Annual Report — [x] Reg. S-K Item 405 — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K405 Hills Stores Company Form 10-K 46 274K
2: EX-3.1 Amended & Restated Certificate of Incorporation 4 17K
3: EX-3.2 Amendment to Certificate of Incorporation 2± 9K
4: EX-10.12 Form of Employment Agreements 13 55K
5: EX-10.13 Consulting Agreement 8 43K
6: EX-11.1 Computation of Earnings Per Share 2 16K
7: EX-21 Subsidiaries 1 6K
8: EX-23 Consent of Coopers & Lybrand LLP 1 7K
9: EX-24 Powers of Attorney 2± 11K
10: EX-27 Financial Data Schedule 1 10K
EX-10.13 — Consulting Agreement
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EXHIBIT 10.13
EXECUTION COPY
(Replaces Agreement dated 08/19/94)
CONSULTING AGREEMENT made as of September 30, 1994, by
and between Hills Department Store Company (the "Company"),
a Delaware corporation having its principal office at 15
Dan Road, Canton, Massachusetts ("Principal Office"), and a
subsidiary of Hills Stores Company, a Delaware corporation
having its principal office at the Principal Office, and
the person ("Consultant") set forth on the signature page
hereof, who resides at the address specified in Schedule A.
WHEREAS, Consultant is presently retained by the Company,
pursuant to a consulting agreement with the Company, with the title and in the
position specified in Schedule A (such title and position, the "Advisory
Position"); and
WHEREAS, the Company desires to secure the continued service
of Consultant in such Advisory Position, and Consultant is willing to continue
to provide such services; and
WHEREAS, both the Consultant and the Company acknowledge and
agree that it is in their best interests to modify and amend certain of the
terms, provisions and conditions of the existing consulting agreement and to
execute a new consulting agreement as so modified and amended.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the Company and Consultant agree as
follows:
SECTION 1. ENGAGEMENT. The Company hereby agrees to continue
to engage Consultant in the Advisory Position, and Consultant hereby accepts
such engagement. The Consultant agrees to commit not less than two-thirds
(2/3) of his professional time commitments (determined on an annual basis) to
providing services to the Company hereunder.
SECTION 2. TERM. The engagement of Consultant by the Company
as provided in Section 1 shall continue to and include the date specified in
Schedule A (including any extension, the "Term") unless further extended or
earlier terminated as hereinafter provided. The Term shall automatically be
extended for successive one (1) year periods unless either party gives at least
ninety (90) days advance written notice before the end of the Term of its
intention not to extend the Term for said additional one (1) year.
SECTION 3. POSITION AND AUTHORITY. Consultant shall continue
to be engaged by the Company in the Advisory Position and shall have the
responsibilities and authority specified in Schedule A; PROVIDED, HOWEVER, that
the Company shall have the right to make reasonable changes in the Consultant's
responsibilities and authority to comport with business necessities as long as
there is not a significant diminution in the Consultant's responsibilities and
authority (such responsibilities and authority, the "Consultant's Authority").
SECTION 4. PLACE OF PERFORMANCE. Consultant may not, without
Consultant's consent, be required to perform Consultant's duties at any
location that is more than fifty (50) miles from the Company's Principal
Office, or its field office headquarters in Aliquippa, Pennsylvania, except for
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necessary travel on the Company's business to an extent substantially
consistent with present business travel obligations.
SECTION 5. COMPENSATION AND EXPENSES. (a) SALARY. Consultant
shall receive the base salary specified in Schedule A. Consultant will be
paid in equal monthly installments on the 15th day of each month or, if such
day is not a business day, on the immediately preceding business day. Base
salary shall be reviewed on an annual basis. There shall be no decrease in
base salary during the Term.
(b) BONUSES. Consultant shall receive the bonuses specified
in Schedule A, upon the terms and conditions specified in Schedule A. Such
bonuses shall be paid to Consultant within sixty (60) days after the end of
each of the Company's fiscal years during the term of this Agreement.
(c) BENEFITS. Except as provided in Section 5(b), Consultant
shall not be entitled to participate in any benefit plans or programs of the
Company.
(d) EXPENSES. The Company shall reimburse Consultant for
all reasonable out-of-pocket expenses incurred by Consultant in connection with
the business of the Company and in performance of Consultant's duties under
this Agreement.
SECTION 6. TERMINATION BY THE COMPANY. The Company shall
have the right to terminate Consultant's engagement at any time for "Cause".
