Xxxxxx X. Xxxxxxxxx
EMPLOYMENT AGREEMENT
AGREEMENT dated as of August 21, 2001 between Xxxxxx X. Xxxxxxxxx,
whose address is _________________________________ ("Executive"), and HomeBase,
Inc., a Delaware corporation, whose principal office is in Irvine, California
("Employer" or "Company")
The parties hereto, in consideration of the mutual agreements
hereinafter contained and intending to be legally bound hereby, agree as
follows:
1. Employment. The Executive is currently an employee of the Company.
Employer will employ Executive and Executive will be an employee of Employer
under the terms and conditions hereinafter set forth. This Agreement supersedes
and replaces any prior employment agreement between Executive and Employer or
its subsidiaries or divisions, except for any Change of Control Severance
Agreement between Executive and Employer.
2. Effective Date; Term of Agreement. Executive's employment under the
terms of this Agreement shall commence on the date hereof and shall continue
until August 21, 2002 and thereafter until terminated by either Executive or
Employer, subject to earlier termination as provided herein (such period of
employment hereinafter called the "Employment Period"). Notwithstanding the
foregoing, the Change of Control Severance Agreement between the Company and
Executive of even date herewith (the Change of Control Agreement), shall remain
in full force and effect.
3. Duties. Executive shall diligently perform the duties of President
and Chief Operating Officer of the Company or such executive duties and
responsibilities as shall from time to time be assigned to Executive by the
Chief Executive Officer.
4. Extent of Services. Except for illnesses and vacation periods,
Executive shall devote substantially all of Executive's working time and
attention and Executive's best efforts to the performance of Executive's duties
and responsibilities under this Employment Agreement; provided, however, that
nothing herein contained shall be deemed to prevent or limit the right of
Executive (a) to make any passive investments where Executive is not obligated
or required to, and shall not in fact, devote any managerial efforts or (b) to
participate in charitable or community activities or in trade or professional
organizations, except only that Employer shall have the right to limit such
participation if the Chief Executive Officer believes that the time spent on
such activities infringes upon the time required by Executive for the
performance of Executive's duties under this Agreement or is otherwise
incompatible with those duties.
5. Base Salary. During the Employment Period, Executive shall receive
a base salary at the rate of $350,000.00 per year, or such higher amount as
Employer shall determine from time to time. Base salary shall be payable in such
manner and at such times as Employer shall pay base salary to other executive
employees.
6. Policies and Fringe Benefits. Executive shall be subject to
Employer's policies applicable to its executives generally, and Executive shall
be entitled to receive all such fringe benefits as Employer shall from time to
time make available to other Employer executives generally (subject to the terms
of any applicable fringe benefit plan).
7. Termination of Employment; in General.
a) Employer shall have the right to end Executive's employment at any
time and for any reason, with or without cause. Cause shall mean dishonesty by
Executive in the performance of Executive's duties, conviction of a felony
(other than a conviction arising solely under a statutory provision imposing
criminal liability upon Executive on a per se basis due to the Company offices
held by Executive, so long as any act or omission of Executive with respect to
such matter was not taken or omitted in contravention of any applicable policy
or directive of the Board of Directors of the Company), gross neglect of duties
(other than as a result of incapacity, disability or death), or conflict of
interest which conflict shall continue for 30 days after the Company gives
written notice to Executive requesting the cessation of such conflict.
b) The Employment Period shall terminate when Executive -becomes
entitled to receive long-term disability compensation pursuant to Employer's
long-term disability plan. In addition, if by reason of any incapacity Executive
is unable to perform Executive's duties for at least six months in any 12 month
period, the Employment Period will be terminated for incapacity upon written
notice by Employer to Executive.
c) Whenever the Employment Period shall terminate, Executive shall
resign all offices or other positions Executive shall hold with Employer or any
parent corporation and any subsidiaries or divisions of Employer or any such
parent.
