EXHIBIT 10.7
STAGE STORES, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of April 1, 1998, between Stage Stores, Inc. A
Delaware Corporation (the "COMPANY"), and Xxxxxxx Xxxxxx ("EXECUTIVE").
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT. The Company shall continue to employ Executive, and
Executive hereby accepts continued employment with the Company, upon the terms
and conditions set forth in this Agreement for the period beginning on the date
hereof and ending as provided in paragraph 4 hereof (the EMPLOYMENT PERIOD").
2. POSITION AND DUTIES.
(a) During the Employment Period, Executive shall serve as the Vice
Chairman - Chief Field Operations Officer of the Company and shall have the
normal duties, responsibilities and authority of the Vice Chairman - Chief Field
Operations Officer, subject to the power of the Board to expand such duties,
responsibilities and authority and to override actions of Vice Chairman Chief
Field Operations Officer.
(b) Executive shall report to the Board or to the Chief Executive
Officer, as designated by this Board, and Executive shall devote his best
efforts and his full business time and attention (except for permitted vacation
periods and reasonable periods of illness or other incapacity) to the business
and affairs of the Company and its Subsidiaries. Executive shall perform his
duties and responsibilities to the best of his abilities in a diligent,
trustworthy, businesslike and efficient manner.
(c) For purposes of this Agreement, "SUBSIDIARIES" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one or more Subsidiaries.
(d) Whenever this Agreement calls for action on the part of the Board,
the Board may delegate responsibility for such action to a duly appointed
committee of the Board, including the Compensation Committee of the Board.
3. BASE SALARY AND BENEFITS.
(a) During the Employment Period, Executive's base salary shall be
$425,000 per annum or such other higher rate as the Board may designate from
time to time (the "BASE SALARY"), which salary shall be payable in regular
installments in accordance with the Company's general payroll practices and
shall be subject to customary withholding. Executive shall also receive an auto
allowance of $1,000.00 per month or such other rate as the Board of Directors
may designate and be reimbursed for actual and necessary tax
planning and financial planning expenses up to a maximum of $5,000 per year or
such other annual amount designated by the Board of Directors. In addition,
during the Employment Period, Executive shall be entitled to participate in all
of the Company's employment benefit programs for which senior executive
employees of the Company and its Subsidiaries are generally eligible, including
all supplemental benefit programs such as; supplemental retirement plans,
supplemental medical plans, supplemental disability plans, deferred compensation
plans, supplemental life insurance plans and any other approved plans made
available by the Company to the Executive. Also, the Executive shall be entitled
to four (4) weeks of paid vacation each year, which if not taken may not be
carried forward to any subsequent year.
(b) The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing such duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject to
the Company's requirements with respect to reporting and documentation of such
expenses.
(c) In addition to the Base Salary, the Board may award a bonus to
Executive following the end of each fiscal year during the Employment Period
based upon Executive's performance and the Company's operating results during
such year in relation to performance targets established by the Board. The
target level of such bonus is 50% of base salary, or such higher rate as
designated by the Board. Determination of the bonus amount shall take into
account such unusual or non-recurring items as Board deems appropriate.
4. TERM AND TERMINATION.
(a) The initial employment period shall end on April 1, 1999 and the
Employment Period shall be automatically renewed for consecutive additional
periods of one year each commencing at the end of the initial Employment Period
hereof or any subsequent renewal term, on the same terms and conditions as
herein set forth; however (i) the Employment Period shall terminate prior to the
expiration of the initial or subsequent Employment Period upon Executive's
resignation, (other than for Good Reason as defined below), death or permanent
disability or incapacity (as determined by the Board in its good faith
judgement) and (ii) the Employment Period may be terminated by the Company at
any time prior to such a date for Good Cause (as defined below) or without Good
Cause. In the event the Company chooses not to continue automatic renewal of
this contract at the conclusion of any one year employment period, or the
Company lowers the benefit or compensation level in this Agreement, the Company
must notify Executive in writing 30 days prior to the end of the employment
period that the employment agreement will not be renewed for an additional one
year period. Such notification by the Company will be deemed appropriate grounds
for the Executives resignation and termination for Good Reason making Executive
eligible for benefits and payments under section 5. of this agreement.
(b) If the Employment Period is terminated by the Company without Good
Cause, Executive shall be entitled to receive an amount equal to two times his
annual Base Salary and benefits plus an amount equal to two times the
Executive's annual targeted bonus amount in effect on the date of termination of
Executive's employment (the "TERMINATION DATE") together with any accrued and
unpaid benefits and bonus, if and only if Executive has not breached the
provisions of paragraphs 7 and 8 hereof
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and is not entitled to receive payments pursuant to paragraph 5 hereof. The
amounts payable pursuant to this paragraph 4(b) may be payable, at the
Executives discretion, in one lump sum within thirty (30) days following
termination of the Employment period and will not be reduced by any other
compensation he has earned from any other source nor by any benefits due to him.
