EXHIBIT 10(c)
SEVERANCE COMPENSATION AGREEMENT
This Severance Compensation Agreement (the "Agreement") by and between
▇▇▇▇▇▇▇▇ Stores Inc., a Michigan corporation (the "Company") with its principal
place of business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
of Jackson, Michigan (the "Executive") shall be effective as of the date the
Agreement is approved by the United States Bankruptcy Court for the Eastern
District of Michigan (the "Bankruptcy Court").
WHEREAS, the Company and certain of its affiliates filed voluntary
petitions to reorganize their businesses under Chapter 11 of the United States
Bankruptcy Code, as amended, on January 15, 2002, which cases have been
administratively consolidated under the heading "▇▇▇▇▇▇▇▇ Stores Inc., et. al."
and have been assigned case number 02-40597 (the "Chapter 11 Case");
WHEREAS, the Board of Directors of the Company has determined that it is
in the best interests of the Company and its stakeholders that certain key
members of management be provided with the appropriate incentives to cause them
to remain employed by the Company pending the Company's reorganization;
NOW THEREFORE, in consideration of the agreements contained herein
including the undertakings of the parties hereto, the receipt and sufficiency of
which are hereby acknowledged by each of the parties hereto, it is covenanted
and agreed as follows:
1. Severance Compensation upon Termination of Employment.
In the event that the Executive's employment with the Company is
terminated for one of the reasons described below, the Company shall pay to the
Executive or his/her beneficiaries or heirs, as applicable, the cash severance
payment corresponding to that reason (the "Severance Payment"):
(a) Termination Without Cause or For Good Reason. In the event the
Executive's employment with the Company is terminated (x) by the
Company without Cause or (y) by the Executive for "good reason" (as
defined in Section 1(f)(iv) below), the Severance Payment shall be
the Executive's Annual Base Salary for a period of 12 months and
shall be payable to the Executive in a single lump sum cash payment
within ten (10) business days of the Termination Date,(1) which
payment shall not by offset by salary, earned income, deferred
income, or other income earned by the Executive from other
employment.
----------------------------
(1) Provided, however, if the Company determines in its sole discretion, that it
does not have adequate levels of cash availability to pay the Severance Payment
as provided for herein, then Executive shall be entitled to an administrative
expense claim in the Chapter 11 case in the amount of any unpaid Severance
Payment.
(b) Change of Control. In the event that the Executive's employment with
the Company is terminated by the Company or any successor thereto
following or in connection with a "change of control" as defined in
Exhibit A hereto then the Severance Payment shall be a payment equal
to Executive's Annual Base Salary for a period of 12 months made to
the Executive in a single lump sum cash payment within ten (10)
business days of the Termination Date,(3) which payment shall not by
offset by salary, earned income, deferred income, or other income
earned by the Executive from other employment.
(c) Liquidation of Company. In the event that the Executive's employment
with the Company is terminated by the Company or its estate
following or in connection with the conversion of the Company's
Chapter 11 Case to a case under Chapter 7 of the United States
Bankruptcy Code or other liquidation of the Company, the Severance
Payment shall be a payment equal to Executive's Annual Base Salary
for a period of 12 months made to the Executive in a single lump sum
cash payment within ten (10) business days of the Termination
Date,(4) which payment shall not by offset by salary, earned income,
deferred income or other payment income earned by the Executive from
other employment.
(d) Death of Executive. In the event that the Executive's employment
with the Company is terminated as a result of the Executive's death,
the Severance Payment shall be a payment equal to Executive's Annual
Base Salary for a period of 12 months, payable to Executive's
beneficiaries or heirs as applicable, in a single lump sum cash
payment within 30 days of the Executive's death,(5) against which
the Company will offset, if
------------------------------
(2) Provided, however, if the Company determines in its sole discretion, that it
does not have adequate levels of cash availability to pay the Severance Payment
as provided for herein, then Executive shall be entitled to an administrative
expense claim in the Chapter 11 case in the amount of any unpaid Severance
Payment.
(3) Provided, however, if the Company determines in its sole discretion, that it
does not have adequate levels of cash availability to pay the Severance Payment
as provided for herein, then Executive shall be entitled to an administrative
expense claim in the Chapter 11 case in the amount of any unpaid Severance
Payment.
(4) Provided, however, if the Company determines in its sole discretion, that it
does not have adequate levels of cash availability to pay the Severance Payment
as provided for herein, then Executive's beneficiaries or estate shall be
entitled to an administrative expense claim in the Chapter 11 case in the amount
of any unpaid Severance Payment.
