Employment Agreement between Value City Department Stores, Inc. and James McGrady as Chief Financial Officer

Summary

This agreement is between Value City Department Stores, Inc. and James McGrady, who is being employed as the company's Chief Financial Officer. The contract outlines McGrady's duties, compensation, benefits, and obligations, including a base salary, incentive bonus, stock options, and other executive benefits. It also includes confidentiality and non-solicitation clauses, and specifies a three-year term with automatic one-year renewals unless either party gives notice. The agreement sets expectations for full-time commitment, adherence to company policies, and return of confidential information upon termination.

EX-10.61 2 l88099aex10-61.txt EXHIBIT 10.61 1 EMPLOYMENT AGREEMENT (James McGrady) THIS AGREEMENT is by and between Value City Department Stores, Inc. ("Company") and James McGrady ("Executive"), and is effective as of the date it has been fully executed by both parties. Company agrees to employ Executive as its Chief Financial Officer ("CFO") and Executive hereby accepts this offer and agrees to serve Company subject to the general supervision, advice and direction of Company's President and Chief Operating Officer, and upon the following terms and conditions: 1. POSITION AND DUTIES. Executive shall be employed as CFO of Company, with such authority and duties as are customary for this position, and shall perform such other services and duties as may be designated from time to time. Executive shall report to Company's COO. 1.1. Executive agrees to devote his full business time, best efforts, and undivided attention to the business and affairs of Company, except for any vacations, illness, or disability. Executive shall not engage in any other businesses that would interfere with his duties, provided that nothing contained herein is intended to limit Executive's right to make passive investments in the securities of publicly-owned companies or other businesses which will not interfere or conflict with his duties hereunder or, with the prior written consent of Company's President, to sit on the boards of other businesses. 1.2. Executive agrees that he shall at all times observe and be bound by all rules, policies, practices, and resolutions heretofore or hereafter adopted in writing by Company which are generally applicable and provided to Company's officers and employees and which do not otherwise conflict with this Agreement. 1.3. Company shall indemnify Executive in the performance of his duties and responsibilities and advance expenses in connection therewith to the same extent as other senior executives and officers. Such rights shall not be subject to arbitration under paragraph 6. 2. TERM. This Agreement shall terminate three years from its effective date unless sooner terminated as stated herein; provided, however, that this Agreement shall be extended automatically for successive 12-month periods unless either party notifies the other of an intent to terminate, in writing, at least 60 calendar days prior to the date of automatic extension. 2 3. COMPENSATION. 3.1. BASE SALARY. Company shall pay Executive a base salary of $300,000 as compensation for his services to Company, payable in equal installments in accordance with Company's payroll practices for executive employees. Company's President, with the Chairman's approval, may increase Executive's base salary at his discretion. 3.3. INCENTIVE BONUS. Executive shall be eligible to receive an incentive bonus of at least 40% of his base salary under Company's Management Incentive Plan" ("the Bonus Plan"). The Bonus Plan conditions the payment of this annual performance bonus based on achievement of pre-determined performance goals. Company's Board of Directors must verify that the performance goals and other material terms are met prior to payment. It is the parties' intention that the Bonus Plan be adopted and administered in a manner that enables Company to deduct for federal income tax purposes the amount of any annual incentive bonus. The incentive bonus determined to be due, if any, will be paid within 120 calendar days after the close of Company's fiscal year and completion of an outside audit by its outside audit firm. 3.4. STOCK OPTIONS. Subject to approval of Company's Board of Directors, Executive will receive 30,000 non-qualified options to purchase shares of Company's common stock. These options vest 20% annually over five years with a ten-year term. The option price will be determined from the average of the high and low price on the day they are allocated to Executive. Any options shall be subject to exercise in accordance with Company's "1991 Stock Option Plan" (as amended or revised with Board approval). 3.5. VACATION. During the term of this Agreement, Executive shall be entitled to vacation commensurate with other senior executives. Company's COO and Executive shall mutually agree upon Executive's vacations. 3.6. CAR. During the term of this Agreement, Company shall provide Executive with a car allowance of $1,250 a month ($15,000/year) payable along with his base salary on a semi-monthly basis. This benefit shall be "grossed up" for Executive's personal tax purposes, as that term is commonly used. 3.7. BUSINESS EXPENSES. Company shall pay, advance or reimburse Executive for all normal and reasonable business-related expenses, including travel expenses, incurred in the performance of his duties on the same basis as paid to other senior executives. Company shall furnish Executive with company credit cards provided to other senior executives for use solely in the performance of his duties. 