SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 19, 2000 (February 28, 2000)
Ames Department Stores, Inc.
(Exact Name of Registrant As Specified In Charter)
Delaware
(State Or Other Jurisdiction Of Incorporation)
1-5380 04-2269444
(Commission File Number) (IRS Employer Identification No.)
2418 Main Street; Rocky Hill, Connecticut 06067-2598
(Address Of Principal Executive Offices) (Zip Code)
(860) 257-2000
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name Or Former Address, If Changed Since Last Report)
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Item 5: OTHER EVENTS
Ames Department Stores, Inc. (the "Company") has entered into an employment
agreement with Grant C. Sanborn, effective February 28, 2000, to retain his
services as the Company's Executive Vice President - Operations. A copy of the
employment agreement dated as of February 28, 2000 is attached as Exhibit 10 and
is incorporated by reference herein.
Item 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Exhibit: 10 Employment Agreement dated as of February 28, 2000 between Ames
Department Stores, Inc. and Grant C. Sanborn.
INDEX TO EXHIBITS
Exhibit No. Exhibit Page No.
- ----------- ------- --------
10 Employment Agreement dated as of February 28, 4
2000 between Ames Department 4 Stores, Inc. and
Grant C. Sanborn
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMES DEPARTMENT STORES, INC.
Registrant
Dated: May 18, 2000 By: /s/ Joseph R. Ettore
Joseph R. Ettore
Chairman and Chief
Executive Officer
Dated: May 18, 2000 By: /s/ Rolando de Aguiar
Rolando de Aguiar
Senior Executive Vice
President, Chief Financial
& Administrative Officer
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Exhibit 10
EMPLOYMENT AGREEMENT
Agreement, dated as of February 28, 2000, between AMES DEPARTMENT STORES,
INC., a Delaware corporation (the "Company"), and GRANT SANBORN, residing at 23
Pequot Drive, Rocky Hill, CT 06067 (the "Executive").
WITNESSETH:
WHEREAS, the Company is engaged in the business of operating self-service
retail discount department stores (the "Business"); and
WHEREAS, the Company desires to retain the services of the Executive in the
capacity of Executive Vice President - Operations, and the Executive desires to
provide such services in such capacities to the Company, on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, the Company and Executive have heretofore entered into a certain
Employment Agreement, dated as of August 1, 1999 (the "Old Agreement'), and the
parties hereto intend that the Old Agreement will be superceded by this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
obligations hereinafter set forth, the parties hereto, intending to be legally
bound thereby agree as follows:
1. Employment and Term. The Company hereby employs the Executive, and the
Executive hereby accepts employment by the Company, in the capacities and on the
terms and subject to the conditions set forth herein, for the period commencing
on February 28, 2000 and ending on February 28, 2003, unless terminated earlier
as provided herein (the "Term of Employment").
2. Duties. During the Term of Employment, the Executive shall serve as the
Company's Executive Vice President - Operations. As such officer, the Executive
shall report to the Company's President and Chief Operating Officer and shall
have such powers, duties and responsibilities with respect to the business of
the Company as are customary to his offices and positions or as the President
and Chief Operating Officer, the Chairman and Chief Executive Officer or the
Board of Directors of the Company may reasonably request consistent therewith.
The Executive shall serve the Company faithfully and to the best of his
ability in such capacity, devoting substantially all of his business time,
attention, knowledge, energy and skills to such employment.
The Executive shall reside during the business week and be based at the
Company's offices in Rocky Hill, Connecticut or in the same geographic region,
but the Executive shall travel as reasonably required in connection with the
performance of his duties hereunder. If elected, the Executive also shall serve
during any part of the Term of Employment as any other officer of the Company or
as an officer or director of any of the Company's subsidiaries without any
additional compensation other than as specified in this Agreement.
