EXHIBIT 10.9
EXECUTIVE EMPLOYMENT AGREEMENT
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EXECUTIVE EMPLOYMENT AGREEMENT made as of October 27, 1998 among Hills
Stores Company, a Delaware corporation (the "Company"), Hills Department Store
Company, a Delaware corporation and wholly-owned subsidiary of the Company
(the "Subsidiary"), each having its principal office at ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (the "Executive"), an
individual residing at the address specified on the signature page hereof.
The Company and the Subsidiary each desire to employ the Executive in
the capacities of President and Chief Executive Officer, and the Executive
desires to be so employed by the Company and the Subsidiary, in each case
subject to the terms and conditions set forth in this agreement (the
"Agreement").
Now, therefore, in consideration of the mutual covenants hereinafter set
forth and other good and valuable consideration the receipt and sufficiency of
which is hereby acknowledged, the Company and the Executive intending to be
legally bound hereby agree as follows:
1. EMPLOYMENT: TERM. The Company and the Subsidiary each hereby
employ the Executive, and the Executive hereby accepts such employment and
agrees to serve the Company and the Subsidiary, upon the terms and conditions
hereinafter set forth, for a term commencing on October 27, 1998 (the
"Commencement Date") and terminating on May 1, 2000 (the "Ending Date") unless
terminated earlier in accordance with Section 5 (the "Term").
2. POSITION: CONDUCT.
(a) During the Term, the Executive will hold the titles and
offices of, and serve in the positions of, President and Chief Executive Officer
of the Company and the Subsidiary. The Executive shall report to the Board of
Directors of the Company and the Subsidiary and shall perform such specific
duties and services of a chief executive nature (including service as an
officer, director or equivalent position of any subsidiary, affiliated company
or venture of the Company, without additional compensation) as they shall
reasonably request consistent with the Executive's position; provided, however,
if there is ever any conflict between the instructions of the Board of the
Company and the instructions of the Board of the Subsidiary, the instructions of
the Board of the Company shall govern.
(b) During the Term, the Executive agrees to (i) devote his
full time and attention and best efforts to the business and affairs of the
Company and the Subsidiary and to faithfully and diligently perform, to the best
of his ability, all of his duties and responsibilities; (ii) abide by all
applicable policies of the Company and the Subsidiary from time to time in
effect provided that such policies are reasonable and comply with applicable
law; and (iii) not take any action or conduct himself in any manner which would
be reasonably likely to harm the reputation or goodwill of the Company or the
Subsidiary. Nothing in this Section shall preclude the Executive from devoting
reasonable time and attention to (A) serving, with the prior approval of the
Board of Directors of the Company and the Subsidiary, as director, trustee or
member of a committee of any organization; (B) engaging in charitable and
community activities; and (C) managing his personal investments and affairs;
provided that such activities do not involve any material conflict of interest
with the interests of the Company or individually or collectively interfere
materially with the performance of his duties and responsibilities as
contemplated under this Agreement.
(c) During the Term, the Executive will reside in New York,
New York but will, however, spend substantially all of his working time at the
Company's headquarters in Canton, MA and Pittsburgh, PA and at the Company's
store locations and other facilities.
3. BOARDS OF DIRECTORS. While it is understood that the right to
elect directors of the Company is by law vested in the stockholders and
directors of the Company, it is nevertheless mutually contemplated that, subject
to such rights, the Executive will continue to serve as a member of the
Company's Board of Directors following the Commencement Date. In this regard,
the Company will nominate the Executive for reelection to successive terms as a
member of the Board of Directors of the Company during the Term. The Company
will cause the Executive to serve as a member of the Board of Directors of the
Subsidiary and use its reasonable efforts to retain him as such during the Term.
The Executive agrees to serve on the Board of Directors of the Company and the
Subsidiary without additional compensation.
