EXHIBIT 10.3
STAGE STORES, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of April 1, 1998, between Stage Stores, Inc. a
Delaware corporation (the "COMPANY"), and Xxxx X. 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
President, Chairman and Chief Executive Officer of the Company and shall have
the normal duties, responsibilities and authority of the President, Chairman and
Chief Executive Officer, subject to the power of the Board to expand such
duties, responsibilities and authority and to override action of the President,
Chairman and Chief Executive Officer.
(b) Executive shall report to the Board, and Executive shall devote his
best efforts and his full business time and attention (expect for permitted
vacation periods and reasonable periods of illness or other incapacity) to the
business and affaires of the Company and its Subsidiaries. Executive shall
preform 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
$770,000 per annum or such other 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 benefits 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 60% 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 the 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) In addition to termination of the Employment Period as provided
above, Executive may terminate the Employment Period for Good Reason. If
Executive deems Good Reason to exist Executive shall deliver a written notice to
the Company specifying the violation. If the Company shall fail, within (10)
days, to respond to such notice in writing, or shall respond but shall fail to
specify action taken to correct the event or condition which gave or is giving
rise to such Good Reason, Executive may, at his option,
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resign his employment by giving a further written notice which shall state an
effective date of such resignation no earlier than ten (10) days and no later
than twenty (20) days thereafter. Such resignation shall be deemed a termination
by the Executive for Good Reason.
(c) If the Employment Period is terminated by the Company without Good
Cause or by Executive for Good Reason, Executive shall be entitled to receive a
amount equal to three times his annual Base Salary and 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, vacation and
bonus, if and only if Executive has not breached the provisions of paragraphs 7
and 8 hereof and is not entitled to receive payments pursuant to paragraph 5
hereof. The amounts payable pursuant to this paragraph 4(c) may be payable, at
Executive's discretion, in one lump sum payment within 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 other benefits due
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 three year time period following termination without Good Cause.
During this three year period of vesting Executive will be able to exercise of
Stock Options and distribution of Restricted Grant shares as though Executive
had continued to work and vest normally for thirty six (36) months after the
date of termination.
(d) 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.
(e) Prior to the occurrence of a Change in Control (as defined), "GOOD
REASON" is defined as (a) non-payment of compensation which shall persist more
than ten days after written notice of such non-payment is given by Executive to
the Company; (b) removal of Executive from the offership position of President,
Chairman and Chief Executive Officer or as a Director of Specialty Retailers,
Inc.; (c) Executive shall be assigned any duties which are not appropriate to
the position assigned to him pursuant to this Agreement or shall be deprived of
any of the authority previously exercised by him; (d) Executive's
responsibilities as Chief Executive Officer are substantially diminished, or any
other person shall be appointed to a position of equal or superior authority to
Executive; or (e) the Company shall comment a substantial breach of any other
material provision of this Agreement.
(f) All of Executive's rights to fringe benefits and bonuses hereunder
(if any) which accrue after the termination of the Employment Period shall cease
upon such termination.
(g) 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.
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5. CHANGE IN CONTROL.
(a) If at any time after the date hereof a Change in Control of the
Company occurs and within three 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, 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
on the Termination Date plus an amount equal to three times the Executives
target bonus amount in effect at that time. 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. Executive shall not be required to mitigate the amount of any
payment or benefit provided for in this Section 5 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
Section be reduced by any compensation earned by him as a result of employment
by another employer or by retirement benefits after the Termination Date, or
otherwise.
(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 tax 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 1937, 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
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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; Executive shall be "DISABLED" if, by any
reason of physical or mental disability, he becomes unable to preform his normal
duties for more than 6 months in aggregate (excluding infrequent and temporary
absence due to ordinary transitory illness) during any twelve-month period; and
("GOOD REASON") shall exist, following a Change in Control, 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 of 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 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
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and a period of time following his termination of 36 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 which applies as specified in 8(a)
above, 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:
NOTICES TO EXECUTIVE:
Xxxx Xxxxxx
0000 Xxxxxxxxxxx Xxxx.
Xxxxxxx, Xxxxx 00000
NOTICES TO THE COMPANY :
Stage Stores, Inc.
00000 Xxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
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 if held
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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, constructed 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 be
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 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 provision (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.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date written above.
STAGE STORES, INC.
By __________________________
Its __________________________
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Xxxx Xxxxxx
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