EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of
the 24th day of March 1997, by and between Xxxxxxxx'x, Inc.
("Company"), and Xxxxx X. Xxxx ("Executive").
Company and Executive agree as follows:
1. Employment. Company hereby employs Executive as President
and Chief Executive Officer of its Herberger's Division or in such
other capacity with Company and its subsidiaries as Company's Board
of Directors shall designate.
2. Duties. During his employment, Executive shall devote
substantially all of his working time, energies, and skills to the
benefit of Company's business. Executive agrees to serve Company
diligently and to the best of his ability and to use his best
efforts to follow the policies and directions of Company's Board of
Directors.
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 no less than $290,000 per year.
Executive's Base Salary shall be paid in installments in accordance
with Company's normal payment schedule for its senior management.
All payments shall be subject to the deduction of payroll taxes and
similar assessments as required by law.
(b) Bonus. In addition to the Base Salary, Executive shall
be eligible, as long as he holds the position stated in paragraph
1, for a yearly cash bonus of up to 40% of Base Salary based upon
his performance in accordance withspecific annual objectives, set
in advance, all as approved by the Board of Directors.
(c) Incentive Compensation. Executive shall be and hereby is
granted a non-qualified option as of March 24, 1997, ("Option") to
purchase thirty thousand (30,000) shares of Company common stock at
an option price equal to the closing price of the stock on March
24, 1997, as reported in the Wall Street Journal. The Option is
granted pursuant to Company's 1994 Long-Term Incentive Plan ("1994
LTIP"), and shall be subject to the terms and conditions thereof.
The Option shall be exercisable on or after March 24, 1997, (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 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 (as
provided in the 1994 LTIP) up to ten (10) years from the Grant
Date. Any portion of the Option not exercised within said ten (10)
year period shall expire.
(d) Effect of Change of Control on Options. In the event of
a Change of Control (as defined in the Company's 1994 Long-Term
Incentive Plan), any Options granted to Executive prior to such
Change of Control shall immediately vest.
4. Insurance and Benefits. Company shall allow Executive to
participate in each employee benefit plan and to receive each
executive benefit that Company provides for senior executives at
the level of Executive's position.
5. Term. The term of this Agreement shall be for two years,
provided, however, that Company may terminate this Agreement at any
time upon thirty (30) days' prior written notice (at which time
this Agreement shall terminate except for Section 9, which shall
continue in effect as set forth in Section 9). In the event of
such termination by Company, Executive shall be entitled to receive
his Base Salary (at the rate in effect at the time of termination)
through the end of the term of this Agreement. Such Base Salary
shall be paid thereafter in regular payroll installments.
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, (b) other entitlements under this contract
that expressly survive death, and (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 his participation in any plan maintained by Company.
6. Termination by Company for Cause. (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 crime 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 or
commission of an immoral or unethical act that materially reflects
negatively on 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 material breach of his obligations under paragraph 2 of
the Agreement, as so determined by the Board of Directors.
(b) 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.
7. Change in Control. If Executive's employment is
terminated primarily as a result of a Change in Control of Company
or a Potential Change in Control of Company, as defined below,
Executive shall receive his Base Salary then in effect for a period
of two years or through the end of the term of this Agreement,
whichever is longer.
As used herein, the term "Change in Control" means the
happening of any of the following:
(a) 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 Company, a subsidiary of Company, or any
employee benefit plan of Company or its subsidiaries, becomes the
beneficial owner of Company's securities having 25 percent or more
of the combined voting power of the then
outstanding securities of Company that may be cast for the election
for directors of Company (other than as a result of an issuance of
securities initiated by Company in the ordinary course of
business); or
(b) 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 Company or any successor
corporation or entity entitled to vote generally in the election of
directors of Company or such other corporation or entity after such
transaction, are held in the aggregate by holders of Company's
securities entitled to vote generally in the election of directors
of Company immediately prior to such transactions; or
(c) During any period of two consecutive years, individuals
who at the beginning of any such period constitute the Board of
Directors of Company cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for
election by Company's 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 Company then still in office who
were directors of Company at the beginning of any such period.
