1
Exhibit 10.2
EMPLOYMENT AGREEMENT
Dated as of June 30, 1997
The parties to this agreement are Bed Bath & Beyond Inc., a New York
corporation (the "Company"), and Xxxxxxx Xxxxxxxxx (the "Executive").
The Company wishes to continue to employ the Executive and enter into this
agreement, which embodies the terms of such employment, and the Executive wishes
to enter into this agreement and accept such continued employment on such terms.
Accordingly, the parties agree as follows:
1. Positions, Duties and Responsibilities
(a) During the Executive's employment under this agreement, the
Executive shall be employed as the co-chief executive officer with Xxxxxx
Xxxxxxxxx or chief executive officer of the Company and be responsible for the
general management of the affairs of the Company. It is the intention of the
parties that the Executive be elected to and serve as a member of the board of
directors of the Company. The Executive, in carrying out his duties under this
agreement, shall report to the board of directors of the Company.
(b) Nothing in this agreement shall preclude the Executive from (i)
serving on the boards of directors of a reasonable number of other corporations
or the boards of a reasonable number of trade associations and/or charitable
organizations, (ii) engaging in charitable activities and community affairs and
(iii) managing his personal investments and affairs, provided that such
activities do not materially interfere with the proper performance of his duties
and responsibilities under this agreement.
-44-
2
2. Term of Employment. The Executive's employment under this agreement
shall continue until the earlier of (a) the fifth anniversary of this agreement
(as may be extended from time to time by mutual agreement of the parties) (the
"Final Date") or (b) the termination of his employment in accordance with this
agreement.
3. Senior Status. Notwithstanding anything to the contrary in sections 1
and 2, at any time during the Executive's employment under this agreement and
before the Final Date, the Executive may, at his option, upon 90 days' written
notice given to the Company, elect to terminate his positions, duties and
responsibilities under section 1, and during the period (the "Senior Status
Period") commencing 90 days after such written notice is first given and
continuing until the earlier of (a) the tenth anniversary of the termination of
his positions, duties and responsibilities under section 1 or (b) the
termination of the Executive's employment in accordance with this agreement,
provide consulting (but not line executive) services as an employee. If the
Executive shall not have exercised this option on or before the 90th day before
the Final Date, then, at the written request of the Company given not later than
60 days before the Final Date, the Executive shall nonetheless be deemed to have
exercised this option. It is the intention of the parties that, during the
Senior Status Period, the Executive shall continue to be elected to and serve as
a member of the board of directors of the Company. The Executive, in carrying
out his duties during the Senior Status Period, shall report to the Company's
chief executive officer or, if the board of directors of the Company so
determines, to the board of directors of the Company. During the Senior Status
Period, the Executive shall, at the request from time to time of the Company's
chief executive officer or board of directors, make himself available to the
Company, at times that are reasonably convenient for him, to provide advisory
services (it being understood, however, that such services shall not require the
Executive to travel
-45-
3
to a location more than 25 miles from his residence from time to time or to
devote more than fifty (50) hours in any three-month period to the Company).
During the Senior Status Period, the Company shall provide the Executive an
office (at a location specified by the Executive, which need not be where the
Company's offices are located) and secretary that, in the Executive's good faith
judgment, are appropriate to enable him to perform his duties under this
agreement.
4. Salary. During his employment under this agreement and prior to the
Senior Status Period, the Executive shall be entitled to an annual salary,
payable in accordance with the regular payroll practices of the Company, of
$750,000. During the Senior Status Period, the Executive shall be entitled to an
annual salary, payable in accordance with the regular payroll practices of the
Company, of $400,000. The Company may pay additional compensation to the
Executive, whether in the form of an increase in salary, bonus or otherwise, if
and to the extent authorized by the board of directors of the Company, in its
sole discretion, from time to time, it being understood that the board of
directors may give consideration to increasing such compensation at various
intervals during the term of this agreement.
5. Employee Benefit Programs Generally. During the Executive's employment
under this agreement, the Executive shall be entitled to participate in all
employee pension and welfare benefits plans and programs available to the
Company's senior level executives or to its employees generally, as such plans
or programs may be in effect from time to time, including, without limitation,
pension, profit sharing, savings and other retirement plans or programs,
medical, dental, hospitalization, short-term and long-term disability and life
insurance plans, accidental death and dismemberment protection, travel accident
insurance, and any other pension or retirement plans or programs and any other
employee welfare benefit plans or programs that may be sponsored by the Company
from time to time, including any plans that supplement the
-46-
4
above-listed types of plans or programs, whether funded or unfunded.