4. SALARY: ADDITIONAL COMPENSATION: PERQUISITES AND BENEFITS.
(a) As an inducement to Executive to accept the position of
President and Chief Executive Officer, the Company will pay the Executive a
signing bonus (the "Signing Bonus") in the amount of $500,000 upon execution of
this Agreement. The Signing Bonus will be returned by the Executive, pro rata,
if the employment of the Executive is terminated by the Company for Cause (as
that term is defined in Section 6(d)) or if the Executive terminates his
employment without Good Reason (as that term is defined in Section 6(e); such
termination without Good Reason not to include for any purpose under this
Agreement termination on account of death or Disability (as hereinafter
defined)) prior to the Ending Date; provided, however, that the Executive will
not be required in these circumstances to return any portion of the Signing
Bonus if (x) the Executive has served at least six months and (ii) prior to the
termination of the Executive's employment as aforesaid, the Company has entered
judicially supervised reorganization proceedings ("Reorganization Proceedings").
The amount of the Signing Bonus to be returned shall be in the proportion that
the number of days remaining to the Ending Date at the time of termination bears
to the total number of days from the Commencement Date to the Ending Date. For
the avoidance of doubt, the parties acknowledge that if the Executive's
employment is terminated at any time following the Company's rejection or
disaffirmance of this Agreement, the Executive will not be required to return
any portion of the Signing Bonus.
(b) During the Term, the Company and the Subsidiary will pay
the Executive a salary at an annual rate of $1,000,000 per annum. Such salary
shall be paid in installments in accordance with the Company's standard
practice, but not less frequently than monthly.
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(c) The Executive will not be eligible to earn a bonus
during the Term, except as provided in clause (d) below.
(d) The Executive will receive a success bonus (a "Success
Bonus") as follows, up to the amount of $1,500,000 in total under the circum-
stances set forth clauses (i) through (iii) below (such that if the conditions
specified in more than one of such clauses is satisfied, the Executive will
receive the amount provided in all of such clauses up to a total of $1,500,000
but not in excess thereof):
(i) The Executive will receive a bonus of $1,500,000 if the
Company engages in a merger, consolidation, reorganization or
recapitalization, or a sale or other exchange of substantially all of
the assets, or any similar business combination or restructuring
transaction (a "Capital Transaction"), during the Term and as a result
of which the holders of the common stock of the Company (the "Common
Stock") shall receive consideration of at least $2.50 per share in
value, (such amounts to be appropriately adjusted for any stock splits,
reverse stock splits, stock dividends, recapitalizations or similar
capital transactions affecting the Common Stock occurring after the
date of this Agreement (each, a "Stock Change")). Such bonus will be
payable if the Capital Transaction occurs (i) during the Term or (ii)
within one year following the expiration of the Term, if the transaction
is attributable in substantial part to actions, plans or strategies
implemented by the Executive during the Term. The bonus will be payable
promptly following the consummation of the Capital Transaction, provided
that if the Company is not the surviving corporation in the Capital
Transaction, the Company shall not consummate the transaction unless the
surviving corporation agrees to be bound by the Company's obligations
under this clause (i). If the consideration received by the holders of
the Common Stock in any Capital Transaction is other than cash, the
value of such non-cash consideration shall be as determined by the Board
of Directors of the Company in good faith on the advice of an investment
banking firm of national reputation and standing selected by the Board
and reasonably acceptable to the Executive.
(ii) The Executive will receive a bonus of $500,000 if the
closing price of the Company's Common Stock as reported on the
consolidated transaction tape of the New York Stock Exchange or, if the
Company's Common Stock is then listed on the National Market System of
the Nasdaq Stock Market, on such stock market (the "Stock Price")
exceeds $2.50 per share (subject to appropriate adjustment for one or
more Stock Changes) for 20 trading days during any 30 day trading period
commencing after the date the Company releases its results of operations
for the fourth quarter of its fiscal year ended January 31, 1999. The
Executive will receive a bonus of $1,500,000 ($1,000,000 if the
Executive has earned a bonus pursuant to the preceding sentence) if the
Stock Price exceeds $2.50 per share (subject to appropriate adjustment
for one or more Stock Changes) for 20 trading days during the 40 trading
day period preceding the Ending Date. Notwithstanding the foregoing, a
bonus will not be payable under this clause (ii) if the period during
which the respective Stock Price condition, or any part thereof, is
satisfied occurs after the commencement of Reorganization Proceedings.
