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Exhibit 10.14
AGREEMENT
This AGREEMENT, as amended and restated as of the first day of
February, 1999 (hereinafter the "Agreement"), by and between Service Merchandise
Company, Inc., a Tennessee corporation (hereinafter the "Company"), and Xxx
Xxxxxx (hereinafter the "Executive").
RECITALS
WHEREAS, the Executive is currently employed by the Company.
WHEREAS, the Company and the Executive wish to set forth their
respective rights and obligations during the period of the Executive's
employment pursuant to the terms of this Agreement, and to provide for
incentives, salary continuations, and benefits on the terms and conditions set
forth herein.
WHEREAS, the Company and the Executive wish to amend and restate this
Agreement as of the date set forth above, this Agreement supersedes and replaces
any prior agreements between the Executive and the Company.
NOW, THEREFORE, in consideration of the premises and other mutual
agreements contained herein, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. Resignation. The execution of this Agreement by Executive shall
serve as notice to the Company's board of directors of the resignation by
Executive from the board effective May 20, 1999.
2. Employment. The Company agrees to continue the employment of the
Executive, and the Executive agrees to remain employed as the Chief Financial
Officer of the Company (hereinafter "CFO"), for a period beginning on the date
hereof and ending May 20, 1999 (the
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"Employment Period"). The Executive will devote his time, energy and effort to
the discharge of his duties as CFO. During the Employment Period, the Company
agrees that the Executive will have all rights, responsibilities and obligations
currently vested on him or exercised by him as CFO, and it will not diminish his
duties, responsibilities or professional stature in any way.
3. Term. The term of this Agreement shall commence on the date hereof
and expire at the close of business on the last day of the Employment Period,
subject to earlier termination as hereinafter provided.
4. Salary. As compensation for the services contemplated by this
Agreement, the Company shall continue to pay the Executive his current weekly
salary based on his annual of Four Hundred Sixty Thousand Dollars ($460,000) per
year, payable in weekly increment (the "Salary").
5. Incentives. The Company agrees to provide the Executive incentives
to remain with the Company because (a) his employment is critical to the Company
during the recent change in control of the Chief Executive Officer ("CEO"); (b)
his employment will help the Company to develop its business plan; and (c) for
executing the settlement of Executive's claims for severance and other matters
described in his severance agreement existing on the date hereof.
a. Cash Payment. The Company shall pay the Executive, on the
date of this Agreement, a cash payment in the amount of Six Hundred
Forty-Four Thousand Dollars ($644,000.00), subject however, to
applicable withholding pursuant to Section 8 hereof.
b. Letter of Credit. The Company shall provide Executive an
irrevocable draw or direct-pay letter of credit from a reputable United
States bank assuring payment to the Executive of four equal
installments in the amount of One Hundred Sixty-One Thousand Dollars
($161,000.00). The first payment shall be due on March 1, 1999. The
second
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payment shall be due on March 19, 1999. The third payment shall be due
on April 20, 1999. The final payment shall be due on May 20, 1999. In
the event the Company files a voluntary bankruptcy petition, has an
involuntary bankruptcy petition filed against it, or is the subject of
any insolvency proceeding of any sort, the Executive shall be entitled
to all amounts set forth in this Agreement, when due, and the Executive
shall be entitled to draw upon the letter of credit consistent with the
terms of this Agreement.
c. Stock. The Company shall cause all unvested stock options
currently held by the Executive to be fully vested as of the last day
of the Employment Period.
d. Automobile. The Company shall execute a transfer of title
to the Company automobile which is currently assigned to the Executive,
in the Executive's name on the date of execution of this Agreement. The
value of the benefit received by Executive pursuant to this Section
5(d) shall be subject to applicable withholding pursuant to Section 8
hereof.
e. Attorneys' Fees. The Company shall reimburse to Executive
any and all reasonable fees incurred for legal services for the
negotiation and execution of this Agreement.
f. Indemnity. Contemporaneously with the execution of this
Agreement, the Company will execute an indemnification agreement in
the form set forth on Exhibit A.
