EMPLOYMENT AGREEMENT
Exhibit
10
THIS
EMPLOYMENT AGREEMENT (the "Agreement") is entered into this 10th day of
February, 2006 and effective as of the 20th day of
February, 2006, by and between STAGE STORES, INC., a Nevada corporation (the
"Company"), and XXXXXX XXXX, an individual (the "Executive").
WITNESSETH:
WHEREAS,
the Board of Directors of the Company (the "Board") has determined that it is in
the best interests of the Company to hire and appoint the Executive to the
position of President and Chief Operating Officer of the Company (the
"Position"), subject to the terms and conditions of this Agreement;
and
WHEREAS,
the Executive desires to be hired by the Company and to be appointed to the
Position, subject to the terms and conditions set forth in this
Agreement.
NOW,
THEREFORE, in consideration of the promises and mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as
follows:
1. EMPLOYMENT. Company
hereby hires and appoints Executive to the Position, and Executive hereby
accepts such employment with the Company and appointment to the Position,
subject to the terms and conditions set forth in this Agreement. Subject to
earlier termination in accordance with Section 4 below, this Agreement
shall continue in effect for a period of thirty-six (36) months commencing from
the effective date hereof (the "Initial Term"). Upon the expiration of the
Initial Term or any Renewal Period (as hereafter described), the term of
Executive's employment under this Agreement shall automatically be extended for
an additional twelve (12) month period (a "Renewal Period"), unless either the
Company or Executive notifies the other party in writing at least thirty (30)
days prior to the expiration of the Initial Term or the then current Renewal
Period that the Employment Period shall not be extended upon such
expiration.
1.1 Failure
to Extend
by Company.
In the
event the Company notifies Executive that the Employment Period shall not be
extended at the expiration of the Initial Term or the then current Renewal
Period in accordance with Section 1 hereof, such failure to extend shall
constitute termination of this Agreement by the Company without Good Cause (as
hereafter defined), and the Company and Executive agree that Executive shall be
entitled to receive the payments described in Section 4.3
hereof.
1.2 Failure
to Extend by Executive. In the
event Executive notifies the Company that the Employment Period shall not be
extended at the expiration of the Initial term or the then current Renewal
Period in accordance with Section 1 hereof, such failure to extend shall
constitute termination of this Agreement by Executive without Good Reason (as
hereafter defined), and the Company and Executive agree that Executive shall be
entitled to receive the payments described in Section 4.5
hereof.
2. POSITION
AND DUTIES. During
such time as Executive is employed with the Company (the "Employment Period"),
Executive shall serve in the Position and shall have the normal duties,
responsibilities and authority associated with or related to such Position,
subject to the power and authority of the Board to expand or limit such duties,
responsibilities and authority and to override actions of the Executive.
Executive, however, shall not have responsibility for Finance/Accounting and
Systems and Logistics. Executive shall report to the Chief
Executive Officer. 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) exclusively to the business and affairs of the Company and its
"Subsidiaries" (as hereafter defined) and any duty, task or responsibility
assigned or given to Executive by the Board, and Executive shall perform his
duties and responsibilities to the best of his abilities in a diligent,
trustworthy, businesslike and efficient manner. As used in this Agreement,
"Subsidiaries" shall mean any entity of which the securities having a majority
of the voting power in electing directors or managers are, at the time of
determination, owned by the Company either directly or through one or more
Subsidiaries.
2.1 Outside
Directorships. In the
event Executive is invited, solicited or otherwise asked to become a director,
advisor or consultant for any entity or organization of any type or function
whatsoever other than the Company or its Subsidiaries, Executive shall notify
the Board in writing of such invitation, the entity or organization extending
such invitation and the capacity to be served by Executive for such entity or
organization. The Board shall have the sole power and authority to authorize
Executive to accept such invitation based on such criteria and standards as the
Board may determine, and Executive shall not accept such invitation without the
Board's prior written consent, which consent shall not be unreasonably
withheld.
2.2 Delegation
by Board.
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 but not limited to the Compensation Committee of the Board, and
Executive agrees to treat, comply with and be bound by any action taken by such
committee as if the Board had taken such action directly.
3. COMPENSATION
AND BENEFITS. During
the Employment Period, Executive shall be paid or receive compensation and
benefits as follows:
3.1 Base
Salary. The
base salary for Executive shall be $550,000 per year, or such other rate as the
Board may designate from time to time (the "Base Salary"). The Base Salary shall
be payable in regular installments in accordance with the Company's general
payroll practices and shall be subject to withholdings for applicable taxes.
Executive's performance shall be evaluated annually in March of each year. Any
future salary increases will be based on the Executive's individual performance
and will be approved by the Board in its sole discretion. Executive will be
eligible for a salary increase on April 1, 2007 and annually
thereafter.
3.2 Performance
Bonus.
Executive will be eligible for an annual performance bonus award, payable on or
about April 1, 2007 and every year thereafter that Executive is employed, as of
April 1 of the then current year. Executive's annual bonus target will be 65% of
the Base Salary. Executive's maximum bonus amount will be 130% of the Base
Salary. The award of any bonus shall be based upon the financial earning
parameters which shall be determined by the Board in its sole discretion.
