Exhibit 10.4
NON-COMPETITION AND CONSULTING
AGREEMENT
THIS NON-COMPETITION AND CONSULTING
AGREEMENT (“Agreement”) is made and entered into as of
the 1 st day of September, 2009, by and between
Kohl’s Department Stores, Inc., a Delaware corporation and
Kohl’s Corporation, a Wisconsin corporation (collectively,
“Kohl’s”), and R. Lawrence Montgomery
(“Consultant”).
W I T N E S S E T H:
WHEREAS, Consultant served Kohl’s
for approximately 21 years in various senior executive positions,
including Chief Executive Officer and Chairman of Kohl’s
Board of Directors (“Board”);
WHEREAS, Consultant has expressed his
desire to retire from his current position as Chairman of the Board
on August 31, 2009, and will continue to serve as a member of the
Board and as a Kohl’s employee through January 30,
2010;
WHEREAS, Consultant will retire from all
director, officer and employment positions with Kohl’s
effective January 30, 2010, and the parties wish to finalize all
aspects of Consultant’s relationship with
Kohl’s;
WHEREAS, Kohl’s desires to ensure
that following his retirement, Consultant will not engage in
certain activities that are in competition with Kohl’s, as
more fully described in this Agreement;
WHEREAS, in order to assure and retain
the availability of Consultant’s specific expertise regarding
Kohl’s, its products and marketplaces, the retail industry in
which it operates and the contacts and business relationships which
Consultant established prior to his retirement and which Consultant
will establish after his retirement, Kohl’s desires to engage
Consultant in a post-retirement consulting relationship as more
fully described in this Agreement;
WHEREAS, Consultant desires to accept
such engagement and perform such services for Kohl’s, upon
the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the
recitals and the mutual promises and covenants contained in this
Agreement, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
Release
Consultant acknowledges and agrees that
Kohl’s has complied with all of its obligations to Consultant
under the January 30, 1998 Employment Agreement, as amended,
between Kohl’s and Consultant (“Employment
Agreement”) and that Kohl’s will have no further
obligations to Consultant under the Employment Agreement after
January 30, 2010; provided, however, that Kohl’s obligation
to continue to provide Consultant and Consultant’s Eligible
Dependents with Health Insurance Benefits (each as defined in the
Employment Agreement) pursuant to the terms of Section 7.3, as
amended, of the Employment Agreement shall remain in full force and
effect.
In order to wrap up any loose ends
regarding Consultant’s employment by Kohl’s through
January 30, 2010, Consultant agrees to sign and return the Complete
and Permanent Release (“Release”) which is attached
hereto as Exhibit A and incorporated herein; provided, however,
that Consultant acknowledges and agrees that he may not sign the
Release until after the last date of his employment with
Kohl’s (i.e., January 30, 2010), and the signed Release must
be delivered to Kohl’s on or before February 5, 2010.
Consultant acknowledges and agrees that if he fails to sign
and return the Release to Kohl’s in a timely manner or
chooses to revoke his acceptance of the Release as specified in
Exhibit A, this Agreement shall not become effective and shall be
null and void.
ARTICLE II
Consultation
2.1.
Consulting Period
. For purposes of this Agreement,
the “Consulting Period” shall be the period from
January 31, 2010 through the earlier of (a) January 30, 2013 or (b)
the termination, for whatever reason, of this Agreement pursuant to
Article IV, below.
2.2.
Services . During the Consulting Period, Kohl’s
hereby retains Consultant to act as an independent contractor for
purposes of performing consulting services for Kohl’s
regarding its products and marketplaces and the retail industry in
which it operates, and Consultant hereby agrees to be engaged in
such capacity, all in accordance with the expressed terms, duties
and obligations as set forth in this Agreement.
2.3.