3.8. TAXES. The compensation provided to Executive hereunder shall be subject to any withholdings and deductions required by any applicable tax laws. 2 3 3.9. BENEFIT PLANS. Executive is entitled to participate in any deferred compensation or other employee benefit plans, including any profit sharing or 401(k) plans; group life, health, hospitalization and disability insurance plans; deferred compensation plans; discount privileges; incentive bonus plans; and other employee welfare benefits made available generally to, and under the same terms as, Company's executives. 4. EXECUTIVE'S OBLIGATIONS. 4.1. CONFIDENTIAL INFORMATION. Executive agrees that during and after his employment, any "confidential information" as defined below shall be held in confidence and treated as proprietary to Company. Executive agrees not to use or disclose any confidential information except to promote and advance the business interests of Company. Executive agrees that upon his separation from employment, for any reason whatsoever, he shall not take or copy, and shall immediately return to Company, any documents that constitute or contain confidential information. "Confidential information" includes, but is not limited to, any confidential data, figures, projections, estimates, pricing data, customer lists, buying manuals or procedures, distribution manuals or procedures, other policy and procedure manuals or handbooks, supplier information, tax records, personnel histories and records, information regarding sales, information regarding properties and any other confidential information regarding the business, operations, properties or personnel of Company which are disclosed to or learned by Executive as a result of his employment, but shall not include his personal personnel records. Confidential information shall not include any information that (i) Executive had in his possession prior to his first performing services for Company; (ii) becomes a matter of public knowledge thereafter through sources independent of Executive; (iii) is disclosed by Company without restriction on its use; or (iv) is required to be disclosed by law or governmental order or regulation. 4.2. SOLICITATION. 4.2.1. EMPLOYEES. Executive agrees that during his employment and for two years after the end of his employment, for any reason, he shall not, directly or indirectly, solicit, or in any other manner induce or encourage Company's employees or consultants to leave their employment or assignments; he shall not hire or offer to hire them; and, he shall not cause or induce any of Company's competitors to do the same with respect such employees or consultants. 4.2.2. THIRD PARTIES. Executive agrees that during his employment and for two years following the end of his employment, for any reason, he shall not, either directly or indirectly, recruit, solicit or otherwise induce or influence any customer, supplier, sales representative, lender, lessor or any other person having a business relationship with Company to discontinue or reduce the extent of such relationship except in the course of his duties pursuant to this Agreement and with the good faith objective of advancing the business interests of same. 3 4 4.3. NONCOMPETITION. Executive agrees that for a period of one year following the end of his employment, for any reason, he shall not, either directly or indirectly, accept employment with, act as a consultant to, or otherwise perform the same services (which shall be determined regardless of job title) for any business that directly competes with Company's business, which is understood to currently be the sale of off-price and discount merchandise, including jewelry and shoes and related merchandise, and shall also include any other line of business pursued by Company in the future. The parties may mutually agree to revise, amend or eliminate this provision; provided; however, that such agreement must be in writing and signed by Company's President. 4.4. COOPERATION. 4.4.1. WITH COMPANY. Executive agrees to cooperate with Company during the course of all third-party proceedings arising out of Company's business about which Executive has knowledge or information. Such proceedings may include, but are not limited to, internal investigations, administrative investigations or proceedings, and lawsuits (including pre-trial discovery). For purposes of this paragraph, cooperation includes, but is not limited to, Executive's making himself available for interviews, meetings, depositions, hearings, and/or trials without the need for subpoena or assurances by Company, providing any and all documents in his possession that relate to the proceeding, and providing assistance in locating any and all relevant notes and/or documents. 4.4.2. WITH THIRD PARTIES. Executive agrees to communicate with, or give statements to, third parties relating to any matter about which Executive has knowledge or information as a result of his employment only to the extent that it is Executive's good faith belief that such communication or statement is in Company's business interests. This shall not preclude Executive from any manner of communication which is legally required or which may be required to respond to governmental or regulatory agency inquiries. 4.4.3. WITH MEDIA. Executive agrees to communicate with, or give statements to, any member of the media (print, television or radio) relating to any matter about which Executive has knowledge or information as a result of his employment only to the extent that it is Executive's good faith belief that such communication or statement is in Company's business interests. 4.5. REMEDIES. Executive agrees that any disputes under this paragraph shall not be subject to arbitration. If Executive breaches this paragraph, the damage will be substantial, although difficult to quantify, and money damages may not afford Company an adequate remedy; therefore, if Employee breaches or threatens to breach this paragraph, Company shall be entitled, in addition to other rights and remedies, to specific performance, injunctive relief and other equitable relief to prevent or restrain such conduct. 