For purposes of this Agreement, "Cause" shall mean (a) termination by action of
a majority of the members of the Company's Board of Directors, acting on the
written opinion of counsel, because of Consultant's willful and continued
refusal, without proper cause, to perform substantially Consultant's duties
under this Agreement; or (b) the conviction of Consultant of a felony or an act
of fraud or embezzlement against the Company or any of its divisions,
subsidiaries of affiliates (which through lapse of time or otherwise is not
subject to appeal). Such termination shall be effected by written notice
thereof, personally hand delivered by the Company to Consultant, and, except as
hereinafter provided, shall be effective as of the thirtieth (30th) calendar
day after such notice; provided, however, that if within such thirty (30)
calendar day period Consultant shall cease Consultant's refusal and shall use
Consultant's best efforts to perform such obligations, the termination shall
not be effective.
SECTION 7. TERMINATION BY DEATH. In the event Consultant
dies during the Term, Consultant's engagement shall terminate (effective on the
date of Consultant's death) and the provisions of Section 10 shall be
applicable.
SECTION 8. TERMINATION BY DISABILITY. In the event that
Consultant suffers a disability which prevents Consultant from substantially
performing Consultant's duties under this Agreement for a period of at least
one hundred eighty (180) consecutive or nonconsecutive calendar days within any
three hundred sixty-five (365) calendar day period, the Company shall have the
right, after such one hundred eighty (180) calendar day period has elapsed, to
terminate Consultant's engagement hereunder upon thirty (30) calendar days
written notice to Consultant and the provisions of Section 10 shall be
applicable.
SECTION 9. TERMINATION BY CONSULTANT. Notwithstanding any
other provision of this Agreement, Consultant may terminate Consultant's
engagement either (i) in the event of a Change in Control or (ii) by written
notice served upon the Company within thirty (30) calendar days after
Consultant has knowledge of an event constituting "Good Reason."
For purposes of this Agreement, the term "Change in Control"
shall mean either (i) that,
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after the date hereof, any person (an "Acquiring Person"), together with its
affiliates and associates (as defined in Rule 12b-2 under the Securities
Exchange Act of 1934, or any successor rule thereto) shall become the
beneficial owner (as defined in Rule 13d- 3 under the Securities and Exchange
Act), including by merger or otherwise, of more than fifty percent (50%) of the
total voting power of all classes of voting stock of the Company or (ii) that
one or more Acquiring Persons has succeeded as the result of or in
response to actual or threatened election contests, whether by settlement or
otherwise, in having elected to the Board of Directors of the Company, whether
at one time or on a cumulative basis, a sufficient number of its nominees to
constitute (x) more than thirty percent (30%) of the members of the Company's
Board of Directors, rounded down to the nearest whole number, if the number of
directors on the Company's Board is eight or less, or (y) more than forty
percent (40%) of the members of the Company's Board, rounded down to the
nearest whole number, if the number of directors on the Company's Board is nine
or more.
For purposes of this Agreement, the term "Good Reason" shall mean:
(i) any action by the Company which results in a
diminution in the Advisory Position or in the Consultant's Authority
except for the actions permitted to be made by the Company in Section
3 above;
(ii) any failure by the Company to timely pay the amounts
or provide the benefits described in Section 5 of this Agreement,
other than an isolated failure not occurring in bad faith and which is
remedied promptly after receipt of written notice thereof given by
Consultant;
(iii) a material breach by the Company of any of the
provisions of this Agreement which failure or breach shall have
continued for thirty (30) days after written notice from you to the
Company specifying the nature of such failure or breach; or
(iv) any action by the Company that would result in a
violation of Section 4.
SECTION 10. EFFECT OF TERMINATION. (a) FOR CAUSE; WITHOUT
GOOD REASON AND NO CHANGE IN CONTROL; AND DEATH. In the event of termination
of this Agreement (i) by the Company for Cause, (ii) by Consultant without Good
Reason or Change in Control or (iii) by reason of the death of the Consultant,
the Company shall pay Consultant (or Consultant's beneficiary in the event of
the Consultant's death) any base salary or other compensation earned (and a pro
rata portion of the bonus payable with respect to the year in which termination
occurred) but not paid to Consultant prior to the effective date of such
termination and, in the case of termination by reason of death, the Company
shall pay Consultant's beneficiary (i) the base salary that Consultant would
have earned for a period of six (6) months following his death plus (ii) a pro
rata portion of any bonuses or other incentive compensation that Consultant
would have earned if he had been engaged for the full fiscal year in which he
died payable at the time of payment of similar bonuses made to senior
executives of the Company, plus (iii) any death benefits that Consultant is
entitled to under the Company's policies in effect on Consultant's date of
death.
