EXHIBIT 10.6

 

 

EMPLOYMENT AGREEMENT

 

dated as of

 

July 1, 2005

 

between

 

FEDERATED CORPORATE SERVICES, INC.

 

and

 

SUSAN KRONICK

 

EMPLOYMENT AGREEMENT

    THIS AGREEMENT, made in the City of Cincinnati and State of Ohio, as of July
1, 2005, between FEDERATED CORPORATE SERVICES, INC., a Delaware corporation
(hereinafter called the "Employer"), and SUSAN KRONICK (hereinafter called the
"Employee").

    In consideration of the premises, it is agreed by and between the parties
hereto as follows:

ARTICLE I

EMPLOYMENT

    1.1 Term and Duties. The Employer shall employ the Employee, and the
Employee shall serve the Employer, as an executive for the period (the "Term")
beginning on the date of this Agreement and ending on the later of (a) the date
set forth on Exhibit A hereto and (b) any later date to which the Term may have
been extended by agreement of the parties. During the Term the Employee shall
faithfully and in conformity with the directions of the Board of Directors of
the Employer (the "Board") or its delegate perform the duties of his employment
and shall devote to the performance of such duties his full time and attention.
During the Term the Employee shall serve in the office or offices of the
Employer to which the Board may from time to time elect or appoint him. The
Employee shall be excused from performing any services hereunder during periods
of temporary incapacity and during vacations in accordance with the Employer's
disability and vacation policies.

    1.2 Compensation. In consideration of his services during the Term, the
Employer shall pay the Employee cash compensation at an annual rate not less
than the greater of his current base salary as set forth on Exhibit A hereto or
the base salary of the Employee most recently approved by the Board or its
delegate ("Base Compensation"). Employee's Base Compensation shall be subject to
such increases as may be approved by the Board or its delegate.

    1.3 Payment Schedule. The Base Compensation specified in Section 1.2(a)
hereof shall be payable as current salary, in installments not less frequently
than monthly, and at the same rate for any fraction of a month unexpired at the
end of the Term.

    1.4 Expenses. During the Term the Employee shall be allowed reasonable
traveling expenses and shall be furnished office space, assistance and
accommodations suitable to the character of his position with the Employer and
adequate for the performance of his duties hereunder.

    1.5 Termination in Case of Disability. The Employee shall not be in breach
of this Agreement if he shall fail to perform his duties hereunder because of
physical or mental disability. If for a continuous period of 12 months during
the Term the Employee fails to render services to the Employer because of the
Employee's physical or mental disability, the Board or its delegate may end the
Term prior to its stated termination date. If there should be any dispute
between the parties as to the Employee's physical or mental disability at any
time, such question shall be settled by the opinion of an impartial reputable
physician agreed upon for the purpose by the parties or their representatives,
or failing agreement within 10 days of a written request therefor by either
party to the other, then one designated by the then president of the local
Academy of Medicine. The written opinion of such physician as to the matter in
dispute shall be final and binding on the parties.

    1.6 Termination of Services. If the Employer notifies the Employee that his
services will no longer be required during the Term, the Employee shall be
entitled (except as otherwise provided in Section 1.5 or Section 1.7 hereof) to
continue to receive his Base Compensation for the remainder of the Term.

    1.7 Mitigation. If the Employee receives notice from the Employer pursuant
to Section 1.6 hereof, the Employee (subject to Section 2.4 hereof) shall be
free to become actively engaged with another business and shall use his best
efforts to find other comparable employment. Upon the payment to the Employee of
compensation for employment or other services by any unaffiliated third party,
the Employee shall automatically cease to be an employee of the Employer. The
Employee shall promptly notify the Employer of any such employment or other
services and of the compensation received, to be received or receivable from his
subsequent employer or such other party attributable to the Term. All Base
Compensation otherwise payable to the Employee by the Employer under this
Agreement during the remainder of the Term shall be reduced to the extent of his
similar compensation received, to be received or receivable from such other
employment or other services.

    1.8 Termination for Cause. The Employer may terminate the employment of the
Employee and this Agreement and all of its obligations hereunder, except for
obligations accrued but unpaid to the effective date of termination, for Cause
upon notice given pursuant to this Section. As used in this Agreement, the term
"Cause" shall mean:

        (a) an intentional act of fraud, embezzlement, theft or any other
material violation of law in connection with the Employee's duties or in the
course of his employment with the Employer;

        (b) intentional wrongful damage to material assets of the Employer;

        (c) intentional wrongful disclosure of material confidential information
of the Employer;

        (d) intentional wrongful engagement in any competitive activity which
would constitute a material breach of the duty of loyalty; or

        (e) intentional breach of any stated material employment policy of the
Employer.

    No act, or failure to act, on the part of an Employee shall be deemed
"intentional" if it was due primarily to an error in judgment or negligence, but
shall be deemed "intentional" only if done, or omitted to be done, by the
Employee not in good faith and without reasonable belief that his action or
omission was in or not opposed to the best interest of the Employer. Failure to
meet performance standards or objectives of the Employer shall not constitute
Cause for purposes hereof.

