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Exhibit 10.13
Service Merchandise Company, Inc.
0000 Xxxxxxx Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
January 8, 1999
Mr. Xxxxx Xxxxx
Xxxxx Enterprises, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Dear Xx. Xxxxx:
This letter agreement (the "Agreement") sets forth our mutual agreement
concerning your resignation as a director of Service Merchandise Company, Inc.,
a Tennessee corporation ("SMC" or the "Company").
1. Resignation. Your service as a director with SMC and its affiliates
will terminate in all capacities as of January 7, 1999 (the "Effective Date"),
although you may continue to maintain an office at the SMC corporate
headquarters for a period of no longer than two (2) weeks from the Effective
Date as defined herein. In that regard, you hereby resign, as of the Effective
Date, from your position as Chairman of the Board of Directors of SMC and from
all other officer, directorships and other positions that you currently hold
with SMC or any of its subsidiaries or affiliates.
2. Severance Benefits. SMC will provide you with the following
severance payments and benefits:
(a) Compensation. The Company will pay a lump sum payment of Two
Hundred Fifty Thousand and no/100 ($250,000.00) on January 11, 1999.
(b) No Other Compensation or Benefits. Except as otherwise specifically
provided herein, you will not be entitled to any compensation or benefits or to
participate in any past, present or future compensation or benefit programs of
SMC or any of its subsidiaries or affiliates after the Effective Date.
3. Cooperation. From and after the date hereof, you will (i) cooperate
in all reasonable respects (after taking into account any employment obligations
you may have) with SMC and its affiliates and subsidiaries and their respective
directors, officers, attorneys and experts in connection with the conduct of any
action, proceeding, investigation or litigation involving SMC or any of its
subsidiaries and affiliates, including any such action, proceeding,
investigation or litigation in which you are called to testify and (ii) promptly
respond to all reasonable requests by SMC and its
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subsidiaries and affiliates relating to information concerning the operations
and activities of SMC, its Board of Directors and subsidiaries and affiliates.
The Company will reimburse you for any reasonable out-of-pocket expenses
incurred by you in connection with your compliance with this Section 3, provided
that such expenses have been approved in writing in advance by the Chief
Executive Officer of the Company.
4. Return of Property. On or prior to the date hereof, you will
surrender all property of SMC, its subsidiaries and affiliates in your
possession and all property, information or data made available to you in
connection with your association with SMC, including, without limitation, any
and all records, manuals, customer lists, marketing, vendor or financial
information, notebooks, computers, computer programs and files, papers,
electronically stored information and documents kept or made by you in
connection with your position as a director.
5. Confidentiality/No Public Comment. This Agreement is confidential.
Except as required by legal process, you agree that you will not disclose,
publicize, or discuss this Agreement or any of its terms or conditions with
anyone, except a spouse, if any, attorney, and/or accountant. In the event you
disclose this Agreement or any of its terms or conditions to your spouse,
attorney, and/or accountant, it shall be your duty, responsibility and
obligation to advise said individual(s) of the confidential nature of this
Agreement and direct them not to disclose, publicize, or discuss this Agreement
or any of its terms and conditions with anyone else. In the event you disclose
this Agreement or any of its terms or conditions to any person or entity, not
authorized by this Agreement, SMC shall be entitled to a full return of all
amounts paid under this Agreement. You and SMC agree to refrain from making,
directly or indirectly, now or at any time in the future (i) any derogatory
comment(s) concerning the other party or any of such other party's subsidiaries
or affiliates, current or former directors, officers or employees or (ii) any
other comment(s) that could reasonably be expected to be detrimental to the
business or financial prospects or operations of the other party or any of such
other party's subsidiaries or affiliates; to the news or other media; any
employees of such other party or any of its subsidiaries or affiliates; or any
individual or entity with whom such other party or any of its subsidiaries or
affiliates has or may reasonably expect to have a business relationship.
6. Breach of Agreement. In the event of any material breach by you of
any provision of Section 3, 4 or 5 of this Agreement, SMC will cease to have any
obligation to make payments or provide benefits to you under this Agreement.
7. Release.
(a) General Release. In consideration of the payment and benefits
provided to you under this Agreement, you hereby release and forever discharge
SMC, its subsidiaries and affiliates and each of their respective officers,
employees, directors and agents from any and all claims, actions and causes of
action (collectively "Claims"), including without limitation, any Claims arising
under any applicable federal, state or local or foreign law, that you may have,
or in the future may possess, arising out of (i) your association or employment
relationship with and service as a director, employee or officer of SMC or any
of its subsidiaries or affiliates, and the termination of such
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relationship or service or (ii) any event, condition, circumstance or obligation
that occurred, existed or arose on or prior to the date hereof; provided
however, that the release set forth in this section will not apply to (A) the
obligations of SMC under this Agreement and (B) the obligations of SMC and its
subsidiaries to continue to provide director and officer indemnification. You
further agree that the payments and benefits described in this Agreement will be
in full satisfaction of any and all claims for payments or benefits, whether
express or implied, that you may have against SMC or any of its subsidiaries or
affiliates arising out of your service as a director of SMC or any of
subsidiaries or affiliates and the termination thereof.