6. Reimbursement of Business and Other Expenses. The Executive is
authorized to incur reasonable expenses in carrying out his duties and
responsibilities under this agreement, and the Company shall promptly reimburse
him for all business expenses incurred in carrying out the business of the
Company, subject to documentation in accordance with the Company's policies.
7. Termination of Employment
(a) In the event the Executive's employment terminates due to his
death, his estate or his beneficiaries, as the case may be, shall be entitled to
his salary for a period of 90 days following his death, any amount owing but not
yet paid under section 6 and other or additional benefits in accordance with
applicable plans and programs of the Company.
(b) In the event the Executive's employment terminates due to his
inability substantially to perform his duties and responsibilities under this
agreement for a period of 180 consecutive days, he shall be entitled to his
salary for a period of 90 days following the date of termination, any amount
owing but not yet paid under section 6, continued participation at the Company's
expense in medical, dental, hospitalization and life insurance coverage and in
all other employee plans and programs in which he or his family was
participating on the date of termination of his employment until the tenth
anniversary of the date of termination and other or additional benefits in
accordance with applicable plans and programs of the Company (and thereafter, at
the Executive's option and expense, to the extent he or his family can be
included in such plans and programs). If the Executive is precluded from
continuing his participation in any benefit plan or program referred to in the
immediately preceding sentence, he shall be provided the after-tax economic
equivalent of the benefits provided under the plan or program in which he
-47-
5
is unable to participate. The economic equivalent of any benefit foregone shall
be deemed to be the lowest cost that would be incurred by the Executive in
obtaining such benefit himself on an individual basis. In no event shall a
termination of the Executive's employment under this section 7(b) occur, unless
the party terminating the Executive's employment gives written notice to the
other party in accordance with this agreement.
(c) (i) As used in this agreement, the term "Cause" means (A) the
Executive is convicted of a felony involving moral turpitude or (B) the
Executive is guilty of willful gross neglect or willful gross misconduct in
carrying out his duties under this agreement, resulting, in either case, in
material economic harm to the Company, unless the Executive believed in good
faith that such act or nonact was in the best interests of the Company.
(ii) The Company may terminate the Executive's employment
under this agreement for Cause. A termination for Cause shall not take effect,
however, unless the provisions of this paragraph (c)(ii) are complied with. The
Executive shall be given written notice by the board of directors of the Company
of the intention to terminate his employment for Cause, such notice to state in
detail the particular act or acts or failure or failures to act that constitute
the grounds on which the proposed termination for Cause is based. The Executive
shall have 10 days after the date that such written notice has been given in
which to cure such conduct, to the extent a cure is possible. If he fails to
cure such conduct, his employment shall be terminated for Cause.
(iii) In the event the Company terminates the Executive's
employment for Cause, he shall be entitled to his salary through the date of the
termination of his employment, any amounts owing but not yet paid under section
6 and other or additional benefits in accordance with applicable plans or
programs of the Company.
-48-
6
(d) (i) As used in this agreement, the term "Constructive
Termination Without Cause" means a termination of the Executive's employment at
his initiative following the occurrence, without the Executive's prior written
consent, of one or more of the following events (except in consequence of a
prior termination):
(A) a reduction in the Executive's salary or a material
reduction of any employee benefit or perquisite enjoyed by him
(other than as part of any across-the-board action applicable to all
executive officers of the Company);
(B) the failure to elect or reelect the Executive to any of
the officer or director positions referred to in section 1(a) or
removal of him from any of such positions;
(C) a material diminution in the Executive's duties or the
assignment to the Executive of duties materially inconsistent with
his duties or that materially impair the Executive's ability to
function, prior to the Senior Status Period, as the co-chief
executive officer or chief executive officer of the Company;
(D) the relocation of the Company's principal office, or the
Executive's own office location as assigned to him by the Company,
to a location more than twenty-five (25) miles from Farmingdale, New
York.