With
respect to Executive's eligibility for a performance bonus on April 1,
2007, if Executive's employment with Company begins after April 1, 2006,
the amount of Executive's performance bonus will be calculated, pro rata, based
upon the number of days worked by Executive during fiscal year 2006. Thereafter,
in order to
receive any such performance bonuses, the Executive must be employed in the
position on April 1 of the then current year and must have worked for the
Company in the position for the previous 12 months. Any such bonus award shall
be subject to withholdings for applicable taxes.
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3.3 Medical,
Dental and Other Benefits. After 60
days of employment, Executive shall be eligible to enroll and participate in any
and all benefits plans the Company provides to its executive officers and
employees including, but not limited to, medical and dental insurance coverage
for Executive and family, life insurance policy, long term disability insurance,
stock options, and retirement plans and arrangements. The premiums, costs and
expenses for any such benefit plans under which Executive is participating shall
be borne by Company. Executive shall receive four (4) weeks of paid vacation
each year, which if not taken may not be carried forward to any subsequent year.
Executive, however, shall not receive any compensation for any unused vacation
days and upon termination of employment for any reason, any unused vacation days
shall be forfeited. Any and all benefits provided for hereunder shall not be
included in the definition of the term "Base Salary" as such term is used in
this Agreement. All such medical
and dental insurance, life insurance and long term disability insurance
benefits
shall immediately cease and terminate upon the later of (1) the termination
date of the Employment Period or (2) the expiration date of coverage for
such benefits by the Company as described in Section 4 hereof; provided,
that upon such termination, Executive shall have the right to elect to continue
any or all of such health benefits, programs or coverage, at his sole cost and
expense, in accordance with and subject to the terms and limitations set forth
in the Consolidated Omnibus Reconciliation Act of 1985 ("COBRA") and the
regulations promulgated in connection therewith.
3.4 Automobile
Allowance. Company
shall provide Executive with an automobile allowance in the amount of $1,000.00
per month to be allocated at Executive's discretion, or such other amount
designated by the Board in its sole discretion, and such allowance shall be
payable in regular installments in accordance with the Company's general payroll
practices.
3.5 Financial
Planning Allowance. Company
shall reimburse Executive for any expenses incurred by Executive in connection
with the preparation of taxes, estate planning or financial counseling up to a
maximum amount of $10,000.00 per year, or such other annual amount designated by
the Board in its sole discretion, which amount may not be carried forward to any
subsequent year. Such expenses shall be reimbursed in accordance with the
standard policies and procedures of the Company in effect from time to time
related to such reimbursable expenses.
3.6 Business
Expense. Company
shall reimburse Executive for all reasonable travel, entertainment and other
business expenses incurred by Executive in the course of performing the duties
of the Position. Such expenses shall be reimbursed in accordance with the
standard policies and procedures of the Company in effect from time to time
related to such reimbursable expenses.
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4. TERMINATION;
EFFECTS OF TERMINATION. This
Agreement may be terminated upon the occurrence of any of the following
events:
4.1 Terminable
At Will.
Notwithstanding any other provision of this Agreement including, but not limited
to Section 1 hereof, this Agreement and Executive's employment with the
Company or its Subsidiaries shall be terminable at will at any time for any
reason by either party upon written notice, and this Agreement shall expire
automatically when Executive ceases to hold the Position with the Company for
any reason. Upon such termination, the rights of Executive to receive the monies
and benefits from the Company shall be determined in accordance with the terms
and provisions contained in this Section 4, and Executives agrees that such
monies and benefits are fair and reasonable and are the sole monies and benefits
which shall be due to him from the Company in the event of
termination.
4.2 By
Company For Good Cause. Upon
written notice to Executive, Company may immediately terminate this Agreement at
any time during the Employment Period for "Good Cause" (as hereafter
defined).
4.2.1 Monies
and Payments to Executive. Upon
such termination, Executive shall be entitled to receive any Base Salary earned
and unpaid, and fringe benefits described in Section 3.3 hereof accrued and
unpaid, through the date of such termination, and no other monies or benefits
shall be payable or owed to Executive under this Agreement.
4.2.2 Forfeiture
of Options.
Effective as of such termination date, any and all stock options, stock
appreciation rights, restricted stock options, warrants and other similar rights
granted to or received by Executive under any option or incentive plan of the
Company to which Executive is participating or enrolled shall immediately be
terminated and forfeited, except for such options or rights granted to or
received by Executive which have fully and completely vested prior to such
termination date. Any and all such options and rights to which Executive has
become fully and completely vested prior to such termination date shall expire
as set forth in the respective plan document or agreement granting such options
and rights.