A bonus payable under this clause (ii) will be paid promptly following
satisfaction of the respective stock price condition; provided, however
that if, prior to the Ending Date, the employment of the Executive is
terminated by the Company for Cause or by the Executive without Good
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Reason, the Executive will return the bonus pro rata in the proportion
that the number of days from the date of termination to the Ending Date
bears to the number of days from the date the bonus became payable to
the Ending Date.
(iii) If the Board of Directors determines in the fair and
reasonable exercise of its discretion that the Executive has made a
material contribution to the enterprise value of the Company, the
Executive will be awarded a bonus in the discretion of the Board of up
to $1,500,000.
(e) Unless and until Executive notifies the Company that he
elects to participate in a health plan maintained by the Company, the Company
will pay the Executive in amount equal to the premiums payable on the health
insurance policy maintained by the Executive as of the date of this Agreement.
(f) During the Term, the Executive will participate in all
benefit plans now existing or hereafter adopted for the general benefit of the
Company's or the Subsidiary's employees (not including equity or incentive based
compensation programs or any bonus, severance or profit sharing plans) such as
retirement plans, life and health insurance plans, or other insurance plans and
benefits (collectively, subject to the aforementioned exceptions, "Benefit
Plans"), if and to the extent that Executive is and remains eligible to
participate thereunder, and subject to the provisions of such plans as the same
may be in effect from time to time; provided, however, the Executive shall not
be adversely affected by any change to such plans unless such change is
applicable to all senior executives of the Company. The Executive will be
included in any Company or Subsidiary Benefit Plans in which senior executives
of the Company and the Subsidiary participate. To the extent permitted by law,
the terms of the respective plans (as such terms are currently in effect or may
be amended to accommodate the provisions of this sentence) and applicable
federal tax restrictions all waiting periods and vesting periods for such plans
of the Company and the Subsidiary will be waived for the Executive. Notwith-
standing the foregoing, for so long as the Executive is receiving payments
pursuant to subsection (e), the Executive shall not be entitled to participate
in any health plans of the Company or the Subsidiary.
(g) The Company and the Subsidiary will reimburse the
Executive, in accordance with their standard policies from time to time in
effect, for such reasonable and necessary documented out-of-pocket business
expenses as may be incurred by the Executive during the Term in the performance
of his duties.
(h) Without limiting the provisions of subsection (g), the
Executive shall be entitled to reimbursement for all reasonable travel, food and
lodging expenses outside of New York, New York.
(i) The Executive will be entitled to a vacation period to
be credited and taken in accordance with Company policy from time to time in
effect for similarly situated executives, which in any event shall not be less
than a total of four weeks per calendar year, beginning with the first calendar
year of this Agreement (pro rata as to portions of years).
(j) The Executive's rights under this Agreement with respect
to the plans, programs, perquisites and policies of the Company and the
Subsidiary shall not preclude the Company or the Subsidiary from modifying or
terminating any such plan, program, perquisite or policy, subject to the
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Executive's right, in accordance with the terms of this Agreement, to partici-
▇▇▇▇ in or be eligible for such program, perquisite or policy as so modified or
any replacement thereof.
5. TERMINATION.
(a) The Term will terminate at the election of the Company
or the Subsidiary immediately upon notice from the Company or the Subsidiary to
the Executive.
(b) The Term will terminate forthwith upon the Executive's
death or, upon notice by the Company or the Executive, upon the Executive's
Disability. As used herein the term "Disability" means the Executive's
inability to perform the Executive's duties and responsibilities as contemplated
under this Agreement for a period of more than 180 days, whether or not
continuous, during any 365-day period, due to physical or mental incapacity or
impairment. A determination of Disability will be made by a physician
satisfactory to both the Executive and the Company; provided that if the
Executive and the Company cannot agree as to a physician, then each will select
a physician and these two together will select a third physician, whose
determination as to Disability will be binding on the Executive and the Company.