Also, if the Employment Period is terminated without Good Cause, Executives
Stock Option Awards and Restricted Stock Grant Awards will continue to vest
during the two year time period following termination without Good Cause. During
this two year period of vesting, Executive will be able to exercise Stock
Options and receive distribution of Restricted Grant shares as though Executive
had continued to work and vest normally for twenty four (24) months after the
date of termination.
(c) If the Employment Period is terminated by the Company for Good Cause
or is terminated pursuant to clause (a)(i) above, Executive shall be entitled to
receive his Base Salary through the date of termination.
(d) All of Executive's rights to fringe benefits and bonuses hereunder
(if any) which otherwise would accrue after the termination of the Employment
Period shall cease upon such termination.
(e) Prior to receipt of any severance benefits hereunder including any
amounts payable pursuant to sections 4(b), 4(c) or 5(a), Executive shall execute
a release of claims against the Company and its affiliates in form and substance
reasonably satisfactory to the Company.
5. CHANGE IN CONTROL.
(a) If at any time after the date hereof a Change in Control (as
defined) of the Company occurs and within two years thereafter (i) Executive
involuntarily ceases to be an employee of the Company for any reason other than
termination for Good Cause, disability or death or (ii) Executive terminates his
employment with the Company for Good Reason (as defined), then Executive shall
be entitled to benefits under this Section 5. The amount of such benefits (which
benefits shall be in addition to any other benefits to which Executive is
entitled other than by reason of this Agreement) shall be equal to the sum of
(i) unpaid salary with respect to any vacation days accrued but not taken as of
the Termination Date; (ii) accrued but unpaid salary and targeted bonus through
the Termination Date; and (iii) an amount equal to three times the Base Salary
and benefits in effect at the time plus an amount equal to three times the
Executives annual targeted bonus amount in effect on the Termination Date; In
addition, Executive shall receive an amount equal to the additional tax due
defined as excise tax computed on the severance payment of three times base and
bonus which amount shall be grossed up for tax purposes. The amount of any
payment or benefit provided for in clause 5(a)(iii) above shall be payable at
Executives discretion in one lump sum payment within 30 days following the
termination of Executive and shall not be reduced by any compensation earned by
him from any other source.
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(b) Executive is the holder of various stock option agreements and also
is entitled to receive various restricted stock grant awards which are approved
by the Board. Each of these "option" and "grant" agreements specify individual
vesting schedules which determine the dates upon which Executive can take
ownership of the stipulated shares. At any time after the date hereof a Change
in Control (as defined) of the Company occurs, then effective on that date (the
"TRIGGER Date") all of Executives stock option agreements and restricted stock
grant awards will automatically become fully vested and Executive will be
enabled to purchase and/or take possession of all otherwise unvested shares.
Executive will also be entitled to receive from the Company an amount equal to
the federal taxes due (including any excise taxes due) on the gain of these
shares which were received due to the accelerated vesting plus additional "tax"
on the tax computed by the companies traditional "tax grossing-up method". The
amount of this tax payment will be made to the Executives tax withholding
account within 30 days following the Trigger Date of said Change in Control.
(c) For purposes of this Agreement, a "CHANGE OF CONTROL" shall be
deemed to have occurred if (i) any "person" or "group" (as such terms are used
in Section 13(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company's then
outstanding securities and, following such "person" or "group" acquiring 50% or
more of the combined voting power of the Company (the "TRIGGER DATE") the
members of the Board immediately prior to the Trigger Date cease to constitute a
majority of the Board, (ii) there shall be consummated any consolidation or
merger of the Company in which the Company is not the surviving or continuing
corporation or pursuant to which shares of the Company's Common Stock would be
converted into cash, securities or other property, other than a merger of the
Company in which the holders of the Company's Common Stock immediately prior to
the merger have (directly or indirectly) at least a 51% ownership interest in
the outstanding Common Stock of the surviving corporation immediately after the
merger, (iii) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all, or substantially all, of the assets of
the Company, or (iv) the stockholders of the Company approve any plan or
proposal for the liquidation or dissolution of the Company.
6. CERTAIN DEFINITIONS. For purposes of this Agreement, "GOOD CAUSE"
means (a) Executive's conviction of any criminal violation involving dishonesty
or fraud, (b) Executive's gross negligence or willful and serious misconduct in
the performance of his duties, or (c) Executive's willful failure to comply with
reasonable directives of the Board or the Chief Executive Officer; and "GOOD
REASON" shall exist if, without Executive's express written consent, (a)
Executive is assigned duties inconsistent with his position, duties,
responsibilities and status with the Company as of the time of a Change of
Control, (b) the Company reduces Executive's Base Salary as in effect on the
effective date hereof, or (c) the Company requires Executive regularly to
perform his duties of employment beyond a fifty-mile radius from the location of
his employment as of the time of a Change in Control.