(5) Provided, however, if the Company determines in its sole discretion, that it
does not have adequate levels of cash availability to pay the Severance Payment
as provided for herein, then Executive shall be entitled to an administrative
expense claim in the Chapter 11 case in the amount of any unpaid Severance
Payment.
2
applicable, the proceeds of any life insurance policy maintained by
the Company insuring Executive's life that is acquired after the
date of this agreement and that are paid to a beneficiary designated
by the Executive or to his or her estate, if the Company paid the
premiums with respect to such insurance.
(e) Disability. In the event that the Executive's employment with the
Company is terminated as a result of the Executive's Disability, the
Severance Payment shall be a payment equal to Executive's Annual
Base Salary for a period of 12 months, payable to Executive in a
single lump sum cash payment within 30 days of the Executive's
termination, against which the Company will offset, if applicable,
the benefits paid to Executive under any disability insurance policy
maintained by the Company.(6)
(f) Certain Definitions. For purposes of this Agreement, the following
words and phrases shall have the following meanings:
(i) "Annual Base Salary" shall mean the Executive's base salary in
effect on the date of this Agreement, as such base salary may
be increased from time to time.
(ii) "Disability" shall mean (1) if the employee is covered by a
company-provided disability insurance policy, the definition
of disability contained in, and entitling the employee to
benefits under, that policy, or (2) if the employee is not
covered by such a policy, the employee's inability to perform
fully the duties and responsibilities of the employee's
employment with the Company by reason of illness, injury or
incapacity for a period of 26 consecutive weeks, with or
without reasonable accommodation.
(iii) "Termination Date" shall mean the date upon which the
Executive formally ceases all regular employment activities on
behalf of the Company as recognized by the records of the
Company.
(iv) A termination for "good reason" shall be deemed to have
occurred, and the Executive shall be entitled to the benefits
set forth in this Section 1, if the Executive voluntarily
terminates his/her employment after the occurrence of any of
the following events: (1) the assignment to the Executive of
any duties inconsistent with the highest position (including
status, offices, titles and reporting requirements),
authority, duties or responsibilities attained by the
----------------------
(6) Provided, however, if the Company determines in its sole discretion, that it
does not have adequate levels of cash availability to pay the Severance Payment
as provided for herein, then Executive shall be entitled to an administrative
expense claim in the Chapter 11 case in the amount of any unpaid Severance
Payment.
3
Executive during the period of his/her employment by the
Company; (2) a relocation of the Executive more than thirty
(30) miles from Company's present offices; or (3) a decrease
in the Executive's compensation (including base salary, bonus
or fringe benefits).
(v) "Cause" shall mean (1) the Executive's continued failure
either to (x) devote substantially all of his or her business
time to his or her employment duties (except because of
Executive's illness or Disability) or (y) make a good faith
effort to perform Executive's employment duties; (2) any other
willful act or omission which Executive knew, or had reason to
know, would materially injure the Company; or (3) Executive's
conviction of a felony involving dishonesty or fraud.
2. Effective Date.
This Agreement shall become effective as of the date on which the
Bankruptcy Court grants its approval thereto.
3. Release of Liability.
Notwithstanding anything to the contrary herein, as a condition precedent
to the Company's obligation to make the Severance Payment described in Section 1
hereof, Executive shall execute and deliver to the Company a release and waiver
of employment liabilities in substantially the form attached to this Agreement
as Exhibit B, provided, however, that the Company may modify such form from time
to time in order for such form to comply with the continually developing law of
employment release enforceability.
4. Confidential Information.
The Executive will never use for his/her own advantage or disclose any
proprietary or confidential information relating to the business operations or
properties of the Company, any affiliate thereof or any of their respective
customers, suppliers, landlords or licensees. On the Termination Date, the
Executive will surrender and deliver to the Company all documents and
information of every kind relating to or connected with the Company and its
affiliates and their respective businesses, customers, suppliers, landlords and
licensees.
5. Nonsolicitation of Employees.
(a) Unless Executive's termination is a result of a liquidation of the
Company, as provided in Section 1(c) hereof, for a one (1) year
period following the Termination Date, Executive will not, in any
manner, hire or engage, or assist any company or business
organization by which he/she is employed
4
or which is directly or indirectly controlled by him/her to hire or
engage, any person who is or was employed by the Company or one of
its affiliates at any time during his/her employment with the
Company or during the period of one (1) year thereafter.