3. Compensation and Benefits. As full and complete compensation to the
Executive for his execution and delivery of this Agreement and performance of
the services required hereunder, the Company shall pay, grant or provide the
Executive, and the Executive agrees to accept, the following salary and other
compensation and benefits (all such amounts to be calculated in United States
dollars):
(a) a base salary, payable in accordance with the Company's standard
payroll practices for senior executive officers, of no less than $300,000 a year
(the "Base Salary");
(b) an annual bonus, payable with respect to each full fiscal year of the
Company during the Term of Employment, or pro rata portion thereof, in each case
based upon the performance of the Company for each applicable full fiscal year
of the Company and otherwise in accordance with the Company's Annual Incentive
Compensation Plan in effect from time to time, and as approved by the Company's
Board of Directors or its Compensation Committee, but with a maximum bonus
percentage of no less than 50% of Executive's Base Salary for each such fiscal
year;
(c) an option (the "Option") to acquire 25,000 shares (the "Option Shares")
of common stock, par value $.01 per share, of the Company (the "Common Stock"),
which shall be exercisable as of February 28, 2003, at a price per share equal
to the closing price on the NASDAQ -National Market System on the date hereof;
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(d) a grant of 10,000 shares of restricted stock (the "Restricted Stock")
granted pursuant to the 1998 Stock Incentive Plan and vesting on February 28,
2003;
(e) the right to participate in any savings and stock option plans or
programs and in any medical, dental, disability, retirement, insurance, savings,
vacation, holiday, paid sick leave or other plans as in effect from time to time
generally available for the benefit of the Company's senior executive officers;
(f) the right to participate in any long term incentive program as in
effect from time to time and generally available for the benefit of senior
executive officers of the Company or any of its subsidiaries;
(g) an annual automobile allowance in an amount and payable in accordance
with the policies and procedures of the Company as in effect from time to time
for senior executive officers, but not less than $15,200 per year;
(h) prompt reimbursement for all reasonable business related expenses
incurred by the Executive, in accordance with the policies and procedures of the
Company as in effect from time to time for senior executive officers;
(i) four (4) weeks paid vacation per year in accordance with the policies
and procedures of the Company as in effect from time to time for senior
executive officers; and
(j) life insurance underwritten by the Company's present insurer (or
another insurer reasonably acceptable to the Company and the Executive) in the
face amount of the Executive's base salary then in effect; provided that the
Executive shall assist the Company in procuring such insurance by submitting to
reasonable medical examinations and by filling out, executing and delivering
such applications and other instruments in writing as may reasonably be required
by any insurer to which the Company may apply.
4. Termination.
(a) Permanent Disability. During the Term of Employment hereunder, the
Company shall maintain a disability insurance policy which shall pay the
Executive 60% of his Base Salary during any period of disability up to
Executive's age 65; provided, that the Executive shall assist the Company in
procuring such insurance by submitting to reasonable medical examinations and by
filling out, executing and delivering such applications and other instruments in
writing as may reasonably be required by any insurer to which the Company may
apply; and provided, further, that the Executive shall be insurable at standard
rates. In that event of the permanent disability (as hereinafter defined) of the
Executive during the Term of Employment, the Company shall have the right, upon
written notice to the Executive, to terminate the Executive's employment
hereunder, effective upon the giving of such notice (or such later date as shall
be specified in such notice). Upon such termination, the Company shall have no
further obligations hereunder, except to pay the Executive any amounts or
provide the Executive any benefits to which the Executive may otherwise have
been entitled under the Company's permanent disability insurance referred to
above, and the Executive shall continue to have the obligations provided for in
Sections 6 and 7. For purposes of this paragraph, "permanent disability" means
any disability as defined under the Company's disability insurance policy
referred to in Section 3(e).
(b) Death. In the event of the death of the Executive during the Term of
Employment, this Agreement shall automatically terminate and the Company shall
have no further obligations hereunder, except to pay the Executive's beneficiary
or legal representative any amounts or provide any benefits to which the
Executive may otherwise have been entitled prorated to the date of death.
(c) Cause. The Company shall have the right, upon written notice to the
Executive, to terminate the Executive's employment under this Agreement for
Cause (as hereinafter defined), effective upon the giving of such notice (or
such later date as shall be specified in such notice), and the Company shall
have no further obligations hereunder, except to pay the Executive any amounts
or provide the Executive any benefits to which the Executive may otherwise have
been entitled prorated to the effective date of termination.
