Agreement Dated as of August 29, 2003,Wayland



 



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Exhibit 10.1               



	 	 	 
	STATE OF NORTH CAROLINA	 	 
	 	 	 
	COUNTY OF MECKLENBURG	 	
AGREEMENT



     THIS AGREEMENT (the “Agreement”), is made and entered into as of the 29th
day of August, 2003 (the “Effective Date”) by and between The Cato Corporation,
a Delaware corporation (the “Company”), and Wayland H. Cato, Jr. (“Wayland
Cato”).


W I T N E S S E T H:



     WHEREAS, Wayland Cato is an employee, director and non-executive Chairman
of the Board of the Company; and


     WHEREAS, the Company and Wayland Cato have negotiated and agreed on the
terms of this Agreement providing for his resignation as an employee and
director of the Company and
for the ongoing obligation of the parties following the effective date of this
Agreement and his retirement from the Company.


     NOW, THEREFORE, the parties, intending legally to be bound, hereby agree
to the mutual terms and conditions set forth below:


     1.     Continued Services and Retirement. Wayland Cato shall continue to
serve as
an employee, a director and as non-executive Chairman of the Board of the
Company to January 31, 2004 (the “Retirement Date”) at which time his
resignation as an employee, director and the non-executive chairman of the
Board of Directors of the Company shall be effective and he shall retire and
relinquish all positions and responsibilities with the Company and its
subsidiaries and affiliates (the “Cato Group”) except as specifically set forth
herein. Provided, that Wayland Cato shall be entitled, at his option, to
resign as a director and/or as the non-executive Chairman of the Board prior to
January 31, 2004 without affecting the obligations of the Company set forth
herein.


     2.     Continuing Obligations of Wayland Cato. In consideration of the
benefits to Wayland Cato set forth in paragraph 3 hereof, Wayland Cato shall
comply with the following obligations to the Cato Group following the
Retirement Date:


          A. Confidentiality of Company Information. Wayland Cato acknowledges the
confidential and proprietary nature of the Confidential Information of the Cato
Group and agrees that he will not, without the prior, express written consent
of the Chief Executive Officer of the Company, directly or indirectly:




	 	(i)	 	use or disclose any Confidential Information
outside the Cato Group
except as required by law,
	 
	 	(ii)	 	publish any article with respect thereto,









 



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Exhibit 10.1             



	 	(iii)	 	except in the performance of services to the
Cato Group, remove from the premises of the Company, or aid in
such removal, any such Confidential Information or any
property or material related thereto (except as
authorized under subparagraph E. below), or
	 
	 	(iv)	 	sell, exchange or give away or otherwise dispose
of any such Confidential Information now or hereafter owned by
the Company.



     For purposes of this Agreement, “Confidential Information” means and
includes any and
all of the following (whether or not documented):



	 	(i)	 	vendor information, including but not limited to
names of vendors, vendor transaction information, and billing,
purchasing or credit history
information about vendors;
	 
	 	(ii)	 	financial information, including but not limited
to, financial statements, balance sheets, profit and loss
statements, earnings, commissions, benefits and salaries paid
to employees, sales data and projections, sales and
income forecasts, cost analyses, pricing information,
business goals and projections, equipment and inventory data,
profit margins, and similar information;
	 
	 	(iii)	 	all sources and methods of supply, including but
not limited to supplier
lists, business arrangements, buying and inventory
techniques, supply
terms, supply and manufacturing contracts, purchasing
discounts, distribution agreements, and similar information;
	 
	 	(iv)	 	all plans and projections for business
opportunities for new or developing business, including but
not limited to, marketing concepts, business plans,
merchandising and marketing techniques, store leases, store
site selection and location plans and processes, real estate
activities, real
estate/expansion information, advertising strategies, product
lines, store development, and sales plans;
	 
	 	(v)	 	all information relating to costs, research and
development activities,
service performance, quality control measures or strategies,
loss
prevention measures, operating results, pricing strategies,
employee lists
and other confidential or proprietary information, software,
designs,
patents, ideas, machinery, plans, know-how and trade secrets;
	 
	 	(vi)	 	all other confidential or trade secret
information that is used, or is
designed to be used in the business of the Cato Group or
results from its research or development activities.