    1.9 Election of Benefits. If the Employee receives notice from the Employer
pursuant to Section 1.6 hereof, the Employee shall have the right to elect to
receive (in lieu of the payments hereunder specified in such Section 1.6) any
benefits that may be payable to him pursuant to any severance plan of the
Employer applicable to him. If no such election is made, the amounts specified
in such Section 1.6 shall be payable as specified therein, no benefit shall be
payable to the Employee under such severance plan, and the Employee hereby
expressly waives any benefits that might otherwise be due him under such
severance plan.

    This Agreement has no impact upon any election made by the Employee to
participate in or decline participation in any other benefit plans or programs
made available by the Employer, including but not limited to the Employer's
early dispute resolution program, Solutions InSTORE. The Employee and Employer's
rights and obligations for the purposes of such other benefit plans or programs
shall be governed by the terms and conditions of said benefit plans and
programs.

ARTICLE II

CERTAIN OBLIGATIONS OF THE EMPLOYEE

    2.1 No Participation in Other Businesses. During the Term (except as
otherwise expressly provided in Section 1.7 hereof) the Employee shall not,
without the consent of the Board or its delegate, become actively associated
with or engaged in any business other than that of the Employer or a division or
affiliate of the Employer, and he shall do nothing inconsistent with his duties
to the Employer. If the Employee shall breach his obligations under this
Section, he shall promptly reimburse the Employer for any monies paid by the
Employer in connection with his relocation during the Term or in contemplation
of the signing of this Agreement, including, without limitation, any bonus or
relocation expenses paid for or incurred by the Employer, including, without
limitation, carrying costs for property purchased from or on behalf of the
Employee. Any such reimbursement shall be in addition to any other remedy for
breach of this Agreement that the Employer may be entitled to at law or in
equity.

    2.2 Trade Secrets and Confidential Information. Employee shall not (either
during the Term or thereafter) without the consent of the Employer disclose to
anyone outside of the Employer, or use in other than the Employer's business,
trade secrets or confidential information relating to the Employer's business in
any way obtained by him while employed by the Employer.

    2.3 Noncompetition. It is recognized by the Employee and the Employer that
Employee's duties hereunder will entail the receipt of trade secrets and
confidential information, which include not only information concerning the
Employer's current operations, procedures, suppliers and other contacts, but
also its short-range and long-range plans, and that such trade secrets and
confidential information have been developed by the Employer and its affiliates
at substantial cost and constitute valuable and unique property of the Employer.
Accordingly, the Employee acknowledges that the foregoing makes it reasonably
necessary for the protection of the Employer's business interests that the
Employee not compete with the Employer or any of its affiliates during the Term
and for a reasonable and limited period thereafter. Therefore, during the Term
and for a period of one year thereafter, the Employee shall not have an
investment of $100,000 or more in a Competing Business (as hereinafter defined)
and shall not render personal services to any such Competing Business in any
manner, including, without limitation, as owner, partner, director, trustee,
officer, employee, consultant or advisor thereof. The noncompete provisions of
this section shall not be applicable to Employee if he has been notified
pursuant to Section 1.6 hereof that his services will no longer be required
during the Term or if Employee has been advised that his services will no longer
be required after the expiration of the Term.

    If the Employee shall breach the covenants contained in this Section 2.3 or
in Section 2.2 hereof, the Employer shall have no further obligation to make any
payment to the Employee pursuant to this Agreement and may recover from the
Employee all such damages as it may be entitled to at law or in equity. In
addition, the Employee acknowledges that any such breach is likely to result in
immediate and irreparable harm to the Employer for which money damages are
likely to be inadequate. Accordingly, the Employee consents to injunctive and
other appropriate equitable relief upon the institution of proceedings therefor
by the Employer in order to protect the Employer's rights hereunder. Such relief
may include, without limitation, an injunction to prevent the Employee from
disclosing any trade secrets or confidential information concerning the Employer
to any Competing Business, to prevent any Competing Business from receiving from
the Employee or using any such trade secrets or confidential information and/or
to prevent any such Competing Business from retaining or seeking to retain any
other employees of the Employer. Employer agrees, however, that it will not seek
injunctive relief for the purposes of preventing Employee from competing with
Employer after the expiration of the Term. The provisions of the foregoing
sentence shall not apply, however, to injunctions of the type described in the
preceding sentence.

        (a) As used in this Agreement, the term "affiliate" shall mean, with
respect to a particular person, a person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, such person.

        (b) As used in this Agreement, the term "Competing Business" shall mean
any business which:

            (i) at the time of determination, is substantially similar to the
whole or a substantial part of the business conducted by the Employer or any of
its divisions or affiliates;

            (ii) at the time of determination, is operating a store or stores
which, during its or their fiscal year preceding the determination, had
aggregate net sales, including sales in leased and licensed departments, in
excess of $10,000,000, if such store or any of such stores is or are located in
a city or within a radius of 25 miles from the outer limits of a city where the
Employer, or any of its division's or affiliates, is operating a store or stores
which, during its or their fiscal year preceding the determination, had
aggregate net sales, including sales in leased and licensed departments, in
excess of $10,000,000; and

            (iii) had aggregate net sales at all its locations, including sales
in leased and licensed departments and sales by its divisions and affiliates,
during its fiscal year preceding that in which the Employee made such an
investment therein, or first rendered personal services thereto, in excess of
$25,000,000.