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For purposes of this Agreement, "Cause" means:
(i) fraud or embezzlement on the part of the Executive or material breach
by the Executive of any of his obligations under this Agreement;
(ii) Executive shall have committed any act of gross negligence in the
performance of his duties or obligations hereunder or any material act of
malfeasance, disloyalty, dishonesty or breach of trust against the Company;
(iii) conviction of the Executive for any felony;
(iv) a material breach of, or the willful failure or refusal by the
Executive to perform and discharge, his duties, responsibilities or obligations
under this Agreement (other than under Sections 6 and 7 hereof, which shall be
governed by clause (i) above, and other than by reason of permanent disability
or death) that is not corrected within 30 days of written notice thereof to the
Executive by the Company, such notice to state with specificity the nature of
the breach, failure or refusal; provided, that if such breach, failure or
refusal cannot reasonably be corrected within 30 days of written notice thereof,
correction shall be commenced by the Executive within such period and may be
corrected within a reasonable period thereafter; or
(v) any substantiated, willful act by the Executive intended to result in
substantial personal enrichment of the Executive at the expense of the Company
or any of its affiliates or which has a material adverse impact on the business
or reputation of the Company or any of its affiliates.
(d) Without Cause. The Company shall have the right to terminate the
Executive's employment under this Agreement without Cause and upon written
notice, in which case the Executive's employment under this Agreement shall
terminate on the date specified in such notice (except that the Executive shall
continue to have the obligations provided for in Sections 6 and 7(a)) and the
Company shall have no further obligations hereunder, except (i) to pay the
Executive, promptly following such termination, an amount equal to (A) his Base
Salary when it would otherwise be payable, and (B) the annual bonus payable to
the Executive under Section 3(b) prorated to the effective date of termination
hereof, (ii) to cause the Option to vest in full as of the date of termination
and to remain exercisable until the end of the option period set forth in the
Option, and (iii) to maintain coverage of the Executive in the Company's medical
plan for a period of one (1) year after the date of termination, as such plan is
in effect during such period for the benefit of the Company's senior executive
officers, in lieu of any other compensation, payment or other benefits to which
the Executive may otherwise be entitled under this Agreement. There shall be no
mitigation for any amounts payable by the Company pursuant to this Section 4(d).
(e) Good Reason. The Executive shall have the right to terminate his
employment under this Agreement for Good Reason upon at least three months'
prior written notice thereof to the Company given within 30 days of the first
occurrence of any event constituting Good Reason, in which case the Executive's
employment under this Agreement shall terminate on the date specified in such
notice. In the event of any termination of employment by the Executive for Good
Reason, the Executive shall have no further obligations under this Agreement
other than the obligations provided for in Sections 6 and 7(a). The failure by
the Executive to give such written notice in such 30-day period shall preclude
the Executive from terminating his employment for Good Reason with respect to
such occurrence. In the event of any termination of employment by the Executive
for Good Reason, the Company shall have no further obligations hereunder, except
(i) to pay the Executive, promptly following such termination, an amount equal
to (A) his Base Salary when it would otherwise be payable for the balance of the
Term of Employment and (B) the annual bonus payable to the Executive under
Section 3(b) prorated to the effective date of termination, (ii) to cause the
Option to vest in full as of the date of termination and to remain exercisable
until the end of the option period set forth in the Option, (iii) to cause the
shares of Restricted Stock to vest in full as of the date of termination; and
(iv) to maintain coverage of the Executive in the Company's medical plan for a
period of one (1) year after the date of termination, as such plan is in effect
during such period for the benefit of the Company's senior executive officers,
in lieu of any other compensation, payment or other benefits to which the
Executive may otherwise be entitled under this Agreement. There shall be no
mitigation for any amounts payable by the Company pursuant to this Section 4(e).
It is understood and agreed that, during the three-month period following the
Executive's delivery of notice of termination for Good Reason to the Company,
the Executive shall cooperate fully with the Company to effect the orderly
transfer of the Executive's duties to another person or persons. Notwithstanding
anything to the contrary contained herein, upon receipt of the Executive's
notice of termination for Good Reason, the Company shall have the right to cause
the Executive's termination to become effective prior to the end of the
three-month period or the date specified in the notice therefore by giving at
least two business days' notice thereof to the Executive; provided, that the
Company shall continue to pay the Executive's Base Salary until the end of the
third month after such notice is given and such amount shall not be offset
against any other amounts payable under this Section 4(e).