 



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Exhibit 10.1             


Confidential Information shall not include information that is generally known
or available to the public or the industry other than as a result of disclosure
by Wayland Cato.


          B. Non-solicitation of Cato Group Employees. Wayland Cato agrees that
he will not, during the period of time through January 31, 2007, (i) solicit
for employment, offer employment to, engage as an employee, independent
contractor or in any manner induce or seek
to induce any person who is a managerial or administrative employee of the Cato
Group to
become employed by or engaged as an independent contractor with someone other
than the Cato Group, (ii) solicit or encourage any such employee to terminate
his or her employment with the Cato Group, or (iii) otherwise interfere with
any such employee’s relationship with the Cato Group. Provided, that the
foregoing prohibition shall not apply to the employees currently assigned to
the non-executive Chairman’s office (namely, Theresa Gebhardt, Sylvia Remeta
and Debra Jones) all of whom are anticipated to remain employees of the Company
only through December 31, 2003.



          C. Non-Competition. Wayland Cato agrees that for the period of time
through January 31, 2007 (the “Restricted Period”) he will not, directly or
indirectly, in the Restricted Area (as defined below), Compete (as defined
below) with the Cato Group.



          For purposes of this Agreement, the “Restricted Area” means the area
within a twenty-five (25) mile radius of any retail store under development,
operation or ownership by
any member of the Cato Group during the Restricted Period.



          For purposes of this Agreement, “Compete” means to engage in any business
activity whatsoever related in any manner or fashion to the operation of retail
stores that sell or offer to sell value-priced women’s apparel or accessories.
Without limiting the generality of the foregoing, Wayland Cato will not,
directly or indirectly (whether for compensation or
otherwise), alone or as an agent, principal, partner, officer, employee,
trustee, director,
shareholder or in any other capacity, own, manage, operate, join, control or
participate in the ownership, management, operation or control of, or furnish
any capital to, or be connected in any manner with, or provide any services as
a consultant for, any business which Competes with the Cato Group in the
Restricted Area; provided, however, that notwithstanding the foregoing,
nothing contained in this letter shall be deemed (i) to preclude Wayland Cato
from owning not more than 5% of the publicly traded securities of any entity
which Competes with the Cato
Group or (ii) to preclude Wayland Cato from owning or having an ownership
interest in
shopping centers or buildings which may lease property to businesses that
Compete with the
Cato Group.



          D. Consulting Services. During the period following the Retirement Date
through January 31, 2007, Wayland Cato will be available on reasonable notice
and at reasonable times, either in person or by telephone, to furnish to the
Cato Group such advisory or consulting services regarding senior management
issues as the Company may reasonably call upon
Wayland Cato to furnish, provided that Wayland Cato will not be required to
devote more than eighty (80) hours of service during any 12 month period to the
Cato Group. The Company will reimburse Wayland Cato for any reasonable
expenses he incurs in connection with rendering consulting services requested
by the Company.








 




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Exhibit 10.1             


          E. Office Relocation. No later than the Retirement Date, Wayland Cato
will relocate his office from the Company premises. Wayland Cato shall be
entitled to remove all or any part of the property listed on Schedule 1 from
the Company premises without reimbursement or payment to the Company.



     3.     Obligations of the Company. In consideration of the obligations of
Wayland
Cato to the Cato Group set forth in paragraph 2 of the Agreement, the Company
shall comply
with the following obligations to Wayland Cato:


          A. Salary and Benefits. The Company will continue Wayland Cato’s
current salary and benefits through January 31, 2004. In the event of Wayland
Cato’s death prior to January 31, 2004, the Company will continue to pay his
salary to his estate to January 31,
2004.



          B. Continuing Payments. The Company will pay Wayland Cato the sum of
$500,000 per year during the three-year period commencing February 1, 2004 in
equal monthly installments. In the event of Wayland Cato’s death subsequent to
the Effective Date, the
Company will pay Wayland Cato’s estate a lump sum amount equal to the then
aggregate present value (determined using a discount rate equal to the
applicable federal short-term rate in effect under Section 1274(d) of the
Internal Revenue Code for the month of his death) of the payments payable
pursuant to this subparagraph which remain unpaid to January 31, 2007. Such
payment
to be made as soon as administratively feasible after his death.



