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EXHIBIT 10(r)
EXECUTIVE SEVERANCE AGREEMENT
This Agreement ("Agreement") is entered into and made effective as of the __th
day of _______, 1999 by and among CONSOLIDATED STORES CORPORATION, an Ohio
corporation ("Consolidated"), CONSOLIDATED STORES CORPORATION, a Delaware
corporation and the ultimate parent company of Consolidated ("CSC") and
____________, an individual residing in Ohio (the "Executive").
WHEREAS, the Board of Directors of Consolidated (the "Board") believes it is in
the best interests of Consolidated and its shareholders to assure the continued
services of Executive, undiminished by any actual or perceived threat to
continued employment that may arise from an actual or threatened Change in
Control (as defined herein) of Consolidated or CSC;
WHEREAS, should Consolidated or CSC receive any proposal that may result in a
Change in Control, the Board believes it imperative that Consolidated and the
Board be able to rely upon the Executive's continued employment in the
Executive's then current position, and that Consolidated be able to receive and
rely upon Executive's advice, if it requests it, as to the best interests of
Consolidated, CSC and their respective share/stockholders, without concern that
Executive might be distracted by the personal uncertainties and risks created by
such a proposal; and
WHEREAS, Executive wishes to continue to serve in Executive's then current
capacity, subject to assurance that in the event of a Change in Control,
Executive will have a reasonable degree of financial security;
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, Consolidated, CSC and Executive agree as follows:
1. If there is a Change in Control (as defined in Section 3 hereof) and
Executive's employment is thereupon terminated or terminated within
twenty four (24) months after the effective date thereof, Executive shall
be entitled to the termination benefits set forth in Section 2 hereof.
For purposes of this Agreement, Executive's employment shall be deemed to
have been terminated only if Consolidated terminates such employment
other than for Cause or if a Constructive Termination occurs. "Cause"
shall mean Executive's conviction of a felony, or an act or acts of
personal dishonesty on Executive's part intended to result and resulting
in material harm to Consolidated, or any refusal by Executive to perform
his assigned duties for a period exceeding ten (10) consecutive business
days, other than any such refusal arising from a Constructive Termination
or by reason of temporary physical or mental disability or illness.
"Constructive Termination" shall mean a resignation by Executive because
of any material adverse change or material diminution in Executive's
reporting relationships, job description, duties, responsibilities,
compensation, perquisites, office or location of employment (as
reasonably determined by Executive in his/her good faith discretion);
provided, however, that Executive shall notify Consolidated in writing at
least forty five (45) days in advance of any election by Executive to
terminate his or her employment hereunder, specifying the nature of the
alleged adverse change or diminution, and Consolidated or CSC, as the
case may be, shall have a period of ten (10) business days after the
receipt of such notice to cure such alleged adverse change or diminution
before Executive shall be entitled to exercise any such rights and
remedies. Executive shall not be entitled to the benefits available
hereunder unless such notice is timely given.
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EXHIBIT 10(r)
2. The benefits payable to Executive pursuant to Section 1 hereof are as
follows:
A. Consolidated shall pay to Executive a lump sum cash payment, net of
any applicable withholding taxes, in an amount equal to the annual
salary paid or payable to Executive immediately prior to the effective
date of such Change in Control (the "Lump Sum Payment"); provided,
however, that if there are fewer than twelve (12) months remaining
from the date of Executive's termination to Executive's normal
retirement date under any retirement plan then in effect, Consolidated
shall instead pay Executive the amount obtained by multiplying the
Lump Sum Payment by a fraction, the numerator of which is the number
of months so remaining and the denominator of which is 12. The
applicable amount shall be paid on the later of (x) the next business
day after the day Executive's employment is terminated, or (y) the
next business day after the effective date of such Change in Control.
