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Exhibit 10.16
EMPLOYMENT AGREEMENT
This Employment Agreement is made as of the 23rd day of March, 1999
(the "Agreement") by and between Service Merchandise Company, Inc., a Tennessee
corporation (the "Company"), and Xxx Xxxxxx (the "Executive").
RECITALS
WHEREAS, the Executive is currently employed by the Company;
WHEREAS, the Company desires to provide for the employment of the
Executive in accordance with the terms and conditions provided herein;
WHEREAS, the Executive wishes to perform services for the Company in
accordance with the terms and conditions provided herein; and
WHEREAS, this Agreement shall supersede the Agreement dated December 3,
1998 between the Executive and the Company (the "Prior Agreement").
NOW, THEREFORE, in consideration of the premises hereof and of the
mutual promises and agreements contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and
the Executive hereby agrees to perform services for the Company, on the terms
and conditions set forth herein.
2. Term. The term of employment of the Executive by the Company
hereunder shall commence effective as of March 23, 1999 (the "Effective Date"),
and shall end on March 23, 2002, unless further extended or sooner terminated as
hereinafter provided. Commencing on March 23, 2003, and on each anniversary
thereafter (each such date, an "Anniversary Date"), the term of the Executive's
employment shall automatically be extended for one additional year unless, not
later than the December 31, immediately preceding an Anniversary Date, either
party shall have given notice to the other party that it does not wish to extend
this Agreement (a "Notice of Non-Renewal"). References herein to the "Term" of
this Agreement shall refer to both the initial term and any extended term of the
Executive's employment hereunder. Notwithstanding the foregoing, if a Change of
Control (as defined in Section 6) occurs during the Term, in no event shall the
Term end prior to the end of the twenty-fourth (24th) month following the month
in which such Change of Control occurs.
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3. Position and Duties.
(a) The Executive shall serve as Chief Executive Officer of the
Company, shall have such responsibilities, duties and authority as are generally
consistent and customary with such a position and shall report solely to the
Board of Directors of the Company (the "Board"). The Executive shall also serve,
if requested by the Board, as a director or officer of any of the Company's
present or future direct or indirect subsidiaries. During the Term, the Company
shall cause the Executive to be included in the slate of persons nominated to
serve as directors on the Board and shall use its best efforts (including,
without limitation, the solicitation of proxies) to have the Executive elected
and re-elected to the Board during the Term. The Executive shall, during the
Term, be the chairman of both the Executive Committee and the Operating
Committee.
(b) During the Term, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive shall devote
reasonable attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive under this Agreement, use the
Executive's reasonable best efforts to carry out such responsibilities
faithfully and efficiently. It shall not be considered a violation of the
foregoing for the Executive to serve on corporate, industry, civic or charitable
boards or committees, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement.
(c) The Executive shall be based primarily and reside in the general
area of Nashville, Tennessee, except for such reasonable travel obligations as
do not materially exceed the Executive's travel obligations immediately prior to
the Effective Date.
4. Compensation.
(a) Base Salary. During the Term, the Executive shall receive an
annual base salary ("Annual Base Salary") of $650,000. The Annual Base Salary
shall be payable in accordance with the Company's regular payroll practice for
its senior executives, as in effect from time to time. During the Term, the
Annual Base Salary shall be reviewed by the Compensation Committee of the Board
for possible increase at least annually. Any increase in the Annual Base Salary
shall not limit or reduce any other obligation of the Company under this
Agreement. The Annual Base Salary shall not be reduced after any such increase,
and the term "Annual Base Salary" shall thereafter refer to the Annual Base
Salary as so increased.