(b) WITHOUT CAUSE; NON-EXTENSION OF TERM; FOR GOOD REASON.
In the event of (i) termination of this Agreement by the Company other than for
Cause, (ii) delivery of notice by the Company to prevent the automatic
extension of the Term pursuant to Section 2 or (iii) termination of this
Agreement by Consultant for Good Reason without a Change in Control, the
Company shall pay Consultant, in a lump sum within thirty (30) days after
termination under this Section 10(b), the sum of
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(A) the amount described in Section 10(a) of this Agreement (other than the
payments to be paid in case of termination by death), and (B) the amount equal
to two times (x) the Consultant's annual base salary in effect at the time of
termination under this Section 10(b), and the Company shall continue during the
Term all of the benefits and perquisites set forth in Sections 5(c) and (e).
(c) CHANGE IN CONTROL (OTHER THAN AN APPROVED CHANGE IN
CONTROL). In the event of termination of this Agreement by Consultant within
one (1) year after a Change in Control (other than an Approved Change in
Control), the Company shall pay Consultant, in a lump sum payment within thirty
(30) days after termination under this Section 10(c), the sum of (A) the amount
described in Section 10(a) of this Agreement (other than the payments to be
made in case of termination by death), and (B) the amount equal to three (3x)
times Consultant's Annual Compensation, and the Company shall continue during
the Term all of the benefits set forth in Section 5(c).
For purposes of this Agreement, the term "Approved Change in
Control" shall mean a Change of Control that has occurred with the prior
approval of a majority of the Continuing Directors and the term "Continuing
Director" shall mean any member of the Board of Directors of the Company who is
not an Acquiring Person or a nominee or representative of an Acquiring Person
or of any affiliate or associate of an Acquiring Person and any successor to a
Continuing Director who was recommended for election or elected to succeed a
Continuing Director by a majority of the Continuing Directors then on the Board
of Directors of the Company.
During the term of this Agreement as specified in the amended
Schedule A, for purposes of this Section 10(c) of this Agreement the term
"Consultant's Annual Compensation" shall mean (i) the sum of (A) the
Consultant's base salary for 1994 and (B) any bonus compensation to which
Consultant would have been entitled if Consultant continued to be engaged under
this Agreement to the end of 1994 (assuming that all Company and individual
performance goals and objectives had been achieved pursuant to Section 5(b)),
provided that if the Consultant's base salary or bonus compensation is
increased after 1994 following significant changes in the Consultant's
responsibilities the term shall mean the sum of (a) the base salary in effect
at the time of termination and (b) any bonus compensation to which Consultant
would have been entitled if Consultant had continued to be engaged under this
Agreement to the end of the Company's fiscal year in which his engagement
terminated (assuming that all Company and Individual performance goals and
objectives had been achieved pursuant to Section 5(b)). If the Agreement is
extended at the end of the present term of the Agreement, "Consultant's Annual
Compensation" shall mean (ii) the sum of (A) the base salary in effect at the
time of termination and (B) any bonus compensation to which Consultant would
have been entitled if Consultant had continued to be engaged under this
Agreement to the end of the Company's fiscal year in which his engagement
terminated (assuming that all Company and Individual performance goals and
objectives had been achieved pursuant to Section 5(b)).
(d) WITH GOOD REASON FOLLOWING AN APPROVED CHANGE IN CONTROL.
In the event of termination of this Agreement by Consultant with Good Reason
within one (1) year after an Approved Change in Control, the Company shall pay
Consultant, in a lump sum payment within thirty (30) days after termination
under this Section 10(c), the sum of (A) the amount described in Section 10(a)
of this Agreement (other than the payments to be made in case of termination by
death), (B) the amount equal to three (3x) times the sum of (i) Consultant's
annual base salary in effect at the time of termination, and (ii) any bonus
compensation to which Consultant would have been entitled if Consultant had
continued to be engaged under this Agreement to the end of the Company's fiscal
year in which his engagement terminated (assuming that all Company and
individual performance goals and objectives had been
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achieved pursuant to Section 5(b)).