7. CONFIDENTIAL INFORMATION. Executive acknowledges that the
information, observations and data obtained by him while employed by the Company
and its Subsidiaries concerning the business or affairs of the Company or any
Subsidiary ("CONFIDENTIAL INFORMATION") are the property of the Company or such
Subsidiary. Therefore, Executive agrees that he shall not disclose to any
unauthorized person or use for his
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own purposes any Confidential Information without the prior written consent of
the Board, unless and to the extent that the aforementioned matters become
generally known to and available for use by the public other than as a result of
Executive's acts or omissions. Executive shall deliver to the Company at the
termination of the Employment Period, or at any time the Company may request,
all memoranda, notes, plans, records, reports, computer tapes, printouts and
software and other documents and data (and copies thereof) relating to the
Confidential Information, or the business of the Company or any Subsidiary which
he may then posses or have under his control.
8. NON-COMPETE, NON-SOLICITATION.
(a) Executive hereby agrees that during the Noncompete Period (as
defined below), he will not directly or indirectly either for himself or for any
other person or entity (whether as an owner, stockholder, consultant, agent,
advisor, partner (general or limited) or otherwise), individually or as a part
of a group, own, operate, manage, control, participate in, consult with, render
services for, or in any manner engage in any business competing with any part of
the business presently engaged in by the Company within any geographical area in
which the Company engages or has proposed to engage in such business (or solicit
any person to engage in any of the foregoing activities). For purposes of the
foregoing, a business shall be deemed to be competing with the business of the
Company if such business (a) operates apparel stores in small markets (i.e.,
with populations of less than 50,000) and (b) operates a significant number of
its apparel stores (25% or more of its total apparel stores) in 10,000 - 30,000
square foot formats and (c) has sales in excess of $10 million per annum.
"NONCOMPETE PERIOD" shall mean the term of Executive's employment and a period
of time following his termination of 24 months. Nothing herein shall prohibit
Executive from being a passive owner of not more than 5% in the aggregate, of
the outstanding stock of any class of a corporation which is publicly traded and
which competes with the business of the Company so long as Executive has no
direct or indirect participation in the management of such corporation.
Executive acknowledged that there is no general geographical restriction (other
than in small markets with populations less than 100,000) contained in this
paragraph due to the Company-wide nature of his job responsibilities and that no
lesser scope of the restriction would adequately protect the Company's assets
and other legitimate business interests.
(b) During this same period of time following his termination which is
covered by salary replacement, Executive agrees not to directly or indirectly,
on his own behalf or for any other person or entity, induce or attempt to induce
any employee of the Company to leave the employ of the Company, hire any person
who is an employee of the Company as of or immediately prior to the time of such
hiring, or induce or attempt to induce any manufacturers' representative,
customer, supplier, licensee, agent or other business relation of the Company to
cease doing business with the Company.
9. SURVIVAL. Paragraphs 7 and 8 and paragraphs 11 through 18 shall
survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period.
10. NOTICES. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed by first class mail,
return receipt requested, to the recipient at the address below indicated:
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NOTICES TO EXECUTIVE:
---------------------
Xxxxxxx Xxxxxx
0000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxx 00000
NOTICES TO THE COMPANY:
-----------------------
Stage Stores, Inc.
00000 Xxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Executive
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or mailed.
11. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
12. COMPETE AGREEMENT. This Agreement, those documents expressly
referred to herein and other documents of every date herewith embody the
complete agreement and understanding among the parties and supersede and preempt
any prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
13. NO STRICT CONSTRUCTION. The language used in this Agreement shall
deemed to be language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
14. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
15. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure
to the benefit of and be enforceable by executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
his rights or delegate his obligations hereunder without the prior written
consent of the Company.
16. CHOICE OF LAW. All issues and questions concerning the construction,
validity, enforcement
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and interpretation of this Agreement and the exhibits and schedules hereto shall
be governed by, and construed in accordance with, the laws of the State of
Texas, without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Texas or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Texas. In furtherance of the foregoing, the internal law of the State of Texas
shall control the interpretation and construction of this Agreement (and all
schedules and exhibits hereto), even though under the jurisdiction's choice of
law or conflict of law analysis, the substantive law of some other jurisdiction
would ordinarily apply.
17. AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity binding effect or
enforceability of this Agreement.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
STAGE STORES, INC.
By __________________________
Its __________________________
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