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For purposes of this Agreement, "Good Reason" means the assignment to the
Executive of any duties inconsistent in any material respect with the
Executive's positions (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section
2 of this Agreement.
(f) Change in Control. The Executive shall be entitled to participate in
the Company's Key Employee Continuity Plan (or any successor or replacement
plan) and, upon a Change in Control of the Company (as defined therein), shall
be entitled to the greatest of the benefits provided by (x) the Company's Key
Employee Continuity Plan, (y) any such successor or replacement plan and (z) the
benefits provided by this Agreement.
5. Resignation Upon Termination. Upon the termination of the Executive's
employment hereunder for any reason the Executive agrees that he shall be deemed
to have resigned from all offices and directorships held by him in the Company
or any of its subsidiaries immediately.
6. Confidentiality: Ownership. (a) During the Term of Employment and
thereafter, the Executive shall keep secret and retain in strictest confidence
and not divulge disclose, discuss, copy or otherwise use or suffer to be used in
any manner, except in connection with the Business of the Company and the
businesses of any of its subsidiaries or affiliates, any Protected Information
in any Unauthorized manner or for any Unauthorized purpose (as such terms are
hereinafter defined).
(i) "Protected Information" means trade secrets, confidential or
proprietary information and all supplier and customer lists, market research,
databases, computer programs and software, operating procedures, knowledge of
the organization, products (including prices, costs, sales or content),
machinery, contracts, financial information or measures, business plans, details
of consultant contracts, new personnel acquisition plans, business acquisition
plans, business relationships and other information owned, developed or
possessed by the Company or its subsidiaries or affiliates, except as required
in the course of performing duties hereunder; provided, that Protected
Information shall not include information (a) that is considered by law, custom
or otherwise to be generally known in the industry of the Company; (b) developed
by the Executive individually or jointly with others prior to the commencement
of employment under Section 2; and (c) that becomes generally known to the
public or the trade without violation of this Section 6.
(ii) "Unauthorized" means: (A) in contravention of the policies or
procedures of the Company or any of its subsidiaries or affiliates; (B)
otherwise Inconsistent with the measures taken by the Company or any of its
subsidiaries or affiliates to protect their interests in any Protected
Information; (C) in contravention of any lawful instruction or directive, either
written or oral, of an employee of the Company or any of its subsidiaries or
affiliates empowered to issue such instruction or directive; or (D) in
contravention of any duty existing under law or contract. Notwithstanding
anything to the contrary contained in this Section 6, the Executive may disclose
any Protected Information to the extent required by court order or decree or by
the rules and regulations of a governmental agency or as otherwise required by
law; provided, that the Executive shall provide the Company with prompt notice
of such required disclosure in advance thereof so that the Company may seek an
appropriate protective order in respect of such required disclosure.
(b) The Executive acknowledges that all developments, including, without
limitation, inventions, patentable or otherwise, discoveries, improvements,
patents, trade secrets, designs, reports, computer software, flow charts and
diagrams, procedures, data, documentation, ideas and writings and applications
thereof relating to the Business or planned business of the Company or any of
its subsidiaries or affiliates that, alone or jointly with others, the Executive
may conceive, create, make, develop, reduce to practice or acquire during the
Term of Employment (collectively, the "Developments") are works made for hire
and shall remain the sole and exclusive property of the Company and the
Executive hereby assigns to the Company all of his right, title and interest in
and to all such Developments. The Executive shall promptly and fully disclose
all future material Developments to the Board of Directors of the Company and,
at any time upon request and at the expense of the Company, shall execute,
acknowledge and deliver to the Company all instruments that the Company shall
prepare, give evidence and take all other actions that are necessary or
desirable in the reasonable opinion of the Company to enable the Company to file
and prosecute applications for and to acquire, maintain and enforce all letters
patent, trademark registrations or copyrights covering the Developments in all
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countries in which the same are deemed necessary by the Company. All memoranda,
notes, lists, drawings, records, files, computer tapes, programs, software,
source and programming narratives and other documentation (and all copies
thereof) made or compiled by the Executive or made available to the Executive
concerning the Developments or otherwise concerning the Business or planned
business of the Company or any of its subsidiaries or affiliates shall be the
property of the Company or such subsidiaries or affiliates and shall be
delivered to the Company or such subsidiaries or affiliates promptly upon the
expiration or termination of the Term of Employment.