4.2.3 Good
Cause Defined. For
purposes of this Agreement, "Good Cause" means (i) Executive's conviction
of, or plea of nolo contendere or guilty to, any criminal violation involving
dishonesty, fraud or moral turpitude; (ii) Executive's gross negligence;
(iii) Executive's willful and serious misconduct; (iv) Executive's
breach of trust or fiduciary duty in the performance of his duties or
responsibilities; (v) Executive's willful failure to comply with reasonable
directives and policies of the Board; or (vi) Executive's breach of any
material
term or
provision of this Agreement and
Executive's failure to cure such breach within 30 days of his receipt of notice
of the breach by the Company.
4.3 By
Company Without Good Cause. Upon ten
(10) days prior written notice to Executive, Company may terminate this
Agreement at any time during the Employment Period without Good
Cause.
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4.3.1 Monies
and Benefits to Executive. Upon
such termination, Executive shall be entitled to receive: (i) any Base
Salary earned and unpaid, and fringe benefits described in Section 3.3
hereof accrued and unpaid, through the date of such termination; (ii) one
and one-half (1½) times the aggregate of: (x) the Base Salary plus
(y) your annual bonus target amount (65% of Base Salary); (iii) any
performance bonus (65% of Base Salary) for the fiscal year in which such
termination occurs pro-rated through the date of such termination; provided,
however, Executive shall not receive any portion of the performance bonus unless
the Board determines in good faith that Executive would have been entitled to
receive any performance bonus for the fiscal year in which such termination
occurred in accordance with Section 3.2 hereof; (iv) continuation of
the fringe benefits described in Section 3.3 hereof under which Executive
is participating as of the date of such termination for a period of eighteen
(18) months from the date of such termination; (v) payment of outplacement
services for Executive for a period of twelve (12) months from the date of such
termination; provided, however, the aggregate amount of such payments shall not
exceed $15,000.00.
4.3.2 Payment
of Monies and Benefits. The
payments described
in Section 4.3.1(i) and
4.3.1(ii) hereof
shall be paid to Executive in a lump
sum within
thirty (30) days from the date of such termination and shall be subject to
withholdings for applicable taxes. The payment described in
Section 4.3.1(iii) hereof shall be payable in a lump sum on or before
April 1 following the end of the fiscal year in which such termination occurred
and shall be subject to withholdings for applicable taxes. The benefits
described in Section 4.3.1(iv) shall be provided in accordance with
the Company's standard policies and practices. The payments described in
Section 4.3.1(v) hereof shall be paid directly to the entity providing
outplacement services to Executive within ten (10) days of receipt of an invoice
or statement from such entity.
4.3.3 Forfeiture
of Options.
Effective as of such termination date, any and all stock options, stock
appreciation rights, restricted stock options, warrants and other similar rights
granted to or received by Executive under any option or incentive plan of the
Company to which Executive is participating shall immediately be terminated and
forfeited, except for such options or rights granted to or received by Executive
which have fully and completely vested prior to such termination date. Any and
all such options and rights to which Executive has become fully and completely
vested prior to such termination date shall expire as set forth in the
respective plan document or agreement granting such options and rights.
4.4 By
Executive for Good Reason. Upon
thirty (30) days prior written notice to Company, Executive may terminate this
Agreement at any time during the Employment Period for "Good Reason" (as
hereafter defined), and if requested by Company, Executive shall continue to
work exclusively for the Company during such thirty (30) day period; provided,
however, the Company shall have the right, in its sole discretion, to terminate
this Agreement at any time during such thirty (30) day period upon written
notice to Executive.
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4.4.1 Monies
and Benefits to Executive. Upon
such termination, Executive shall be entitled to receive: (i) any Base
Salary earned and unpaid, and fringe benefits described in Section 3.3
hereof accrued and unpaid, through the date of such termination; (ii) one
and one-half (1½) times the aggregate of: (x) the Base Salary plus (y) your
annual bonus target amount (65% of Base Salary); (iii) any performance
bonus (65% of Base Salary) for the fiscal year in which such termination occurs
pro-rated through the date of such termination; provided, however, Executive
shall not receive any portion of the performance bonus unless the Board
determines in good faith that Executive would have been entitled to receive any
performance bonus for the fiscal year in which such termination occurred in
accordance with Section 3.2 hereof; (iv) continuation of the fringe
benefits described in Section 3.3 hereof under which Executive is
participating as of the date of such termination for a period of eighteen (18)
months from the date of such termination; and (v) payment of outplacement
services for Executive for a period of twelve (12) months from the date of such
termination; provided, however, the aggregate amount of such payments shall not
exceed $15,000.00.
4.4.2 Payment
of Monies and Benefits. The
payments described in Section 4.4.1(i)
and
4.4.1(ii) hereof
shall be paid to Executive within thirty (30) days from the date of such
termination and shall be subject to withholdings for applicable taxes. The
payment described in Section 4..1(iii) hereof shall be payable in a lump
sum on or before April 1 following the end of the fiscal year in which such
termination occurred and shall be subject to withholdings for applicable taxes.
The benefits described in Section 4.4.1(iv)
shall be provided in accordance with the Company's standard policies and
practices. The payments described in Section 4.4.1(v) hereof shall be paid
directly to the entity providing outplacement services to Executive within ten
(10) days of receipt of an invoice or statement from such
entity.
