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Exhibit 10.39.2
December 7, 1994
To: Myron E. Ullman, III
This letter is to confirm our agreement with respect to your
separation from employment at R.H. Macy & Co., Inc., together with any
successor thereof, as constituted (and as it may from time to time be known)
upon and after the merger of Federated Department Stores, Inc. ("Federated")
with and into R.H. Macy & Co., Inc. pursuant to the Agreement and Plan of
Merger between R.H. Macy & Co., Inc. and Federated dated as of August 16, 1994
(the "Merger Agreement"). R.H. Macy & Co., Inc. as so constituted is
hereinafter referred to as "Macy's". The parties expressly agree that the
following provisions represent certain benefits entitlements and other
consideration for relinquishing your right to future employment with Macy's
pursuant to the Amended and Restated Employment Agreement, dated as of February
5, 1994, as amended by letter agreements dated August 16, 1994, August 20,
1994, September 19, 1994 and December 6, 1994, between Macy's and you (as it
may from time to time hereafter be amended, the "Employment Agreement") which
have been agreed upon in order to reach this Agreement. As set forth below in
Paragraph 22 hereof, the parties expressly acknowledge and agree that the
Employment Agreement is not superseded hereby, shall remain in full force and
effect in accordance with its terms, and that, except as expressly provided
herein in Paragraphs 6 and 11 below, the payments and benefits owed to you
hereunder are in addition to the payments and benefits owed to you under the
Employment Agreement.
1. Your last day of employment at Macy's will be January 31, 1995 or, if
later, the date on which the Effective Time (as defined in Section 2.5 of
the Merger Agreement) occurs (such last day being referred to herein as
the "Termination Date"), unless sooner terminated due to your death or
disability. The parties agree that this Agreement constitutes a Notice
of Termination for purposes of the Employment Agreement.
2. On the later of the Effective Date (as defined below) of this Agreement
or the Termination Date, Macy's will (i) forgive your outstanding
indebtedness with respect to Macy's which is equal to $100,000 (the
"Indebtedness") and (ii) pay you such amounts as are necessary to
place you in the same after-
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tax financial position that you would have been in if you had not
incurred any federal, state or local income tax liability in connection
with Macy's forgiveness of the Indebtedness, it being agreed that such
reimbursements shall be in the amount of $85,460.
3. On the later of the Effective Date of this Agreement or the Termination
Date, in lieu of any further monthly car allowance, Macy's agrees to pay
you, in a lump sum, $96,000, less applicable taxes and withholding, which
is equivalent to your car allowance for 36 months.
4. You will receive retirement benefits as set forth on Schedule A attached
hereto, less applicable taxes and withholding; provided that such
benefits shall be reduced, but not to below zero, by the aggregate
amounts (to the extent accrued through the Termination Date) payable
under the R.H. Macy & Co., Inc. Pension Plan, the R.H. Macy & Co., Inc.
Pension and Benefit Equalization Plan, the Federated Department Stores,
Inc. Pension Plan and the Retirement Income portion of the Federated
Department Stores, Retirement Income and Thrift Incentive Plan (after
adjusting such benefits for payment at the same time and in the same
manner as your benefits under the aforementioned plans), all of which
provide exclusively for defined benefit accruals. The parties expressly
acknowledge and agree that neither this Paragraph 4 nor any other
provision of this Agreement shall in any manner reduce or affect your
rights and benefits under the aforementioned plans, and that you continue
to have and will have all rights and be entitled to all benefits under
such plans and any other retirement plans of Macy's as you may otherwise
now or in the future have or be entitled to without regard to this
Agreement.
5. Macy's shall continue to pay the premiums you are obligated to pay in
connection with the split dollar life insurance policy currently in
effect between Macy's and yourself (the "Policy") (and shall continue to
pay you such additional amounts as are necessary to place you in the same
after-tax financial position that you would have been in if you had not
incurred any federal, state or local income tax liability in connection
with such payments) for a period of 36 months commencing with the
Termination Date, and all rights and obligations of the parties thereto
shall continue in full force and effect under such Policy. The parties
expressly acknowledge, without limiting the generality of the last
sentence of Paragraph 22, that the obligations of Macy's under Section
6(a) of the Employment Agreement are
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not limited by this Paragraph 5 and remain in full force and effect in
accordance with the terms of Section 6(a) of the Employment Agreement.