(b) Annual Bonus; February Payments. During the Term, the Executive
shall be entitled to receive an annual bonus ("Annual Bonus") pursuant to the
Company's annual bonus plan, as in effect from time to time, offset by any
payments (the "February Payments") received by the Executive pursuant to
paragraph 5 (a) and (b) of that certain agreement dated February 1, 1999 between
the Company and the Executive (the "February 1999 Agreement"); provided,
however, that any such offset shall not exceed in any one year an amount equal
to one-third of the aggregate February Payments. The Executive shall have no
obligation to pay back to the Company any portion
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of the February Payments unless the Executive is terminated for Cause (as
defined in Section 5(b) hereof) on or prior to May 20, 1999. In the event that
the Executive is terminated for Cause on or prior to May 20, 1999, the Company
shall be entitled to recoup from the Executive the February Payments and the
automobile given to the Executive pursuant to the February 1999 Agreement;
provided, however, that the Company shall, not be entitled to recoup from the
Executive the February Payments pursuant to this sentence if and to the extent a
portion of the February Payments has been offset against the Executive's Annual
Bonus pursuant to this Section 4(b),
(c) Other Benefits. During the Term, the Executive shall be entitled
to participate in other employee benefit plans, programs and arrangements of the
Company, other than Annual Bonus plans (covered by Section 4(b) above) (the
"Benefit Plans"), now or hereinafter in effect, that are Applicable to the
Company's employees generally or to its executive officers, as the case may be,
subject to and on a basis consistent with the terms, conditions and overall
administration of the Benefit Plans. During the Term, the Company shall provide
to the Executive all of the fringe benefits and perquisites that are provided to
senior executives of the Company, and the Executive shall be entitled to
participate in and receive any other fringe benefits or perquisites that become
available to the Company's senior executives.
(d) Vacation and Other Leaves. The Executive shall be entitled to
vacation in accordance with the Company's vacation policy (and to compensation
in respect of earned but unused vacation days) and all paid holidays and
personal leave days that are available generally to executive officers of the
Company.
(e) Expenses; Attorneys' Fees. During the Term, the Executive shall
be entitled to receive prompt reimbursement for all reasonable and customary
expenses incurred by the Executive in performing his services hereunder,
including all expenses of travel and accommodations while engaged in business of
the Company, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company. The
Company shall reimburse the Executive for all reasonable legal fees and expenses
incurred in connection with the negotiation and execution of this Agreement
(f) Services Furnished. The Company shall furnish the Executive with
office space, secretarial and/or administrative assistance, office supplies,
support services and such other facilities and services as shall be suitable to
the Executive's position and adequate for the performance of his duties
hereunder.
5. Compensation on Termination of Employment (Except Within Two Years
Following a Change of Control). This Section 5 shall apply to termination of the
Executive's employment during the Term and prior to a Change of Control (as
hereinafter defined in Section 6) and to termination of the Executive's
employment more than two (2) years following a Change of Control. This Section 5
shall not apply to termination of Executive's employment during the Change of
Control Period (as hereinafter defined in Section 6):
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(a) Disability. If the Executive's employment with the Company
is terminated by the Executive or the Company due to the Executive's inability
to perform Executive's duties as a result of physical or mental incapacity
("Disability"), the Executive shall be paid such amounts, if any, as the
Executive is entitled to receive under the Company's disability insurance
policies then in effect for Company offices, but shall be entitled to no further
compensation or benefits (unless previously accrued under the Company's benefit
plans).
(b) Other Termination Not Giving Rise to Salary Continuation.
If the Executive's employment shall be terminated for Cause (as hereinafter
defined) or if the Executive dies or if the Executive terminates Executive's
employment for any reason other than for a material breach of this Agreement by
the Company, the Company shall pay the Executive any installments of Executive's
Annual Base Salary as then in effect that would otherwise be due through the
date on which Executive's employment is terminated. The Company shall then have
no further obligations to the Executive under this Agreement except that in the
event of termination by death, the Executive's estate or beneficiaries, as the
case may be, shall be paid such amounts as may be payable to the Executive under
the Company's insurance policies and/or other benefit plans. For the purposes of
this Agreement, the Company shall have "Cause" to terminate the Executive's
employment upon (i) the willful engaging by the Executive in misconduct
materially injurious to the Company, (ii) acts of dishonesty or fraud by the
Executive, or (iii) the willful violation by the Executive of the provisions of
Section 8 or Section 9 hereof.