B. In addition to the payment described in Subsection 2.A. above,
Consolidated shall pay to Executive a lump sum cash payment, net of
any applicable withholding taxes, in an amount equal to the
Executive's then current annual Stretch Bonus, as defined and
determined annually by the Compensation Committee of the CSC Board of
Directors (the "Lump Sum Bonus Payment"); provided, however, that (i)
in the event the Executive's then current Stretch Bonus is undefined
or is not subject to a maximum payout, the Executive's annual Stretch
Bonus shall be deemed to be 200% of the Executive's then current base
salary and (ii) if there are fewer than twelve (12) months remaining
from the date of Executive's termination to Executive's normal
retirement date under any retirement plan then in effect, Consolidated
shall instead pay Executive the amount obtained by multiplying the
Lump Sum Bonus Payment by a fraction, the numerator of which is the
number of months so remaining and the denominator of which is 12.
Executive shall receive the Lump Sum Bonus Payment at the same time
Executive receives the Lump Sum Payment described in Subsection 2.A.
above.
C. For a period of one year, Executive (and his or her family, if their
participation is permitted under the terms of the subject plan) shall
be entitled to participate in any group life, hospitalization, or
disability insurance plan, health program, or other executive benefit
plan (other than bonus compensation or performance plans to the extent
that such plans, in the case of Executive, are in lieu of the bonus
plan set forth in Subsection 2.B. above) that is generally available
to similarly titled executive officers of Consolidated; provided,
however, that Executive's participation in the plans referred to in
this Subsection 2.C. shall be terminated (other than as provided by
law) when and to the extent that Executive is entitled to receive the
same from another employer during such period. Executive's
participation in and benefits under any such plan shall be on the
terms and subject to the conditions specified in the governing
document of the particular plan.
D. If all or any portion of the amount payable to Executive under this
Agreement, either alone or together with other amounts that Executive
is entitled to receive in connection with a Change in Control,
constitutes "excess parachute payments" within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"), or
any successor provision, that are subject to the excise tax imposed by
Section 4999 of the Code (or any similar tax or assessment), the
amounts payable hereunder shall be increased to the extent necessary
to place Executive in the same after-tax position as Executive would
have been in had no such excise tax or assessment been imposed on any
such payment paid or payable to Executive under this Agreement or any
other
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EXHIBIT 10(r)
payment that Executive may receive as a result of such Change in
Control. The determination of the amount of any such tax or assessment
and the resulting amount of incremental payment required hereby in
connection therewith shall be made by the independent accounting firm
employed by Consolidated immediately prior to the applicable Change in
Control, within thirty (30) calendar days after the payment of the
amount payable pursuant to Subsections 2.A. and 2.B. hereof, and said
incremental payment shall be made within five (5) business days after
said determination has been made.
E. If, after the date upon which any payment required under this
Agreement has been made, it is determined (pursuant to final judgment
of a court of competent jurisdiction or an agreed upon tax assessment)
that the amount of excise or other similar taxes or assessments
payable by Executive is greater than the amount initially so
determined, then Consolidated shall pay Executive an amount equal to
the sum of (i) such additional excise or other similar taxes, plus
(ii) any interest, fines and penalties resulting from such
underpayment, plus (iii) an amount necessary to reimburse Executive
for any income, excise or other tax or assessment payable by Executive
with respect to the amounts specified in (i) and (ii) above, and the
reimbursement provided by this clause (iii). Payment thereof shall be
made within five (5) business days after the date upon which such
subsequent determination is made.