(c) The provisions of this Section 6 shall, without any limitation as to
time, survive the expiration or termination of the Executive's employment
hereunder, irrespective of the reason for any termination.
7. Covenant Not to Compete. Subject to the last sentence of this Section 7
the Executive agrees that until February 28, 2003 the Executive shall not,
directly or indirectly, without the prior written consent of the Company:
(a) solicit, entice, persuade or induce any employee, consultant, agent or
independent contractor of the Company or of any of its subsidiaries or
affiliates to terminate his or her employment with the Company or such
subsidiary or affiliate, to become employed by any person, firm or corporation
other than the Company or such subsidiary or affiliate or approach any such
employee, consultant, agent or independent contractor for any of the foregoing
purposes, or authorize or assist in the taking of any such actions by any third
party (for purposes of this Section 7(a), the terms "employee," "consultant,"
"agent" and "independent contractor" shall include any persons with such status
at any time during the six months preceding any solicitation in question); or
(b) directly or indirectly engage, or participate, or make any financial
investment in, or become employed by or render consulting, advisory or other
services to or for any of the following business enterprises (or their
respective successors-in-interest, including, without limitation, by change of
name): K-Mart; Wal-Mart; Shopko; Target; and Bradlees; provided, that nothing in
this Section 7(b) shall be construed to preclude the Executive from making any
investments in the securities of any such business enterprise to the extent that
such enterprise's securities are actively traded on a national securities
exchange or in the over-the-counter market in the United States or on any
foreign securities exchange and represent, at the time of acquisition, not more
than 3% of the aggregate voting power of such business enterprise.
Notwithstanding the foregoing, the Executive shall not be subject to the
terms and provisions of paragraph (b) of this Section 7 in the case of a
termination of employment of the Executive by the Company without Cause.
8. Specific Performance. The Executive acknowledges that the services to be
rendered by the Executive are of a special, unique and extraordinary character
and, in connection with such services, the Executive will have access to
confidential information vital to the Company's Business and the businesses of
its subsidiaries and affiliates. By reason of this, the Executive consents and
agrees that if the Executive violates any of the provisions of Section 6 or 7
hereof, the Company and its subsidiaries and affiliates would sustain
irreparable injury and that money damages will not provide adequate remedy to
the Company and that the Company shall be entitled to have Section 6 or 7
specifically enforced by any court having equity jurisdiction. Nothing contained
herein shall be construed as prohibiting the Company or any of its subsidiaries
or affiliates from pursuing any other remedies available to it for such breach
or threatened breach, including the recovery of damages from the Executive.
9. Indemnification. To the fullest extent permitted or required by the laws
of the State of Delaware, the Company shall indemnify and hold harmless the
Executive, in accordance with the terms of such laws, if the Executive is made a
party, or threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that the Executive is or was an officer or
director of the Company or any subsidiary or affiliate of the Company, in which
capacity the Executive is or was serving at the Company's request and in
furtherance of the Company's best interests, against expenses (including
reasonable attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding, which indemnification shall include the protection of the applicable
indemnification provisions of the Amended and Restated Certificate of
Incorporation and the Amended and Restated By-laws of the Company from time to
time in effect.
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10. Deductions and Withholding; Expenses. The Executive agrees that the
Company or its subsidiaries or affiliates, as applicable, shall withheld from
any and all compensation paid to and required to be paid to the Executive
pursuant to this Agreement, all Federal, state, local and/or other taxes which
the Company determines are required to be withheld in accordance with applicable
statutes or regulations from time to time in effect and all amounts required to
be deducted in respect of the Executive's coverage under applicable employee
benefit plans. For purposes of this Agreement and calculations hereunder, all
such deductions and withholdings shall be deemed to have been paid to and
received by the Executive,
11. Entire Agreement. This Agreement embodies the entire agreement of the
parties with respect to the Executive's employment and supersedes any other
prior oral or written agreements, arrangements or understandings between the
Executive and the Company. This Agreement may not be changed or terminated
orally but only by an agreement in writing signed by the parties hereto.