(b) Specific Release for ADEA Claims. In consideration of the payments
and benefits provided to you under this Agreement, you hereby release and
forever discharge SMC, each of its subsidiaries and affiliates and each of their
respective officers, employees, directors and agents from any and all claims,
actions and causes of action that you may have as of the date you sign this
Agreement arising under the Federal Age Discrimination in Employment Act of
1967, as amended, and the applicable rules and regulations promulgated
thereunder ("ADEA"). By signing this Agreement, you hereby acknowledge and
confirm the following: (i) you were advised by SMC in connection with your
resignation to consult with an attorney of your choice prior to signing this
Agreement and to have such attorney explain to you the terms of the Agreement,
including, without limitation, the terms relating to your release of claims
under the ADEA; (ii) you have been given a period of not fewer than 21 days to
consider the terms of this Agreement and to consult with an attorney of your
choosing with respect thereto; and (iii) you are providing the release and
discharge set forth in this Section only in exchange for consideration in
addition to anything of value to which you are already entitled.
8. Miscellaneous.
(a) Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to the matters covered
hereby and supersedes and replaces any express or implied prior agreement with
respect to the terms of your service as a director with SMC (including, without
limitation, that certain letter addressed to you, dated February 11, 1998)
(b) Governing Law. This Agreement will be governed by, and construed in
accordance with the laws of the state of Tennessee.
(c) Withholding Taxes. Any payments made or benefits provided to you
under this Agreement will be reduced by any applicable withholding taxes.
(d) Notices. Any notices required or made pursuant to this Agreement
will be in writing and will be deemed to have been given when delivered or
mailed by U. S. certified mail, return receipt requested, postage prepaid, as
follows:
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If to Xxxxx X. Xxxxx:
Xxxxx Enterprises, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
with a copy to:
If to SMC:
Service Merchandise Company, Inc.
7100 Service Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
or to such other address as either party may furnish to the other in writing in
accordance with this Section. Notices of change of address will be effective
only upon receipt.
9. Revocation. You may revoke this Agreement at any time during the
seven (7) day period beginning on the date signed (the "Revocation Period"). In
the event of any such revocation by you, all obligations of SMC under this
Agreement will terminate and be of no further force and effect as of the date of
such revocation. No such revocation by you will be effective unless it is in
writing and signed by you and received by SMC prior to the expiration of the
Revocation Period.
SERVICE MERCHANDISE COMPANY, INC.
BY: /s/ Xxxx X. Xxxxxx
------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------
Title: Senior Vice President
--------------------------
ACCEPTED AND AGREED TO:
/s/ Xxxxx X. Xxxxx
--------------------------------
XXXXX X. XXXXX
Date: 1/11/99
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SERVICE MERCHANDISE COMPANY, INC.
0000 XXXXXXX XXXXXXXXXXX XXXXX
XXXXXXXXX, XX 00000
January 11, 1999
Mr. Xxxxx Xxxxx
Xxxxx Enterprises, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Dear Xx. Xxxxx:
This letter shall amend and does hereby amend that certain letter
agreement, dated January 8, 1999 (the "Letter Agreement"), which sets forth the
agreement concerning your resignation as a director of Service Merchandise
Company, Inc., a Tennessee corporation ("SMC" or the "Company". In addition to
the matters set forth in the Letter Agreement, SMC hereby agrees to the
following:
1. Moving Expenses. SMC agrees to arrange for the moving of your
personal furnishings and belongings, from your current office at the SMC
corporate headquarters and pay any and all moving expenses related thereto.
2. Discount Card. As consistent with SMC policy, SMC will provide you
with an associate identification card ("One Card") for use in purchasing
merchandise at all SMC stores, at the discount applicable to other associates at
the time of purchase, for the remainder of your life. In the event that SMC
discontinues discount privileges to associates or otherwise discontinues use of
the One Card for any reason, your discount privileges shall immediately cease.
This letter is supplemental to the Letter Agreement, which is made a
part by reference hereto, and all terms, conditions and provisions of the Letter
Agreement, unless specifically modified, are to apply to this letter and are
made a part hereof as though expressly rewritten, incorporated and included
herein.
SERVICE MERCHANDISE COMPANY, INC.
BY: /s/ C. Xxxxxx Xxxxx
----------------------------------
Name: C. Xxxxxx Xxxxx
----------------------------
Title: V.P., General Counsel
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ACCEPTED AND AGREED TO:
/s/ Xxxxx X. Xxxxx
---------------------------
XXXXX X. XXXXX
Date: 1/12/99
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