(c) Termination Giving Rise to Salary Continuation. If the
Company shall terminate the Executives employment with the Company or shall
provide a Notice of Non-Renewal for any reason other than due to the Executive's
death or Disability or for Cause, or if the Executive terminates this Agreement
because of a material breach of this Agreement by the Company, then, subject to
the compliance by the Executive with the provisions of Sections 8 and 9 hereof,
the Company shall pay, as salary continuation, to the Executive an amount equal
to two (2) times the Executive's maximum Annual Base Salary paid during the
prior five (5) year period (inclusive of the Annual Bonus paid to Executive
during the 12-month period preceding the date of termination or the Annual Bonus
earned by the Executive with respect to the fiscal year immediately preceding
the date of termination, whichever Annual Bonus is higher, but excluding
unearned bonuses negotiated by Executive at the time of the Executive's
employment with the Company), payable in a lump sum, less an amount equal to any
portion of the February Payments which has not been previously offset pursuant
to Section 4(b) hereof, but no other compensation or benefits (unless accrued
under the Company's benefit plans prior to the date of termination of employment
or as provided in Section 4(d) hereof) shall be paid to the Executive. For
purposes of this Section 5(c), Executive's Annual Bonus shall be determined
without regard to the offset described in Section 4(b) hereof. In addition, the
Company shall cause all unvested stock options held by the Executive to be fully
vested as of the date of termination under this Section 5(c).
(d) Healthcare Coverage. If the Executive's employment with
the Company is terminated by the Company for any reason other than due to the
Executive's death or Disability or for Cause, the Company will reimburse the
Executive for the premium paid by the Executive for continued coverage for the
Executive (and any dependents of the Executive covered by the
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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
executives and their eligible dependents. The Executive will be entitled to
reimbursement for such coverage for the period commencing with the date of
termination of 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 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 Executive's covered dependents. If the Executive (or
Executive's dependents covered at the time of termination of employment) elects
not to continue coverage under COBRA (or any other mandatory healthcare
continuation law then in effect) or is not eligible to continue coverage under
such healthcare continuation law, and is otherwise eligible under this Section
5(d), 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
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 13 hereof. In the event of Executive's death following
termination giving rise to the benefit described in this Section 5(d), but
before the expiration of such benefits, Executive's dependents shall be entitled
to such benefits.
(e) Sole Remedy. The Executive hereby agrees that amounts payable
under this Section 5 and under paragraph 5(a) and (b) of the February 1999
Agreement shall be Executive's sole and exclusive remedy against the Company on
account of termination of employment during the Term and prior to a Change of
Control and on account of termination of employment more than two (2) years
following a Change of Control.
6. Compensation on Termination of Employment Within Two Years Following
A Change in Control. This Section 6 shall apply to termination of Executive's
employment during the "Change of Control Period" (as defined in this Section 6).
This Section 6 shall not apply to termination of Executive's employment prior to
a Change of Control or more than two (2) years following a Change of Control:
(a) Definition of Certain Terms.
