Exhibit 99.1
EMPLOYMENT
AGREEMENT
This EMPLOYMENT AGREEMENT (this
"Agreement") is made and entered into effective as of 25th day of
August, 2008, by and between Duckwall-ALCO Stores, Inc., a Kansas
corporation (the "Company"), and Ted Beaith, an
individual.
W I T N E S S E T H:
WHEREAS, the Company desires to
employ Ted Beaith as the Company's Senior Vice President and Chief
Information Officer (hereinafter the “Employee”) on the
terms and conditions set forth herein;
NOW, THEREFORE, the Company and the
Employee, each intending to be legally bound, hereby mutually
covenant and agree as follows:
SECTION 1.
DEFINITIONS
The following terms used in this
Agreement shall have the meanings set forth below:
"Base Salary" shall mean the amount
set forth in Section 3(a).
"Board" shall mean the board of
directors of the Company.
"Cause" shall mean (i) the
Employee's material violation of any of Sections 2(c), 4(a),4(b) or
4(c) of this Agreement; (ii) the Employee engaging in conduct which
is fraudulent or illegal with respect to the Company or any of its
subsidiaries; (iii) the Employee’s gross negligence in the
performance or nonperformance of his duties or responsibilities
hereunder; (iv) the Employee's engagement in misconduct which is
materially injurious or materially damaging to the Company or any
of its subsidiaries or the reputation of the Company or any of its
subsidiaries; (v) the Employee's conviction of, or plea of
nolo contendere
to, a felony; (vi) failure to
cooperate with regulatory or legal proceedings; or (vii) material
breach of Company policy; (viii) Employee’s unauthorized use
or disclosure of confidential or proprietary information, or
related materials, or the violation of any of the terms of the
Company’s standard confidentiality policies and procedures;
(ix) Employee’s violation of the Company’s policies on
discrimination, harassment or substance abuse.
"Competitor" shall have the meaning
set forth in Section 4(b).
"Confidential Information" shall
have the meaning set forth in Section 4(c).
"Change of Control" shall mean a
change in control of a nature as set forth in the Duckwall-ALCO
Stores, Inc. Incentives Stock Option Plan of 2003, or as may be
amended ("ISO Plan").
"Disability" shall mean Employee's
permanent disability or incapacity as determined in accordance with
the Company's disability insurance policy, if such a policy is then
in effect, or if no such policy is then in effect, such permanent
disability or incapacity shall be determined by the Company in its
good faith judgment based upon inability to perform
the essential functions of his
position, with reasonable accommodation by the Company, for a
period in excess of 180 days during any period of 365 calendar
days. Employee’s employment will terminate automatically on
Employee’s death. If Employee dies before Employee’s
employment starts, all of the provisions of this Agreement will
also terminate and there will be no liability of any kind under
this Agreement.
"Earned Obligations" shall mean, as
of the date of Termination of Employment, the sum of (A) the
Employee's aggregate Base Salary through such date to the extent
not theretofore paid, plus (B) all vacation pay, expense reimbursements and
other cash entitlements earned by the Employee hereunder as of such
date to the extent not theretofore paid.
"Good Reason" means any of the
following:
(a) Any material
diminution in Employee’s Salary, other than any such reduction agreed to by Employee in
writing.
(b) Any material
diminution in Employee’s authority, duties or
responsibilities.
(c) Any other
action or inaction that constitutes a material breach by the
Company of this Agreement.
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(d)
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The Company has a Change in
Control.
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(e) The
Company’s placing Employee on paid leave for up to 90
consecutive days while it is determining whether there is a basis
to terminate Employee’s employment for Cause will not
constitute Good Reason.
(f) To
terminate Employee’s employment “for Good
Reason”, Employee must give the Company a Termination Notice
detailing why Employee believes a Good Reason event has occurred
and such notice must be provided to the Company within ninety (90)
days of the initial occurrence of such alleged Good Reason event.
The Company shall then have thirty (30) days after its receipt of
written notice to cure the item cited in the written notice.
“Good Reason” will not have formally occurred with
respect to the event in question, unless and until the cure period
has expired and the item remains uncured. At the end of the cure
period, if the Company has not cured the basis for the Good Reason
termination, Employee’s obligation to serve the Company, and
the Company’s obligation to employ Employee under the terms
of this Agreement, shall terminate simultaneously.
"Person" shall mean an individual,
corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, other entity or
governmental or other agency or political subdivision
thereof.
"Termination of Employment" shall
mean (i) the Employee's death or Disability, (ii) termination by
the Company of the Employee's employment for Cause or without
Cause, (iii) resignation by
the Employee from the employ of the Company, (iv) retirement of the
Employee.
SECTION 2.