4.4.3 Forfeiture
of Options.
Effective as of such termination date, any and all stock options, stock
appreciation rights, restricted stock options, warrants and other similar rights
granted to or received by Executive under any option of incentive plan of the
Company to which Executive is participating shall immediately be terminated and
forfeited, except for such options or rights granted to or received by Executive
which have fully and completely vested prior to such termination date. Any and
all such options and rights to which Executive has become fully and completely
vested prior to such termination date shall expire as set forth in the
respective plan document or agreement granting such options and rights.
4.4.4 Good
Reason Defined. For
purposes of this Agreement, "Good Reason" shall exist if, without Executive's
express written consent, the Company: (i) materially reduces or decreases
Executive's Base Salary from the level in effect on the date hereof;
(ii) willfully fails to include Executive in any incentive compensation
plans, bonus plans, or other plans and benefits provided by the Company to other
executive level executive; (iii) materially reduces, decreases or
diminishes the nature, status or duties and responsibilities of the Position
from those in effect on the date hereof, and such reduction, decrease or
diminution is not reasonably related to or the result of an adverse change in
Executive's performance of assigned duties and responsibilities;
(iv) the
hiring by Company of an executive senior to Executive; or (v) requires
Executive to regularly perform the duties and responsibilities of the Position
at a location which is more than fifty (50) miles from the location of
Executive's principal place of employment. Notwithstanding the above, Good
Reason shall not include the death, disability or voluntary retirement of
Executive or any other voluntary action taken by or agreed to by Executive
related to the Position or its employment with the Company or its
Subsidiaries.
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4.5 By
Executive Without Good Reason. Upon
thirty (30) days prior written notice to Company, Executive may terminate this
Agreement at any time during the Employment Period without Good Reason, and if
requested by the Company, Executive shall continue to work exclusively for the
Company during such thirty (30) day period; provided, however, the Company shall
have the right, in its sole discretion, to terminate this Agreement at any time
during such thirty (30) day period upon written notice to
Executive.
4.5.1 Monies
and Benefits to Executive.
Executive shall be entitled to receive any Base Salary earned and unpaid, and
fringe benefits described in Section 3.3 hereof accrued and unpaid, through
the date of such termination or the date on which the Company terminates this
Agreement during such thirty (30) day period, and no other monies or benefits
shall be payable or owed to Executive under this Agreement.
4.5.2 Forfeiture
of Options.
Effective as of such termination date, any and all stock options, stock
appreciation rights, restricted stock options, warrants and other similar rights
granted to or received by Executive under any option or incentive plan of the
Company to which Executive is participating or enrolled shall immediately be
terminated and forfeited, except for such options or rights granted to or
received by Executive which have fully and completely vested prior to such
termination date. Any and all such options and rights to which Executive has
become fully and completely vested prior to such termination date shall expire
as set forth in the respective plan document or agreement granting such options
and rights.
4.6 By
Company Due to Change in Control. In the
event a Change in Control (as hereafter defined) occurs and during the period
beginning three (3) months before the Change in Control and ending twenty-four
(24) months after the Change in Control:(i) this Agreement is terminated by
the Company or its successor without Good Cause; or (ii) this Agreement is
terminated by Executive with Good Reason, Executive shall be entitled to
receive, and Company or its successor shall be obligated to pay, the monies and
benefits described in this Section 4.6, and Sections 4.3 or 4.4 hereof
shall not be applicable to such Change in Control or termination.
4.6.1 Monies
and Benefits to Executive. Upon
such Change in Control or termination, Executive shall be entitled to receive:
(i) any Base Salary earned and unpaid, and fringe benefits described in
Section 3.3 hereof accrued and unpaid, through the date of such Change in
Control or termination; (ii) three (3) times the aggregate of (x) the Base
Salary plus (y) your annual bonus target (65% of Base Salary); (iii) any
performance bonus (65% of Base Salary) for the fiscal year in which such Change
in Control or termination occurs pro-rated through the date of such Change in
Control or termination; provided, however, Executive shall not receive any
portion of the performance bonus under this Section 4.6.1(iii) unless the
Board determines in good faith that Executive would have been entitled to
receive any performance bonus for the fiscal year in which such Change in
Control or termination occurred in accordance with Section 3.2 hereof;
(iv) continuation of the fringe benefits described in Sections 3.3
hereof under which Executive is participating as of the date of such Change in
Control or termination for a period of thirty-six (36) months from the date of
such Change in Control or termination; (v payment of outplacement services
for Executive for a period of twelve (12) months from the date of such Change in
Control or termination; provided, however, the aggregate amount of such payments
shall not exceed $15,000.00; and (vi) continuation of the financial
planning allowance described in Section 3.5 hereof for a period of
thirty-six (36) months from the date of such Change in Control or
termination.
