EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 22, 1995, by and between
PROFFITT'S, INC., a Tennessee corporation (the "Company"), and W.
THOMAS GOULD (the "Executive").
WHEREAS, the Company, BALTIC MERGER CORPORATION ("Merger Sub"),
and YOUNKERS, INC. ("Younkers"), a Delaware corporation, have
entered into an Agreement and Plan of Merger, dated as of October
22, 1995 (the "Merger Agreement") providing for the merger of
Merger Sub with and into Younkers;
WHEREAS, the Company desires to employ, as of the Effective Time
(as such term is defined in the Merger Agreement), the Executive as
Vice Chairman of the Company, and as Chairman of Younkers, and the
Executive desires to serve the Company in this role;
NOW, THEREFORE, in consideration of the premises and the
respective covenants and agreements of the parties herein
contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I
Employment
Section 1.1.Position. The Company hereby agrees to employ
Executive, and Executive hereby agrees to serve the Company, as
Vice Chairman of the Company, subject to the direction of the Chief
Executive Officer of the Company ("CEO"), on the terms and
conditions set forth herein. In addition to its obligations under
Section 6.1(g) of the Merger Agreement, the Company agrees to
appoint the Executive to both the Board of Directors of the Company
and the Board of Directors of Younkers until their next annual
meetings, and thereafter shall, subject to fiduciary concerns,
utilize its best efforts to have Executive nominated for reelection
to each of the Boards during his employment under this Agreement.
Section 1.2.Duties. For the period the Executive is employed
by the Company hereunder, the Executive shall devote his reasonable
time and attention in advising the CEO with respect to matters
relating to the transaction of the business of the Company as the
CEO shall reasonably request. Notwithstanding the foregoing, the
Executive may serve as a member of the Board of Directors and the
Executive Committee of both (i) the National Retail Federation, and
(ii) Frederick Atkins, Inc. Additionally, the Executive may
participate in other endeavors which in the determination of the
Board of Directors of the Company (the "Board") do not unreasonably
interfere with the business of the Company or the performance by
Executive of his duties hereunder.
Section 1.3.Term. The term of this Agreement and the
effectiveness thereof will commence on the Effective Date and end
on the fifth anniversary of the Effective Date (the "Term"). For
purposes of this Agreement, the "Effective Date" shall be the date
of the occurrence of the Effective Time of the Merger Agreement.
Section 1.4.Working Facilities. The Executive shall be
provided with such office facilities and services as are customary
for and commensurate with his position at the Company and are
appropriate for the performance of his duties, including without
limitation, an Executive Assistant at the principal executive
offices of the Company in Alcoa, Tennessee, and at any of the
mutually agreed upon places of employment under Section 1.5.
Section 1.5.Place of Performance. Executive's employment
shall be primarily based at the principal executive offices of the
Company in Alcoa, Tennessee, or at any other mutually agreed upon
place of employment, or by telephone.
Section 1.6.Non-competition; Unauthorized Disclosure.
(a) Non-competition. During the period Executive is
employed under this Agreement, and for a period of two (2) years
thereafter, Executive:
(i) shall not engage in any activities, whether
as employer, proprietor, partner, stockholder (other than the
holder of less than 5% of the stock of a corporation the securities
of which are traded on a national securities exchange or in the
over-the-counter market, director, officer, employee or otherwise,
in competition with (A) the businesses conducted at the date hereof
by Company or any subsidiary or affiliate, or (B) any business in
which Company or any subsidiary or affiliate is substantially
engaged at any time during the employment period;
(ii) shall not solicit, in competition with
Company, any person who is a customer of the businesses conducted
by Company at the date hereof or of any business in which Company
is substantially engaged at any time during the term of this
Agreement; and
(iii) shall not induce or attempt to persuade any
employee of Company or any of its divisions, subsidiaries or then
present affiliates to terminate his or her employment relationship
in order to enter into competitive employment.
(b) Unauthorized Disclosure. During the period
Executive is employed under this Agreement, and for a further
period of two years thereafter, Executive shall not, except as
required by any court or administrative agency, without the
written consent of the Board, or a person authorized thereby,
disclose to any person, other than an employee of Company or a
person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by Executive of his duties as an
executive for Company, any confidential information obtained by him
while in the employ of Company; provided, however, that
confidential information shall not include any information now
known or which becomes known generally to the public (other than as
a result of unauthorized disclosure by Executive).
(c) Scope of Covenants; Remedies. The following
provisions shall apply to the covenants of Executive contained in
this Section 1.6:
(i) the covenants contained in paragraph (i) and
(ii) of Section 1.6(a) shall apply within all the territories in
which Company is actively engaged in the conduct of business while
Executive is employed under this Agreement, including, without
limitation, the territories in which customers are then being
solicited;
(ii) without limiting the right of the Company to
pursue all other legal and equitable remedies available for
violation by Executive of the covenants contained in this Section
1.6, it is expressly agreed by Executive and the Company that such
other remedies cannot fully compensate the Company for any such
violation and that the Company shall be entitled to injunctive
relief to prevent any such violation or any continuing violation
thereof;
(iii) each party intends and agrees that if, in
any action before any court or agency legally empowered to enforce
the covenants contained in this Section 1.6, any term, restriction,
covenant or promise contained therein is found to be unreasonable
and accordingly unenforceable, then such term, restriction,
covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency; and
(iv) the covenants contained in this Section 1.6 shall
survive the conclusion of Executive's employment by Company.
