FIFTH AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FIFTH AMENDMENT TO EMPLOYMENT AGREEMENT (the "Fifth Amendment")
is made effective as of June 29, 1998, by and between Xxxx Stores, Inc.
(the "Company") and Xxxxxx X. Xxxxxxx (the "Executive"). The Executive and
the Company are parties to an Employment Agreement of March 15, 1994, as
amended on March 16, 1995, June 1, 1995, July 29, 1996, and May 19, 1997
(the "Employment Agreement"). The Company and the Executive now desire to
further amend the Employment Agreement to set forth (a) the terms upon
which the Executive will resign from his employment with the Company, and
(b) the payments and benefits that the Executive will be entitled to
receive upon his resignation. Accordingly, the Executive and the Company
now enter into this Fifth Amendment.
1. Resignation. The Executive hereby voluntarily resigns from any
and all positions that he holds as an officer, director and/or employee of
the Company and any of its subsidiaries effective as of the earlier of (a)
January 28 , 2000, or (b) the date that is 60 days after the date on which
the Executive's successor commences employment with the Company (the
"Resignation Date"). The Executive and the Company may mutually agree in
writing to an earlier or later Resignation Date.
2. Terms of Continued Employment. The Executive shall continue to
be employed by the Company in accordance with the terms of the Employment
Agreement until the Resignation Date or the earlier termination of the
parties' employment relationship in accordance with the terms of the
Employment Agreement. Prior to the Resignation Date, it is agreed that
there shall be no reduction in Executive's reporting responsibilities
unless mutually agreed upon between the Company and the Executive.
3. Salary and Bonuses. The Executive's salary, referenced in
paragraph 4(a) of the Employment Agreement, shall be not less than $645,000
through February 28, 1999. Effective on March 1, 1999, the Executive's
salary shall be increased to $680,000.
4. Resignation Payments and Benefits. The Executive and the Company
agree that his voluntary resignation as of the Resignation Date will be a
Voluntary Termination as defined in Paragraph 7(g) of the Employment
Agreement. Accordingly, the Executive shall not be entitled to any
payments or benefits from the Company following the Resignation Date except
as set forth in this Fifth Amendment.
5. Consideration For Release of Claims. In consideration of (a) the
Executive's continued performance of his duties for the Company in a
satisfactory fashion through the Resignation Date, and (b) the Executive's
release (the "Release") of any claims as of the Resignation Date as set
forth in Paragraph 6 of this Fifth Amendment (provided that the Release is
not revoked by the Executive within seven days after the Resignation Date),
then the Company shall provide the Executive with the following payments
and benefits when the Release becomes effective:
2
(i) for the period commencing on the Resignation Date and ending
February 1, 2001, the continuation of the Executive's base salary rate as
described in Paragraph 3 above, less applicable withholding, payable in
installments in accordance with the Company's standard payroll policies;
(ii) if the Resignation Date precedes the last day of either
Fiscal 1998, and/or Fiscal 1999, the Executive shall be entitled to receive
annual bonus(es) attributable to such fiscal year(s), if any, when paid in
accordance with the Company's standard practices, less applicable
withholdings;
(iii) a lump sum payment on February 1, 2001, equal to the
highest annual bonus that the Executive received, if any, for either fiscal
1998 or fiscal 1999, less applicable withholding;
(iv) with respect to any stock options granted to the Executive
by the Company, the Executive shall immediately become vested in any
unvested stock options;
(v) with respect to any restricted stock granted to the
Executive by the Company, the Executive shall immediately become vested in
any unvested restricted stock;
(vi) with respect to Paragraph 4(f) [Services Furnished] of the
Employment Agreement, the Company shall provide the office space and
services described therein to the Executive for a period commencing on the
Resignation Date and ending February 1, 2001; and
(vii) until his death or the date of his 65th birthday,
whichever occurs first, the Executive shall be entitled to continue to
participate (at no cost to the Executive) in the following Company employee
benefit plans and arrangements in effect on the date hereof (or other
benefit plans or arrangements providing substantially similar benefits) in
which the Executive now participates: executive medical, dental, vision
and mental health insurance; life insurance; accidental death and
