EXHIBIT 10.19
PERSONAL & CONFIDENTIAL
Mr. David L. Dworkin
3880 North Mission Road
Los Angeles, CA 90031
Re: David L. Dworkin - Employment Agreement
Dear David:
Carter Hawley Hale Stores, Inc. ("CHH" or the "Company") is
pleased to extend to you employment upon the terms established
pursuant to this letter and the attached document entitled
"Carter Hawley Hale Stores, Inc. Executive Employment Agreement -
General Provisions". Your signature on Page 4 of this letter and
its delivery to us indicates your agreement to a relationship
with our Company on terms so established.
1. TERM. You have been acting as a consultant for CHH
since February 15, 1993 and except as set forth in Section 4
below, you are entitled to no compensation in your role as a
consultant. Your status as a consultant shall cease at 11:59
p.m. on March 23, 1993. The term of your employment shall be for
a period commencing on March 24, 1993 and ending on March 23,
1996.
2. COMPENSATION. (A) The annual rate of your salary shall
be $1,000,000.00 which shall be paid to you during the entire
term subject to the provisions of Sections 3 and 9 of the General
Provisions. Said salary shall be subject to annual review by the
Board of Directors of CHH, but shall never be reduced during the
term.
(B) In addition to the salary set forth above, you shall be
paid a bonus in the amount of $1,375,000.00 payable on March 24,
1993 in consideration of your commencing your duties hereunder.
(C) You shall be eligible for annual bonuses throughout the
term of your employment pursuant to CHH's annual incentive plan,
as in effect from time to time, as developed by you, but subject
to Board approval. Said bonuses shall be payable, to the extent
earned, as and when provided in said incentive plan.
Notwithstanding the foregoing, your bonus for fiscal year 1993
and 1994 shall not be less than 40% and 30% of your annual salary
rates, respectively.
3. POSITION. You shall be currently employed in the
position of President and Chief Executive Officer and shall have
such duties as are usually associated with that position. You
shall also be elected to CHH's Board of Directors.
4. STOCK OPTIONS. You have been granted, in your role as
a consultant, options to purchase 1,000,000 shares of CHH's
common stock. The options shall be issued at an exercise price
as provided in CHH's 1992 Stock Incentive Plan ("Option Plan").
The options shall be exercisable (vested) as follows: (a) one-
third upon commencement of your employment term (March 24, 1993);
(b) two-thirds upon completion of one year of employment service;
and (c) fully exercisable upon completion of two years of
employment service. Notwithstanding the foregoing to the
contrary, if your employment is terminated (or deemed terminated)
for any reason including death, but other than "Cause", as
defined in the attached General Provisions, those options which
have not yet vested shall be fully exercisable for a period of
ninety (90) days after such termination. All other options shall
be treated as provided in the Option Plan. In the event this
Agreement is terminated for Cause, you shall retain only those
options which were exercisable prior to termination and those
options shall be exercisable in accordance with the terms of the
Option Plan except those provisions of the Option Plan which may
shorten the exercise period. In the event of a "change of
control", as defined below, all options shall become fully
exercisable in accordance with the terms of the Plan and as set
forth in this Agreement. Notwithstanding, any other definition
of change of control used with respect to CHH or other employment
agreements, for purposes of this agreement, a "change of control"
shall be deemed to have occurred if any of the following shall
occur: (i) the nominees or designees of Zell/Chilmark Fund, L.P.
("Z/C") cease to compose a majority of CHH's Board of Directors;
or (ii) Z/C ceases to own at least 36% of the outstanding voting
shares of CHH; or (iii) CHH's Board of Directors terminate any
CHH Executive Vice President or higher officer without your
consent; or (iv) a person or entity (including its affiliates)
shall acquire a greater percentage of the outstanding common
stock of CHH than is then under voting control of Z/C. For
purposes of the foregoing, if Samuel Zell and/or David M. Schulte
control voting power through their affiliates, voting trust
agreements or other means, said voting power plus any shares
owned or controlled by you shall be deemed to be under the voting
control of Z/C.