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4.6.2 Payment
of Monies and Benefits. The
payments described in Sections 4.6.1(i) and 4.6.1(ii) hereof shall be paid
to Executive in a lump sum within thirty (30) days of the date of such Change in
Control or termination and shall be subject to withholdings for applicable
taxes. The payment described in Section 4.6.1(iii) hereof shall be payable
in a lump sum on or before April 1 following the end of the fiscal year in which
such Change in Control or termination occurred and shall be subject to
withholdings for applicable taxes. The benefits described in
Section 4.6.1(iv) hereof shall be provided in accordance with the Company's
or its successor's standard policies and practices. The payments described in
Section 4.6.1(v) hereof shall be paid directly to the entity providing
outplacement services to Executive within ten (10) days of receipt of an invoice
or statement from such entity. The reimbursement of the expenses related to
Section 4.6.1(vi) shall be made to Executive in accordance with the
Company's or its successor's policies and procedures.
4.6.3 Vesting
of Options.
Effective as of such Change in Control or termination date, any and all stock
options, stock appreciation rights, restricted stock options, warrants and other
similar rights granted to or received by Executive under any option or incentive
plan of the Company or its successors to which Executive is participating or
enrolled shall immediately become fully and completely vested and exercisable as
if Executive had satisfied any and all terms, conditions or requirements
described or contained in such plan. In the event Executive has not previously
exercised, or does not exercise, all or any portion of such options or rights
within sixty (60) days of the date of such Change in Control or termination (the
"Exercise Period"), Executive shall be entitled to receive, and Company or its
successor shall be obligated to pay, compensation for such unexercised options
or rights in an amount equal to (i) the number of shares not exercised by
Executive under such options or rights multiplied by (ii) the closing price
of the common stock of the Company or its successor as of the day immediately
prior to such Change in Control or termination minus the exercise price of
Executive described in such options or rights (the "Option Compensation"). The
Option Compensation shall be payable in a lump sum within thirty (30) days after
the expiration of the Exercise Period, and shall be subject to withholdings for
applicable taxes. Executive shall take any and all actions, and execute and
deliver to Company or its successor any and all agreements, certificates or
instruments, necessary or required to consummate the transactions contemplated
under this Section 4.6.3 including, but not limited to, the assignment,
transfer or conveyance of any and all shares and rights to be acquired by the
Company or its successor and the cancellation, revocation or termination of any
options or rights Executive has or may have under any such option or incentive
plan.
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4.6.4 Change
in Control Defined. For
purpose of this Agreement, a "Change in Control" shall be deemed to have
occurred as of the date (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 twenty-five percent (25%) or more of the
combined voting power of the Company's then outstanding securities, and within
one (1) year after such "person" or "group" becomes the beneficial owner of
twenty-five percent (25%) 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) the consummation of
a 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 fifty one percent (51%) ownership interest in the
outstanding common stock of the surviving corporation immediately after the
merger, or (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, except for any sale, lease exchange or transfer
resulting from any action taken by any creditor of the Company in enforcing its
rights or remedies against any assets of the Company in which such creditor
holds a security interest.
4.6.5 Payments
from Tax Implications.
(a)
Gross-Up
Payment.
Notwithstanding anything to the contrary in this Agreement, in the event it
shall be determined that any payment or distribution made, or benefit provided
(including, but not limited to, Section 4.6.3 hereof), by the Company to or
for the benefit of Executive under this Agreement but determined without regard
to any additional payments required under this Section 4.6.5 (each, a
"Payment"), would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended from time to time (the "Code"), or
any similar excise tax, or any interest or penalties incurred by Executive with
respect to such excise tax (such tax with any such interest and penalties being
collectively referred to as the "Excise Tax"), Executive shall be entitled to
receive an additional payment (a "Gross Up Payment") from the Company in an
amount such that after payment by Executive of all taxes (including any Excise
Tax, income tax or payroll tax) imposed upon the Gross Up Payment and any
interest or penalties imposed with respect to such taxes, Executive retains from
the Gross Up Payment an amount equal to the Excise Tax imposed upon the
Payments.
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(b)
Determination
of Gross-Up Payment. Subject
to the provisions of Section 4.6.5(c) hereof, all determinations required
to be made under this Section 4.6.5, including a determination of the
requirement for and amount of any Gross Up Payment, shall be made by the
independent public accounting firm which is then retained by the Company to
audit its financial statements (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and Executive within thirty
(30) business days of the date of such termination, if applicable, or such
earlier time as is requested by the Company, provided that any determination
that an Excise Tax is payable by Executive shall be made on the basis of
substantial authority. Any initial Gross Up Payment shall be paid to Executive
within fifteen (15) business days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is payable
by Executive, the Accounting Firm shall furnish Executive with a written opinion
that he has substantial authority not to report any Excise Tax on his federal
income tax return. Any determination by the Accounting Firm meeting the
requirements of this Section 4.6.5(b) shall be binding upon the Company and
Executive; subject only to payments pursuant to the following sentence based on
a determination that additional Gross Up Payments should have been made,
consistent with the calculations required to be made hereunder (the amount of
such additional payments, including any interest and penalties, being
collectively referred to as the "Gross Up Underpayment" ). In the event the
Company exhausts its remedies pursuant to Section 4.6.5(c) hereof and
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Gross Up Underpayment that has
occurred and any such Gross Up Underpayment shall be promptly paid by the
Company to or for the benefit of Executive. The fees and disbursements of the
Accounting Firm shall be paid by the Company.