8. BENEFITS UPON TERMINATION OF EMPLOYMENT.
a) Termination by Employer Other Than for Cause. Disability or
Incapacity. If the Employment Period shall have been terminated by Employer for
any reason other than cause, disability or incapacity, no compensation or other
benefits shall be payable to or accrue to Executive hereunder except as follows:
(i) Vested vacation pay accrued at date of termination shall
be paid upon termination.
(ii) Employer will continue to pay to Executive Executive's
then base salary for a period of 12 months from the date of
termination, which base salary shall be reduced after three months for
compensation earned from other employment or self-employment.
(iii) Until the expiration of the period of base salary
payments described in (ii) immediately above or until Executive shall
commence other employment or self-employment, whichever shall first
occur, Employer will provide such medical and hospital insurance and
life insurance (but not long-term disability insurance) for Executive
and Executive's family, comparable to the insurance provided for
executives generally, as Employer shall determine, and upon the same
terms and conditions as shall be provided for Employer's executives
generally.
(iv) Employer will pay to Executive, without offset for
compensation earned from other employment or self-employment, the
following amounts under Employer's Management Incentive Plan ("MIP")
applicable to Executive:
First, if not already paid, any amounts to which Executive is
entitled under MIP for the fiscal year ended immediately
prior to Executive's termination of employment. These amounts
will be paid at the same time as other awards for such prior
year are paid.
Second, such amount as Executive would have earned under MIP
if Executive's employment had continued until the end of the
fiscal year during which the termination of employment occurs
(prorated for the period of active employment during such
fiscal year). This amount will be paid at the same time as
other MIP awards for the year of termination are paid.
(v) Executive shall also be entitled to payments or benefits
under other plans of Employer to the extent that such plans provide
benefits following a termination of employment.
b) Termination for Death. Disability or Incapacity. If the Employment
Period shall terminate at any time by reason of death, disability, or
incapacity, no compensation or other benefits shall be payable to or accrue to
Executive hereunder except as follows:
(i) Vested vacation pay accrued at date of termination shall
be paid upon termination.
(ii) Employer will pay to Executive, without offset for
compensation earned from other employment or self-employment, the
following amounts under MIP applicable to Executive:
First, if not already paid, any amounts to which Executive is
entitled under MIP for the fiscal year ended immediately
prior to Executive's termination of employment. These amounts
will be paid at the same time as other awards for such prior
year are paid.
Second, such amount as Executive would have earned under MIP
if Executive's employment had continued until the end of the
fiscal year during which the termination of employment occurs
(prorated for the period of active employment during such
fiscal year). This amount will be paid at the same time as
other MIP awards for the year of termination are paid.
(iii) Executive shall also be entitled to payments or benefits
under other plans of Employer to the extent that such plans provide
benefits following a termination of employment.
c) Voluntary Termination; Termination for Cause; Violation of Certain
Covenants. If Executive should end Executive's employment voluntarily or if
Employer should end Executive's employment for cause, or if Executive should
violate the protected persons or non-competition provisions of Section 9, all
compensation and benefits otherwise payable pursuant to this Agreement shall
cease. Employer does not waive any rights it may have for damages or for
injunctive relief.
9. Agreement Not to Solicit or Compete.
(a) Upon the termination of the Employment Period at any time for any
reason, Executive shall not during the Prohibited Period under any circumstances
employ, solicit the employment of, or accept unsolicited the services of, any
"protected person", or recommend the employment of any "protected person" to any
other business organization in which Executive has any direct or indirect
interest (other than a less-than-one percent equity interest in an entity), with
which Executive is affiliated or for which Executive renders any services.
"Prohibited Period" shall mean a period coterminous with the period of base
salary continuation (without regard to reduction for income from other
employment or self-employment) which is applicable or which would have been
applicable had the termination been pursuant to Section 8(a). A "protected
person" shall be a person known by Executive to be employed by Employer or its
subsidiaries at or within six months prior to the commencement of conversations
with such person with respect to employment.