(i) "Good Reason" shall mean the occurrence or
continuation, without consent of Executive, after a Change of
Control, of any of the following events within the Change of
Control Period:
(A) the assignment to Executive of any duties inconsistent
with the customary powers and duties that Executive held
immediately prior to the Change of Control, or an adverse
change in the status, position or conditions of Executive's
employment or the nature of Executive's responsibilities in
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effect immediately prior to such Change of Control, or any
removal of Executive from, or any failure to reelect Executive
to, any of such positions;
(B) a reduction by the Company in Executive's Annual Base
Salary as in effect immediately prior to such Change of Control;
(C) the relocation of Executive's principal office to a
location outside a 35 mile radius from Executive's principal
office immediately prior to such Change of Control, except for
required travel on the Company's business to an extent
substantially consistent with Executive's business travel
obligations immediately prior to such Change of Control;
(D) the failure by the Company to continue in effect any
benefit or compensation plan in which Executive participates
immediately prior to the Change of Control which is material to
Executive's total compensation, including but not limited to any
stock or stock option, employee stock ownership, bonus,
insurance, disability and vacation plans which the Company
currently has or any substitute or additional plans adopted
prior to the Change of Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan or plans)
has been made with respect to such plan, or the failure by the
Company to continue Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of benefits provided
and the level of Executive's participation relative to other
participants, as in existence immediately prior to such Change
of Control; or
(E) the failure of the Company to obtain an agreement from
any successor to assume and agree to perform this Agreement as
contemplated herein.
(ii) A "Change of Control" shall be deemed to have taken
place if (i) any person or entity, including a "group" as
defined in Section 13(d)(3) of the Securities and Exchange Act
of 1934, other than Company or a wholly-owned subsidiary thereof
or any employee benefit plan of Company or any of its
subsidiaries, becomes the beneficial owner of the Company
securities having 20% or more of the combined voting power of
the then outstanding securities of the Company that may be cast
for the election of directors of the Company (other than as a
result of an in issuance of securities initiated by the Company
in the ordinary course of business); or (ii) as the result of or
in connection with, any cash tender or exchange offer, merger or
other business combination, sale of assets or contested
election, or any combination of the foregoing transactions, less
than a majority of the combined voting power of the then
outstanding securities of the Company or any successor
corporation or entity entitled to vote generally in the election
of the directors of the
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Company or such other corporation or entity after such
transaction is held in the aggregate by the holders of the
Company's securities entitled to vote generally in the election
of directors of the Company immediately prior to such
transaction; or (iii) the following individuals cease for any
reason to constitute a majority of the number of directors then
serving: individuals who, as of the Effective Date, constitute
the Board and any new director (other than a director whose
initial assumption of office is m connection with an actual or
threatened election contest including but not limited to, a
consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or
nomination for election by the Company's shareholders, was
approved or recommended by a vote of at least two-thirds of the
directors of the Company then still in office who were directors
of the Company on the Effective Date or whose appointment,
election or nomination for election was previously so approved
or recommended.
(iii) "Change of Control Period" shall mean the two (2)
year period following a Change of Control.
(iv) "Change of Control Severance Benefits" shall mean
all of the following payments:
(A) any installments of Executive's Annual Base
Salary through the date of termination of employment at
the rate in effect at the time the Notice of Termination
is given,
(B) the Special Termination Payment; and
(C) the Medical Benefits.
(v) "Change of Control Date" shall mean the date on which
a Change of Control occurs.
(vi) "Medical Benefits" shall mean the reimbursement for
continued medical coverage for Executive and Executive's
dependents described in Section 5(d) hereof.
(vii) "Notice of Termination" shall refer to written
notice described in Section 6(d) indicating the specific
termination provision of this Agreement relied upon, setting
forth in reasonable detail the facts and circumstances claimed
to provide the basis for terminations of Executive's employment
under the provision so indicated and stating the date of
termination.
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(viii) "Special Termination Payment" shall mean an amount
payable in a single lump sum equal to the product of (x) the sum
of the Executive's maximum Annual Base Salary paid during the
five (5) year period preceding the date of termination
(inclusive of the Annual Bonus paid to Executive during the
12-month period preceding the date of termination or the Annual
Bonus earned by the Executive with respect to the. fiscal year
immediately preceding the date of termination, whichever Annual
Bonus is higher, but excluding unearned bonuses negotiated by
Executive at the time of Executive's employment with the
Company), multiplied by (y) the number three (3), less an amount
equal to any portion of the February Payments which has not been
previously offset pursuant to Section 4(b). For purposes of this
Section 6(a)(viii), Executive's Annual Bonus shall be determined
without regard to the offset described in Section 4(b) hereof.