6. On the later of the Effective Date of this Agreement or the Termination
Date, Macy's will pay you, in a lump sum, the cash bonus provided for
under Section 5 of the Employment Agreement for the 12-month period
commencing July 1 within which the Termination Date occurs, prorated for
the portion of the applicable 12-month period completed as of the
Termination Date, which prorated lump sum, as of January 31, 1995, is
equal to $364,581, less applicable taxes and withholding. This payment
is not intended to, and does not, extend your employment beyond the
Termination Date. The payments under this Paragraph 6 shall subsume any
prorated bonus payments otherwise required to be made under Section 5 and
Section 10 of the Employment Agreement with respect to the 12-month
period commencing July 1 within which the Termination Date occurs.
7. On the later of the Effective Date of this Agreement or the Termination
Date, Macy's agrees to pay you, in a lump sum, $45,000, less applicable
taxes and withholding, for financing planning services.
8. Macy's will continue to make available to you office space and
secretarial services substantially comparable to the office space and
secretarial services available to you as of January 1, 1995, until the
first to occur of (i) the one-year anniversary of the later of the
Effective Date of this Agreement or the Termination Date or (ii) your
commencement of employment with an entity unaffiliated with Macy's. This
provision is not intended to, and does not, extend your employment beyond
the Termination Date.
9. You and your present wife will be entitled to a merchandise discount (the
"Discount"), as set forth herein, during your lifetime and your present
wife's lifetime. Following the effective date of the Joint Plan of
Reorganization of Macy's and certain of its subsidiaries (the "Joint
Plan"), which includes the consummation of a merger pursuant to the
Merger Agreement, and through the third anniversary of the Termination
Date, your discount will be at the rate of 40% and will be available at
all Federated divisions. Macy's will pay you such amounts as are
necessary to place you in the same after-tax financial position that you
would have been in if you had not incurred any federal, state or local
income tax liability in connection with all purchases made through such
third anniversary of the Termination Date pursuant to such merchandise
discount program. Such amounts will be paid annually in
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January, for purchases made during the prior year. Following such
third anniversary, you will be entitled to the merchandise discount then
applicable to Chief Executive Officers of Federated divisions at all
Federated divisions. The merchandise discount will be subject to all
terms and conditions that apply to that privilege, as may be amended from
time to time.
10. Macy's agrees to cover you for long-term disabilities, on the same terms
and conditions as are currently in effect, with respect to long-term
disabilities occurring within the period of 36 months commencing with the
Termination Date. Such coverage shall be provided for as long as you do
not receive long-term disability benefits from a subsequent employer of
yours (a "Successor Employer"); provided that you accept any coverage for
which you are eligible that is available to other similarly situated
executives of a Successor Employer; and provided, further, that, in any
event, if you receive payments on account of long-term disability
incurred within such 36-month period under a disability program of your
Successor Employer (the "Successor LTD Benefits"), or if you incur a
long-term disability within such 36-month period for which Successor LTD
Benefits are not payable, Macy's will pay or cause you to be paid the
excess of (i) the payments which you would have received under the
coverage required to be provided to you under the first sentence of this
Paragraph 10 (had you not been covered by the long-term disability
program of your Successor Employer) over (ii) the Successor LTD Benefits,
if any. Long-term disability coverage under this Paragraph 10 shall be
provided by Macy's payments to you (or, with your consent, on your
behalf) of the amount of all required premiums relating to your
participation in the long-term disability plan, program, or insurance
policy or other arrangement under which Macy's will provide the long-term
disability benefits required hereby, it being understood that you will
be subject to income taxation on such payments.
11. Macy's agrees to continue to pay the premiums for health insurance
benefits ("Health Benefits") at the same level to which you are currently
entitled, including premiums in connection with any converted policies
with respect to such Health Benefits, to the extent you currently
participate in these programs, for a period of 36 months commencing with
the Termination Date. Such payments shall be made as long as you do not
receive health insurance benefits from a Successor Employer; provided
that you accept any coverage for which you are eligible that is available
to other similarly situated executives of a Successor Employer; and
provided,
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further, that any benefits not payable by the Successor Employer but
that would have been payable under the insurance required to be purchased
on your behalf under the first sentence of this Paragraph 11 (had you not
been covered by the health insurance program of your Successor Employer)
shall be payable by Macy's. The benefits under this Paragraph 11 shall
subsume any medical benefits otherwise required to be provided under
Section 10(a) of the Employment Agreement.
12. You understand that Macy's makes no representations as to the income tax
treatment of any payments hereunder and that any and all payments (and
all salaries, benefits and/or other payments previously made to you by
Macy's) will be subject to such tax treatment as applies, and to such
deductions, if any, as may be required under the applicable tax laws.
13. It is expressly understood and agreed that this settlement and the
effectuation of its terms do not constitute an admission or statement by
any party that Macy's has acted unlawfully or is otherwise liable to you
in any way. It is further agreed that evidence of this settlement, its
terms or the circumstances surrounding the parties entering into this
Agreement, shall be inadmissible in any action or lawsuit of any kind,
except an action for alleged breach of this Agreement.