(e) DISABILITY. In the event of termination of this
Agreement by reason of disability, the Company shall continue to pay
Consultant's base salary at the time of such termination for the remainder of
the Term, reduced by the maximum amount of salary which may be insured under
the Company's Long Term Disability Plan at the time of disability.
SECTION 11. EXCISE TAXES. In the event that Consultant shall
have imposed upon him the tax which is imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") or by any successor provision, by
reason of any payment or benefit which Consultant has received under this
Agreement, the Company shall pay as additional compensation to Consultant that
amount which, after taking into account all taxes (including any tax which
shall be imposed by Code Section 4999) imposed upon such amount by any federal,
state or local government, shall be equal to the amount of said tax imposed by
Code Section 4999.
SECTION 12. ACCELERATION AND EXPIRATION OF OPTIONS. Any
options to purchase capital stock of the Company ("Options") granted by the
Company to Consultant that have not yet become exercisable shall become
exercisable upon the earliest to occur of (a) the termination of Consultant's
engagement as a result of Consultant's death or disability; (b) the termination
by Consultant with Good Reason; or the termination by Consultant after a Change
in Control (other than an Approved Change in Control). Notwithstanding the
foregoing, all Options, whether currently exercisable or not, shall expire and
cease to be exercisable as follows:
(a) if the Company terminates Consultant's engagement for
Cause, immediately upon the effective date of such termination;
(b) if Consultant terminates Consultant's engagement with the
Company other than for Good Reason, a Change in Control, death, or
disability, immediately upon the effective date of such termination;
(c) if Consultant terminates Consultant's engagement with the
Company with Good Reason or after a Change in Control (other than an
Approved Change in Control), ninety (90) days after the effective date
of such termination (but in no event later than the date the Term
would expire without giving effect to any automatic renewal);
(d) if Consultant dies while engaged by the Company, six (6)
calendar months after Consultant's death (but in no event later than
the date the Term would expire without giving effect to any automatic
renewal); and
(e) if Consultant's engagement is terminated as a result of
disability, six (6) calendar months after the effective date of such
termination (but in no event later than the date the Term would expire
without giving effect to any automatic renewal).
SECTION 13. NO MITIGATION; NO OFFSET. Consultant shall be
under no obligation to mitigate damages or the amount of any payment provided
for under this Agreement by seeking other engagement or otherwise and there
shall be no offset against amounts due Consultant under this Agreement on
account of any remuneration attributable to any subsequent engagement that
Consultant may obtain.
5
SECTION 14. COVENANTS OF CONSULTANT. (a) Consultant
recognizes that the knowledge of, information concerning and relationship with
customers, suppliers and agents, and the knowledge of the Company's business
methods, systems, plans and policies which Consultant will establish, receive
or obtain as a consultant to the Company, are valuable and unique assets of the
business of the Company. Consultant will not, during or within two (2) years
after the Term, disclose any such knowledge or information pertaining to the
Company, its customers, suppliers, agents, policies or other aspects of its
business, for any reason or purpose, whatsoever except pursuant to Consultant's
duties hereunder or as otherwise authorized by the Company in writing. The
foregoing restriction shall not apply, following termination of Consultant's
engagement hereunder, to knowledge or information which (i) is in or enters the
public domain without violation of this Agreement or other obligations of
confidentiality by Consultant or his agents or representatives, (ii) Consultant
can demonstrate was in his possession on a nonconfidential basis prior to the
commencement of his engagement with the Company, or (iii) Consultant can
demonstrate was received or obtained by him on a non-confidential basis from a
third party who did not acquire it wrongfully or under an obligation of
confidentiality, subsequent to the termination of his engagement hereunder.
(b) All memoranda, notes, records or other documents made or
compiled by Consultant or made available to Consultant while engaged concerning
customers, suppliers, agents or personnel of the Company, or the Company's
business methods, systems, plans and policies, shall be the Company's property
and shall be delivered to the Company on termination of Consultant's engagement
or at any other time on request.
(c) During the term of Consultant's engagement and for two
(2) years thereafter, Consultant shall not, except pursuant to and in
furtherance of his duties hereunder, directly or indirectly solicit or initiate
contact with any employee of the Company with a view to inducing or encouraging
such employee to leave the employ of the Company for the purpose of being hired
by Consultant, an employer affiliated with him or any competitor of the
Company.
(d) Consultant acknowledges that the provisions of this
section are reasonable and necessary for the protection of the Company and that
the Company will be irrevocably damaged if such covenants are not specifically
enforced. Accordingly, Consultant agrees that, in addition to any other relief
to which the Company may be entitled in the form of actual or punitive damages,
the Company shall be entitled to seek and obtain injunctive relief from a court
of competent jurisdiction for the purposes of restraining Consultant from any
actual or threatened breach of such covenants.