(c)
Remedies
to Company.
Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of
a Gross Up Payment. Such notification shall be given as soon as practicable but
not later than ten (10) business days after Executive receives written notice of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. Executive shall not pay such
claim prior to the expiration of thirty (30) days following the date on which
Executive gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the
Company notifies Executive in writing prior to the expiration of such thirty
(30) day period that the Company desires to contest such claim at the Company's
sole cost and expense and the Company will provide the indemnification as
required by this Section 4.6.5(c), Executive shall: (1) give the Company
any information reasonably requested by the Company relating to such claim;
(2) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including, but
not limited to, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company and reasonably satisfactory to
Executive; (3) cooperate with the Company in good faith in order
effectively to contest such claim, and (4) permit the Company to
participate in any proceedings relating to such claim.
10
The
Company shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after tax basis, for any Excise
Tax, income tax or payroll tax, including interest and penalties with respect
thereto, imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 4.6.5(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority with respect to such claim and may, at its sole option, either
direct Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided,
however, that if
the Company directs Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to Executive, on an interest
free basis and shall indemnify and hold Executive harmless, on an after tax
basis, from any Excise Tax, income tax or payroll tax, including interest or
penalties with respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and
further provided that any
extension of the statute of limitations relating to the payment of taxes for the
taxable year of Executive with respect to which such contested amount is claimed
to be due shall be limited solely to such contested amount, unless Executive
agrees otherwise. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross Up Payment would be payable
hereunder and Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
(d)
Refund
of Excise Tax to Company. If,
after the receipt by Executive of an amount advanced by the Company pursuant to
Section 4.6.5(c), Executive becomes entitled to receive any refund with
respect to such claim, Executive shall (subject to the Company's complying with
the requirements of Section 4.6.5(c) hereof) promptly pay to the Company
the amount of such refund, together with any and all interest paid or credited
thereon after taxes applicable thereto. If, after the receipt by Executive of an
amount advanced by the Company pursuant to Section 4.6.5(c) hereof a
determination is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive in writing of
its intent to contest such denial of refund prior to the expiration of thirty
(30) days after such determination, then any obligation of Executive to repay
such advance shall be forgiven and the amount of such advance shall offset, to
the extent thereof, the amount of Gross Up Payment required to be paid by the
Company.
11
4.7 Execution
of Release by Executive. Company
shall not be obligated to pay any portion of the monies and benefits described
above, if any, unless and until Executive shall have executed and delivered to
the Company a release of all claims against the Company and its Subsidiaries and
their respective shareholders, partners, member, directors, managers, officers,
employees, agents and attorneys, arising out of or related to any act or
omission which occurred on or prior to the date on which this Agreement was
terminated, in form and substance reasonably satisfactory to the
Company.
5. POST-EMPLOYMENT
DUTIES. For a
period of three (3) years following the termination of this Agreement, Executive
shall: (i) fully and truthfully cooperate and assist the Company and its
Subsidiaries, to the fullest extent possible, in any and all issues, matters,
legal proceedings or litigation related to or associated with the business,
management or operation of or any other matter involving the Company or its
Subsidiaries in any way or of any nature whatsoever arising from, related to or
connected with any period in which Executive was employed by or otherwise
provided services to the Company or its Subsidiaries or in which Executive has
or may have past knowledge, information or experience or applicable expertise;
and (ii) fully cooperate, assist, participate and work with the Company or
its Subsidiaries on any and all issues or matters for which the Company or its
Subsidiaries may seek his cooperation, assistance, participation, involvement or
consultation. Such assistance shall be provided at such times and dates which
shall not unreasonably interfere or conflict with Executive's then current
employment. The Company shall reimburse Executive for any and all costs and
expenses reasonably incurred by Executive in providing such assistance in
accordance with the standard policies and procedures of the Company in effect
from time to time related to such reimbursable expenses.
6. CONFIDENTIAL
INFORMATION.
