit or other plans or
programs in which he currently participates.
18. Assignability; Binding Nature.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of the Executive)
and permitted assigns. No rights or obligations of the Company under this
Agreement may be assigned or transferred by the Company except that such rights
or obligations may be assigned or transferred in connection with the sale or
transfer of all or substantially all of the assets of the Company, provided that
the assignee or transferee is the successor to all or substantially all of the
assets of the Company and such assignee or transferee assumes the liabilities,
obligations and duties of the Company, as contained in this Agreement, either
contractually or as a matter of law. The Company further agrees that, in the
event of a sale or transfer of assets as described in the preceding sentence, it
shall take whatever action it legally can in order to cause such assignee or
transferee to expressly assume the liabilities, obligations and duties of the
Company hereunder. No rights or obligations of the Executive under this
Agreement may be assigned or transferred by the Executive other than his rights
to compensation and benefits, which may be transferred only by will or operation
of law, except as provided in Section 24 below.
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19. Representation.
The Company represents and warrants that it is fully authorized and
empowered to enter into this Agreement and that the performance of its
obligations under this Agreement will not violate any agreement between it and
any other person, firm or organization.
20. Entire Agreement.
This Agreement contains the entire understanding and agreement between the
Parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the Parties with respect thereto. This Agreement is not
intended to supersede the letter dated February 4, 1994, (providing for 24
months of severance in the event the Executive is terminated other than for
cause as defined in this letter), in the event the Agreement has expired and the
Executive has not retired pursuant to Section 10(f), 10(g) or 10(h) or his
employment has otherwise terminated prior to such expiration.
21. Amendment or Waiver.
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by the Executive and an authorized officer of
the Company. No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Executive or an authorized officer of the Company, as the case may
be.
22. Severability.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
23. Survivorship.
The respective rights and obligations of the Parties hereunder shall
survive any termination of the Executive's employment to the extent necessary to
the intended preservation of such rights and obligations.
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24. Beneficiaries/References.
The Executive shall be entitled, to the extent permitted under any
applicable law, to select and change a beneficiary or beneficiaries to receive
any compensation or benefit payable hereunder following the Executive's death by
giving the Company written notice thereof. In the event of the Executive's death
or a judicial determination of his incompetence, reference in this Agreement to
the Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative.
25. Governing Law/Jurisdiction.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of New York without reference to principles of conflict
of laws.
26. Notices.
Any notice given to a Party shall be in writing and shall be deemed to have
been given when delivered personally or sent by certified or registered mail,
postage prepaid, return receipt requested, duly addressed to the Party concerned
at the address indicated below or to such changed address as such Party may
subsequently give such notice of:
If to the Company: Melville Corporation
Xxx Xxxxxx Xxxx
Xxx, Xxx Xxxx 00000
Attention: Chairman
If to the Executive: Xx. Xxxxxx Xxxxxxxxx
00 Xxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
and
Xxxxxxx Xxxxxx, Esq.
Proskauer Xxxx Xxxxx & Xxxxxxxxxx
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
27. Headings.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
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28. Counterparts.
This Agreement may be executed in two or more counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
Melville Corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxxx
/s/ Xxxxxx Xxxxxxxxx
----------------------------------
Xx. Xxxxxx Xxxxxxxxx
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