The Executive, the Executive's legal representative or any adult member of the
Executive's immediate family shall have the right to present to the Company and
such physician such information and arguments on the Executive's behalf as the
Executive or they deem appropriate, including the opinion of the Executive's
personal physician. Should the Executive become incapacitated, the Executive's
employment shall continue and all salary and other compensation otherwise due to
the Executive hereunder shall be continued through the date on which the
Executive's employment is terminated for Disability.
6. SEVERANCE.
(a) In the event that the Term is terminated by the Company
or the Subsidiary for Cause, or if the Executive terminates his employment here-
under without Good Reason, the Company and the Subsidiary will pay to the
Executive an amount equal to the Executive's accrued but unpaid salary pursuant
to Section 4(b) through the date of such termination, additional salary payments
in lieu of the Executive's accrued and unused vacation for the current calendar
year (on a pro rata basis), any Success Bonus earned but not paid prior to the
date of termination (subject to any applicable pro rata adjustment as provided
in Section 4(d)), unreimbursed business expenses in accordance with Section 4(g)
and Section 4(h), unreimbursed medical, dental and other employee benefit
expenses incurred in accordance with the applicable plans and any and all other
benefits provided under the terms of the applicable Benefit Plans to terminated
employees (all such payments being hereinafter referred to as the "Standard
Termination Payments"), less any amount of the Signing Bonus or a Success Bonus
required to be returned by the Executive as provided in Section 4(d); provided
that the Executive will continue to be obligated to repay the amount of any
bonus required to be repaid under Section 4(d) to the extent not offset against
the Standard Payments as aforesaid.
(b) Upon the Executive's death or termination for
Disability, the Company and the Subsidiary shall pay to the Executive's estate
or the Executive, as the case may be, the Standard Termination Payments. Any
and all death benefits under the Benefit Plans shall be paid to the Executive's
beneficiary or beneficiaries as duly designated in writing by the Executive.
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(c) In the event that the Company or the Subsidiary
terminate the Executive's employment under this Agreement without Cause or the
Executive terminates his employment hereunder for Good Reason, so long as the
Executive shall not have breached the Executive's obligations to the Company
under Section 7 and Section 8 hereof (without limitation to any other remedy
available to the Company), the Company shall (i) pay the Executive a lump sum
payment equal to his salary pursuant to Section 4(b) for the remainder of the
Term, (ii) continue in effect the Executive's benefits under Section 4(e) or
their equivalent for the remainder of the Term, (iii) pay the Executive any
Success Bonus payable under Section 4(d) earned but not paid prior to the date
of termination, and (iv) if and only if the Executive terminates his employment
for Good Reason as a result of a Change of Control, pay to the Executive
$1,500,000 less the amount of any Success Bonus earned by the Executive prior
to termination, such difference to be pro rated in the proportion that the
number of days from the Commencement Date to the date of termination bears to
the total number of days from the Commencement Date to the Ending Date.
(d) As used herein the term "Cause" means:
(i) The Executive's willful or intentional failure or refusal to
perform or observe any of the Executive's material duties,
responsibilities or obligations set forth in, or as contemplated
under, this Agreement, if such breach is not cured within 30
days after notice thereof to the Executive by the Company or the
Subsidiary.
(ii) Any willful or intentional act or failure to act involving
fraud, theft, embezzlement, dishonesty or moral turpitude
(collectively, "Fraud") affecting the Company or the Subsidiary
or any supplier or employee of the Company or the Subsidiary; or
(iii) Conviction of (or plea of nolo contendere to) an offense which
is a felony in the jurisdiction involved or which is a
misdemeanor in the jurisdiction involved but which involves
Fraud;
(e) As used herein, termination of employment hereunder by
the Executive for "Good Reason" shall mean the Executive's termination of his
employment upon notice to the Company following
(i) assignment to the Executive of duties and responsibilities
materially inconsistent with the Executive's position as
described in Section 2(a);
(ii) the removal of the Executive from his position;
(iii) the failure of the Executive to be elected to the Board of
Directors of the Company and the Subsidiary or the removal of
the Executive from either Board other than for Cause;
(iv) any change in any employee benefit plan in effect and
applicable to the Executive and such change, taking into
account any offsetting increase in compensation or benefits,
constitutes a material reduction in the Executive's over-all
compensation considered as a whole; or
(v) a change in the location of the Company's principal business
offices from Canton, MA, Pittsburgh, PA or New York, NY;
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(vi) an actual or deemed rejection or disaffirmance by the Company
of its obligations under the Agreement;
(vii) a Change in Control (as defined below); or
(viii) a material breach by the Company of the terms of this Agreement,
in each case without the Executive's consent, which termination shall be
effective 30 days after prompt notice of such circumstances by the Executive to
the Company, if such circumstances have not been cured prior to such date.