(ii) In the event the Company terminates the Executive's
employment without Cause, other than pursuant to section 7(a) or (b), or in the
event there is a Constructive Termination Without Cause, the Executive shall be
entitled to his salary through the date of termination of employment, his salary
at the annual rate of $750,000 through the Final Date and thereafter at the
annual rate of $400,000 through the 10th anniversary of the Final Date (provided
that, at the Executive's option, exercised by written notice given to the
Company, the Company
-49-
7
shall pay him the present value of such salary continuation payments in a lump
sum (using as the discount rate the Applicable Federal Rate for short-term
Treasury obligations as published by the Internal Revenue Service for the month
in which such termination occurs)), any amount owing but not yet paid under
section 6, and he shall be afforded continued participation in all medical,
dental, hospitalization and life insurance coverage and in other employee
benefit plans or programs in which he was participating on the date of the
termination of his employment until the earlier of:
(A) the end of the period during which he is receiving salary
continuation payments (or in respect of which a lump-sum
payment is made);
(B) the date, or dates, he receives equivalent coverage and
benefits under the plans and programs of a subsequent employer
(such coverages and benefits to be determined on a
coverage-by-coverage, or benefit-by-benefit, basis);
(provided that (x) if the Executive is precluded from continuing his
participating in any employee benefit plan or program as so provided, he shall
be provided with the after-tax economic equivalent of the benefits provided
under the plan or program in which he is unable to participate for the periods
so specified, (y) the economic equivalent of any benefit foregone shall be
deemed to be the lowest cost that would be incurred by the Executive in
obtaining such benefit himself on an individual basis and (z) payment of such
after-tax economic equivalent shall be made quarterly in advance), and he shall
be afforded other or additional benefits in accordance with applicable plans and
programs of the Company.
(e) Subject to section 8(b), in the event of a termination of
employment by the Executive on his own initiative other than a termination
otherwise provided for in this section 7,
-50-
8
the Executive shall have the same entitlements as provided in section 7(c)(iii)
for a termination for Cause. A voluntary termination under this section 7(e)
shall be effective upon 30 days written notice given to the Company and shall
not be deemed a breach of this agreement.
(f) In the event of any termination of employment under this section
7, the Executive shall be under no obligation to seek other employment and there
shall be no offset against amounts due the Executive under this agreement on
account of any remuneration attributable to any subsequent employment that he
may obtain, except as specifically provided in this section 7.
8. Change in Control
(a) As used in this agreement, the term "Change in Control" means
the occurrence of any one of the following events:
(i) any "person," as such term is used in sections 3(a)(9) and
13(d) of the Securities Exchange Act of 1934, becomes a "beneficial owner," as
such term is used in Rule 13d-3 under that act, of 30% or more of the
outstanding common stock of the Company, excluding a person that is an affiliate
(as such term is used under that act) of the Company on the date of this
agreement, or any affiliate of any such person;
(ii) the majority of the board of directors of the Company
consists of individuals other than Incumbent Directors, which term means the
members of the board of directors of the Company on the date of this agreement;
provided that any person becoming a director subsequent to such date whose
election or nomination for election was supported by two-thirds of the directors
who then comprised the Incumbent Directors shall be considered an Incumbent
Director;
(iii) the Company adopts any plan of liquidation providing for
the
-51-
9
distribution of all or substantially all its assets;
(iv) all or substantially all the assets or business of the
Company are disposed of pursuant to a merger, consolidation or other transaction
(unless the shareholders of the Company immediately prior to such merger,
consolidation or other transaction beneficially own, directly or indirectly, in
substantially the same proportion as they own the common stock of the Company,
all the common stock or other ownership interests of the entity or entities, if
any, that succeed to the business of the Company); or
(v) the Company combines with another company and is the
surviving corporation, but, immediately after the combination, the shareholders
of the Company immediately prior to the combination hold, directly or
indirectly, 50% or less of the common stock or other ownership interests of the
combined company (there being excluded from the number of shares held by such
shareholders, but not from the common stock or other ownership interests of the
combined company, any shares other ownership interests received by affiliates of
such other company in exchange for stock of such other company).
(b) Following a Change in Control, the Executive may, at his option,
upon 90 days' written notice given to the Company, terminate his employment
under this agreement and, in lieu of any other amounts otherwise payable to him
under section 7, (i) he will be entitled to receive, in a single lump sum on or
before the 90th day after such written notice is given, an amount equal to (A)
the product of (1) the Executive's annual salary then in effect and (2) three,
if the written notice is given before the Senior Status Period, or (B) the
product of (1) $200,000 and (2) the number of years (including fractions), if
any, remaining in the Senior Status Period on the 90th day after such written
notice is given, if the written notice is given during the Senior Status Period,
and (ii) subject to the provisos set forth in (x), (y) and (z) of section
7(d)(ii), he
-52-
10
shall be afforded continued participation in all medical, dental,
hospitalization and life insurance coverage and in other employee benefit plans
or programs in which he was participating on the date of the termination of his
employment until the earlier of (A) the tenth anniversary of the termination of
employment or (B) the date, or dates, he receives equivalent coverage and
benefits under the plans and programs of a subsequent employer (such coverages
and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit,
basis).