    2.4 Conflicts of Interest. The Employee shall not engage in any activity
that would violate the Conflict of Interest or Business Ethics Statement signed
from time to time by the Employee.

    2.5    Non-Solicitation. During the term and for a period of one year
thereafter (such period is referred to as the "No Recruit Period") the employee
will not solicit, either directly or indirectly, any person that he or she knows
or should reasonably know to be an employee of Federated Department Stores, Inc.
or any of its subsidiaries, divisions or affiliates (collectively referred to in
this Agreement as the "Federated Affiliates") (whether any such employees are
now or hereafter through the No Recruit Period so employed or engaged) to
terminate their employment with any of the Federated Affiliates. The foregoing
undertaking is not intended to limit any legal rights or remedies that any of
the Federated Affiliates may have under common law with regard to any
interference by Employee at any time with the contractual relationship the
Federated Affiliates may have with any of their employees.

ARTICLE III

MISCELLANEOUS

    3.1 Assignment. This Agreement may be assigned by the Employer to any of its
affiliates. This Agreement shall not otherwise be assignable by the Employer
without the consent of the Employee, except that, if the Employer shall merge or
consolidate with, or transfer all or any substantial portion of its assets,
including goodwill, to another corporation or other form of business
organization, this Agreement shall (or, in the case of any such transfer, may)
be assigned to and shall bind and run to the benefit of the successor of the
Employer resulting from such merger, consolidation or transfer. The Employee may
not assign, pledge or encumber his interest in this Agreement or any part
hereof.

    3.2 Governing Law. This Agreement has been executed on behalf of the
Employer by an officer of the Employer located in the City of Cincinnati, Ohio.
This Agreement and all questions arising in connection herewith shall be
governed by the internal substantive laws of the State of Ohio. The Employer and
the Employee each consent to the jurisdiction of, and agree that any controversy
between them arising out of this Agreement shall be brought in, the United
States District Court for the Southern District of Ohio, Western Division; the
Court of Common Pleas for Hamilton County, Ohio; or such other court venued
within Hamilton County, Ohio as may have subject matter jurisdiction over the
controversy.

    3.3 Severability. If any portion of this Agreement is held to be invalid or
unenforceable, such holding shall not affect any other portion of this
Agreement.

    3.4 Entire Agreement. This Agreement comprises the entire agreement between
the parties hereto and as of the date hereof, supersedes, cancels and annuls any
and all prior agreements between the parties hereto. This Agreement may not be
modified, renewed or extended orally, but only by a written instrument referring
to this Agreement and executed by the parties hereto.

    3.5 Gender and Number. Words in the masculine herein may be interpreted as
feminine or neuter, and words in the singular as plural, and vice versa, where
the sense requires.

    3.6 Notices. Any notice or consent required or permitted to be given under
this Agreement shall be in writing and shall be effective when given by personal
delivery or five business days after being sent by certified U.S. mail, return
receipt requested, to the Secretary of Federated Department Stores, Inc. at its
principal place of business in the City of Cincinnati or to the Employee at his
last known address as shown on the records of the Employer.

    3.7 Withholding Taxes. The Employer may withhold from any amounts payable
under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.

    3.8 Waiver and Release. In consideration of the Employer's entering into
this Agreement, and the receipt of other good and valuable consideration, the
sufficiency of which is expressly acknowledged, the Employee, for himself and
his successors, assigns, heirs, executors and administrators, hereby waives and
releases and forever discharges the Employer and its affiliates and their
officers, directors, agents, employees, shareholders, successors and assigns
from all claims, demands, damages, actions and causes of action whatsoever which
he now has on account of any matter, whether known or unknown to him and whether
or not previously disclosed to the Employee or the Employer, that relates to or
arises out of (a) any existing or former employment agreement (written or oral)
entered into between the Employee and the Employer or any of its affiliates (or
any amendment or supplement to any such agreement), (b) any agreement providing
for a payment or payments or extension of the employment relationship triggered
by a merger or sale or other disposition of the stock or assets or restructuring
of the Employer or any affiliate of the Employer, or (c) any applicable
severance plan.

    IN WITNESS WHEREOF, the parties hereto have hereunto and to a duplicate
hereof set their signatures as of the day and year first above written.

FEDERATED CORPORATE SERVICES, INC.

By: /s/ Dennis J. Broderick               

           Dennis J. Broderick

Title: President

SUSAN KRONICK

/s/ Susan Kronick                          

 

 

EXHIBIT A

to

EMPLOYMENT AGREEMENT

Dated as of July 1, 2005

Name: Susan Kronick

End of Term: June 30, 2008

Base Compensation:

$1,005,000

Date: July 1, 2005