(b) Unless Executive's termination is a result of a liquidation of the
Company, as provided in Section 1(c) hereof, for a one (1) year
period following the Termination Date, Executive will not, in any
manner, solicit, recruit or induce, or assist any company or
business organization by which he is employed or which is directly
or indirectly controlled by him to solicit, recruit or induce, any
person who is or was employed by the Company or one of it affiliates
(or is or was an agent, representative, contractor, project
consultant or consultant of the Company or one of its affiliates) at
any time during his/her employment with the Company, or during the
period of one (1) year thereafter, to leave his/her employment,
relationship or engagement with the Company.
6. Nonsolicitation of Customers.
(a) Executive agrees that, for a period of one (1) year following the
Termination Date he/she will not, in any manner, solicit for
business (or assist any company or business organization by which
he/she is employed or which is directly or indirectly controlled by
him/her to solicit or do business) any customer or client of the
Company or any of its affiliates with whom Executive has had the
contact or for whom Executive has performed services during his/her
employment with the Company.
(b) Executive agrees that, for a period of one (1) year following the
Termination Date, Executive will not, in any manner, solicit for
business (or assist any company or business organization by which
he/she is employed or which is directly or indirectly controlled by
him/her to solicit or do business) any customer or client of the
Company made known to him/her by the Company during his/her
employment with the Company.
7. Company's Sole Severance Obligation.
Executive acknowledges and agrees that the Severance Payment set forth in
Section 1 is in lieu of and shall preclude any and all other severance or
termination payments that would otherwise be made by Company to Executive as the
result of Company policy, agreement, state or federal laws or regulations or
otherwise and that Company's commitment to make said Severance Payment is
subject to and conditioned upon the prior execution by Executive of the release
and waiver described in Section 3 above.
8. Nonguarantee of Employment.
5
Nothing contained in this Agreement shall be construed as a contract of
employment between the Company and the Executive, or as a right of the Executive
to continue in the employ of the Company, or as a limitation of the right of the
Company to discharge the Executive with or without cause.
9. Successors.
(a) This Agreement shall be binding upon the Company, its successors and
assigns, and in the event of a Change of Control of the Company or
in the event the Company shall be merged or consolidated or
otherwise combined into one or more other corporations or other
entities, or substantially all of its assets are sold or otherwise
transferred to one or more other corporations or entities, this
Agreement shall be binding upon the corporation or entity resulting
from such merger or consolidation or to which such assets shall be
sold or transferred and shall be assignable by it by way of transfer
of assets, merger, consolidation or combination to the same extent
as if it were the Company. Except as provided above in this Section
8(a), this Agreement shall not be assignable by the Company or its
successors and assigns. The Company will require any successor or
assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of this
business and/or assets of the Company, by agreement in form and
substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume or agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken
place.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributes, devisees and
legatees.
10. Assignment by Executive.
This Agreement shall not be assignable by the Executive and shall not be
subject to attachment, executive, pledge or hypothecation.
11. Notice.
For the purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and either delivered in hand
or by mail by United States registered or certified mail, return receipt
requested, postage prepaid, or by nationally recognized overnight courier, and
shall be deemed to have been duly given the sooner of when actually received or
three (3) days following deposit (a) in the mail by United States registered or
certified mail, return receipt requested, postage prepaid or (b) with a
nationally recognized overnight courier, as follows:
6
If to the Company:
▇▇▇▇▇▇▇▇ Stores Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chairman of the Board
Copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ LLP
2290 First National Building
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
If to the Executive:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as either party may furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
12. Modification.
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such party shall be deemed a waiver of any other provisions hereof or of any
similar of dissimilar provisions of conditions at the same or any prior of
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject mater hereof have been made by either party
which are not set forth expressly in this Agreement.
13. Validity.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provisions of this
Agreement, which shall remain in full force and effect.
14. Governing Law.
This Agreement shall be governed by the laws of Michigan without giving
effect
7
to the conflicts of law principles thereof. The parties hereby agree that
Bankruptcy Court shall retain exclusive jurisdiction to determine any disputes
under this Agreement during the pendency of the Chapter 11 Case (or any
conversion of such case to a case under Chapter 7 of the United States
Bankruptcy Court).
15. Entire Agreement.
This Agreement constitutes the entire understanding of the parties, and
revokes and supersedes all prior employment agreements between the parties and
is intended as a final expression of their Agreement. This Agreement shall take
precedence over any other documents that may be in conflict therewith.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
▇▇▇▇▇▇▇▇ STORES INC.