(c) In the event the amount provided to the Executive under section
8(b) is determined to constitute a Parachute Payment, as such term is defined in
section 280G(b)(2) of the Internal Revenue Code of 1986 (the "Code"),
notwithstanding anything to the contrary in this agreement, the amount so
provided shall be reduced to the maximum amount (if any) that can be so provided
without any of that amount being subject to any excise tax imposed by section
4999 of the Code ("Excise Tax"). The determination of whether the amount so
provided constitutes a Parachute Payment and, if so, the amount to be paid to
the Executive and the time of payment pursuant to this section 8(c) shall be
made by an independent auditor (the "Auditor") jointly selected by the Company
and the Executive and paid by the Company. The Auditor shall be a nationally
recognized United States public accounting firm, which has not, during the two
years preceding the date of its selection, acted in any way on behalf of the
Company or any affiliate of the Company. If the Executive and the Company cannot
agree on the firm to serve as the Auditor, the Executive and Company shall each
select one accounting firm and those two firms shall jointly select the
accounting firm to serve as the Auditor.
9. Indemnification
(a) The Company agrees that, if the Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal,
-53-
11
administrative or investigation (a "Proceeding"), by reason of the fact that he
is or was a director, officer or employee of the Company or is or was serving at
the request of the Company as a director, officer, member, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether or not the
basis of such Proceeding is the Executive's alleged action in an official
capacity while serving as director, officer, member, employee or agent, the
Executive shall be indemnified and held harmless by the Company to the fullest
extent permitted or authorized by the Company's certificate of incorporation or
bylaws or, if greater, by the laws of the state of New York, against all cost,
expense, liability and loss (including, without limitation, attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to the Executive even if
he has ceased to be a director, member, employee or agent of the Company or
other entity and shall inure to the benefit of the Executive's heirs, executors
and administrators. The Company shall advance to the Executive all reasonable
costs and expenses incurred by him in connection with a Proceeding within 20
days after receipt by the Company of a written request for such advance. Such
request shall include a undertaking by the Executive to repay the amount of such
advance if it shall ultimately be determined that he is not entitled to be
indemnified against such costs and expenses.
(b) Neither the failure of the Company (including its board or
directors, independent legal counsel or shareholders) to have made a
determination prior to the commencement of any proceeding concerning payment of
amounts claimed by the Executive under section 9(a) that indemnification of the
Executive is proper because he has met the applicable standard of conduct, nor a
determination by the Company (including its board of
-54-
12
directors, independent legal counsel or shareholders) that the Executive has not
met such applicable standard of conduct, shall create a presumption that the
Executive has not met the applicable standard of conduct.
(c) The Company agrees to continue and maintain a director's and
officers' liability insurance policy covering the Executive to the extent the
Company provides such coverage for its other executive officers.
10. Confidentiality. The Executive shall at all times during the period of
his employment and thereafter hold in confidence any and all Confidential
Information (as defined below) that may have come or may come into his
possession or within his knowledge concerning the products, services, processes,
businesses, suppliers, customers and clients of the Company or its controlled
affiliates. The Executive agrees that neither he nor any person or enterprise
controlled by him will for any reason directly or indirectly, for himself or any
other person, use or disclose any trade secrets, proprietary or confidential
information, inventions, manufacturing or industrial processes or procedures,
patents, trademarks, trade names, customer lists, service marks, service names,
copyrights, applications for any of the foregoing or licenses or other rights in
respect thereof (collectively, "Confidential Information"), owned or used by, or
licensed to, the Company or any of its controlled affiliates, provided that the
Executive may disclose Confidential Information that has become generally
available to the public other than as a result of a breach of this agreement by
the Executive or pursuant to an order of a court of competent jurisdiction or of
a governmental agency, department or commission. Upon termination of his
employment under this agreement, the Executive shall promptly surrender to the
Company all documents he believes contain Confidential Information and that are
within his possession or control, other than documents to which the Executive is
or was a party or that relate to the
-55-
13
Executive or the basis, or purported basis, on which his employment was
terminated.
11. Noncompetition and Nonsolicitation
(a) The Executive agrees that from the date of this agreement and
subsequent to the termination of his employment under this agreement and
continuing for the period (the "Non-Compete Period") after termination of
employment under section 7 (but not under section 8) in respect of which salary
continuation payments would be required to be made under section 7(d)
(regardless of whether termination of employment occurs pursuant to section
7(d)), neither the Executive nor any person or enterprise controlled by him will
become a shareholder, lender, director, officer, agent or employee of a
corporation or member of or lender to a partnership, engage as a sole proprietor
in any business, act as a consultant to any of the foregoing or otherwise engage
directly or indirectly in any business that is in competition with the business
then conducted by the Company or any of its controlled affiliates in any state
in the United States or any other country in which the Company or any of its
controlled affiliates has engaged in such business during the Executive's
employment under this agreement; provided, however, that the foregoing shall not
prohibit the Executive from owning less than two percent of the outstanding
securities of any class of capital stock of a corporation the securities of
which are regularly traded or quoted on a national securities exchange or on an
inter-dealer quotation system.