4 5 5. TERMINATION AND RELATED BENEFITS. 5.1. DEATH. This Agreement shall terminate automatically upon Executive's Death, and Company shall pay his surviving spouse, or if he leaves no spouse, his estate, any base salary earned by Executive, and any rights or benefits that have vested. In addition, Company shall pay Executive's surviving spouse, or if he leaves no spouse, his estate, any declared but unpaid bonus that, but for Executive's death, would otherwise have been payable to Executive. 5.2. PERMANENT DISABILITY. Upon Executive's permanent disability, Company shall have the right to terminate this Agreement immediately with written notice. For these purposes, permanent disability shall mean that Executive fails to perform his duties on a full-time basis for a period of more than 90 calendar days during any 12-month period, due to a physical or mental disability or infirmity. If this Agreement is terminated due to Executive's permanent disability, Company shall pay Executive any base salary earned and any rights or benefits that have vested. In addition, Company shall pay Executive any declared but unpaid bonus that, but for Executive's permanent disability, would otherwise have been payable to Executive. 5.3. TERMINATION BY COMPANY. 5.3.1. AT END OF TERM. Company may terminate this Agreement at the end of its term or any extension thereof by giving 60 calendar days' written notice to Executive. Company may, in its sole discretion, require Executive to cease active employment and pay out the 60-day notice period. 5.3.2. DURING THE TERM. Except as provided below in paragraph 5.3.3, Company may terminate this Agreement during its term, for any reason, upon 30 days' written notice to Executive. Company may, in its sole discretion, require Executive to cease active employment immediately. In the event of such a termination, Company shall have only the following obligations: (i) Pay Executive severance in the form of base salary continuation for 12 months; provided, however, that such salary continuation shall immediately cease if Executive accepts employment or an assignment with or otherwise performs services for one of Company's competitors. (ii) If Executive has been employed the full fiscal year prior to the date of termination, pay Executive any incentive bonus declared, but unpaid. (iii) Continue Executive's health coverage (excluding life and disability) for 12 months under the same terms as provided to other Company executives; provided, however, that such coverage shall cease upon Executive's becoming eligible for similar coverage under another benefit plan or if Executive accepts employment or an assignment with or otherwise 5 6 performs services for one of Company's competitors. 5.3.3. FOR CAUSE. Company may terminate this Agreement during its term if it has "cause" to do so. For purposes of this paragraph, the term "cause" means the following: (i) willful violation of laws and regulations governing Company; (ii) failure to substantially comply with any material term of this Agreement, provided Company shall make a written demand for substantial compliance setting forth the specific reason(s) for same and Executive shall have 60 days to cure, if possible; (iii) willful breach of fiduciary duties; (iv) willful damage, willful misrepresentation, willful dishonesty, or act of moral terpitude which Company determines has had or is likely to have a material adverse effect upon its operations, assets, reputation or financial conditions; or (v) willful breach of any stated material employment policy. Failure to meet performance targets and measures shall not constitute "cause" as that term is used herein. Executive shall have reasonable opportunity to be heard by the Board prior to a termination for cause. For purposes of this paragraph, Executive's acts or omissions shall be considered "willful" if done without a good faith, reasonable belief that such act or omission was in Company's best interest. In the event of termination for cause, Company's obligations hereunder cease on Executive's last day of active employment, unless otherwise provided herein. 5.3.4. METHOD OF PAYMENT. Executive agrees that Company shall have the option of paying the present value of any amount(s) due under this paragraph in a lump sum or in the form of salary continuation, but in no event shall such payout period exceed the applicable severance period stated in paragraph 5.3.2(i) above. Present value shall be calculated based upon National City Bank's prime interest rate. 5.4. TERMINATION BY EXECUTIVE. 5.4.1. AT END OF TERM. Executive may terminate this Agreement at the end of its term or any extension of this Agreement by giving 60 calendar days' written notice to Company's President. Company may, in its sole discretion, accept Executive's termination effective immediately; provided, however, that it shall continue to pay Executive for 60 calendar days. Company shall thereafter have no obligations to Executive under this Agreement. 6 7 5.4.2. VOLUNTARY RESIGNATION. Executive may terminate this Agreement by his voluntary resignation. Executive shall give at least 60 calendar days' written notice of his intention to resign to Company's President, which Company may accept immediately. In the event of Executive's resignation, Company will have no further obligations or liability hereunder except as provided herein. 5.5. SALARY DUE AT TERMINATION. In the event of any termination of Executive's employment under this Agreement, Executive (or his estate) shall be paid any unpaid portion of his salary that has accrued by virtue of his employment during the period prior to termination, and any unpaid, declared bonus, together with any unpaid business expenses properly incurred under this Agreement prior to termination. Such amounts shall be paid within 15 days of the date of termination, unless otherwise provided herein. 