3. As used herein, "Change in Control" means any of the following events:
(i) any person or group (as defined for purposes of Section 13(d) of the
Securities Exchange Act of 1934) becomes the beneficial owner of, or has
the right to acquire (by contract, option, warrant, conversion of
convertible securities or otherwise), 20% or more of the outstanding
equity securities of CSC entitled to vote for the election of directors;
(ii) a majority of the Board of Directors of CSC is replaced within any
period of two years or less by directors not nominated and approved by a
majority of the directors of CSC in office at the beginning of such
period (or their successors so nominated and approved), or a majority of
the Board of Directors of CSC at any date consists of persons not so
nominated and approved; (iii) the stockholders of CSC approve an
agreement to reorganize, merge or consolidate with another corporation
(other than Consolidated or an affiliate); or (iv) the stockholders of
CSC adopt a plan or approve an agreement to sell or otherwise dispose of
all or substantially all of CSC's assets (including without limitation, a
plan of liquidation or dissolution), in a single transaction or series of
related transactions. The effective date of any such Change in Control
shall be the date upon which the last event occurs or last action is
taken such that the definition of such Change in Control (as set forth
above) has been met. For purposes of this Agreement, the term "affiliate"
shall mean: (i) any person or entity qualified as part of an affiliated
group which includes Consolidated and CSC pursuant to Section 1504 of the
Code; or (ii) any person or entity qualified as part of a
parent-subsidiary group of trades and businesses under common control
within the meaning of Treasury Regulation Section 1.414(c)(2)(b).
Determination of affiliate shall be tested as of the date immediately
prior to any event constituting a Change in Control. The other provisions
of this Section 3 notwithstanding, the term "Change in Control" shall not
mean any transaction, merger, consolidation, or reorganization in which
CSC exchanges or offers to exchange newly issued or treasury shares in an
amount less than 50% of the then outstanding equity securities of CSC
entitled to vote for the election of directors, for 51% or more of the
outstanding equity securities entitled to vote for the election of at
least the majority of the directors of a corporation other than CSC or an
affiliate thereof (the "Acquired Corporation"), or for all or
substantially all of the assets of the Acquired Corporation.
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EXHIBIT 10(r)
4. If Executive hires legal counsel with respect to any alleged failure by
Consolidated or CSC to comply with any of the terms of this Agreement, or
institutes any negotiation or institutes or responds to any legal action
to assert or defend the validity of or to enforce Executive's rights
under, or to recover damages for breach of, this Agreement, Consolidated
shall pay Executive's actual expenses for attorneys' fees and
disbursements, together with such additional payments, if any, as may be
necessary so that the net after-tax payments so made to Executive equal
such fees and disbursements; provided, however, that Executive shall be
responsible for his own fees and expenses with respect to any lawsuit
between Executive and Consolidated to enforce rights or obligations under
this Agreement in which Consolidated is the prevailing party. The fees
and expenses incurred by Executive in instituting or responding to any
such negotiation or legal action shall be paid by Consolidated as they
are incurred, in advance of the final disposition of the action or
proceeding, upon receipt of an undertaking by Executive to repay such
amounts if Consolidated is ultimately determined to be the prevailing
party.
5. If any amount due Executive hereunder is not paid when due, then
Consolidated shall pay interest on said amount at an annual rate equal to
the base lending rate of National City Bank, Cleveland, Ohio, or
successor, as in effect from time to time, for the period between the
date on which such payment is due and the date said amount is paid.
6. Consolidated's obligation to pay Executive the compensation and to make
the arrangements required hereunder shall be absolute and unconditional
and shall not be affected by any circumstance, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right
that Consolidated may have against Executive or otherwise. All amounts
payable by Consolidated hereunder shall be paid without notice or demand.
Subject to the proviso in Section 1 above, each and every payment made
hereunder by Consolidated shall be final and Consolidated shall not seek
to recover all or any part of such payment from Executive or from
whosoever may be entitled thereto, for any reason whatsoever. Executive
shall not be obligated to seek other employment or compensation or
insurance in mitigation of any amount payable or arrangement made under
any provision of this Agreement, and the obtaining of any such other
employment or compensation or insurance, except as otherwise provided in
this Agreement, shall in no event effect any reduction of Consolidated's
obligations to make the payments and arrangements required to be made
under this Agreement.
7. From and after any termination of Executive's employment, Executive shall
retain in confidence and not use for his own benefit or on behalf of any
other person or entity any confidential information known to him
concerning CSC, Consolidated, their respective subsidiaries or their
respective businesses so long as such information is not publicly
disclosed by someone other than Executive.