(b) Termination Not Giving Rise To Special Termination Payments or
Medical Benefits. If Executive's employment is terminated during the Change of
Control Period for Cause (as defined in Section 5(b), or on account of
Disability (as defined in Section 5(a)), or if Executive dies during the Change
of Control Period, or if Executive terminates Executive's employment during the
Change of Control Period without Good Reason, the Company shall pay to Executive
any installments of Executive's Annual Base Salary as then in effect that would
otherwise be due through the date on which Executive's employment is terminated.
The Company shall then have no further obligations to the Executive under this
Agreement (unless accrued under the Company's benefit plans) except that in the
event of termination by death, the Executive's estate or beneficiaries, as the
case may be, shall be paid such amounts as may be payable to the Executive under
the Company's insurance policies and/or other benefit plans, and except that in
the event of termination by Disability, the Executive shall be paid such amounts
as Executive is entitled to receive under the Company's disability insurance
policies and plans then in effect covering the Executive.
(c) Termination Giving Rise to Change of Control Severance Benefits.
If the Executive's employment is terminated or a Notice of Non-Renewal is given
by the Company during the Change of Control Period for any reason other than
Cause, death of the Executive or Disability, or if the Executive terminates his
employment during the Change of Control Period for Good Reason, then Executive
shall be entitled to receive the Change of Control Severance Benefits, all of
which (except the Medical Benefits) shall be paid to Executive within ten (10)
days following the date of termination. In addition, the Company shall cause all
unvested stock options held by the Executive to be fully vested as of the date
of termination.
(d) Notice of Termination. Any termination of Executive's employment
by the Company or by Executive pursuant to this Section 6 shall be communicated
by written notice of termination (the "Notice of Termination") to the other
party hereto, which shall indicate the specific termination provision in the
Agreement relied upon, shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment and shall state the date of termination.
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(e) Sole Remedy. The Executive hereby agrees that the Change
of Control Severance Benefits and the amounts due, if any, under paragraph 5(a)
and (b) of the February 1999 Agreement shall be Executive's sole and exclusive
remedy against the Company or any successor on account of termination of
employment during the Change of Control Period.
7. Certain Reduction in Payments by the Company.
(a) Definition of Certain Terms.
(i) A "Payment" shall mean any payment or distribution in the
nature of compensation to or for the benefit of Executive, whether
paid or payable pursuant to this Agreement or otherwise.
(ii) An "Agreement Payment" shall mean a Payment paid or payable
on account of termination of employment during the Change in
Control Period pursuant to Section 6 of this Agreement (disregarding
the reduction provided by Section 7(b)).
(iii) "Net After Tax Receipt" shall mean the Present Value (as
defined below) of all Payments that are contingent on a Change of
Control within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), net of all taxes
imposed on Executive with respect thereto under Sections 1 and
4999 of the Code, determined by applying the highest marginal rate
under Section 1 of the Code which applied to Executive's taxable
income for immediately preceding taxable year.
(iv) "Present Value" shall mean such value determined in
accordance with Section 280G(d)(4) of the Code.
(b) Limitation on Agreement Payments. It is intended that all Agreement
Payments hereunder, together with all other Payments to Executive contingent
upon or in connection with a Change of Control, are reasonable compensation for
Executive's service to Company and its subsidiaries. Notwithstanding the
foregoing, should Company determine, based upon the opinion of the independent
accounting advisors of Company immediately prior to the Change of Control
("Accounting Firm"), that the Agreement Payments and other Payments, together
with any other amounts received by Employee that must be included in such
determination, would result in the payment of an "excess parachute payment" as
defined in Section 280G of the Code, then Company will reduce the Agreement
Payments to the minimum extent necessary so that no portion of the aggregate
Payments would result in the payment of an "excess parachute payment;" provided,
however, that such reduction will be made if, but only if, the value of all such
Payments (without regard to the foregoing reduction) would result in Net After
Tax Receipts which are less than the Net After Tax Receipts that would result
after taking into account any such reduction.