5. MOVING EXPENSES AND RELOCATION COSTS. You shall be
reimbursed for all reasonable moving expenses and relocation
costs in accordance with CHH's policy, as applicable to executive
officers. Notwithstanding the foregoing, and in addition
thereto,
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you shall be reimbursed for your rent on your London apartment
through the July 30, 1993 term, at the rate of 500 pounds per
week commencing on the date that you no longer reside in CHH
provided temporary housing. CHH shall provide you suitable
interim housing in California for up to six months commencing on
March 24, 1993.
All of said expenses reimbursed to you shall be grossed up,
as necessary, so that the net of tax reimbursement to you equals
the aggregate amount of expenses you actually and ultimately
bear.
6. PENSION AND RETIREMENT BENEFITS. In addition to all
benefits you shall receive under Section 6 of the General
Provisions, you shall be eligible to receive benefits under all
non-qualified retirement plans offered by CHH, pursuant to their
current terms or as later modified, provided that any
modifications are not detrimental to the amount of benefits
payable to you under said plans as their terms exist on this
date. The amount of your annual benefit shall be as determined
under said plans, but in no event shall the benefit be less than
45% of your base salary in your last year of service or
$1,000,000, whichever is greater; provided however, one-tenth of
your benefit shall vest upon the completion of each year of
service rendered by you to CHH. Accordingly, your benefit shall
be fully vested after ten years of service.
7. TERMINATION EFFECTS. (A) In the event your employment
pursuant to this Employment Agreement is terminated before, at,
or subsequent to the expiration of the term of this Employment
Agreement, as set forth in paragraph 1 above, other than for
Cause or your death or your voluntary termination of employment,
you shall receive a payment equal to two years salary less
regular payroll withholdings within three days after the
termination of your employment. All payments of salary after
termination shall include payment of a pro rata portion of any
bonus for which you are eligible in the year of termination only.
If said bonus is not determinable at the time of termination, it
shall be estimated and paid not more than ninety (90) days after
the end of the then current fiscal year. Any benefits received
under a Company provided disability program shall be offset
against compensation owing hereunder.
(B) A change of control, as defined above, may be
deemed to be an involuntary termination at your sole option by
giving written notice to CHH's Chairman of the Board of Directors
not more than one hundred eighty (180) days after the event
giving rise to
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the change of control occurs. Should notice not be timely given,
you shall be deemed to have waived your rights hereunder with
respect to the applicable change of control event.
(C) If your employment is terminated for Cause, your
death or voluntary termination, your salary and all benefits
arising out of your employment, other than as specifically set
forth herein to the contrary, shall terminate.
8. LIFE INSURANCE. The Company shall provide you life
insurance during the term in the amount of the greater of: (i)
two times your base salary (without regard to the standard
Company limitations); or (ii) the amount the Company provides all
executive officers. Further, you shall have the right to
purchase life insurance in addition to that provided by the
Company in an amount equal to one times your annual salary. To
the extent the Company is unable to provide its portion of the
required life insurance, the Company shall reimburse to you the
cost of your obtaining said insurance with said reimbursement to
be grossed-up so your net of tax cost is zero.
9. INDEMNIFICATION. You shall be indemnified, and held
harmless from any claims, allegations, charges, or any liability
or judgments resulting therefrom, and from your cost of defense
attorney's fees, resulting from or relating to your position with
CHH or Z/C; except you shall not be indemnified against any
judgment premised on alleged conduct by you which constitutes a
fraud on CHH, or similar gross misconduct directed at CHH, unless
such conduct was concurrently actually known to or participated
in by other members of the CHH Board or any general partners of
Z/C.
10. ATTORNEYS FEES. CHH shall be responsible for all
attorneys fees incurred by you and CHH in the course of
negotiating your separation from British Home Store and this
agreement. You have advised CHH that you have been represented
solely by Bruce S. Sperling of Sperling, Slater & Spitz [Chicago,
Illinois] and acknowledge that he has been paid in full for all
of said services.
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11. FEBRUARY LETTER. This Employment Agreement represents
the "more complete agreement" contemplated by that certain
binding letter agreement dated February 15, 1993, ("February
Letter") by and among Z/C, CHH and you. Accordingly, the
February Letter, as amended by those two certain amendments dated
May 13, 1993, and December 10,1993, respectively, is fully
superceded hereby, as its terms, as so amended, have been fully
incorporated herein.
Sincerely,
CARTER HAWLEY HALE STORES, INC.