dismemberment insurance; travel insurance; group excess personal liability;
and matching of Executive's 401(k) and supplemental 401(k) contributions
(the "Matching Contributions"). The Company shall not make any changes in
such plans or arrangements that would adversely affect the Executive's
rights or benefits thereunder, unless such change occurs pursuant to a
program applicable to all senior executives of the Company and does not
result in a proportionately greater reduction in the rights of, or benefits
to, the Executive as compared with any other senior executive of the
Company. For purposes of this Paragraph 5(vi), in the event of a Change of
Control, as defined in Paragraph 7(f) of the Employment Agreement, the
"Company" shall include any other entity that is a successor to the
Company, whether by merger, consolidation, liquidation, as a result of the
sale, exchange or transfer of all or substantially all of the Company's
assets, or otherwise, and the provisions of this Paragraph 5(vi) shall
continue to be binding on and shall be performed by such successor for the
benefit of the Executive and his heirs and successors. Further, in the
event of any such change of control the "senior executives of the Company"
referred to in the second sentence of this Paragraph shall mean the senior
executives who are members of its executive committee, or equivalent, or if
there is no such committee who hold the most senior rank in the successor
entity.
3
(viii) until his death, the Executive and all members of his
immediate family shall be entitled to Company employee discount cards.
(ix) until his death or the date of his 65th birthday, whichever
occurs first, the Executive shall be reimbursed by the Company for any
estate planning fees or expenses actually incurred by the Executive, up to
a maximum annual reimbursement of $5,000; provided, however, that such
annual limit shall be increased from time to time consistent with increases
in similar benefits provided to Xxxxxx Xxxxxx.
With respect to Paragraphs 5(iv) and (v), the Executive agrees to comply
with applicable federal and state securities laws and/or the Company's
xxxxxxx xxxxxxx policies as in effect on the Resignation Date.
6. Release. (a) In exchange for the payments and benefits provided
to him pursuant to this Fifth Amendment, effective as of the Resignation
Date, the Executive and his successors release the Company, its
subsidiaries and their respective shareholders, investors, directors,
officers, employees, agents, attorneys, legal successors and assigns of and
from any and all claims, actions and causes of action, whether known or
unknown, which the Executive has, or at any other time had, or shall or may
have against the released parties based upon or arising out of any matter,
cause, fact, thing, act or omission whatsoever occurring or existing at any
time up to and including the Resignation Date including, but not limited
to, any claims of breach of contract, wrongful termination, fraud,
defamation, infliction of emotional distress or national origin, race, age,
sex, sexual orientation, disability or other discrimination or harassment
under the Civil Rights Act of 1964, the Age Discrimination In Employment
Act of 1967, the Americans With Disabilities Act, the Fair Employment and
Housing Act or any other applicable law.
Nothing herein, however, is intended to release the Executive's
claims, if any, relating to vested shares, vested retirement benefits or
the Executive's rights under California Labor Code Section 2802 and under
California General Corporation Law Section 317 which are expressly not
released.
(b) In exchange for the release provided herein, the
Company releases the Executive, effective as of the Resignation Date, from
any and all claims, actions and causes of actions, whether known or
unknown, which the Company has, or at any other time had, or shall or may
have against the Executive based upon or arising out of any matters, cause,
fact, thing, act or omission whatsoever occurring or existing at any time
up to and including the Registration Date.
(c) The Executive and the Company acknowledge that each has
read section 1542 of the Civil Code of the State of California, which
states in full:
A general release does not extend to claims which
the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if
known by him must have materially affected his
settlement with the debtor.
The Executive and the Company waive any rights that each has or may have
under section 1542 to the full extent that each may lawfully waive such
rights pertaining to this general release of claims, and affirms that each
is releasing all known and unknown claims that each has or may have against
the parties listed above.
