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EMPLOYMENT AGREEMENT
(Xxxxx XxXxxxx)
THIS AGREEMENT is by and between Value City Department Stores, Inc. ("Company")
and Xxxxx XxXxxxx ("Executive"), and is effective as of the date it has been
fully executed by both parties.
Company agrees to employ Executive as its Chief Financial Officer ("CFO") and
Executive hereby accepts this offer and agrees to serve Company subject to the
general supervision, advice and direction of Company's President and Chief
Operating Officer, and upon the following terms and conditions:
1. POSITION AND DUTIES. Executive shall be employed as CFO of Company,
with such authority and duties as are customary for this position, and shall
perform such other services and duties as may be designated from time to time.
Executive shall report to Company's COO.
1.1. Executive agrees to devote his full business time, best efforts,
and undivided attention to the business and affairs of Company, except for any
vacations, illness, or disability. Executive shall not engage in any other
businesses that would interfere with his duties, provided that nothing contained
herein is intended to limit Executive's right to make passive investments in the
securities of publicly-owned companies or other businesses which will not
interfere or conflict with his duties hereunder or, with the prior written
consent of Company's President, to sit on the boards of other businesses.
1.2. Executive agrees that he shall at all times observe and be bound
by all rules, policies, practices, and resolutions heretofore or hereafter
adopted in writing by Company which are generally applicable and provided to
Company's officers and employees and which do not otherwise conflict with this
Agreement.
1.3. Company shall indemnify Executive in the performance of his duties
and responsibilities and advance expenses in connection therewith to the same
extent as other senior executives and officers. Such rights shall not be subject
to arbitration under paragraph 6.
2. TERM. This Agreement shall terminate three years from its effective
date unless sooner terminated as stated herein; provided, however, that this
Agreement shall be extended automatically for successive 12-month periods unless
either party notifies the other of an intent to terminate, in writing, at least
60 calendar days prior to the date of automatic extension.
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3. COMPENSATION.
3.1. BASE SALARY. Company shall pay Executive a base salary of $300,000
as compensation for his services to Company, payable in equal installments in
accordance with Company's payroll practices for executive employees. Company's
President, with the Chairman's approval, may increase Executive's base salary at
his discretion.
3.3. INCENTIVE BONUS. Executive shall be eligible to receive an
incentive bonus of at least 40% of his base salary under Company's Management
Incentive Plan" ("the Bonus Plan"). The Bonus Plan conditions the payment of
this annual performance bonus based on achievement of pre-determined performance
goals. Company's Board of Directors must verify that the performance goals and
other material terms are met prior to payment. It is the parties' intention that
the Bonus Plan be adopted and administered in a manner that enables Company to
deduct for federal income tax purposes the amount of any annual incentive bonus.
The incentive bonus determined to be due, if any, will be paid within 120
calendar days after the close of Company's fiscal year and completion of an
outside audit by its outside audit firm.
3.4. STOCK OPTIONS. Subject to approval of Company's Board of
Directors, Executive will receive 30,000 non-qualified options to purchase
shares of Company's common stock. These options vest 20% annually over five
years with a ten-year term. The option price will be determined from the average
of the high and low price on the day they are allocated to Executive. Any
options shall be subject to exercise in accordance with Company's "1991 Stock
Option Plan" (as amended or revised with Board approval).
3.5. VACATION. During the term of this Agreement, Executive shall be
entitled to vacation commensurate with other senior executives. Company's COO
and Executive shall mutually agree upon Executive's vacations.
3.6. CAR. During the term of this Agreement, Company shall provide
Executive with a car allowance of $1,250 a month ($15,000/year) payable along
with his base salary on a semi-monthly basis. This benefit shall be "grossed up"
for Executive's personal tax purposes, as that term is commonly used.
3.7. BUSINESS EXPENSES. Company shall pay, advance or reimburse
Executive for all normal and reasonable business-related expenses, including
travel expenses, incurred in the performance of his duties on the same basis as
paid to other senior executives. Company shall furnish Executive with company
credit cards provided to other senior executives for use solely in the
performance of his duties.
3.8. TAXES. The compensation provided to Executive hereunder shall be
subject to any withholdings and deductions required by any applicable tax laws.
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3.9. BENEFIT PLANS. Executive is entitled to participate in any
deferred compensation or other employee benefit plans, including any profit
sharing or 401(k) plans; group life, health, hospitalization and disability
insurance plans; deferred compensation plans; discount privileges; incentive
bonus plans; and other employee welfare benefits made available generally to,
and under the same terms as, Company's executives.