"Change of Control" means the Continuing Directors ceasing to consti-
tute a majority of the Board of Directors of the Company. "Continuing Director"
means any director of the Company on the date of this Agreement and any person
nominated for election as a director by a majority of the Continuing Directors
in office at the time of such nomination.
(f) In the event that the Term is terminated for any reason,
the payments provided in this Section 6 shall constitute complete satisfaction
of all obligations of the Company and the Subsidiary to the Executive pursuant
to this Agreement. Upon any such termination, the Executive shall cease to be
an employee of the Company and Subsidiary for all purposes, and (except as
otherwise expressly set forth in this Section 6) the Company and the Subsidiary
shall have no obligation to provide the Executive with any employee benefits or
perquisites hereunder. The Executive's rights set out in this Section 6 shall
constitute the Executive's sole and exclusive rights and remedies as a result of
the Executive's actual or constructive termination of employment without Cause.
7. CONFIDENTIAL INFORMATION.
(a) The Executive acknowledges that the Company, its
subsidiaries, affiliated companies and ventures from time to time (collectively,
including the Company, the "Company Affiliates") own and have developed and/
compiled, and will own, develop and compile, certain proprietary techniques and
confidential information which have great value to their business ("Confidential
Information"). Confidential Information includes not only information disclosed
by the Company Affiliates to the Executive, but also information developed or
learned by the Executive during the course or as a result of employment here-
under, which information the Executive acknowledges is and shall be the sole and
exclusive property of the Company Affiliates. Confidential Information includes
all proprietary information that has or could have commercial value or other
utility in the business in which the Company Affiliates are engaged or contem-
plate engaging, and all proprietary information of which the unauthorized
disclosure could be detrimental to the interests of any of the Company
Affiliates, whether or not such information is specifically labelled as
Confidential Information by a Company Affiliate. By way of example and without
limitation, Confidential Information includes any and all information developed,
obtained or owned by any Company Affiliate concerning trade secrets, techniques,
know-how (including designs, plans, procedures, merchandising know-how,
processes and research records), software, computer programs, innovations,
discoveries, improvements, research, development, test results, reports,
specifications, data, formats, marketing data and plans, business plans,
strategies, forecasts, unpublished financial information, orders, agreements
and other forms of documents, price and cost information, merchandising oppor-
tunities, expansion plans, designs, plans, budgets, projections, customer,
supplier and subcontractor identities, characteristics and agreements, and
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salary, staffing and employment information. Notwithstanding the foregoing,
Confidential Information shall not in any event include information which (i)
was generally known or generally available to the public prior to its disclosure
to the Executive; (ii) becomes generally known or generally available to the
public subsequent to disclosure to the Executive through no wrongful act of any
person or (iii) which the Executive is required to disclose by applicable law or
regulation (provided that the Executive provides the Company with prior notice
of the contemplated disclosure and reasonably cooperates with the Company and
the Subsidiary at their expense in seeking a protective order or other appro-
priate protection of such information).
(b) The Executive acknowledges and agrees that in the
performance of his duties hereunder the Company Affiliates will from time to
time disclose to him and entrust him with Confidential Information. The
Executive also acknowledges and agrees that the unauthorized disclosure of
Confidential Information, among other things, may be prejudicial to the
interests of the Company Affiliates, an invasion of privacy and an improper
disclosure of trade secrets. The Executive agrees that he shall not, directly
or indirectly, use, make available, sell, disclose or otherwise communicate to
any corporation, partnership, individual or other third party, other than in the
course of his assigned duties and for the benefit of the Company Affiliates, any
Confidential Information, either during the Term or thereafter.