ARTICLE II
Compensation
Section 2.1.Base Compensation. The Company shall pay to the
Executive $750,000 per year, subject to periodic review for
increases ("base compensation"), as consideration for: (a) the
cancellation of the Severance Agreement entered into between the
Executive and Younkers, Inc. dated January 8, 1995, (b) the
cancellation of the Employment Agreement between the Executive and
Younkers, Inc. dated April 7, 1995, (c) compensation for services
rendered as an officer of Proffitt's, Inc. and (d) in consideration
of the non-competition provisions in Section 1.6 of this Agreement,
all as allocated on Exhibit A attached hereto as mutually agreed by
the parties hereto. Additionally, the Company will grant to the
Executive such options as provided in Section 2.3 of this Agreement
as compensation and in consideration of items (c) and (d). Such
$750,000 shall be paid pursuant to the Company's normal payroll
practices for senior management of the Company.
Section 2.2.Incentive Compensation. The Executive will be
eligible to participate in the Company's bonus or similar incentive
plans for senior management, on such terms and conditions as are
established from time to time by the Compensation Committee of the
Board; provided, however, that Executive's actual participation, as
well as the extent of his participation, in such plans shall (as is
the case with all other senior management) be determined by the
Compensation Committee, in its sole discretion.
Section 2.3.Stock Options. The Company shall grant on the
Effective Date to the Executive an option to purchase 100,000
shares of the common stock of the Company (the "Option") under the
Company's 1994 Long-Term Incentive Plan ("LTIP"), unless the
Company and the Executive agree to an alternative arrangement to
compensate the Executive. The exercise price of the Option shall
be equal to the closing price at the end of the first business day
coincident with or following the Effective Date (the "Grant Date").
Pursuant to the Company's policies for senior executives, the
Option shall be exercisable on the Grant Date to the extent of 20%
of the shares covered thereby; exercisable to the extent of an
additional 20% of the shares covered thereby on and after the first
anniversary of the Grant Date; exercisable to the extent of an
additional 20% of the shares covered thereby on and after the
second anniversary of the Grant Date; exercisable to the extent of
an additional 20% of the shares covered thereby on and after the
third anniversary of the Grant Date; and exercisable to the extent
of any remaining shares on and after the fourth anniversary of the
Grant Date; provided, however, that no portion of the Option shall
be exercisable any earlier than six months from the Grant Date. If
Executive's employment is terminated pursuant to this Agreement,
then all portions of this Option shall become immediately
exercisable.
Section 2.4.Benefits and Perquisites. Executive shall
participate in all employee pension and welfare benefit plans,
programs, and arrangements, and shall receive all other fringe
benefits as are from time to time made generally available to the
senior management of the Company. The Executive shall be entitled
to take time off for vacation or illness in accordance with the
Company's policies with respect thereto established from time to
time with respect to its senior management.
Section 2.5.Expense Reimbursements. All travel and other
expenses incurred by the Executive in connection with the
performance of services hereunder shall be paid by the Company in
accordance with the Company's then applicable customary expense
reimbursement policy. If such expenses are paid in the first
instance by the Executive, the Company will reimburse the Executive
for all such expenses upon the Executive's presentation of an
itemized account of such expenditures in a form acceptable to the
Company.
Section 2.6.Miscellaneous. The entire amount of base
compensation hereunder shall be treated as base salary for purposes
of any incentive plan under Section 2.2 or benefit plan under
Section 2.4. To the extent Executive owes any self-employment tax
or state tax with respect to the payments under Section 2.1 or 2.2
which would not have been owed had such payments been treated as
base salary, the Company shall reimburse Executive in an amount
such that after payment by Executive of all taxes on such amounts
Executive retains an amount of such reimbursement equal to the
amount of such additional tax owed as a result of not treating the
entire amount as base salary.
ARTICLE III
Termination of Employment
Section 3.1.Accrued Amounts. Either the Company or Executive
may terminate the Executive's employment relationship before the
expiration of the Term by providing the other party written notice
at least thirty (30) calendar days prior to the date on which such
termination is to be effective; provided, however, that the Company
and the Executive agree not to provide such written notice for a
period of one (1) year from the Effective Time. Following the
termination of Executive's employment hereunder for any reason
whatsoever, the Company shall pay Executive his unpaid base
compensation accrued through the Date of Termination and any unpaid
amounts owed to Executive pursuant to the terms and conditions of
the employee pension and welfare benefit plans, programs, and
arrangements of the Company at the time such payments are due. For
purposes of this Agreement, "Date of Termination" shall mean the
date of Executive's death or the date otherwise set forth on a
notice of termination provided by one party hereof to the other
(which shall be no earlier than 30 days following such notice).