4
THE EXECUTIVE UNDERSTANDS THAT HE SHOULD CONSULT WITH AN ATTORNEY PRIOR TO
SIGNING THIS FIFTH AMENDMENT AND THAT EFFECTIVE ON THE RESIGNATION DATE HE
IS GIVING UP ANY LEGAL CLAIMS HE HAS AGAINST THE PARTIES RELEASED ABOVE BY
SIGNING THIS FIFTH AMENDMENT. THE EXECUTIVE FURTHER UNDERSTANDS THAT HE
MAY HAVE UP TO 21 DAYS TO CONSIDER THIS RELEASE, THAT HE MAY REVOKE THIS
RELEASE AT ANY TIME DURING THE 7 DAYS AFTER THE RESIGNATION DATE BY SENDING
WRITTEN NOTICE TO THE CHAIRMAN OF THE COMPENSATION COMMITTEE OF THE
COMPANY'S BOARD OF DIRECTORS, AND THAT THIS RELEASE SHALL NOT BECOME
EFFECTIVE UNTIL THAT 7-DAY REVOCATION PERIOD HAS PASSED. THE EXECUTIVE
ACKNOWLEDGES THAT HE IS SIGNING THIS FIFTH AMENDMENT KNOWINGLY, WILLINGLY
AND VOLUNTARILY IN EXCHANGE FOR THE PAYMENTS AND BENEFITS DESCRIBED IN THIS
FIFTH AMENDMENT.
7. Non-Solicitation; Non-Competition. For a period of three years
following the Resignation Date:
(i) The Executive shall not, directly or indirectly, solicit any
employee or officer of the Company to terminate his/her employment with the
Company.
(ii) The Company and the Executive acknowledge that the Company
has a special interest in and derives significant benefit from the unique
skills and experience of the Executive. In addition, the Executive will
use and have access to some of the Company's proprietary and valuable
confidential information during the course of the Executive's employment.
Accordingly, unless otherwise prohibited by law, the Executive shall not
provide any labor, work, services or assistance to (whether as an officer,
director, employee, partner, agent, owner, independent contractor,
stockholder or otherwise) Burlington Coat Factory Warehouse Corporation,
Xxxxxxx Department Stores, Inc., Filene's Basement Corp., The Federated
Stores, The May Department Stores Company, The TJX Companies, Inc. and
Value City Department Stores, Inc. as well as all subsidiaries, divisions
and/or the surviving entity of any of the above that do business in the
retail industry in the case of a merger or acquisition. However, this
subsection shall not prohibit the Executive from making any investment of
1% or less of the equity securities of any publicly-traded corporation that
is engaged in any business of the type or character engaged in by the
Company. If the Executive breaches this paragraph 7, he shall be liable to
the Company for any damages caused by such breach and shall not be entitled
to the benefits described in Paragraph 5(vi) and (vii) following such
breach.
8. Attorneys' Fees. The Company shall reimburse the Executive for
his reasonable attorneys' fees incurred in the negotiation and
documentation of this Fifth Amendment. Each party
5
shall bear its own attorneys' fees and costs incurred in any dispute
arising out of this Fifth Amendment.
9. Governing Law; Severability. The validity, interpretation,
construction and performance of this Agreement shall be governed by the
laws of the State of New York. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
10. Effect On Employment Agreement. Except as modified by this Fifth
Amendment, the Employment Agreement shall remain in full force and effect,
and the provisions of the Employment Agreement that are to remain in effect
following the termination of the parties' employment relationship
(including, but not limited to, paragraphs 6, 10, 11, 12, 17 and 18) shall
remain in effect following the Resignation Date.
11. Entire Agreement; Modification. This Fifth Amendment, along with
the Employment Agreement, constitutes the entire agreement between the
Executive and the Company concerning the termination of their employment
relationship and the subjects described herein. This Fifth Amendment
cannot be modified or amended except in a document signed by the Executive
and the chairman of the Compensation Committee of the Company's Board of
Directors (or such other person as may be designated by the Company's Board
of Directors).
IN WITNESS WHEREOF, the parties have executed this Fifth Amendment
effective as of the day and year first written above.
XXXX STORES, INC.
By: /s/ Xxxxxxx Xxxxxxx 7/22/98 /s/Xxxxxx X. Xxxxxxx 6/29/98
XXXXXX X. XXXXXXX