(c) In the event the Executive's employment with the Company
and the Subsidiary ceases for any reason, the Executive will not remove from the
premises of the Company or the Subsidiary without their prior written consent
any records, files, drawings, documents, equipment, materials or writings
received from, created for or belonging to the Company Affiliates, including
those which relate to or contain Confidential Information, or any copies
thereof. Upon request or when the Executive's employment with the Company and
the Subsidiary terminates, the Executive will immediately deliver the same to
the Company.
(d) During the Term, the Executive will disclose to the
Company and the Subsidiary all designs, inventions and business strategies or
plans developed by the Executive during such period which relate directly or
indirectly to the business of the Company Affiliates, including without
limitation any process, operation, product or improvement. The Executive agree
that all of the foregoing are and will be the sole and exclusive property of the
Company and the Subsidiary and that the Executive will at the request and cost
of the Company or the Subsidiary do whatever is necessary to secure the rights
thereto, by patent, copyright or otherwise, to the Company or the Subsidiary.
(e) The Executive, the Company and the Subsidiary agree that
the Executive shall not disclose to any Company Affiliate or use for the benefit
of any Company Affiliate, any information which may constitute trade secrets or
confidential information of third parties, to the extent the Executive has any
such secrets or information.
(f) The provisions of this Section 7 shall survive the
termination of this Agreement and the Term.
8. RESTRICTIVE COVENANTS.
(a) The Executive acknowledges and agrees (i) that the
services to be rendered by the Executive for the Company and the Subsidiary are
of a special, unique, extraordinary and personal character, (ii) that the
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Executive has and will continue to develop a personal acquaintance and relation-
ship with one or more of the employees, suppliers and independent contractors of
the Company Affiliates, which may constitute the primary or only contact of the
Company or Subsidiary with such employees, suppliers and independent
contractors, and (iii) that the Executive will be uniquely identified by
employees, suppliers, independent contractors and retail customers with the
Company and the Subsidiary. Consequently, the Executive agrees that it is fair,
reasonable and necessary for the protection of the business, operations, assets
and reputation of the Company and the Subsidiary that the Executive make the
covenants contained in this Section 8.
(b) The Executive agrees that, during the Term and for three
months thereafter, the Executive shall not, directly or indirectly, own, manage,
operate, join, control, participate in, invest in or otherwise be connected or
associated with, in any manner, including as an officer, director, employee,
partner, consultant, advisor, proprietor, trustee or investor, any Competing
Business in the Territory; provided however that nothing contained in this
Section 8(b) shall prevent the Executive from owning less than 2% of the voting
stock of a publicly held corporation for investment purposes. For purposes of
this Section 8(b), the term "Competing Business" shall mean a business engaged
in the operation of discount retailing department stores. For purposes of this
Section 8(b), the term "Territory" means any location within a radius of 10
miles from any location at which any Company Affiliate then operates a discount
retailing department store and or any location at which, at the date of
termination of the Executive's employment hereunder, any Company Affiliate has
taken substantial steps toward establishing such operations.
(c) The Executive agrees that, during the Term and for one
year thereafter, the Executive shall not, directly or indirectly,
(i) seek to employ or engage, or assist anyone else to seek
to employ or engage, any person who at any time during the year
preceding the termination of the Executive's employment hereunder was
in the employ of any of the Company Affiliates or was an independent
contractor providing material merchandising, marketing, sales, financial
or management consulting services in connection with the business of any
of the Company Affiliates and with whom the Executive had regular
contact; or
(ii) interfere in any manner in the relationship of any
Company Affiliate with any of its suppliers or independent contractors,
whether or not the relationship between such Company Affiliate and such
supplier or independent contractor was originally established in whole
or in part by the Executive's efforts; provided, however, that following
three months after the end of the Term it shall not be deemed a
violation of this clause (ii) for the Executive to engage in ordinary
business contacts on behalf of competitors of the Company with suppliers
of the Company and with those independent contractors of the Company who
do not devote substantially all of their time to the Company.