4. EXECUTIVE'S OBLIGATIONS.
4.1. CONFIDENTIAL INFORMATION. Executive agrees that during and after
his employment, any "confidential information" as defined below shall be held in
confidence and treated as proprietary to Company. Executive agrees not to use or
disclose any confidential information except to promote and advance the business
interests of Company. Executive agrees that upon his separation from employment,
for any reason whatsoever, he shall not take or copy, and shall immediately
return to Company, any documents that constitute or contain confidential
information. "Confidential information" includes, but is not limited to, any
confidential data, figures, projections, estimates, pricing data, customer
lists, buying manuals or procedures, distribution manuals or procedures, other
policy and procedure manuals or handbooks, supplier information, tax records,
personnel histories and records, information regarding sales, information
regarding properties and any other confidential information regarding the
business, operations, properties or personnel of Company which are disclosed to
or learned by Executive as a result of his employment, but shall not include his
personal personnel records. Confidential information shall not include any
information that (i) Executive had in his possession prior to his first
performing services for Company; (ii) becomes a matter of public knowledge
thereafter through sources independent of Executive; (iii) is disclosed by
Company without restriction on its use; or (iv) is required to be disclosed by
law or governmental order or regulation.
4.2. SOLICITATION.
4.2.1. EMPLOYEES. Executive agrees that during his employment
and for two years after the end of his employment, for any reason, he shall not,
directly or indirectly, solicit, or in any other manner induce or encourage
Company's employees or consultants to leave their employment or assignments; he
shall not hire or offer to hire them; and, he shall not cause or induce any of
Company's competitors to do the same with respect such employees or consultants.
4.2.2. THIRD PARTIES. Executive agrees that during his
employment and for two years following the end of his employment, for any
reason, he shall not, either directly or indirectly, recruit, solicit or
otherwise induce or influence any customer, supplier, sales representative,
lender, lessor or any other person having a business relationship with Company
to discontinue or reduce the extent of such relationship except in the course of
his duties pursuant to this Agreement and with the good faith objective of
advancing the business interests of same.
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4.3. NONCOMPETITION. Executive agrees that for a period of one year
following the end of his employment, for any reason, he shall not, either
directly or indirectly, accept employment with, act as a consultant to, or
otherwise perform the same services (which shall be determined regardless of job
title) for any business that directly competes with Company's business, which is
understood to currently be the sale of off-price and discount merchandise,
including jewelry and shoes and related merchandise, and shall also include any
other line of business pursued by Company in the future. The parties may
mutually agree to revise, amend or eliminate this provision; provided; however,
that such agreement must be in writing and signed by Company's President.
4.4. COOPERATION.
4.4.1. WITH COMPANY. Executive agrees to cooperate with
Company during the course of all third-party proceedings arising out of
Company's business about which Executive has knowledge or information. Such
proceedings may include, but are not limited to, internal investigations,
administrative investigations or proceedings, and lawsuits (including pre-trial
discovery). For purposes of this paragraph, cooperation includes, but is not
limited to, Executive's making himself available for interviews, meetings,
depositions, hearings, and/or trials without the need for subpoena or assurances
by Company, providing any and all documents in his possession that relate to the
proceeding, and providing assistance in locating any and all relevant notes
and/or documents.
4.4.2. WITH THIRD PARTIES. Executive agrees to communicate
with, or give statements to, third parties relating to any matter about which
Executive has knowledge or information as a result of his employment only to the
extent that it is Executive's good faith belief that such communication or
statement is in Company's business interests. This shall not preclude Executive
from any manner of communication which is legally required or which may be
required to respond to governmental or regulatory agency inquiries.
4.4.3. WITH MEDIA. Executive agrees to communicate with, or
give statements to, any member of the media (print, television or radio)
relating to any matter about which Executive has knowledge or information as a
result of his employment only to the extent that it is Executive's good faith
belief that such communication or statement is in Company's business interests.
4.5. REMEDIES. Executive agrees that any disputes under this paragraph
shall not be subject to arbitration. If Executive breaches this paragraph, the
damage will be substantial, although difficult to quantify, and money damages
may not afford Company an adequate remedy; therefore, if Employee breaches or
threatens to breach this paragraph, Company shall be entitled, in addition to
other rights and remedies, to specific performance, injunctive relief and other
equitable relief to prevent or restrain such conduct.
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5. TERMINATION AND RELATED BENEFITS.
5.1. DEATH. This Agreement shall terminate automatically upon
Executive's Death, and Company shall pay his surviving spouse, or if he leaves
no spouse, his estate, any base salary earned by Executive, and any rights or
benefits that have vested. In addition, Company shall pay Executive's surviving
spouse, or if he leaves no spouse, his estate, any declared but unpaid bonus
that, but for Executive's death, would otherwise have been payable to Executive.