Section 3.2.Severance Amounts. If the Executive's employment
terminates for any reason, other than by the Company upon
conviction of the Executive of, or plea by the Executive of guilty
or nolo contendere to, a felony involving moral turpitude with
respect to the business of the Company, the Company shall, in
addition to the payments under Section 3.1, for the duration of the
balance of the Term, (a) continue to pay Executive (or his
designated beneficiary) his base compensation (at the rate in
effect on the day prior to the Executive's Date of Termination),
payable at such intervals as such base compensation would
ordinarily be paid, (b) continue to allow the Executive (or his
designated beneficiary) to exercise his Option (and any
subsequently granted options) to purchase common stock of the
Company pursuant to the terms set forth in the LTIP, and (c)
continue to provide medical and life insurance coverage in
accordance with such Company's programs for similarly situated
senior management (and their dependents) as it may exist from time
to time. If the Executive's employment is terminated by his death,
the Company shall direct that all amounts described in Section 3.1
and this Section 3.2 be paid to the Executive's designated
beneficiaries, or to the executors, administrators or other legal
representatives of the Executive (in such order of priority) as the
Executive may have filed with the Company.
Section 3.3.Gross-up Payments.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by the Company or its affiliated companies
to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any
additional payments required under this Section 3.3) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the
Code, or any interest or penalties are incurred by Executive with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that
after payment by Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without
limitation, any income and employment taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax, imposed
upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) All determinations required to be made under this
Section 3.3, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall
be made by the Company's public accounting firm (the "Accounting
Firm") which shall provide detailed supporting calculations both to
the Company and Executive within fifteen (15) business days of the
receipt of notice from Executive that there has been a Payment, or
such earlier time as is requested by the Company (collectively, the
"Determination"). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 3.3, shall be paid by the
Company to Executive within five (5) days of the receipt of the
Determination. The Determination by the Accounting Firm shall be
binding upon the Company and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the
time of the Determination, it is possible that Gross-Up Payments
which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that it is established pursuant to a
final determination of a court or an Internal Revenue Service
proceeding which has been finally and conclusively resolved that
the Executive is required to make payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by
the Company to or for the benefit of Executive, together with
interest on such amount at the applicable federal rate (as defined
in Section 1274(d) of the Code) from the date such amount would
have been paid to Executive until the date of payment.
ARTICLE IV
Miscellaneous
Section 4.1.Successors. The Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement in form and
substance satisfactory to Executive, to expressly assume and 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 had taken place.
Section 4.2.Binding Agreement. This Agreement and all rights
of Executive hereunder shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees, and legatees.
Section 4.3.Notice. For the purposes of this Agreement,
notices, demands and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly
given when delivered or (unless otherwise specified) mailed by
United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to Executive:
W. Thomas Gould
Younkers, Inc.
115 North Calderwood
Alcoa, Tennessee 37701-9388
If to the Company:
Proffitt's, Inc.
3455 Highway 80 West
Jackson, Mississippi 39209
Attn: Brian J. Martin, Esquire
or to such other address as any party may have furnished to the
others in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
Section 4.4.Miscellaneous. No provisions of this Agreement
may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by
Executive and such officer of the Company as may be specifically
designated by its Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth
expressly in this Agreement.
Section 4.5.Applicable Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by
the laws of the State of Tennessee without regard to its conflicts
of law principles.
Section 4.6.Severability. The invalidity or unenforceability
of any provision or provisions of this Agreement shall not affect
the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
Section 4.7.No Mitigation. The Executive shall not be
required to mitigate amounts payable pursuant to this Agreement
hereof by seeking other employment or otherwise, and no amount
shall be subject to mitigation.
Section 4.8.Withholding Taxes. The Company may withhold from
all payments due to Executive (or his beneficiary or estate)
hereunder all taxes which, by applicable federal, state, local or
other law, the Company is required to withhold therefrom.
Section 4.9.Reimbursement of Legal Fees and Expenses. If any
contest or dispute shall arise under this Agreement involving
termination of Executive's employment with the Company or involving
the failure or refusal of the Company to perform fully in
accordance with the terms hereof, the Company shall reimburse
Executive, on a current basis, for all legal fees and expenses, if
any, incurred by Executive in connection with such contest or
dispute (regardless of the result thereof), together with interest
in an amount equal to the prime rate of Chemical Bank from time to
time in effect, but in no event higher than the maximum legal rate
permissible under applicable law, such interest to accrue from the
date the Company receives Executive's statement of such fees and
expenses through the date of payment thereof.
Section 4.10.Entire Agreement. This Agreement sets forth
the entire agreement of the parties hereto in respect of the
subject matter contained herein and supersedes all prior
agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any
prior agreement of the parties hereto in respect of the subject
matter contained herein, including the Employment Agreement dated
April 7, 1995, between Executive and Younkers, Inc. and the
Severance Agreement dated January 8, 1995, between Executive and
Younkers, Inc., is hereby terminated and cancelled.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date and year first above written.
PROFFITT'S, INC.
By:
R. Brad Martin
Chairman of the Board and
and Chief Executive
Officer
ATTEST:
By:
James E. Glasscock
Executive Vice President
and Chief Financial Officer
EXECUTIVE
W. Thomas Gould