(e) In the event that, following the termination of this
Agreement, Consultant is entitled to receive any further payments other than
for compensation or other amounts accrued prior to termination or expiration of
this Agreement, such payments shall nonetheless cease and the Company shall no
longer be obligated to make such payments if there is a material breach of any
of the covenants in this section and Consultant shall forthwith upon demand of
the Company repay any such amounts paid to Consultant subsequent to the date
such breach occurred.
SECTION 15. INDEMNIFICATION. Throughout the Term and
thereafter, the Company shall indemnify Consultant to the fullest extent not
prohibited by law against any and all expenses, fees (including reasonable
legal fees), liabilities and obligations of any nature whatsoever paid or
incurred by Consultant in connection with any suit, proceeding, inquiry,
hearing or investigation arising out of or related to (a) the fact that
Consultant is or was an employee, officer, director, or agent of, or consultant
to, the Company, (b) anything done or not done by Consultant in any such
capacity, or (c) enforcement of the terms of this Agreement. Such
indemnification shall be paid upon the submission of invoices,
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records or other evidence of the expenses, fees liabilities or obligations
accrued or incurred.
SECTION 16. ENTIRE AGREEMENT. This Agreement contains the
entire understanding of the parties with respect to the subject matter thereof,
and, subject to the provisions of Section 21, supersedes and replaces in its
entirety any and all prior agreements of the parties with respect to the
subject matter thereof, including, without limitation, the existing Consulting
Agreement dated August 19, 1994, between Consultant and Hills Department Store
Company, including without limitation the renewal and termination provisions
thereof and cannot be changed or extended except by a writing signed by both
parties hereto. This Agreement shall be binding upon and inure to the benefit
of the parties and their respective legal representatives, executors, heirs,
administrators, successors and assigns.
SECTION 17. GOVERNING LAW. This Agreement and all matters
and issues collateral thereto shall be governed by the laws of The Commonwealth
of Massachusetts applicable to contracts performed entirely therein.
SECTION 18. SEVERABILITY. If any provision of this
Agreement, as applied to either party or to any circumstance, shall be adjudged
by a court to be void and unenforceable, the same shall in no way affect any
other provision of this Agreement or the validity or enforceability thereof.
SECTION 19. NOTICES. All notices or other communications
hereunder shall be given in writing and shall be deemed given if served
personally or mailed by registered or certified mail, return receipt requested,
to the parties at their respective addresses above indicated, or at such other
address or addresses as they may hereafter designate in writing.
SECTION 20. EFFECTIVE DATE. This Agreement shall become
effective as of the date set forth below, provided that the Stipulation of
Settlement contemplated by the Company's Memorandum of Understanding signed
September 30, 1994 settling the Joseph H. Weiss class action and derivative
suit (Case No. 13707) has received final court approval and the Joseph H. Weiss
class action and derivative suit has been dismissed with prejudice.
IN WITNESS WHEREOF, the parties have executed this Agreement on
September 30, 1994.
/s/ Norman S. Matthews
--------------------------------------
HILLS DEPARTMENT STORE COMPANY
By: /s/ Michael Bozic
--------------------------------------
President
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09/30/94
[Enlarge/Download Table]
Schedule A
to
Employment Agreement
Between
Hills Department Store Company
and
Consultant
NAME Norman S. Matthews
ADDRESS 11 Lincoln Lane, Purchase, NY 10577
TITLE OF POSITION Consultant to, and Director of, the Company and Hills Stores Company
TERM OF ENGAGEMENT December 31, 1996
RESPONSIBILITY
AND AUTHORITY Reports to Board of Directors of the Company and Hills Stores Company
AUTHORITY AND LINE
OF REPORTING Reports to Board of Directors of the Company and Hills Stores Company
BASE SALARY $500,000
BONUSES 50% of base salary if annual goals established by the Board are met
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Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
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| This ‘10-K405’ Filing | | Date | | First | | Last | | | Other Filings |
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| |  |
| | 12/31/96 | | 8 |
| Filed on: | | 4/14/95 |
| For Period End: | | 1/28/95 | | | | | | | 10-K/A |
| | 9/30/94 | | 1 | | 7 |
| | 8/19/94 | | 7 |
| List all Filings |
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