As to (i) each "protected person" to whom the foregoing applies, (ii)
each limitation on (A) employment of, (B) solicitation of, and (C) unsolicited
acceptance of services from, each "protected person" and (iii) each month of the
period during which the provisions of this subsection (a) apply to each of the
foregoing, the provisions set forth in this subsection (a) are deemed to be
separate and independent agreements and in the event of unenforceability of any
such agreement, such unenforceable agreement shall be deemed automatically
deleted from the provisions hereof and such deletion shall not affect the
enforceability of any other provision of this subsection (a) or any other term
of this Agreement.
(b) During the course of Executive's employment, Executive will have
learned many trade secrets of the Company and will have access to confidential
information and business plans of the Employer. Therefore, if Executive should
end Executive's employment voluntarily at any time, including by reason of
retirement, disability or incapacity, or if Employer should end Executive's
employment at any time for cause, then during the Prohibited Period, Executive
will not engage, either as a principal, employee, partner, consultant or
investor (other than a less-than-one percent equity interest in an entity) , in
a business which is a competitor of Employer. A business shall be deemed a
competitor of Employer if it shall operate a chain of home decorating
superstores that includes a store located within 10 miles of any "then existing"
Company superstore. The term "then existing" in the previous sentence shall
refer to any such store that is, at the time of termination of the Employment
Period, operated by the Company or any of its subsidiaries or divisions or under
lease for operation as aforesaid. Nothing herein shall restrict the right of
Executive to engage in a business that operates exclusively a chain of
membership warehouse clubs, conventional or full xxxx-up department stores,
general merchandise discount department stores, or apparel stores. Executive
agrees that if, at any time, pursuant to action of any court or administrative
or governmental body, the operation of any part of this paragraph shall be
determined to be unlawful or otherwise unenforceable, then the coverage of this
paragraph shall be deemed to be restricted as to duration, geographical scope or
otherwise, to the extent, and only to the extent, necessary to make this
paragraph lawful and enforceable in the particular jurisdiction in which such
determination is made.
If the Employment Period terminates, Executive agrees (i) to notify
Employer immediately upon Executive's securing employment or becoming
self-employed during any period when Executive's compensation from Employer
shall be subject to reduction or Executive's benefits provided by Employer shall
be subject to termination as provided in Section 8, and (ii) to furnish to
employer written evidence of Executive's compensation earned from any such
employment or self-employment as Employer shall from time to time request. In
addition, upon termination of the Employment Period for any reason other than
the death of Executive, Executive shall immediately return to Employer all
written trade secrets, confidential information and business plans of Employer
and shall execute a certificate certifying that Executive has returned all such
items in Executive's possession or under Executive's control. In the event of
the death of Executive, Executive's estate shall comply with this obligation.
10. ASSIGNMENT. The rights and obligations of Employer shall inure to
the benefit of and shall be binding upon the successors and assigns of Employer.
The rights and obligations of Executive are not assignable except only that
payments payable to Executive after Executive's death shall be made to
Executive's estate.
11. NOTICES. All notices and other communications required hereunder
shall be in writing and shall be given either by personal delivery or by mailing
the same by certified or registered mail, return receipt requested, postage
prepaid. If sent to Employer, the same shall be mailed to Employer at 0000
Xxxxxxxxx Xxxxx, Xxxxxx, XX 00000, Attention: Chief Executive Officer, or such
other address as Employer may hereafter designate by notice to Executive; and if
sent to Executive, the same shall be mailed to Executive at his address set
forth above, or at such other address as Executive may hereafter designate by
notice to Employer. Notices shall be effective upon receipt.
12. GOVERNING LAW. This Agreement and the rights and obligations of
the parties hereunder shall be governed by the -laws of the State of California.
WITNESS the execution hereof the day and year first above written.
HOMEBASE, INC.
/s/XXXXXX X. XXXXXXXXX /s/XXXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxxxxx, Executive Xxxxxxx X. Xxxxxx, Chief Executive Officer