As used in this Section 8, the "supplier" shall mean and include any individual,
proprietorship, partnership, corporation, joint venture, trust or any other form
of business entity which is then a supplier of any Company Affiliate or which
was a supplier at any time during the one-year period immediately preceding the
date of termination of employment.
(d) The provisions of this Section 8 shall survive the
termination of this Agreement and the Term.
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9. SPECIFIC PERFORMANCE. The Executive acknowledges that the
Company Affiliates would sustain irreparable injury in the event of a violation
by the Executive of any of the provisions of Section 7 or Section 8 hereof, and
by reason thereof the Executive consents and agrees that if the Executive
violates any of the provisions of Section 7 or Section 8, in addition to any
other remedies available, the Company or the Subsidiary shall be entitled to a
decree specifically enforcing such provisions, and shall be entitled to a
temporary and permanent injunction restraining the Executive from committing
or continuing any such violation, from any arbitrator duly appointed in
accordance with the terms of this Agreement or any court of competent juris-
diction, without the necessity of proving actual damages, posting any bond, or
seeking arbitration in any forum.
10. WITHHOLDING. The parties understand and agree that all payments
to be made by the Company and the Subsidiary pursuant to this Agreement shall be
subject to all applicable tax withholding obligations of the Company and the
Subsidiary.
11. NO CONFLICT. The Executive represents and warrants that the
Executive is not party to or subject to any agreement, contract, understanding,
covenant, judgment or decree or under any obligation, contractual or otherwise,
in any way restricting or adversely affecting the Executive's ability to act for
the Company and the Subsidiary in all of the respects contemplated hereby.
12. NOTICES. All notices required or permitted hereunder will be
given in writing by personal delivery; by confirmed facsimile transmission
(with a copy dispatched by express delivery or registered or certified mail
hereunder); or by express delivery via express mail or any reputable express
courier service, in each case addressed:
to the Company and the Subsidiary:
Hills Stores Company
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Counsel
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Confirm: ▇▇▇-▇▇▇-▇▇▇▇
and to the Executive at the address set forth on the signature page or, as to
each party, at such other address as may be designated by notice in the manner
set forth herein. Notices which are delivered personally, by confirmed
facsimile transmission, or by courier as aforesaid, will be effective on the
date of delivery.
13. MISCELLANEOUS.
(a) The failure of any party at any time to require perfor-
▇▇▇▇▇ of any provision hereunder will in no way affect the right of that or any
other party thereafter to enforce the same or to enforce any of the other
provisions in this Agreement; nor will the waiver by any party of the breach of
any provision hereof be taken or held to be a waiver of any prior or subsequent
breach of such provision or as a waiver of the provision itself.
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(b) This Agreement is a personal contract calling for the
provision of unique services by the Executive, and the Executive's rights and
obligations hereunder may not be sold, transferred, assigned, pledged or
hypothecated by the Executive. In the event of any attempted assignment or
transfer of rights hereunder by the Executive contrary to the provisions hereof
(other than as may be required by law), the Company and the Subsidiary will have
no further liability for payments hereunder. The rights and obligations of the
Company and the Subsidiary hereunder will be binding upon and run in favor of
the successors and assigns of the Company and the Subsidiary.
(c) Each of the covenants and agreements set forth in this
Agreement is a separate and independent covenant which as been separately
bargained for and the parties hereto intend that the provisions of each such
covenant shall be enforced to the fullest extent permissible. Should the whole
or any part or provision of any such separate covenant be held or declared
invalid, such invalidity shall not in any way affect the validity of any other
such covenant or of any part or provision of the same covenant not also held or
declared invalid. If any covenant shall be found to be invalid but would be
valid if some part thereof were deleted or the period or area of application
reduced, then such covenant shall apply with such minimum modification as may be
necessary to make it valid and effective.
(d) This Agreement has been made and will be governed in all
respects by the laws of the State of Massachusetts applicable to contracts made
and to be wholly performed within such state, and the parties hereby irrevocably
consent to the jurisdiction of the courts of the State of Massachusetts and
federal courts located therein for the purpose of enforcing this Agreement.