BY: /s/ Samuel Zell
------------------------------
Date: Effective as of
March 24, 1993 Chairman of the Board
The undersigned hereby agrees to employment upon the terms and
conditions set forth above and set forth in the attached Carter
Hawley Hale Stores, Inc. Executive Employment Agreement General
Provisions.
/s/ David L. Dworkin
Date: Effective as of -----------------------------------
March 24, 1993 David L. Dworkin
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GUARANTEE OF ZELL/CHILMARK FUND, L.P. ("Zell/Chilmark)
A) Zell/Chilmark acknowledges that as of this date,
Zell/Chilmark is the largest common stock shareholder of CHH and
is receiving a benefit from obtaining David L. Dworkin's ("DLD")
services.
B) Zell/Chilmark hereby guarantees full and prompt performance
by CHH of each of CHH'S obligation's (both monetary and non-
monetary) under DLD's employment agreement. Accordingly, DLD has
a direct claim against Zell/Chilmark for any failure to perform
under said agreement by CHH and DLD need not pursue any remedy
against CHH.
C) Zell/Chilmark hereby agrees to provide DLD an opportunity to
invest up to a maximum of $250,000 in Zell/Chilmark on the same
basis as the general partner ("GP") of Zell/Chilmark invested.
Should DLD wish to so invest in Zell/Chilmark, DLD must make such
election not later than September 30, 1993, at which time DLD
shall pay to the GP the amount ("Amount") DLD wishes to invest
plus GP's cost of capital on the Amount from the date GP made its
investment. DLD's investment in Zell/Chilmark shall be diluted
by any future capital or contribution calls funded by GP. To
make an election to invest in Zell/Chilmark, DLD shall send
written notice to:
David M. Schulte, Two N. Riverside Plaza, Suite 1500,
Chicago, Illinois 60606 with copy to Sheli Z. Rosenberg,
Two N. Riverside Plaza, Suite 600, Chicago, Illinois 60606
by overnight courier, certified mail return receipt requested,
or delivery in person.
D) For so long as DLD remains President & CEO of CHH,
Zell/Chilmark hereby covenants and agrees to cast its votes as a
shareholder of CHH in favor of DLD's being a director of CHH.
ZELL/CHILMARK FUND, L.P.
Date: As of
March 24, 1993 By: Z/C Limited Partnership
By: Z/C Partnership
By: CZ, Inc.
By: /s/ David M. Schulte
-----------------------
David M. Schulte
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CARTER HAWLEY HALE STORES, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
GENERAL PROVISIONS
These General Provisions of Carter Hawley Hale Stores, Inc.
Executive Employment Agreement and the provisions of the document
to which it is attached ("Employment Letter") together constitute
an employment agreement ("this Employment Agreement") between
Carter Hawley Hale Stores, Inc. (herein called the "Company") and
David L. Dworkin (herein called the "Executive") which is
effective as of the beginning of the employment term specified in
Paragraph 1 of the Employment Letter. To the extent these
General Provisions conflict with the terms of the Employment
Letter, the terms of the Employment Letter shall govern.
W I T N E S S E T H:
WHEREAS, the Company desires to employ Executive, and
Executive desires to be employed by the Company, upon the terms
and conditions set forth in this Employment Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the
premises and conditions contained in this Employment Agreement,
it is agreed as follows:
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1. EMPLOYMENT. The Company hereby employs Executive and
Executive hereby accepts such employment upon the terms and
conditions set forth in this Employment Agreement.
2. TERM. The term of this Employment Agreement shall be
the period specified in Paragraph 1 of the Employment Letter
(unless earlier terminated under the provisions thereof or
hereof).
3. COMPENSATION. The Company shall pay Executive a salary
based upon the annual rate set forth in Paragraph 2 of the
Employment Letter. Such salary shall be earned monthly and shall
be payable in periodic installments no less frequently than
monthly in accordance with the customary practices of the
Company. Amounts payable shall be reduced by any appropriate
deductions and by any deferrals elected by Executive pursuant to
any deferred Compensation Plan for Executives of the Company
which the Company may, from time to time in its discretion,
adopt.
4. POSITION AND DUTIES. Executive shall serve in the
position stated in Paragraph 3 of the Employment Letter.