Executive acknowledges that Executive will have access or be privy to certain
confidential business and proprietary information of the Company and its
Subsidiaries as a result of Executive's employment with the Company or its
Subsidiaries. Such confidential information may include but is not limited to
business decisions, plans, procedures, strategies and policies, legal matters
affecting Company and its Subsidiaries and their respective businesses,
personnel, customer records information, trade secrets, bid prices, evaluations
of bids, contractual terms and arrangements (prospective purchases and sales),
pricing strategies, financial and business forecasts and plans and other
information affecting the value or sales of products, goods, services or
securities of the Company or its Subsidiaries, and personal information
regarding employees (collectively, the "Confidential Information"). Executive
acknowledges and agrees the Confidential Information is and shall remain the
sole and exclusive property of the Company or such Subsidiary. Executive shall
not disclose to any unauthorized person, or use for Executive's own purposes,
any Confidential Information without the prior written consent of the Board,
which consent may be withheld by the Board at its sole discretion, 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 agrees to maintain the confidentiality of the Confidential
Information after the termination of Executive's employment; provided, further,
that if at any time Executive or any person or entity to which Executive has
disclosed any Confidential Information becomes legally compelled (by deposition,
interrogatory, request for documents, subpoena, civil investigative demand or
similar process) to disclose any of the Confidential Information, Executive
shall provide the Company with prompt, prior written notice of such requirement
so the Company, in its sole discretion, may seek a protective order or other
appropriate remedy and/or waive compliance with the terms hereof. In the event
that such protective order or other remedy is not obtained or the Company waives
compliance with the provisions hereof, Executive shall ensure that only the
portion of the Confidential Information which Executive or such person is
advised by written opinion of the Company's counsel that Executive is legally
required to disclose is disclosed, and Executive further covenants and agrees to
exercise reasonable efforts to obtain assurance that the recipient of such
Confidential Information shall not further disclose such Confidential
Information to others, except as required by law, following such disclosure. In
addition Executive covenants and agrees to deliver to the Company upon
termination of this Agreement, and at any other time as the Company may request,
any and all property of the Company including, but not limited to, keys,
computers, credit cards, company car, memoranda, notes, plans, records, reports,
computer tapes, printouts and software, Confidential Information in any form
whatsoever, and other documents and data (and copies thereof) and relating to
the Company or any Subsidiary which he may then posses or have under his control
or to which Executive had access to or possession of in the course of such
employment.
12
7. COVENANT
NOT TO COMPETE, SOLICIT OR DISPARAGE.
Executive hereby agrees that for a period of two (2) years following the
expiration or termination of this Agreement (the "Non-Compete Period"),
Executive shall not: (i) directly or indirectly, either individually or for
any other person or entity (whether as an officer, director, employee, owner,
stockholder, consultant, agent, advisor, general partner, limited partner or
otherwise), 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); (ii) directly or indirectly, individually 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 any other person or entity having a business relationship
with the Company to cease doing business with or reduce the volume of its
business with the Company; or (iii) initiate, participate or engage in any
communication whatsoever with any current or former customer, supplier, vendor
or competitor of the Company or its Subsidiaries or any of their respective
shareholders, partners, members, directors, managers, officers, employees or
agents, or with any current or former shareholder, partner, member, director,
manager, officer, employee or agent of the Company or its Subsidiaries, or with
any third party, which communication could reasonably be interpreted as
derogatory or disparaging to the Company or its Subsidiaries, including but not
limited to the business, practices, policies, shareholders, partners, members,
directors, managers, officers, employees, agents, advisors and attorneys of the
Company or its Subsidiaries. Provided, however, nothing herein shall prohibit
Executive from being a passive owner of or controlling, directly or indirectly,
of not more than five percent (5%) in the aggregate of the outstanding stock of
any class of a corporation which is publicly traded and which competes in the
business of the Company so long as Executive has no direct or indirect
participation in the management of such corporation. Executive acknowledges that
the foregoing restriction is reasonable in all respects and that there is no
less restrictive provision in terms of duration, prohibited activities or
geographic area which would adequately protect the Company's assets and other
legitimate business interests. 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 (populations of less than
25,000) and (b) operates a significant number of its apparel stores (75% or
more of its total apparel stores) in 10,000 to 30,000 square foot formats.
Notwithstanding the foregoing, in the event any part of this covenant set forth
in this provision shall be held invalid, illegal or unenforceable by a court of
competent jurisdiction, Executive and the Company hereby agree that such
invalid, illegal or unenforceable provision or section hereof shall be severed
from this Agreement without affecting the remaining portions hereof in any
manner. In the event any portion of this provision related to the time or
geographical area restrictions hereof shall be declared by a court of competent
jurisdiction to exceed the maximum time or geographical area restrictions such
court deems reasonable or enforceable, said time or geographic area restriction
shall be deemed to become and thereafter shall be such time or geographic area
which such court shall deem reasonable and enforceable.
13
8. ARBITRATION. Should
any dispute arise relating to the meaning, interpretation, enforcement or
application of this Agreement, such dispute shall be settled in Xxxxxx County,
Texas, in accordance with the terms, conditions and requirements described or
contained in the Company's arbitration policy, if any, and the employment
dispute arbitration rules of the American Arbitration Association, and all costs
of such arbitration including, but not limited to reasonable attorney's fees and
costs, shall be borne by the losing party. The Company, however, shall be
entitled to obtain injunctive relief from any court of competent jurisdiction to
enforce the provisions of Sections 6 and 7 of this Agreement.
9. 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 indicated below:
|
To
Executive: |
Xxxxxx
Xxxx |
|
00
Xxxx Xxxxxx Xxxxx |
|
Xxx
Xxxxxxxxx, XX 00000 |
|
With
a copy to: |
Xxxxxxxxx
Xxxxxxxx LLP |
|
Xxx
Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000 |
|
Xx.