12. Waiver. The waiver by the Company of a breach of any provision of this
Agreement by the Executive shall not operate or be construed as a waiver of any
subsequent breach by him. The waiver by the Executive of a breach of any
provision of this Agreement by the Company shall not operate or be construed as
a waiver of any subsequent breach by the Company.
13. Governing Law, Jurisdiction. (a) This Agreement shall be subject to,
and governed by, the laws of the State of New York applicable to contracts made
and to be performed therein.
(b) Any action to enforce any of the provisions of this Agreement shall be
brought in a court of the State of New York located in the Borough of Manhattan
of the City of New York or in a Federal court located within the Southern
District of New York. The parties consent to the jurisdiction of such courts and
to the service of process in any manner provided by New York law. Each party
irrevocably waives any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding brought in such court
and any claim that such suit, action or proceeding brought in such court has
been brought in an inconvenient forum and agrees that service of process in
accordance with the foregoing sentences shall be deemed in every respect
effective and valid personal service of process upon such party.
14. Assignability. The obligations of the Executive may not be delegated
and, except with respect to the designation of beneficiaries in connection with
any of the benefits payable to the Executive hereunder, the Executive may not,
without the Company's written consent thereto, assign, transfer, convey, pledge,
encumber, hypothecate or otherwise dispose of this Agreement or any interest
therein. Any such attempted delegation or disposition shall be null and void and
without effect. The Company and the Executive agree that this Agreement and all
of the Company's rights and obligations hereunder may be assigned or transferred
by the Company to and shall be assumed by and binding upon any successor to the
Company. The term "successor" means, with respect to the Company or any of its
subsidiaries, any corporation or other business entity, which, by merger,
consolidation, purchase of the assets or otherwise, including after a Change in
Control of the Company, acquires all or a material part of the assets of the
Company.
15. Severability. If any provision of this Agreement or any part thereof
including, without limitation, Sections 6 and 7, as applied to either party or
to any circumstances shall be adjudged by a court of competent jurisdiction to
be void or unenforceable, the same shall in no way affect any other provision of
this Agreement or remaining part thereof, which shall be given full effect
without regard to the invalid or unenforceable part thereof, or the validity or
enforceability of this Agreement.
If any court construes any of the provisions of Section 6 or 7, or any part
thereof, to be unreasonable because of the duration of such provision or the
geographic scope thereof, such court may reduce the duration or restrict or
redefine the geographic provision and enforce such provision as so reduced,
restricted or redefined.
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16. Notices. All notices to the Company or the Executive permitted or
required hereunder shall be effective upon receipt or refusal, shall be in
writing and shall be delivered personally, by courier service providing for
next-day delivery, or sent by registered or certified mail, return receipt
requested, to the following addresses:
The Company:
Ames Department Stores, Inc.
2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Chief Executive Officer
with required copies to:
Weil, Gotshal & Manges LLP David H. Lissy, Esq.
767 Fifth Avenue and Senior Vice President
New York, New York 10153 General Counsel
Attn: Jeffrey J. Weinberg, Esq Ames Department Stores, Inc.
2418 Main Street
Rocky Hill, Connecticut 06067
The Executive:
Grant Sanborn
23 Pequot Drive
Rocky Hill, CT 06067
Either party may change the address to which notices shall be sent by
sending written notice of such change of address to the other party.
17. No Conflicts. The Executive hereby represents and warrants to the
Company that his execution, delivery and performance of this Agreement and any
other agreement to be delivered pursuant to this Agreement will not (i) require
the consent, approval or action of any other person or (ii) violate, conflict
with or result in the breach of any of the terms of or constitute (or with
notice or lapse of time or both, constitute) a default under, any agreement,
arrangement or understanding with respect to the Executive's employment to which
the Executive is a party or by which the Executive is bound or subject. The
Executive hereby agrees to indemnify and hold harmless the Company, its
directors, officers, employees, agents, representatives and affiliates (and such
affiliates' directors, officers, employees, agents and representatives) from and
against any and all losses, liabilities or claims (including, interest,
penalties and reasonable attorneys' fees, disbursements and related charges)
based upon or arising out of the Executive's breach of any of the foregoing
representations and warranties. The Old Agreement is hereby rendered null and
void and superceded in its entirety by the provisions hereof except for any
payment designations, which have accrued thereunder from the date hereof.