5.2. PERMANENT DISABILITY. Upon Executive's permanent disability,
Company shall have the right to terminate this Agreement immediately with
written notice. For these purposes, permanent disability shall mean that
Executive fails to perform his duties on a full-time basis for a period of more
than 90 calendar days during any 12-month period, due to a physical or mental
disability or infirmity. If this Agreement is terminated due to Executive's
permanent disability, Company shall pay Executive any base salary earned and any
rights or benefits that have vested. In addition, Company shall pay Executive
any declared but unpaid bonus that, but for Executive's permanent disability,
would otherwise have been payable to Executive.
5.3. TERMINATION BY COMPANY.
5.3.1. AT END OF TERM. Company may terminate this Agreement at
the end of its term or any extension thereof by giving 60 calendar days' written
notice to Executive. Company may, in its sole discretion, require Executive to
cease active employment and pay out the 60-day notice period.
5.3.2. DURING THE TERM. Except as provided below in paragraph
5.3.3, Company may terminate this Agreement during its term, for any reason,
upon 30 days' written notice to Executive. Company may, in its sole discretion,
require Executive to cease active employment immediately. In the event of such a
termination, Company shall have only the following obligations:
(i) Pay Executive severance in the form of base salary
continuation for 12 months; provided, however, that such
salary continuation shall immediately cease if Executive
accepts employment or an assignment with or otherwise performs
services for one of Company's competitors.
(ii) If Executive has been employed the full fiscal year prior to
the date of termination, pay Executive any incentive bonus
declared, but unpaid.
(iii) Continue Executive's health coverage (excluding life and
disability) for 12 months under the same terms as provided to
other Company executives; provided, however, that such
coverage shall cease upon Executive's becoming eligible for
similar coverage under another benefit plan or if Executive
accepts employment or an assignment with or otherwise
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performs services for one of Company's competitors.
5.3.3. FOR CAUSE. Company may terminate this Agreement during
its term if it has "cause" to do so. For purposes of this paragraph, the term
"cause" means the following:
(i) willful violation of laws and regulations governing Company;
(ii) failure to substantially comply with any material term of this
Agreement, provided Company shall make a written demand for
substantial compliance setting forth the specific reason(s)
for same and Executive shall have 60 days to cure, if
possible;
(iii) willful breach of fiduciary duties;
(iv) willful damage, willful misrepresentation, willful dishonesty,
or act of moral terpitude which Company determines has had or
is likely to have a material adverse effect upon its
operations, assets, reputation or financial conditions; or
(v) willful breach of any stated material employment policy.
Failure to meet performance targets and measures shall not constitute "cause" as
that term is used herein. Executive shall have reasonable opportunity to be
heard by the Board prior to a termination for cause. For purposes of this
paragraph, Executive's acts or omissions shall be considered "willful" if done
without a good faith, reasonable belief that such act or omission was in
Company's best interest. In the event of termination for cause, Company's
obligations hereunder cease on Executive's last day of active employment, unless
otherwise provided herein.
5.3.4. METHOD OF PAYMENT. Executive agrees that Company shall
have the option of paying the present value of any amount(s) due under this
paragraph in a lump sum or in the form of salary continuation, but in no event
shall such payout period exceed the applicable severance period stated in
paragraph 5.3.2(i) above. Present value shall be calculated based upon National
City Bank's prime interest rate.
5.4. TERMINATION BY EXECUTIVE.
5.4.1. AT END OF TERM. Executive may terminate this Agreement
at the end of its term or any extension of this Agreement by giving 60 calendar
days' written notice to Company's President. Company may, in its sole
discretion, accept Executive's termination effective immediately; provided,
however, that it shall continue to pay Executive for 60 calendar days. Company
shall thereafter have no obligations to Executive under this Agreement.
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5.4.2. VOLUNTARY RESIGNATION. Executive may terminate this
Agreement by his voluntary resignation. Executive shall give at least 60
calendar days' written notice of his intention to resign to Company's President,
which Company may accept immediately. In the event of Executive's resignation,
Company will have no further obligations or liability hereunder except as
provided herein.
5.5. SALARY DUE AT TERMINATION. In the event of any termination of
Executive's employment under this Agreement, Executive (or his estate) shall be
paid any unpaid portion of his salary that has accrued by virtue of his
employment during the period prior to termination, and any unpaid, declared
bonus, together with any unpaid business expenses properly incurred under this
Agreement prior to termination. Such amounts shall be paid within 15 days of the
date of termination, unless otherwise provided herein.