14. Until your last day of employment by Macy's, you agree to faithfully and
diligently perform your duties consistent with your position as Deputy
Chairman of Macy's, in a manner such as to promote a successful
transition following your separation from employment, serve Macy's and
its divisions, subsidiaries and affiliates to the best of your ability
and comply with Macy's Code of Business Conduct. You shall devote your
working time, attention and energies to the business and affairs of
Macy's and its divisions, subsidiaries and affiliates; provided, however,
that nothing herein shall prevent you from taking action, between the
date of this Agreement and your last day of employment, relating to your
future employment, so long as such action does not prevent you from
performing your required duties for Macy's.
15. These payments and benefits are not intended to, and do not, extend your
employment beyond the Termination Date. Notwithstanding the foregoing,
you are required to comply with all applicable Term (as defined in the
Employment Agreement) and post-Term terms and conditions set forth in the
Employment Agreement; provided, however, that the non-competition
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provisions set forth in Section 12(d) of the Employment Agreement shall
not be applicable and, therefore, nothing herein or therein shall
preclude you from accepting any other employment, including without
limitation employment with a competing retailer.
16. You agree to return to Macy's all original documents, software,
equipment, and other materials belonging to Macy's, including, but not
limited to, Macy's identification and keys, wherever such items may be
located.
17. In consideration for Macy's commitment to the various arrangements
described in the preceding paragraphs, and in lieu of any other benefits
or payments, as a full and final mutual settlement, you hereby release
and discharge Macy's, its divisions, subsidiaries and affiliates and the
current and former directors, officers, shareholders, agents and
employees of each, and each of their predecessors, successors and assigns
(herein "the Macy Entities"), from any and all claims and causes of
action arising out of or related to your employment or separation from
employment, including, but not limited to, any claims for severance pay,
vacation pay, salary, bonuses or other compensation, discrimination based
on race, color, national origin, ancestry, religion, marital status, sex,
sexual orientation, pregnancy, disability (as defined by the Americans
with Disabilities Act, or any other federal, state or local law), age or
other unlawful discrimination (under the Age Discrimination in Employment
Act, as amended by the Older Workers Benefit Protection Act of 1990,
Title VII of the Civil Rights Act, as amended, or any other federal,
state, or local laws), as well as any claims in contract or tort
including, but not limited to, claims for breach of implied or express
contracts, breach of promises, misrepresentation, fraud, estoppel or
wrongful discharge, that you, your heirs, executors, administrators,
successors, and assigns now have, ever had or may hereafter have, whether
known or unknown, suspected or unsuspected, up to and including the date
of this Agreement; provided, however, that nothing contained herein shall
be construed to release any claim you may have against Macy's (i) for
payments or benefits specifically set forth in this Agreement or under
the Employment Agreement; (ii) related to the obligation of Macy's to
indemnify you as and to the full extent it is required to indemnify
directors and officers of Macy's for services in such capacities; (iii)
related to pre-petition obligations of Macy's, to the extent such
pre-petition obligations have been provided for in the Joint Plan or (iv)
under the continuation-of-coverage provisions of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"). It is further
agreed that you have not
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and will not institute any complaint, lawsuit, or action at law or
otherwise against any of the Macy Entities and shall hold each of the
Macy Entities harmless against such actions except for (i) actions
related to the various payments and benefits specified in this Agreement,
which describes the complete arrangements to which we agree as to the
subject matter thereof, or in the Employment Agreement; (ii) actions
related to the obligation of Macy's to indemnify you as and to the full
extent it is required to indemnify directors and officers of Macy's for
services in such capacities; (iii) actions related to pre-petition
obligations of Macy's, to the extent such pre-petition obligations have
been provided for in the Joint Plan and (iv) actions under COBRA.
18. In the event of a breach of this Agreement, either party will be entitled
to such relief as is provided by law or equity.
19. If any section of this Agreement should be held invalid by operation of
law or by a tribunal of competent jurisdiction, or if compliance with or
enforcement of any section is restrained by such tribunal, the
application of any and all other sections, other than those which have
been held invalid, shall not be affected.
20. This Agreement shall be binding on you, your heirs, administrators,
representatives, executors, successors and assigns and shall likewise be
binding on Macy's and its divisions, subsidiaries and affiliates, and
their respective successors and assigns, and shall inure to the benefit
of you, your heirs, administrators, representatives, executors,
successors and assigns, and of Macy's and its divisions, subsidiaries and
affiliates, and their respective successors and permitted assigns.