As used herein, the term "Potential Change in Control" means
the happening of any of the following:
(a) The approval by stockholders of an agreement by Company,
the consummation of which would result in a Change of Control of
Company; or
(b) The acquisition of beneficial ownership, directly or
indirectly, by any entity, person or group (other than Company, a
wholly-owned subsidiary thereof or any employee benefit plan of
Company or its subsidiaries (including any trustee of such plan
acting as trustee)) of securities of Company representing 5 percent
or more of the combined voting power of Company's outstanding
securities and the adoption by the Board of Directors of Company of
a resolution to the effect that a Potential Change in Control of
Company has occurred for purposes of this Agreement.
8. Disability. If Executive becomes disabled at any time
during the term of this Agreement, he shall after he becomes
disabled continue to receive all payments and benefits provided
under the terms of this Agreement for a period of twelve
consecutive months, or for the remaining term of this Agreement,
whichever period is longer. For purposes of this Agreement, the
term "disabled" shall mean the inability of Executive (as the
result of a physical or mental condition) to perform the duties of
his position under this Agreement with reasonable accommodation and
which inability is reasonably expected to last at least one (1)
full year.
9. Non-competition; Unauthorized Disclosure.
(a) Non-competition. During the period Executive is
employed under this Agreement, and for a period of one year
thereafter, Executive:
(i) shall not engage in any activities, whether as
employer, proprietor, partner, stockholder (other than the holder
of less than 5% of the stock of a corporation the securities of
which are traded on a national securities exchange or in the
over-the-counter market), director, officer, employee or otherwise,
in competition with (i) the businesses conducted at the date hereof
by Company or any subsidiary or affiliate, or (ii) any business in
which Company or any subsidiary or affiliate is substantially
engaged at any time during the employment period;
(ii) shall not do business with any vendor that is one of
the top 100 vendors of the businesses conducted by Company or its
affiliates at the date hereof or at any time during the term of
this Agreement; and
(iii) 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
in order to enter into competitive employment.
(b) Unauthorized Disclosure. During the period Executive is
employed under this Agreement, 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 his duties as an executive for Company,
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) the covenants contained in paragraph (i) and (ii) of
Section 9(a) shall apply within all the territories in which
Company or its affiliates or subsidiaries are actively engaged in
the conduct of business while Executive is employed under this
Agreement, including, without limitation, the territories in which
customers are then being solicited;
(ii) 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; provided, however,
Company shall be entitled to injunctive relief only to protect
itself from unfair competition of the type protected under
Tennessee law.
(iii) 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
(iv) the covenants contained in this Section 9 shall
survive the conclusion of Executive's employment by Company.
10. 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
his or its address by written notice in accordance with this
Section 10 (a). Notices shall be deemed communicated as of the
actual receipt or refusal of receipt.
If to Executive: Xxxxx X. Xxxx
X.X. Xxxxxxxxx'x, Inc.
000 Xxxx Xxxxxxx
Xx. Xxxxx, XX 00000
If to Company: Xxxxx X. Xxxxxx
Xxxxxxxx'x, Inc.
Xxxx Xxxxxx Xxx 0000
Xxxxx, 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 Tennessee.
(d) Entire Agreement. Except for any prior grants of
options, restricted stock, or other forms of incentive compensation
evidenced by a written instrument or by an action of the Board or
Directors, this Agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect
to employment of Executive by Company and contains all of the
covenants and agreements between the parties with respect to such
employment. Each party to this Agreement acknowledges that no
representations, inducements or agreements, oral or otherwise, that
have not been embodied herein, and no other agreement, statement or
promise not contained in this Agreement, shall be valid or binding.
Any modification of this Agreement will be effective only if it is
in writing signed by the party to be charged.
(e) No Conflicting Agreement. By signing this Agreement,
Executive warrants that he is not a party to any restrictive
covenant, agreement or contract which limits the performance of his
duties and responsibilities under this Agreement or under which
such performance would constitute a breach.
(f) Headings. The Section, paragraph, and subparagraph
headings are for convenience or reference only and shall not define
or limit the provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
XXXXXXXX'X, INC.
BY: _____________________
Xxxxx X. Xxxxxx
Senior Vice President
_____________________
Xxxxx X. Xxxx
Executive
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