Consulting Duties
. During the Consulting Period,
Consultant shall perform consulting services for Kohl’s
regarding its products and marketplaces and the retail industry in
which it operates, consistent with Consultant’s professional
expertise. Such consulting services shall, as authorized by
Kohl’s from time to time, include, without limitation, the
following (which for purposes of this Agreement are designated as
the “Services”):
(a)
Consulting and advising Kohl’s
regarding real estate issues, including without limitation, new
site evaluation;
(b)
Consulting and advising Kohl’s
regarding store operations issues;
(c)
Consulting and advising Kohl’s
regarding its strategic growth, including potential
acquisitions;
(d)
Consulting and advising Kohl’s
regarding various strategic operational initiatives;
(e)
Consulting and advising Kohl’s
regarding the development of new and existing industry
relationships;
(f)
Assisting Kohl’s with the education
of and relations with customers and employees regarding
Kohl’s and its operations;
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(g)
Consulting with Kohl’s regarding
the enhancement of the visibility and reputation of Kohl’s
through such activities as attendance at industry conferences and
various public relations events;
(h)
Maintenance of regular and normal
communications and relationship-building to build the brands of
Kohl’s; and
(i) Any
activities reasonably related to the activities described above, as
may reasonably be requested of Consultant from time to time by
Kohl’s Chief Executive Officer and/or Board.
Consultant acknowledges and agrees that
Consultant has no authority to enter into any contracts or assume
any obligations on behalf of Kohl’s. Kohl’s shall
not be liable for any actions or omissions of Consultant in excess
of his authority as set forth above or otherwise in breach of this
Agreement.
2.4.
Time . During the Consulting Period, Consultant
agrees to devote such of his time and efforts as are necessary to
perform and complete the Services; provided, however, that such
time and efforts do not exceed 250 hours per calendar year.
Kohl’s anticipates that the performance of the Services
will, from time to time, be conducted in person, at meetings,
presentations or conferences, or via telephone, email or other
electronic communication. Kohl’s acknowledges and
agrees that the time and effort that Consultant must devote to the
performance of Services hereunder will likely vary from time to
time.
ARTICLE III
Consideration; Expenses
3.1.
Consideration .
(a)
During the Consulting Period, as full and
complete compensation for the Services to be provided and the
obligations to be undertaken by Consultant hereunder, Kohl’s
shall pay Consultant a fee of Sixty Two Thousand Five Hundred and
00/100 Dollars ($62,500.00) per month; provided, however, that
should this Agreement terminate pursuant to Article IV, below,
prior to January 30, 2013, Kohl’s shall have no further
payment obligations to Consultant under this Agreement other than
payment of the portion of the final monthly fee, pro-rated for the
portion of the final month of service completed prior to such
termination. Payments under this Section 3.1(a) will be made
to Consultant by Kohl’s no later than the 15 th
day of the month following the month to which the fee
relates.
(b)
Provided that this Agreement has not
terminated prior to January 30, 2013, for the twenty-four (24)
month period immediately following the Consulting Period, in
consideration of Consultant’s continuing obligations under
Articles VII through X, below, Kohl’s shall pay Consultant a
fee of Thirty-One Thousand Two Hundred Fifty and no/100 Dollars
($31,250.00) per month, payable no later than the last day of each
such month following the Consulting Period; provided, however, that
should this Agreement terminate pursuant to Article IV, below,
prior to the end of such twenty-four (24) month
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period, Kohl’s shall have no
further payment obligations to Consultant under this Agreement
other than payment of the final monthly fee, pro-rated for the
portion of the month in which such termination occurs;
provided, further, that should Consultant violate the terms of
Articles VII through X, below, such payments shall immediately
cease and Consultant shall be required to repay Kohl’s any
amounts paid to Consultant pursuant to this Section 3.1(b).
Consultant acknowledges and agrees that the provisions of
Articles VII through X, below, shall be enforceable against him
notwithstanding his receipt or lack of receipt of payments under
this Section 3.1(b).
3.2.