6. Benefits. During the Employment Period, the Company shall continue
to provide Executive the same benefits that are made available to all other
senior executives of the Company upon the same terms that are offered to other
senior executives of the Company.
7. Termination. The Company shall have the right at any time during
the Employment Period to terminate Executive without Cause (as defined below),
provided that Company shall
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immediately pay to Executive in full all amounts identified in Sections 4 and 5
of this Agreement. In addition, the Company shall have the right to terminate
Executive for "Cause" at any time. Upon termination for Cause, the Company shall
(i) no longer be required to pay to Executive the amounts due under Section 4
hereof, and (ii) be entitled to recoup from Executive all money paid to, or
benefits bestowed upon, Executive pursuant to Sections 5(a), 5(b), and 5(d) of
this Agreement. "Cause" as used in this Agreement shall mean, (A) the willful
engaging by the Executive in misconduct materially injurious to the Company, (B)
acts of dishonesty or fraud by Executive, or (C) the willful violation by the
Executive of the provisions of Sections 10 or 11 hereof.
a. Disability or Death. In the event Executive's employment
with the Company is terminated because of his death or inability to
perform his duties as a result of a physical or mental incapacity
("Disability"), the Executive or his estate shall be paid such amounts,
if any, as the Executive is entitled to receive under the Company's
insurance policies and/or other benefit plans then in effect for
Company officers, and all salary and other benefits and incentives
described hereunder.
b. Healthcare Coverage. At the expiration of the term of this
Agreement or if the Executive's employment with the Company is
terminated for any reason other than due to the Executive's Death or
Disability, the Company will reimburse the Executive for any premium
paid by the Executive for the continued coverage for the Executive (and
any dependents of the Executive covered by the Company's healthcare
plans at the time the Executive's employment was terminated) under the
Company's healthcare plan pursuant to "COBRA" (or any other mandatory
healthcare continuation law then in effect), such coverage then being
substantially similar to that provided by the Company to its senior
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executives and their eligible dependents. The Executive will be
entitled to reimbursement for such coverage for a period commencing
with the date of termination from employment and ending on the earlier
of (i) the second anniversary of termination of employment, or (ii) the
date the Executive becomes eligible to receive any healthcare coverage
from another employer of the Executive or the Executive's spouse, or
any governmental entity, that does not contain any exclusion or
limitation with respect to any pre-existing condition of the Executive
or the Executive's covered dependents. If the Executive (or the
Executive's dependents covered at the time of termination from
employment) elects not to continue coverage under COBRA (or any other
mandatory healthcare continuation law), and is otherwise eligible under
this Section, the Company will reimburse the Executive for the cost of
purchasing substantially similar coverage or a supplement required to
achieve substantially similar coverage under another arrangement
approved by the Company for the same time period; however, such
reimbursement shall be limited to the then current premium charged to
others by the Company for substantially similar coverage under COBRA
(or other mandatory healthcare continuation law then in effect). Any
amount payable to the Executive shall be subject to withholding of
applicable taxes as provided in Section 8 hereof. In the event of the
Executive's death following termination giving rise to the benefit
described in this Section, but before the expiration of such benefits,
Executive's dependents shall be entitled to such benefits.
c. Right to Terminate. In the event the Company breaches this
Agreement, then the Executive has the immediate right to terminate
this Agreement and shall be relieved of
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all duties and obligations contained herein. The Company shall
immediately pay or provide to Executive all salary, incentives, and
other benefits provided hereunder.
8. Withholding. All payments hereunder shall be subject to all
applicable withholding and payroll taxes.