Executive shall have such duties as is usual for a president
and chief executive officer of a company similar to the Company
and as the Board of Directors or the By-Laws of the Company may
from time to time prescribe.
5. LIMITATIONS ON OUTSIDE ACTIVITIES. Executive shall
faithfully devote substantially all of his business efforts to
the
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affairs of the Company. Nothing herein shall be construed as to
prohibit Executive from involvement in philantrhophic causes or
charitable organizations or industry or trade organizations.
6. OTHER BENEFITS. Executive shall be entitled, while in
the status of an employee of the Company, to the following
benefits:
(a) EXPENSES. Executive will be reimbursed in
accordance with Company policies from time to time in
effect for traveling, entertainment and other expenses
reasonably incurred in the performance of the duties
and responsibilities hereunder.
(b) PARTICIPATION IN OTHER COMPANY BENEFITS.
Executive shall be entitled to and shall receive all
other benefits and conditions of employment available
generally to executives of the Company pursuant to
Company plans and programs, including by way of
illustration, but not by way of limitation, retirement
and supplemental retirement plans, hospital, surgical,
medical or other group health insurance benefits, life
insurance benefits, the opportunity to participate in
any annual or long term incentive compensation plan,
profit sharing or retirement income plan, deferred
compensation plan and the Company annual vacation plan.
Except as provided in the Employment Letter, the
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Company reserves the right to suspend, cancel or modify
(collectively, a "Change") any benefit plans so long as
any Change is uniformly applied to all participating
executives.
7. CONFIDENTIAL INFORMATION; NONCOMPETITION. Executive
acknowledges and stipulates that in the performance of duties
hereunder, the Company discloses to and entrusts Executive with
confidential and secret information of a proprietary nature,
including, but not limited to, financial and statistical
information regarding affairs of the Company, supplier and
subcontractor lists, price and cost information, business plans
and programs, merchandising opportunities, expansion plans, data,
methods, techniques, marketing data, designs and knowhow,
developed or obtained by the Company at substantial cost.
Executive agrees that all of the same are, to the extent not
otherwise in the public domain, the exclusive property of the
Company and that Executive may possess or use such information
only in the performance of duties for the Company, and Executive
agrees not to directly or indirectly disclose at any time either
during the term of employment by the Company or thereafter any
such information, whether it be in the form of records, lists,
data, drawings, reports or otherwise, which are acquired through
Executive's relationship with the Company.
8. RESTRICTION ON SOLICITATION.
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EMPLOYEES. Executive agrees that during the term of
this Employment Agreement and for a period of six (6) months
after the expiration or termination of this Employment Agreement,
Executive shall not, directly or indirectly, solicit or encourage
any persons who are then currently employed by the Company or any
subsidiary, affiliate or division of the Company to become
employees of any business, individual, partnership, firm,
corporation or other entity then in competition with the Company
or any subsidiary, affiliate or division of the Company.
9. TERMINATION.
(a) In addition to a terminatiom as provided in
the Employment Letter, Executive's status as an employee
hereunder shall be subject to termination by the Company for
just and substantial cause, but only after the Board of
Directors of the Company shall have adopted a resolution
specifying such cause, and after written notice specifying
the cause for such action shall have been rendered to
Executive. The determination of the Board of Directors
shall be final and conclusive, and Executive shall have no
right to a hearing or to any presentation to the Board on
behalf of or by Executive. "Cause" or "just and substantial
cause" shall mean:
(i) Refusal to perform duties assigned in
accordance with the terms of this Employment Agreement
or overt and willful disobedience of orders or
directives issued to Executive by the Company's Board
of
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Directors and within the scope of Executive's duties
to the Company; or (ii) Fraud by Executive to the
substantial economic detriment of CHH; or (iii)
Gross misconduct.
If the Company terminates this Employment Agreement for
Cause under this Section 9(a), the Company shall not be
obligated to make any further payments under this Employment
Agreement except amounts due at the time of such termination
under Section 3 hereof.
(b) TERMINATION OF OTHER CAPACITIES. In the
event that Executive's status as an employee hereunder is
terminated, or this Agreement is terminated pursuant to
Subsection 9(a), Executive, concurrently with such
termination, will deliver a written resignation as a
director or officer of the Company, any affiliated entity
and any other entity with which Executive is associated as a
result of Executive's employment by the Company, such
resignation to become effective as of the date of such
termination.