(c) Opinion of Accounting Firm. Company may reduce the Agreement
Payments pursuant to this Section 7 only if within thirty (30) days of
Executive's termination it provides
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Executive with an opinion of the Accounting Firm that Executive will be
considered to have received "excess parachute payments" as defined in Section
280G of the Code if Executive were to receive the fall amounts owing pursuant to
the terms of this Agreement and that the reduced amount proposed to be paid by
the Company will result in Net After Tax Receipts that are equal to or greater
than the Net After Tax Receipts which would result from reduction in the
Agreement Payments by any other amount.
8. Unauthorized Disclosure.
(a) During the period in which the Executive is employed by the
Company, the Executive shall not, without the prior written consent of the
Board, 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
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, system, 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 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 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
provisions of this Section 8 shall be binding upon the Executive's heirs,
successors and legal representatives.
(b) Company agrees to refrain from making derogatory or defamatory
statements about or concerning Executive.
9. Non-Competition. During the period in which the Executive is
employed by the Company and for a period of one (1) year following any
termination giving rise to salary continuation payments pursuant to Section 5(c)
or to Change of Control Severance Benefits pursuant to Section 6(c), 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 an group, division or subsidiary of the Company in any area where
such business is being conducted at the time of such termination (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
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other persons that they employ or solicit for employment, any employee of the
Company or any of its subsidiaries or affiliates.
10. Specific Performance. The Executive acknowledges and agrees that,
in the event of a breach of Section 8 or Section 9 hereof by the Executive, the
Company would be irreparably 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.
11. 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
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
12. 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 or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Xx. Xxx Xxxxxx
000 Xxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
If to the Company:
Service Merchandise Company, Inc.
7100 Service Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: General Counsel
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
13. Withholding of Taxes. The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or government regulation or ruling.
14. Governing Law. This Agreement shall be construed according to the
laws of Tennessee, without giving effect to the principles of conflicts of laws
of such State.
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15. 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 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 at any prior or subsequent time.
However, notwithstanding anything in this Agreement to the contrary, if in the
opinion of the Company's accountants, any provision of this Agreement would
preclude the use of "pooling of interest" accounting treatment for a Change of
Control transaction that (i) would otherwise qualify for such accounting
treatment and (ii) is contingent upon qualifying for such accounting treatment
then to the extent any provision of this Agreement disqualifies the transaction
as a "pooling of interest" transaction (including, if applicable, the entire
Agreement), such provision(s) shall be null and void as of the date hereof
16. 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 for herein. Without limiting the generality of 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.
17. Entire Contract. Except with respect to paragraphs 1, 2, 3, 4,
5(c), 6, 7, 10 and 11 of the February 1999 Agreement, the February 1999
Agreement and Appendix A thereto and this Agreement constitute the entire
agreement and supersedes all other prior agreements, employment contracts and
understandings, both written and oral, express or implied with respect to the
subject matter of this Agreement, including, without limitations the Prior
Agreement and any employment agreement or any severance or indemnification, by
and between the Company and the Executive, all of such agreements being rendered
null and void by this Agreement.
18. Termination. This Agreement shall be terminable only upon the
occurrence of any one of the following events: (a) expiration of the Term
without Executive's employment having been previously terminated; (b) the
termination of Executive with payment in full of all the payments/benefits
described in Sections 5 or 6 hereof as appropriate; or (c) the Company (or its
successor in interest) and Executive so agree in writing; provided, however,
that the provisions of Sections 8 and 9 hereof shall survive without limitation.
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IN WITNESS WHEREOF, the parties hereto 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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