Macy's shall not assign this Agreement without your consent; provided
that (i) unless you consent otherwise, Macy's shall cause the purchaser
of substantially all of the assets of Macy's to assume the obligations
under this Agreement and (ii) in the event of an assignment to such a
purchaser, Macy's shall continue to remain jointly and severally liable
for such obligations.
21. Except as otherwise expressly provided above, (i) you shall be under no
duty to mitigate any of the payments and benefits otherwise provided for
herein, and (ii) such payments and benefits shall in no event be reduced
in the event that you do so mitigate.
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22. This Agreement sets forth the entire Agreement between the parties with
respect to the subject matter hereof and fully supersedes any and all
prior agreements or understandings between them pursuant to such subject
matter. The parties expressly acknowledge and agree that the Employment
Agreement is not superseded, and shall remain in full force and effect in
accordance with its terms, and that, except as expressly provided in the
Paragraphs 6 and 11 above, the payments and benefits owed to you
hereunder are in addition to the payments and benefits owed to you under
the Employment Agreement.
23. This Agreement shall be governed by and construed in accordance with the
laws of the state of New York without regard to principles of conflict of
laws.
24. You have the right to consult with an attorney to review this Agreement
and are encouraged to do so. Any legal expenses (at your attorneys'
standard hourly rates, plus disbursements) actually incurred by you in
connection herewith, as well as any legal expenses (at your attorneys'
standard hourly rates, plus disbursements) actually incurred by you
regarding matters in connection with the Merger (as defined in the Merger
Agreement) and the Joint Plan, but not in excess of $100,000, shall be
reimbursed to you by Macy's no later than the tenth business day to
follow the consummation of the Merger; provided that you submit proof in
reasonable detail of such expenses. Any controversy arising out of or
relating to this Agreement or the breach hereof shall be settled by
arbitration in the City of New York in accordance with the rules then
obtaining of the American Arbitration Association and judgment upon the
award rendered may be entered in any court having jurisdiction thereof.
Macy's shall pay all of the fees and expenses of such arbitrator and the
other costs of arbitration. In addition, Macy's shall pay your
reasonable legal fees and expenses incurred in connection with any
successful enforcement or defense by you of your rights hereunder.
25. You have 21 days to consider this Agreement from the date it was first
given to you although you may accept it any time within those 21 days.
26. You have seven days after signing this Agreement to revoke it by
notifying Macy's, in writing, of such revocation within the seven-day
period. However, if you do not revoke your signature, the Agreement will
become effective on the eighth day after you sign it (the "Effective
Date").
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27. The obligations hereunder of the parties hereto shall not become
effective until the Effective Time (as defined in Section 2.5 of the
Merger Agreement), and this Agreement shall be null and void and of no
further force or effect if the Merger Agreement is terminated prior the
Merger for any reason.
If the arrangements we have discussed and agreed upon are accurately
set forth above, please confirm your approval and acceptance of our Agreement
by signing both enclosed copies of this Agreement, and returning both copies to
the undersigned.
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties thereto.
The undersigned hereby represents that he is duly authorized to
execute this Agreement on behalf of Federated Department Stores, Inc., and that
this Agreement shall be binding and enforceable in all regards against Macy's
upon and after the Effective Time (as defined in Section 2.5 of the Merger
Agreement).
FEDERATED DEPARTMENT STORES, INC.
By: /s/ Dennis J. Broderick
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Name: Dennis J. Broderick
Title: Senior Vice President,
General Counsel and Secretary
ACKNOWLEDGED BY:
R.H. MACY & CO., INC.
By: Diane P. Baker
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Name: Diane P. Baker
Title: Group Senior Vice President
and Chief Financial Officer
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I ACKNOWLEDGE THAT I HAVE CAREFULLY READ THIS AGREEMENT AND UNDERSTAND ALL OF
ITS TERMS INCLUDING THE FULL AND FINAL RELEASE OF CLAIMS SET FORTH ABOVE. I
FURTHER ACKNOWLEDGE THAT I HAVE VOLUNTARILY ENTERED INTO THIS AGREEMENT, THAT I
HAVE NOT RELIED UPON ANY REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET
FORTH IN THIS AGREEMENT, THAT I HAVE BEEN GIVEN THE OPPORTUNITY AND ENCOURAGED
TO HAVE THIS AGREEMENT REVIEWED BY MY ATTORNEY AND TAX ADVISOR. I ALSO
ACKNOWLEDGE THAT I HAVE BEEN AFFORDED 21 DAYS TO CONSIDER THIS AGREEMENT AND
THAT I HAVE SEVEN DAYS AFTER SIGNING THIS AGREEMENT TO REVOKE IT BY NOTIFYING
MACY'S, IN WRITING, OF MY REVOCATION. IF I DO NOT REVOKE MY SIGNATURE, THE
AGREEMENT WILL BECOME EFFECTIVE ON THE EIGHTH DAY AFTER I SIGN IT.