BY: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
EXECUTIVE:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
8
EXHIBIT A
"Change of Control" means (i) any "person" as such terms is used in
Sections 13(d) and 14(d) of the Exchange Act (other than Company, any
trustee or other fiduciary holding securities under an employee benefit
plan of the Company, or any company owned directly or indirectly, by the
share owners of the Company in substantially the same proportions as their
ownership of stock in the Company) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly
(through a plan of reorganization or otherwise), of securities of the
Company representing 50% or more of the combined voting power of the
Company's then outstanding securities; (ii) the share owners of the
Company approve (or, if share owner approval is not required, the
consummation of ) a merger or consolidation of the Company with any other
company, other than (1) merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of
the combined voting power of the voting securities of the company or such
surviving entity outstanding immediately after such merger or
consolidation, or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as defined in (i) above) acquires more than 50% of the combined
voting power of the Company's then outstanding securities; or (iii) the
share owners of the Company approve (or, if share owner approval is not
required, the consummation of) a plan of liquidation of the Company or a
sale or disposition by the Company of all or substantially all of the
Company's assets.
9
EXHIBIT B
Form of Release
In exchange for the amounts described in the Severance Compensation
Agreement executed on April 4, 2002 and other good and valuable consideration,
the receipt of which is hereby acknowledged, Executive and his/her
representatives, agents, estate, heirs, successors and assigns, without
limitation, hereby irrevocably and unconditionally release and forever discharge
the Company, its predecessors, successors, parents, subsidiaries, divisions,
affiliates, assigns, and its and their current and former officers, agents,
directors, supervisors, employees, representatives, successors and assigns, and
all persons acting by, through, under, or in concert with, any of them, from any
and all changes, complaints, claims, suits, contracts, causes of actions, debts,
sums of money, controversies, agreements, promises, damages, and liabilities of
any kind or nature whatsoever, both at law and equity, known or unknown,
suspected or unsuspected (hereinafter referred to as "claim" or "claims")
arising from conduct occurring up to and through the date of this release,
including, without limitation, any claims incidental to or arising out of
Executive's employment with the Company or the termination thereof. This release
is intended by the parties to be all encompassing and to act as a full and total
release of any claims, whether specifically enumerated herein or not, that
Executive has, may have or has had, that exist or ever had existed, on or prior
to the date of this Agreement, including, but not limited to, any claims based
upon federal or state law or regulation dealing with either employment or
employment discrimination such as those laws or regulations concerning
discrimination on the basis of age, race, color, religion, creed, sex, sex
harassment, sexual orientation, national origin, ancestry, marital status,
handicap, or physical disability, mental disability, medical condition or status
as a disabled or Vietnam-era veteran, veteran status or any military service or
application for military service; any contract, whether oral or written, express
or implied; any tort; or common law.
IF APPLICABLE:
Waiver of Rights and Claims Under the Age Discrimination in Employment Act of
1967.
Since Executive is 40 years of age or older, Executive has been informed
and agrees that Executive:
(a) has or may have specific rights and/or claims under the Age
Discrimination in Employment Act ("ADEA") of 1967;
(b) is, in consideration for the amounts and benefits described in the
Severance Compensation Agreement dated March ___, 2002, specifically waiving
such rights and /or claims he/she might have against the Company, its
predecessors, successor, parents, subsidiaries, divisions, affiliates, assigns,
and its and their current and former officers, agents, directors, supervisors,
employees, representatives, successors and assigns, and all persons acting by,
through, under, or in concert with any of them, to the
10
extent such rights and/or claims arose prior to the date this release was
executed;
(c) understands that rights or claims under ADEA which may arise after the
date this release is executed are not waived by him/her;
(d) was advised when presented by the Company with the original draft of
this release that he/she had at least 21 days within which to consider this
release; this 21-day review period will not be affected or extended by any
revisions which might be made to this release;
(e) has been advised to consider the terms of this release carefully and
of his/her right to consult with or seek advice from an attorney of his/her
choice or any other person of his/her choosing prior to executing this release
and has not been subject to any undue or improper influence interfering with the
exercise of his/her free will in deciding whether to execute this release;
(f) has carefully read and fully understands all of the provision of this
release, and he/she knowingly and voluntarily agrees to all of the terms set
forth in this release; and
(g) after signing this release, Executive may revoke this release for a
period of seven (7) days following said execution. The release shall not become
effective or enforceable until this revocation period has expired.
------------------------------
[Name of Executive]
Sworn to before me this
______ day of _____, 2002
-----------------------------
Notary Public
11