18. Effective Date. This Agreement shall be effective as of the date first
written above.
19. Paragraph Headings. The paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same instrument.
21. Expenses. All attorneys' fees and expenses incurred by the Executive in
connection with the negotiation, execution and delivery of this Agreement shall
be borne by the Executive.
22. Attorneys' Fees. In the event any litigation or controversy arises out
of or in connection with this Agreement between the parties hereto, the
non-prevailing party in such litigation or controversy shall be responsible for
the attorneys' fees, expenses and suit costs of both parties, including those
associated with any applicable or post-judgment collection proceedings.
23. Officers' and Directors' Insurance. During the Term of Employment, the
Company shall maintain customary directors' and officers' liability insurance if
such insurance is available to the Company at reasonable cost.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first written above.
AMES DEPARTMENT STORES, INC.
By: _______________________________
Joseph R. Ettore
Chairman and Chief Executive Officer
________________________________
Grant Sanborn
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OPTION TERMS
Expiration Date: Ten years from the date of issuance thereof (the
"Expiration Date"), unless terminated earlier as provided below (the "Option
Term").
Exercisability: Subject to the provisions on termination below, each Option
shall be exercisable on a cumulative basis during the relevant Option Term.
In no event may any Option be exercised for less than one hundred Option
Shares (unless the number being purchased is the total balance).
Termination: If the Executive's employment is terminated prior to the
Expiration Date, each Option shall, to the extent not theretofore exercised,
terminate and become null and void, except to the extent described below;
provided that none of the events described below shall extend the period of
exercisability of each Option beyond the Expiration Date:
(a) If the Executive dies while employed by the Company and its
subsidiaries or during either the thirty (30) day or three (3) month period,
whichever is applicable, specified in clauses (b), (c) and (d) below, each
Option shall be exercisable for all Option Shares that the Executive is entitled
to purchase at the time of the Executive's death, at any time up to and
including one (1) year after his death, by the Executive's legatee, distributee,
guardian or legal or personal representative;
(b) If the Executive's employment with the Company and its subsidiaries is
terminated by reason of "permanent disability" (as defined in the Employment
Agreement), each Option shall be exercisable for all Option Shares that the
Executive is entitled to purchase at the effective date of termination of
employment by reason of permanent disability, at any time up to and including
thirty (30) days after such effective date;
(c) If the Executive's employment with the Company and its subsidiaries is
terminated by reason of voluntary retirement after retirement age in accordance
with the Company's practices or by reason of the expiration of the Employment
Agreement, each Option shall be exercisable for all remaining Option Shares,
whether or not then exercisable for such Option Shares, at any time up to and
including three (3) months after the effective date of termination of
employment;
(d) If the Executive's employment with the Company and its subsidiaries is
terminated by the Company without Cause (as defined in the Employment
Agreement), each Option shall, to the extent not theretofore exercised,
immediately become exercisable and shall remain exercisable until expiration of
the Option Term; and
(e) If the Executive's employment with the Company and its subsidiaries is
terminated for Good Reason (as defined in the Employment Agreement) each Option
shall, to the extent not theretofore exercised, immediately become exercisable
and shall remain exercisable until expiration of the Option Term; and
(f) If the Executive's employment with the Company and its subsidiaries is
terminated for any reason other than as provided in clauses (a), (b), (c) , (d)
or (e) above, each Option shall be exercisable for all Option Shares that the
Executive is entitled to purchase at the effective date of termination of
employment, at any time up to and including thirty (30) days after the effective
date of such termination,
Other Restrictions: In order to comply with applicable securities laws, the
Option Shares, when issued, will bear appropriate legends giving notice of
applicable restrictions, if any, on transfer under such laws.
Non-Transferable: Each Option is not transferable, except by will or the
laws of descent and distribution, and may not be pledged or hypothecated in any
manner.
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