          C. Group Term Life Insurance. For the three year period commencing on
the Retirement Date, the Company will continue to provide group term life
insurance to Wayland Cato comparable to that provided to him on January 31,
2004.



          D. Split Dollar Life Insurance. The Split-Dollar Life Insurance Agreement
dated September 17, 1998 and the Supplemental Compensation Agreement dated
September 17, 1998 shall each continue in effect in accordance with their
respective terms.



          E. Healthcare. Following the Retirement Date and for the remainder of
Wayland Cato’s life, the Company will provide Wayland Cato and his wife, Marion
Cato, with
the same or comparable group healthcare coverage on the same economic terms and
conditions
as it provides such coverage to its senior executives. In the event Wayland
Cato predeceases Marion Cato, the Company will provide such coverage to her for
her life (if she is married to Wayland Cato at the time of his death).



          F. Transition Expenses. As soon as is administratively feasible after the
Effective Date, the Company will pay Wayland Cato the sum of $100,000 to assist
with the cost
of the relocation of his office.



          The Company shall have no obligations to Wayland Cato following the
Effective Date except as is specifically set forth in the Agreement; provided
Wayland Cato shall continue









 



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Exhibit 10.1             


to be entitled to any benefits due to him under the benefit plans listed on
Schedule 2 attached hereto.


     4.     Tax. Wayland Cato acknowledges that income may be imputed to him in
connection with the receipt of the benefits provided under the Agreement and
that Wayland Cato will be responsible for the payment of all federal or state
tax liabilities, penalties, interest, tax payments or tax judgments that could
arise as a result of these benefits; provided, that this shall
not affect the obligations of the Company under the Supplemental Compensation
Agreement referred to in subparagraph 3.D. above. The Company may withhold
from any amounts or
benefits payable or provided under this Agreement such federal, state and local
taxes as are required to be withheld pursuant to any applicable law or
regulation.


     5.     Acknowledgements. Wayland Cato acknowledges that he has carefully read
this Agreement, that he knows and understands the contents of this Agreement,
that he has consulted with a lawyer regarding this Agreement, and that he
executes this Agreement of his own free
will. Wayland Cato and the Company agree that the mutual consideration to the
parties hereto is fair and reasonable.


     6.     Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.


     7.     Notices. Any notice or other communications to be given hereunder
shall be deemed to have been given or delivered when delivered by hand to the
individuals named below
or when deposited in the United States mail, registered or certified, with
proper postage and registration or certification fees prepaid, addressed to the
parties as follows (or to such other address as one party shall give the other
in the manner provided herein):



	 	 	 	The Cato Corporation

8100 Denmark Road

P. O. Box 34216

Charlotte, NC 28234

Attention: Chief Executive Officer
	 
	 	 	 	Mr. Wayland H. Cato, Jr.

782 Soldier Creek Road

Sheridan, WY 82801



     8.     Entire Agreement. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter contained herein and
supersedes any and all prior and contemporaneous agreements, representations,
promises, inducements and understandings of the parties. This written
Agreement cannot be varied, contradicted or supplemented by evidence of any
prior or contemporaneous oral or written agreements. Moreover, this written
Agreement
may not be later modified except by a further writing signed by a duly
authorized officer of the Company and Wayland Cato.








 



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Exhibit 10.1             



     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.


	 	 	 	 	 
	 	 	

	 	 	Wayland H. Cato, Jr.
	 	 	 	 	 
	 	 	THE CATO CORPORATION
	 	 	 	 	 
	 	 	
By:
	 	

	 	 	
Its:
	 	










 



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Exhibit 10.1             


Schedule 1



Office furniture and filing cabinets currently located in the Chairman’s office
complex


1999 Ford Taurus


Oil portrait of Wayland H. Cato, Sr. which is currently in storage


Portraits of individual directors and directors as a group currently located in
the Board Room at such time as the Company decides not to display such
portraits








 



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Exhibit 10.1             


Schedule 2



1.     The Cato Corporation 401(k) Profit Sharing Plan


2.     The Cato Corporation Life and AD&D Plan – Option to convert within 31 days
following retirement