(b) The Executive agrees that, during the Non-Compete Period,
neither he nor any person or enterprise controlled by him will (i) solicit for
employment any person who was employed by the Company or any of its controlled
affiliates at any time within one year prior to the time of the act of
solicitation or (ii) in any way cause, influence or participate in the
solicitation for employment of any such individual by anyone else.
(c) The Executive acknowledges that there is no adequate remedy at
law for a
-56-
14
breach of this section 11 and that, in the event of such a breach or attempted
breach, the Company shall be entitled to injunctive or other equitable relief to
prevent any such breach, attempted breach or continuing breach, without
prejudice to any other remedies for damages or otherwise.
12. Assignability; Binding Nature. This agreement shall inure to the
benefit of the parties and their respective successors, heirs (in the case of
the Executive) and assigns. No rights or obligations of the Company under this
agreement may be assigned or transferred by the Company, except pursuant to a
merger or consolidation, or the sale or liquidation of all or substantially all
the assets of the Company, provided that, in the case of such a sale or
liquidation, the assignee or transferee assumes in writing the obligation to
perform this agreement (it being understood, however, that no such assignment or
transfer shall relieve the Company of its liabilities or obligations under this
agreement).
13. Amendment or Waiver. This agreement may not be amended or waived,
except by an instrument in writing signed by the party to be charged.
14. Severability. If any provision of this agreement is invalid or
unenforceable, the remaining provisions of this agreement shall remain in
effect.
15. Governing Law. This agreement shall be governed by and construed and
interpreted in accordance with the law of the state of New York without
reference to principles of conflict of laws.
16. Disputes. Except as otherwise expressly provided in this agreement,
any dispute arising under or in connection with this agreement shall, at the
election of the Executive, be resolved by binding arbitration to be held in New
York City in accordance with the rules of the American Arbitration Association.
Judgment upon the arbitrator's award may be entered in any
-57-
15
court having jurisdiction. Costs of any arbitration or litigation, including,
without limitation, attorneys' fees of both parties, shall be borne by the
Company and advanced to the Executive as appropriate from time to time, provided
that, if the arbitrator or judge, as the case may be, determines that the claims
or defenses of the Executive were without any reasonable basis, each party shall
bear his or its own costs.
17. Notices. All notices and other communications under this agreement
shall be in writing and may be given by any of the following methods: (a)
personal delivery; (b) facsimile transmission; (c) registered or certified mail,
postage prepaid, return receipt requested; or (d) overnight delivery service.
Notices shall be sent to the appropriate party at its or his address or
facsimile number given below (or at such other address or facsimile number for
that party as specified by notice given under this section 17):
if to the Company, to it at:
000 Xxxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx 00000
Fax: 000-000-0000
if to the Executive, to him at:
00 Xxxxxxxxx Xxxx
Xxx Xxxxxxxxxx, Xxx Xxxx 00000
All such notices and communications shall be deemed given and received upon (a)
actual receipt by the addressee, (b) actual delivery to the appropriate address
or (c) in the case of a facsimile transmission, upon transmission by the sender
and issuance by the transmitting machine of a confirmation slip confirming that
the number of pages constituting the notice have been transmitted without error.
In the case of notices sent by facsimile transmission, the sender shall
contemporaneously mail a copy of the notice to the addressee at the address
provided above;
-58-
16
however, such mailing shall in no way alter the time at which the facsimile
notice is deemed given and received.
18. Headings. The section headings in this agreement are for convenience
only and shall not affect the meaning or construction of any provision of this
agreement.
19. Counterparts. This agreement may be executed in counterparts.
20. Entire Agreement. This agreement contains the entire agreement and
understanding of the parties concerning its subject matter and supersedes all
prior agreements and understandings with respect to that subject matter. Nothing
in this agreement is intended to or shall affect the rights or obligations of
the parties under any agreement related to the maintenance of life insurance or
stock options.
BED BATH & BEYOND INC.
By: /s/ XXXXXX XXXXXXXXX
-----------------------------------------------
Xxxxxx Xxxxxxxxx, Chairman and
Co-Chief Executive Officer
THE EXECUTIVE:
/s/ Xxxxxxx Xxxxxxxxx
-----------------------------------------------
Xxxxxxx Xxxxxxxxx
-59-