9. Binding Effect. This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided herein. Without limiting the foregoing, Executive's right to
receive payments hereunder shall not be assignable, transferable or delegable
whether by pledge, creation of a security interest or otherwise, other than by a
transfer by his will or by the laws of descent and distribution and, in the
event of any attempted assignment or transfer contrary to this paragraph, the
Company shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
10. Unauthorized Disclosure. During the period in which the Executive
is employed by the Company, the Executive shall not, without the prior written
consent of the Board of Directors, or a person authorized thereby, disclose to
any person, other than a person to whom disclosure is necessary or appropriate
in connection with the performance by the Executive of Executive's duties as an
officer of the Company, or its subsidiaries or its affiliates, any confidential
information obtained by the Executive while in the employ of the Company with
respect to any of the Company's products, improvements, formulae, designs or
styles, processes, customers, methods of marketing or distribution, systems,
procedures, plans, proposals, policies or methods of manufacture, the disclosure
of which Executive knows, or should have reason to know, will be damaging to the
Company or its subsidiaries or its affiliates, nor shall Executive make any
false statements regarding
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the Company or its subsidiaries or its affiliates or take any other action which
Executive knows, or should have reason to know, will be damaging to the Company
or its subsidiaries or its affiliates; provided, however, that confidential
information shall not include any information known generally to the public
(other than as a result of unauthorized disclosures by the Executive) or any
information of a type not otherwise considered confidential by persons engaged
in the same business or a business similar to that conducted by the Company.
Following the termination of the Executive's employment with the Company for any
reason, the Executive shall not disclose any confidential information of the
type described above or take any action of the type described above except as
may be required in the opinion of the Executive's counsel in connection with any
judicial or administrative proceeding or inquiry. The provision of this Section
shall be binding upon the Executive's heirs, successors and legal
representatives.
Company shall not make any derogatory remarks or defamatory statements
about or concerning the Executive during or after the term of this Agreement.
The Executive shall have the right to review and approve any public statement
made on behalf of the Company, its Board of Directors or officers in connection
with the Executive's separation from the Company, unless the Company terminates
the Executive for Cause.
11. Non-Competition. During the period of this Agreement, the Executive
will not (a) directly or indirectly own, manage, operate, control or participate
in the ownership, management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any financial
interest in, or aid or assist anyone else in the conduct of, any business which
is in substantial competition with any business conducted by the Company or by
any group, division, or subsidiary of the Company in any area where such
business is being conducted during the term
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of this Agreement (provided that ownership of five percent (5%) or less of the
voting stock of any publicly held corporation shall not constitute a violation
hereof) or (b) directly or indirectly employ, solicit for employment, or advise
or recommend to any other persons that they employ or solicit for employment,
any employee of the Company or its affiliates or subsidiaries.
12. Specific Performance. The Executive acknowledges and agrees that,
in the event of a breach of Section 10 or Section 11 hereof by the Executive,
the Company would be irreparable harmed and that monetary damages would be an
inadequate remedy in favor of the Company. Accordingly, the Executive and the
Company agree that in the event of such a breach, the Company shall be entitled
to injunctive relief against the Executive.
13. Binding Agreement. This Agreement and all obligations of the
Company hereunder shall be binding upon the successors and assigns of the
Company. This Agreement and all rights of the Executive hereunder shall inure to
the benefit of and be enforceable by the Executive's personal or legal
representative, executors, administrators, successors, heirs, distributees,
devisees and legatees.
14. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered by United States registered mail,
return receipt requested, postage prepaid, addresses as follows:
If to the Company:
Service Merchandise Company, Inc.
0000 Xxxxxxx Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
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If to the Executive:
Xxx Xxxxxx
000 Xxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
With a copy to:
Xxxxx X. Xxxxxxx, Esquire
Xxxxxxx, Xxxxxxx & Xxx
The Southern Turf Building
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
or to such other address as either party may be furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Tennessee.
16. Amendment, Modification, Waiver. This Agreement may not be amended
except by the written agreement of the parties hereto. No provisions of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing signed by the Executive and the Company. No
waiver by either party hereto at any time of any breach by the other party
hereto or compliance with any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or any prior or subsequent time.
17. Headings. The headings herein are for convenience of reference only
and shall not be deemed to be part of the substance of this Agreement.
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18. Entire Agreement. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof and may be changed
or supplemented only by a written agreement signed by the Executive and the
Company.
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IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date first above written.
SERVICE MERCHANDISE COMPANY, INC.
By: /s/ C. Xxxxxx Xxxxx
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Accepted and Agreed:
/s/ Xxx Xxxxxx
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Xxx Xxxxxx
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