Xxxxx, XX 00000-0000 |
|
Attention:
Xxxxxxx X. Xxxxxxxx, Xx. |
|
To
Company: |
Stage
Stores, Inc. |
|
00000
Xxxx Xxxxxx |
|
Xxxxxxx,
Xxxxx 00000 |
|
Attention:
EVP-Human Resources |
14
|
With
a copy to: |
McAfee
& Xxxx |
|
A
Professional Corporation |
|
211
North Xxxxxxxx |
|
10th
Floor, Two Leadership square |
|
Xxxxxxxx
Xxxx, Xxxxxxxx 00000 |
|
Attn:
Xxxxxx Xxxxxxxx |
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.
10. GOVERNING
LAW. All
issues and questions concerning the construction, validity, enforcement and
interpretation of this Agreement 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, even though under the jurisdiction's choice of
law or conflict of law analysis, the substantive law of some other jurisdiction
would ordinarily apply.
11. SEVERABILITY. Each
section, subsection and lesser section of this Agreement constitutes a separate
and distinct undertaking, covenant or provision hereof. In the event that any
provision of this Agreement shall be determined to be invalid or unenforceable,
such provision shall be deemed limited by construction in scope and effect to
the minimum extent necessary to render the same valid and enforceable, and, in
the event such a limiting construction is impossible, such invalid or
unenforceable provision shall be deemed severed from this Agreement, but every
other provision of this Agreement shall remain in full force and
effect.
12. AMENDMENTS;
MODIFICATIONS. Neither
this Agreement nor any term or provision in it may be changed, waived,
discharged, rescinded or terminated orally, but only by an agreement in writing
signed by the party against whom or which the enforcement of such change,
waiver, discharge, rescission or termination is sought.
13. WAIVER. No
failure on the part of either party to this Agreement to exercise, and no delay
in exercising, any right, power or remedy created hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
remedy by any such party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. No waiver by any party hereto to
any breach of, or default in, any term or condition of this Agreement shall
constitute a waiver of or assent to any succeeding breach of or default in the
same or any other term or condition hereof. The terms and provisions of this
Agreement, whether individually or in their entirety, may only be waived in
writing and signed by the party against whom or which the enforcement of such
waiver is sought.
14. SUCCESSORS
AND ASSIGNS. This
Agreement shall be binding upon and inure to the benefits of the successors,
assigns, heirs, legatees, devisees, executors, administrators, receivers,
trustees and representatives of Executive and the Company and its Subsidiaries
and their respective successors, assigns, administrators, receivers, trustees
and representatives.
15
15. HEADINGS. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement.
16. MULTIPLE
COUNTERPARTS. This
Agreement may be executed in two or more counterparts, each of which is deemed
to be an original and all of which taken together constitute one and the same
agreement.
17. FEES
AND EXPENSES. All
costs and expenses incurred by either party in the preparation, negotiation or
performance of this Agreement shall be borne solely by the party incurring such
expense without right of reimbursement.
18. INDEMNIFICATION. The
Company agrees to indemnify and hold Executive harmless for any costs, attorney
fees or damages that he may suffer if his former employer (May Company)
or its
successor Federated Department Stores, Inc. attempts
to enforce the terms of any provision of his prior employment agreement. The
Executive shall have the right to select counsel to represent him in any such
matters for which the Company will reimburse Executive for all reasonable costs
and attorney fees. This indemnification shall extend to any action by May
Company or
Federated Department Stores, Inc. seeks to
claw back or otherwise recover any gains on stock options or incentive
plans.
19. FURTHER
ASSURANCES.
Executive and the Company covenant and agree that each will execute any
additional instruments and take any actions as may be reasonably requested by
the other party to confirm or perfect or otherwise to carry out the intent and
purpose of this Agreement.
20. CONSTRUCTION. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by Executive and the Company,
and no presumption or burden of proof shall arise favoring or disfavoring either
by virtue of the authorship of any of the provisions of this
Agreement.
21. SURVIVAL.
Executive and the Company agree that the terms and conditions of Sections 4
through 15 (inclusive), 19, 20 and 21 hereof shall survive and continue in full
force and effect, notwithstanding any expiration or termination of the
Employment Period or this Agreement.
22. ENTIRE
AGREEMENT. This
Agreement contains and constitutes the entire agreement between Executive and
the Company and supersedes and cancels any prior agreements, representations,
warranties, or communications, whether oral or written, between Executive and
the Company relating to the subject matter hereof in any way.
23. GENDER
AND NUMBER PLURALITY. Unless
the context otherwise requires, whenever used in this Agreement the singular
shall include the plural, the plural shall include the singular, and the
masculine gender shall include the neuter or feminine gender and vice
versa.
16
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the date first above written.
|
"COMPANY" |
STAGE STORES, INC., | |
| a Nevada Corporation | ||
|
By: |
/s/Xxxxx
X. Xxxxxxxxxxx | |
|
Title:
|
Chairman,
President and Chief Executive Officer | |
|
"EXECUTIVE" |
/s/Xxxxxx Xxxx | |
| XXXXXX XXXX, an individual | ||
17