(e) Any controversy arising out of or relating to this
Agreement, including, without limitation, any determination of the Company or
the Board of Directors under clause (i) of Section 4(d) but not including a
determination of the Board of Directors under clause (iii) of Section 4(d)
unless such determination constitutes a clear abuse of discretion, or the breach
hereof shall be settled by arbitration in New York, New York, Borough of
Manhattan, by a single neutral arbitrator in accordance with the Commercial
Arbitration Rules then obtaining of the American Arbitration Association and
judgment upon the award rendered may be entered in any court having jurisdiction
thereof, except that in the event of any controversy relating to any violation
or alleged violation of any provision of Section 7 or Section 8 hereof, the
Company and the Subsidiary shall in their sole discretion be entitled to seek
injunctive relief from a court of competent jurisdiction without any requirement
to seek arbitration. The parties hereto agree that any arbitral award may be
enforced against the parties to an arbitration proceeding or their assets
wherever they may be found.
(f) This Agreement sets forth the entire understanding
between the parties as to the subject matter of this Agreement and merges and
supersedes all prior agreements, commitments, representations, writings and
discussions among the parties with respect to that subject matter. This
Agreement may be terminated, altered, modified or changed only by a written
instrument signed by all of the parties hereto.
(g) The Section headings contained herein are for purposes
of convenience only and are not intended to define or list the contents of the
Sections.
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(h) The provisions of this Agreement which by their terms
call for performance subsequent to termination of the Term hereunder, or of this
Agreement, shall so survive such termination.
(i) The Company shall pay to the Executive all reasonable
costs incurred by the Executive in any proceeding for the successful enforcement
of the terms of this Agreement, including reasonable costs of investigation and
reasonable attorney's fees and expenses.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
HILLS STORES COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------
Name:
Title:
HILLS DEPARTMENT STORE
COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------
Name:
Title:
Accepted and Agreed: HILLS DEPARTMENT STORE COMPANY
HILLS STORES COMPANY
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. Friend
------------------------- -------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇. Vice President-Secretary
Address for notices:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
Confirm: ▇▇▇ ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Battle Bowler LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
Confirm: ▇▇▇ ▇▇▇-▇▇▇▇
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HILLS STORES COMPANY
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
November 6, 1998
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇▇▇▇:
Reference is made to the Executive Employment Agreement (the "Employment
Agreement") made as of October 27, 1998 among Hills Stores Company (the
"Company"), Hills Department Store Company and you. Capitalized terms used here
without definition have the meanings assigned to them in the Employment
Agreement.
The Company is at the present time in discussions with a third party
(the "Third Party"), with whom the Company has executed a confidentiality agree-
ment dated August 21, 1998, pursuant to which such party would acquire 100% of
the outstanding equity of the Company.
Notwithstanding anything to the contrary in the Employment Agreement,
(i) at such time as the Third Party shall acquire or irrevocably accept for
payment more than 51% of the outstanding equity stock of the Company (a "Change
of Control Event"), you shall be paid an amount equal to (x) the full amount of
the Success Bonus, and (y) your aggregate salary for the remainder of the Term;
and (ii) you shall continue your employment with the Company, without any
additional compensation, for 60 days following the date of the Change of Control
Event. Thereafter, you may terminate your employment with the Company at any
time, and you shall not be required to return any portion of the Signing Bonus.
The payments made to you upon the occurrence of a Change of Control Event shall
be in full satisfaction of all amounts of salary and bonus that may otherwise be
due to you under the Employment Agreement.
Other than as set forth in this letter, the Employment Agreement remains
in full force and effect. This letter shall not apply to a transaction with any
person other than the Third Party or to a Change of Control Event with the Third
Party that occurs after June 30, 1999.
If this letter accurately reflects your agreement to the matters set
forth herein, please sign in the space indicated below.
Very truly yours,
HILLS STORES COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------
Name and Title:
ACCEPTED: HILLS DEPARTMENT STORE COMPANY
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. Friend
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. Vice President-Secretary