8. In partial consideration of the benefits granted to Executive herein,
Executive agrees that during the six-month period immediately following
Executive's termination, if Executive shall have received benefits under
Section 2 above, Executive shall not engage in any Competitive Activity.
For purposes of this Agreement, "Competitive Activity" shall mean
Executive's participation, without the approval of the Board or the
written consent of the chief executive officer of Consolidated, in the
management of any business operation of any enterprise if such operation
(a "Competitive Operation") engages in substantial and direct competition
with Consolidated's closeout business operation at the date of
Executive's termination. For purposes of this Agreement, a closeout
business operation shall be considered in substantial and direct
competition with Consolidated's closeout business operation if such
business operation's sales of
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EXHIBIT 10(r)
closeout merchandise amount to ten percent (10%) or more of such business
operation's total sales. Competitive Activity shall not include (i) the
mere ownership of securities in any enterprise or (ii) participation in
the management of any enterprise or of any business operation thereof,
other than in connection with a Competitive Operation of such enterprise.
9. Any provision in this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only to
the extent of such prohibition or unenforceability without invalidating
or affecting the remaining provision hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10. Except as specifically set forth herein, this Agreement supersedes and
replaces any and all prior Senior Executive Severance Agreements or
Executive Severance Agreements between the parties, but shall not be
deemed to negate, supersede or alter any other agreement or arrangement
between Executive and Consolidated or CSC or any other rights to which
Executive may be entitled, and shall be and remain in effect in addition
to any such other agreement or rights, whether now existing or later
created.
11. This Agreement shall be effective for a one year period beginning
with the effective date hereof (the "Initial Term") and shall
automatically be renewed for successive one year periods commencing on
successive anniversaries of the date hereof (each, a "Renewal Term"),
subject to the following conditions:
A. this Agreement shall be deemed terminated upon any termination or
other cessation whatsoever of Executive's employment for any reason
prior to a Change in Control;
B. this Agreement may be terminated by the mutual agreement of Executive
and Consolidated;
C. Consolidated may terminate this Agreement at any time effective upon
thirty (30) days prior written notice being given; provided, however,
that such notice shall be ineffective if a Change in Control shall
occur prior to the effective date of such termination.
Notwithstanding anything to the contrary herein, this Agreement shall
not be terminated or deemed terminated except by mutual agreement of
Executive and Consolidated (i) during the first twenty four (24)
months after the effective date of a Change in Control or (ii) during
any period when Consolidated or CSC has knowledge that any third
person has taken steps reasonably calculated to effect a Change in
Control, until such third person has abandoned or terminated his or
its efforts in connection therewith. Upon any termination hereof,
Executive shall have no further rights hereunder, except to the
extent that rights to any benefit have accrued hereunder because of a
Change in Control occurring prior to such termination.
12. In consideration of and as inducement to Executive to enter into this
Agreement, CSC hereby absolutely and unconditionally guarantees to
Executive the full, complete and timely payment and performance of all
obligations of Consolidated arising out of or in connection with this
Agreement. This guaranty shall be enforceable against CSC without any
suit or proceeding by Executive against Consolidated and without any
notice of nonpayment or nonperformance hereunder.
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EXHIBIT 10(r)
13. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors, assigns, heirs and
legal representatives. Consolidated shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of Consolidated, by
agreement in form and substance satisfactory to Executive, expressly to
assume and agree to perform and discharge all obligations of Consolidated
arising under this Agreement. All references herein to Consolidated shall
be deemed to include any such successor.
14. This Agreement shall in all respects be subject to, governed by and
construed in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first above written.
ATTEST: CONSOLIDATED STORES CORPORATION,
a Delaware corporation
By:
Secretary, Xxxxxx X. Xxxx Xxxxxxx X. Xxxxxx
Its Chief Executive Officer
ATTEST: CONSOLIDATED STORES CORPORATION,
an Ohio corporation
By:
Secretary, Xxxxxx X. Xxxx Xxxxxxx X. Xxxxxx
Its Executive Vice President
("EXECUTIVE")
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