6. ARBITRATION. Unless stated otherwise herein, the parties agree that arbitration shall be the sole and exclusive remedy to redress any dispute, claim or controversy involving the interpretation of this Agreement or the terms, conditions or termination of this Agreement or the terms, conditions or termination of Executive's employment with Company. The parties intend that any arbitration award shall be final and binding and that a judgment on the award may be entered in any court of competent jurisdiction and enforcement may be had according to its terms. This paragraph shall survive the termination or expiration of this Agreement. 6.1. Arbitration shall be held in Columbus, Ohio, and shall be conducted by a retired federal judge or other qualified arbitrator mutually agreed upon by the parties in accordance with the Voluntary Arbitration Rules of the American Arbitration Association then in effect. The parties shall have the right to conduct discovery pursuant the Federal Rules of Civil Procedure; provided, however, that the Arbitrator shall have the authority to establish an expedited discovery schedule and cutoff and to resolve any discovery disputes. The Arbitrator shall not have jurisdiction or authority to change any provision of this Agreement by alterations of, additions to or subtractions from the terms hereof. The Arbitrator's sole authority in this regard shall be to interpret or apply any provision(s) of this Agreement. The Arbitrator shall be limited to awarding compensatory damages, including unpaid wages or benefits, but shall have no authority to award punitive, exemplary or similar-type damages. 6.2. Any claim or controversy not sought to be submitted to arbitration, in writing, within 120 days of when it arose shall be deemed waived and the moving party shall have no further right to seek arbitration or recovery with respect to such claim or controversy. 6.3. The arbitrator shall be entitled to award expenses, including the costs of the proceeding, and reasonable counsel fees. 7 8 6.4. The parties hereby acknowledge that since arbitration is the exclusive remedy, neither party has the right to resort to any federal, state or local court or administrative agency concerning breaches of this Agreement, except as otherwise provided herein in paragraph 6, and that the decision of the Arbitrator shall be a complete defense to any suit, action or proceeding instituted in any federal, state or local court before any administrative agency with respect to any arbitrable claim or controversy. 7. GENERAL PROVISIONS. 7.1. The parties agree that the covenants and promises set forth in paragraphs 4, 5 and 6 shall survive the termination of this Agreement and continue in full force and effect. 7.2. Except as otherwise provided in paragraph 6.2 above, failure to insist upon strict compliance with any term hereof shall not be considered a waiver of any such term. 7.3. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays, and legal holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday, or legal holiday, then such final day shall be deemed to be the next day which is not a Saturday, Sunday, or legal holiday. 7.4. Executive represents and warrants to Company that he is not now under, or bound to be under in the future, any obligation to any person, firm or corporation which is or would be inconsistent or in conflict with this Agreement, or that would prevent, limit, or impair in any way the performance of his obligations hereunder. 7.5. This Agreement, along with any other document, policy or practice referenced herein (collectively referred to as "Agreement"), contain the entire agreement of the parties regarding Executive's employment and supersede any prior written or oral agreements or understandings relating to the same. No modification or amendment of this Agreement shall be valid unless in writing and signed by or on behalf of both parties. 7.6. Once signed by both parties, this Agreement shall be binding upon and shall inure to the benefit of the heirs, successors, and assigns of the parties. 7.7. This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations. If any provisions of this Agreement, or the application thereof to any person or circumstance, shall, for any reason and to any extent, be held invalid or unenforceable, such invalidity and unenforceability shall not affect the remaining provisions hereof and the application of such provisions to other persons or circumstances, all of which shall be enforced to the greatest extent permitted by law. 8 9 7.8. The validity, construction, and interpretation of this Agreement and the rights and duties of the parties hereto shall be governed by the laws of the State of Ohio, without reference to the Ohio choice of law rules. 7.9. Any written notice required or permitted hereunder shall be mailed, certified mail (return receipt requested) or hand-delivered, addressed to Company's President at its then principal office, or to Executive at the most recent home address. Notices are effective upon receipt. 7.10. The rights of Executive under this Agreement shall be solely those of an unsecured general creditor of Company. 7.11. The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of any provision hereof. IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement consisting of nine pages. EXECUTIVE /s/ James McGrady ------------------------------------- James McGrady Signed: June 21, 2000 VALUE CITY DEPARTMENT STORES, INC. By: /s/ Michael J. Tanner -------------------------------- Michael J. Tanner Its: President Signed: June 21, 2000 9