6. ARBITRATION. Unless stated otherwise herein, the parties agree that
arbitration shall be the sole and exclusive remedy to redress any dispute, claim
or controversy involving the interpretation of this Agreement or the terms,
conditions or termination of this Agreement or the terms, conditions or
termination of Executive's employment with Company. The parties intend that any
arbitration award shall be final and binding and that a judgment on the award
may be entered in any court of competent jurisdiction and enforcement may be had
according to its terms. This paragraph shall survive the termination or
expiration of this Agreement.
6.1. Arbitration shall be held in Columbus, Ohio, and shall be
conducted by a retired federal judge or other qualified arbitrator mutually
agreed upon by the parties in accordance with the Voluntary Arbitration Rules of
the American Arbitration Association then in effect. The parties shall have the
right to conduct discovery pursuant the Federal Rules of Civil Procedure;
provided, however, that the Arbitrator shall have the authority to establish an
expedited discovery schedule and cutoff and to resolve any discovery disputes.
The Arbitrator shall not have jurisdiction or authority to change any provision
of this Agreement by alterations of, additions to or subtractions from the terms
hereof. The Arbitrator's sole authority in this regard shall be to interpret or
apply any provision(s) of this Agreement. The Arbitrator shall be limited to
awarding compensatory damages, including unpaid wages or benefits, but shall
have no authority to award punitive, exemplary or similar-type damages.
6.2. Any claim or controversy not sought to be submitted to
arbitration, in writing, within 120 days of when it arose shall be deemed waived
and the moving party shall have no further right to seek arbitration or recovery
with respect to such claim or controversy.
6.3. The arbitrator shall be entitled to award expenses, including the
costs of the proceeding, and reasonable counsel fees.
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6.4. The parties hereby acknowledge that since arbitration is the
exclusive remedy, neither party has the right to resort to any federal, state or
local court or administrative agency concerning breaches of this Agreement,
except as otherwise provided herein in paragraph 6, and that the decision of the
Arbitrator shall be a complete defense to any suit, action or proceeding
instituted in any federal, state or local court before any administrative agency
with respect to any arbitrable claim or controversy.
7. GENERAL PROVISIONS.
7.1. The parties agree that the covenants and promises set forth in
paragraphs 4, 5 and 6 shall survive the termination of this Agreement and
continue in full force and effect.
7.2. Except as otherwise provided in paragraph 6.2 above, failure to
insist upon strict compliance with any term hereof shall not be considered a
waiver of any such term.
7.3. In computing the number of days for purposes of this Agreement,
all days shall be counted, including Saturdays, Sundays, and legal holidays;
provided, however, that if the final day of any time period falls on a Saturday,
Sunday, or legal holiday, then such final day shall be deemed to be the next day
which is not a Saturday, Sunday, or legal holiday.
7.4. Executive represents and warrants to Company that he is not now
under, or bound to be under in the future, any obligation to any person, firm or
corporation which is or would be inconsistent or in conflict with this
Agreement, or that would prevent, limit, or impair in any way the performance of
his obligations hereunder.
7.5. This Agreement, along with any other document, policy or practice
referenced herein (collectively referred to as "Agreement"), contain the entire
agreement of the parties regarding Executive's employment and supersede any
prior written or oral agreements or understandings relating to the same. No
modification or amendment of this Agreement shall be valid unless in writing and
signed by or on behalf of both parties.
7.6. Once signed by both parties, this Agreement shall be binding upon
and shall inure to the benefit of the heirs, successors, and assigns of the
parties.
7.7. This Agreement is intended to be performed in accordance with, and
only to the extent permitted by, all applicable laws, ordinances, rules and
regulations. If any provisions of this Agreement, or the application thereof to
any person or circumstance, shall, for any reason and to any extent, be held
invalid or unenforceable, such invalidity and unenforceability shall not affect
the remaining provisions hereof and the application of such provisions to other
persons or circumstances, all of which shall be enforced to the greatest extent
permitted by law.
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7.8. The validity, construction, and interpretation of this Agreement
and the rights and duties of the parties hereto shall be governed by the laws of
the State of Ohio, without reference to the Ohio choice of law rules.
7.9. Any written notice required or permitted hereunder shall be
mailed, certified mail (return receipt requested) or hand-delivered, addressed
to Company's President at its then principal office, or to Executive at the most
recent home address. Notices are effective upon receipt.
7.10. The rights of Executive under this Agreement shall be solely
those of an unsecured general creditor of Company.
7.11. The headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of
any provision hereof.
IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement
consisting of nine pages.
EXECUTIVE
/s/ Xxxxx XxXxxxx
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Xxxxx XxXxxxx
Signed: June 21, 2000
VALUE CITY DEPARTMENT STORES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Its: President
Signed: June 21, 2000
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