Myron E. Ullmann 12/8/94
- - ---------------------------------- --------------------------------
Myron E. Ullman, III Date
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January 24, 1995
513/579-7560
FAX 513/579-7354
Mr. Myron E. Ullman, III
200 North Street
Greenwich, CT 06830
Dear Mike:
We have requested that you resign as Deputy Chairman of Federated
Department Stores, Inc. (the "Company") effective as of January 27, 1995,
rather than as of January 31, 1995 as presently contemplated. In consideration
for your agreement to do so, we are hereby offering to provide you with the
assurances and administrative arrangements relating to your termination set
forth below.
First, the Company represents and agrees that your termination as of
January 27, 1995, rather than as of January 31, 1995 as currently contemplated
by your termination agreement with the Company dated December 7, 1994 (the
"Termination Agreement"), shall not have any adverse financial, economic or
other adverse effect on you of any kind. Thus, for example, but without
limitation, your salary, benefits and other compensation and remuneration will
continue as though you had terminated on January 31, 1995, whether such salary,
benefits and other compensation and remuneration are provided for under the
Termination Agreement, your Amended and Restated Employment Agreement with the
Company dated February 5, 1994, as amended by letter agreements dated August
16, 1994, August 20, 1994, September 19, 1994 and December 6, 1994
(collectively, the "Employment Agreement") or otherwise. As another example,
again without limitation, in those cases in which the Company would have
continued to provide you with salary, benefits or other compensation or
remuneration for a fixed period of time measured from January 31, 1995, the
fixed period shall not end sooner than it would have ended were you to have
terminated on January 31, 1995.
Second, the Company will pay to you (net of tax withholding) on January
25, 1995, by wire transfer, the aggregate amount of all gross-up payments it is
required to pay to you under Paragraph 5 of the Termination Agreement (i.e.,
$86,871.00). The Company expressly acknowledges that it will continue to have
all other obligations regarding your split-dollar life insurance as are
provided under Paragraph 5 of the Termination Agreement and as are provided
under Section 6(a) of the Employment Agreement.
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Mr. Myron E. Ullman, III
January 24, 1995
Page 2
Third, the Company will pay to you (net of tax withholding) on January
25, 1995, by wire transfer, $20,655.00. We understand that you will wire
transfer $20,655.00 to the Company as soon as practicable after your receipt
thereof, at which point the Company will accept your return of such sum as
prepayment of all your required premiums relating to the Company's provision,
as required by Section 10 of the Termination Agreement, of long-term disability
benefits for disabilities incurred by you on or before January 31, 1998. We
will contact you if we insure all or a portion of the coverage with an outside
insurer.
Fourth, the Company will on or before January 27, 1995 wire transfer to
you (net of applicable tax withholding):
Your salary for January 1995 $ 104,166.67
Your automobile allowance for January 1995 2,666.67
The amounts owed to you under Section 10(a) of
the Employment Agreement (i.e., $2,500,000 +
$1,727,300) 4,227,300.00
The amounts owed to you under Paragraph 2
of the Termination Agreement 85,460.00
The amounts owed to you under Paragraph 3
of the Termination Agreement 96,000.00
The amounts owed to you under Paragraph 6
of the Termination Agreement 364,581.00
The amounts owed to you under Paragraph 7
of the Termination Agreement
45,000.00
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$4,925,174.334
=============
It is expressly understood that your agreement to terminate on January 27, 1995
is subject to the condition precedent that the Company makes the wire transfer
of $4,925,174.34 (net of applicable tax withholding) on or before such date.
We also expressly acknowledge our obligation to reimburse you for your legal
expenses as provided by Paragraph 24 of the Termination Agreement, upon your
submission of proof in reasonable detail of such expenses.
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If the arrangements we have discussed and agreed upon are accurately set
forth above, please confirm your approval and acceptance of our Agreement by
signing both enclosed copies of this Agreement, retaining one copy for your
files and returning one copy to the undersigned.
The undersigned hereby represents that he is duly authorized to execute
this Agreement on behalf of the Company. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed by
all of the parties hereto.
FEDERATED DEPARTMENT STORES, INC.
/s/ Dennis J. Broderick
----------------------------------------
ACKNOWLEDGED AND AGREED:
By: /s/ Myron E. Ullman
----------------------------------
Myron E. Ullman, III