(c) DUTY OF MITIGATION AND RIGHT OF OFFSET.
Executive shall have no duty to mitigate any damages
accruing hereunder by reason of any action by the Company,
and the Company shall have no right of offset hereunder by
reason of any such mitigation by Executive. The termination
payments provided for in this Agreement are negotiated
benefits.
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(d) RESIGNATION BY EXECUTIVE. If Executive
voluntarily terminates his or her employment hereunder, Executive
shall deliver a written resignation to the Company in accordance
with Subsection 10(d), and the Company shall not be obligated to
make any further payments under this Employment Agreement except
amounts due at the time of termination under Section 3 hereof.
10. GENERAL.
(a) ASSUMPTION AND ASSIGNABILITY OF EMPLOYMENT
AGREEMENT. Rights and duties of the parties hereunder shall not
be assignable by either party except that this Employment
Agreement and all the rights hereunder may be assigned by the
Company (subject to the change of control provisions to
Exective's benefit) to any corporation or other business entity
which succeeds to all or substantially all of the business of
Company through merger, consolidation, corporate reorganization
or by acquisition of all or substantially all of the assets of
the Company and which assumes the Company's obligations under
this Employment Agreement.
(b) INTEGRATION. This Employment Agreement
contains the entire agreement and understanding between the
Executive and the Company and supersedes all prior oral and
written agreements, understandings, commitments and practices
between the parties, including all prior employment agreements,
whether or not fully performed by Executive before the date of
this Employment
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Agreement. No amendments to this Employment Agreement may be
made except by a writing signed by both parties.
(c) SEVERABILITY. If any provision of this
Employment Agreement is determined to be invalid, illegal or
unenforceable by any governmental entity or agency or by a court
of competent jurisdiction, the remaining provisions of this
Employment Agreement shall remain in full force and effect. To
the extent permitted by law, the Company and Executive waive any
provision of law that renders any provision hereof prohibited or
unenforceable in any respect.
(d) SPECIFIC ENFORCEMENT. Executive is obligated
under this Employment Agreement to render service of a
special, unique, unusual, extraordinary and intellectual
character, thereby giving this Employment Agreement peculiar
value so that the loss thereof could not be reasonably or
adequately compensated in damages in an action at law.
Therefore, in addition to other remedies provided by law,
the Company shall have the right, during the term of this
Employment Agreement, to obtain equitable relief for any
breach.
Executive acknowledges that the Company will or
would suffer immediate and irreparable harm if Executive breaches
either Section 7 or Section 8 of the General Provisions to this
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Employment Agreement and that the Company would be entitled to
injunctive and other appropriate equitable relief as a result of
such breach.
(e) REMEDIES; WAIVER. All rights and remedies
existing under this Employment Agreement are cumulative to, and
not exclusive of, any rights or remedies otherwise available
under applicable law. No failure by any party to exercise and no
delay in exercising any right under this Employment Agreement
shall be deemed a waiver thereof. No delay or omission to
exercise any right or remedy hereunder shall be deemed a waiver
of such or any other right or remedy.
(f) NOTICES. Any notices to the Company required
or permitted hereunder shall be given in writing to the
Company, either by personal services or by registered or
certified mail, postage prepaid, duly addressed to the
General Counsel & Secretary of the Company at its then
principal place of business. Any such notice to Executive
shall be given in like manner, and if mailed, shall be
addressed to Executive at his home address with a copy to
Bruce S. Sperling, Sperling, Slater & Spitz, 55 W. Monroe
Street, Suite 3700, Chicago, IL 60603. For the purpose of
determining compliance with any time limit herein, a notice
shall be deemed given on the postmark date.
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(g) ATTORNEYS' FEES. The prevailing party in any
action to enforce this Employment Agreement shall be
entitled to recover its reasonable attorneys' fees, costs
and expenses related to such action. In the event a legal
proceeding is pursued to enforce the terms of this
Employment Agreement, either party hereto may elect that the
dispute be resolved by binding Arbitration.
(h) GOVERNING LAW. This Employment Agreement
shall be governed by and construed in accordance with the
laws of the State of California.
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