STAGE STORES, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of June 12, 1996, between Stage Stores, Inc.
A Delaware corporation (the "Company"), and Xxxxxx 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
Executive Vice President, Director of Stores of the Company and shall have the
normal duties, responsibilities and authority of the Executive Vice President,
Director of Stores, subject to the power of the Board to expand or limit such
duties, responsibilities and authority and to override actions of Executive Vice
President, Director of Stores.
(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
$300,000 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. 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.
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 June 12, 1997 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, 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.
(b) If the Employment Period is terminated by the Company without Good
Cause, Executive shall be entitled to receive an amount equal to his annual Base
Salary 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 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 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.
(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 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
2
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 bonus through the
Termination Date; and (iii) an amount equal to two times the Base Salary in
effect on the Termination Date. 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.
(b) 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 (other than Xxxx Capital ("Xxxx") or Acadia Partners,
L.P. ("Acadia"), or an affiliate of Bain or Acadia) 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,
fraud or breach of trust, (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 the 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 materially 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.
3
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-Complete, 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 proposes 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 (i) operates apparel stores in Houston or (ii) (a)
operates apparel stores in small markets (i.e., with populations of less than
100,000) and (b) operates 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 (i) in the event Executive's
employment is terminated by the Company for Good Cause or by Executive other
than for Good Reason the period ending on the date twenty-four months after
Termination Date and (ii) in the event Executive's employment is terminated by
the Company other than for Good Cause or by Executive for Good Reason, the
period ending twelve months after the Termination Date. 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 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 the period ending twenty-four months after the Termination
Date, 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.
4
9. Option Grants. In consideration of Executive entering into this
Agreement, the Company has granted to Executive as of June 12, 1996 options to
purchase 50,000 shares of the Company's common stock at a price of $20.00 per
share*(1). The option grant shall be governed by a separate option agreement
which shall provide that such options will vest and become exercisable on the
fifth anniversary of grant or, if earlier, following a Change of Control, upon
the termination of Executive other than for Good Cause or by Executive for Good
Reason.
10. 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.
11. 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:
Xxxxxx Xxxxxx
0000 Xxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Notices to the Company:
Stage Stores, Inc.
00000 Xxxxx 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.
12. 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.
13. 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
--------
1 The number of shares and exercise price of such option shall be
equitably adjusted to reflect any stock splits of the Company's common stock as
provided in the agreement governing such option.
5
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.
14. 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.
15. 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.
16. 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.
17. 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 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.
18. 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.
* * * * *
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
STAGE STORES, INC.
By ___________________________
Its __________________________
-----------------------------
7