Reimbursement of Expenses
. During the Consulting Period,
Kohl’s shall pay or reimburse Consultant for all documented
ordinary and reasonable out-of-pocket expenses incurred by
Consultant in performing the Services hereunder in accordance with
Kohl’s policy on such reimbursable expenses; provided,
however, that any single expense exceeding Five Hundred and no/100
Dollars ($500.00) must be pre-approved by Kohl’s in writing
and the aggregate expenses reimbursable pursuant to this Section
3.2 in any calendar year period (pro-rated for any partial calendar
year of this Agreement) shall not exceed Two Thousand and no/100
Dollars ($2,000.00) unless pre-approved by Kohl’s in writing.
Consultant shall be required to submit an itemized account of
such expenditures and such proof as may be necessary to establish
to the reasonable satisfaction of Kohl’s that such expenses
incurred by Consultant were ordinary and necessary business
expenses incurred on behalf of Kohl’s. Should
Consultant elect to perform duties from his home, any such home
office expenses shall be his responsibility. In no event
shall Kohl’s be obligated to pay any compensation other than
that specified in this Article III.
ARTICLE IV
Termination
4.1.
Termination Events
. Notwithstanding any other
provision of this Agreement, this Agreement will terminate if any
of the following events occur:
(a)
The mutual written agreement of the
parties that this Agreement be terminated;
(b)
Upon the material breach or violation of
the terms of this Agreement by either party (including, but not
limited to, Consultant’s failure to perform his duties
satisfactorily), provided : (i) the non-breaching
party has previously delivered written notice of the breach or
violation to the breaching party specifying the nature of the
breach or violation and specifying a reasonable period of time in
which such breach or violation must be cured, and (ii) such
breach or violation remains uncured after the expiration of such
cure period, and (iii) within ten days after the expiration
of such cure period, the non-breaching party delivers written
notice of termination to the breaching party.
(c)
Consultant’s death.
4.2.
Obligations Upon
Termination . Upon the
termination of this Agreement pursuant to Section 4.1, above, or at
such earlier time as specified below, the parties shall have the
following obligations:
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(a)
Consultant shall deliver to Kohl’s
any and all materials relating in any way to and/or created in
connection with the performance of the Services, including, but not
limited to any computer discs or other electronic media, papers or
records containing Confidential Information or Trade Secrets
(defined below) and any and all materials relating to the Services.
Consultant’s obligation to make such delivery shall
arise upon the termination of this Agreement or at any other time
requested by Kohl’s.
(b)
Kohl’s shall make any payments
required under Article III, above, through the date of termination,
in full satisfaction of Kohl’s remaining financial
obligations to Consultant under this Agreement, and the obligation
to make any further payments shall terminate.
(c)
Consultant’s obligations under
Articles VII through X, below, shall survive termination of this
Agreement, and Consultant shall abide by his obligations under
those Articles following termination, for whatever reason, of this
Agreement regardless of whether Consultant is receiving
compensation under Article III, above.
ARTICLE V
Independent Consultant
Relationship
It is expressly acknowledged by the
parties hereto that Consultant is an independent contractor.
Nothing contained herein or otherwise shall be construed in
such manner as to create the relationship of employer/employee
between Consultant and Kohl’s. Kohl’s
acknowledges that Consultant’s duties under this Agreement do
not constitute the only requirement upon the time of Consultant and
that Consultant will be free to exercise his discretion as to the
method and means of performance of the Services. Except as
provided in Articles VII through X, below, Kohl’s further
acknowledges that nothing contained herein shall be deemed to
prohibit Consultant from accepting employment with, or rendering
professional services to, any other party at any time. In
acknowledging that he is an independent contractor, Consultant
agrees that except for the health insurance benefits specifically
referenced in Article I above, he shall not be entitled to
participate in any insurance or other fringe benefits provided by
Kohl’s to its employees. Consultant further agrees that
Kohl’s shall not be required hereunder to withhold nor shall
Kohl’s withhold any federal or state income, social security,
unemployment or other tax or similar