EMPLOYMENT AND
TERM
(a) Employment. The Company hereby offers to employ the Employee
as Employee of the Company, and the Employee hereby accepts such
employment.
(b) Employment Period . The Employee’s employment under this
Agreement will begin on August 25, 2008 and will thereafter govern
Employee’s employment with the Company until the effective
date of termination of Employee’s employment, the
“Employment Period”. During the Employment Period, the
Employee will be an “at-will” employee of the
Company.
(c) Duties . The Employee shall have all powers, duties and
responsibilities commensurate with his position as set forth in
Section 2 hereof or as may be assigned by the Company from time to
time (provided any such powers, duties and responsibilities
assigned by the Company are commensurate with such position). The
Employee shall devote substantially all of his business time,
attention and energies to the performance of his duties hereunder.
Notwithstanding the foregoing, nothing in this Agreement shall
restrict the Employee from managing his personal investments,
personal business affairs and other personal matters, or serving on
civic or charitable boards or committees, provided that none of
such activities interferes with the performance of his duties and
responsibilities hereunder or conflicts or competes with the
interests of the Company or its subsidiaries. The Employee shall
not serve on the Board of Directors or similar governing body of
any for-profit Person without the consent of the Company, which
consents will not be unreasonably withheld. The Employee shall
report to the President of the Company.
SECTION 3.
COMPENSATION AND
BENEFITS
(a) Base Salary . For services performed by the Employee for the
Company and its subsidiaries pursuant to this Agreement, the
Company shall pay the Employee an initial Base Salary of One
Hundred Seventy Thousand Dollars ($170,000.00) per year, payable in
accordance with the Company's regular payroll practices and subject
to annual review by the Company to consider increases.
(b) Bonus . The Employee shall be entitled to participate
in any Bonus Plan that the Compensation Committee and Board of
Directors of the Company may from time to time adopt. Such Plans
will be based upon the Company’s achievement of certain
financial objectives tied to the enhancing of shareholder value and
Return On Equity (ROE). ROE is defined for any completed fiscal
year as (Earnings from continuing operation before discontinued
operations excluding cumulative change in accounting and one-time
termination benefits recognized in accordance with FAS 146) divided
by (stockholders' equity beginning of year plus stockholders'
equity end of year divided by two). The Employee shall be entitled
to receive an annual Bonus equal to Thirty-Five Percent (35%) of
Employee’s base salary. Any bonus payments for the fiscal
year 2009 will be prorated based upon the days employed in
Fiscal Year 2009, which ends
February 1, 2009. The Employee acknowledges that on the date of the
execution of this Employment Agreement, the Compensation Committee
and the Board of Directors of the Company have not adopted a Bonus
Plan for Fiscal 2009.The Company, at its sole discretion may pay,
or not pay any other bonus as it determines. Employee agrees to
reimburse the Company and/or have the Company offset any payments
due to Employee to the extent that any bonuses are paid on
financial information which is later determined to be materially
overstated and results in any financial restatement, which would
have lessened the amount paid to Employee.
(c) Additional Benefits . The Employee shall be eligible for such fringe
benefits, if any, by way of insurance, hospitalization, vacations
and bonus programs normally provided to other members of the
executive management of the Company generally and such additional
benefits as may be from time to time agreed upon in writing between
the Employee and the Company.
(d) Business Expenses . Employee will be reimbursed for all reasonable
business expenses incurred by Employee in performing
Employee’s responsibilities under the Employment Agreement in
accordance with Company policies. It is understood as CIO, those
expenses necessary to provide Employee with 24/7 connection and
access to perform Employee’s duties from home will be
included as reasonable business expenses. If any business expense
is taxable, reimbursement will not be paid later than December 31
of the year which the expense is incurred.
(e) Relocation Expenses . The Company will pay the following relocation
expenses:
(1) Moving expenses for moving
Employee’s furniture and personal possessions from
Scottsdale, Arizona to Kansas.
(2) The Company will reimburse
Employee for necessary hotel, rental car and up to two (2) round
trip coach airline flights to Kansas for Employee and
Employee’s spouse to secure housing between the date of this
Agreement and September 30, 2008.
(3) The Company will, in an effort
to assist Employee with establishment of a household in Kansas, pay
Employee Forty-two Hundred Dollars ($4,200), grossed up for
necessary taxes, to be paid by September 15, 2008.
(4) The parties acknowledge that the
Employee is not the record owner of his personal residence in
Scottsdale, Arizona (the “Residence”). The record owner
of the Residence at 10071 N. 118 th St., Scottsdale,
Arizona 85259 is through a family Trust. Employee (and his spouse)
are the primary beneficiaries under the Trust. The Company will
reimburse Employee the first Twenty Thousand Dollars ($20,000) of
the total Real Estate commissions and closing cost associated with
selling Employee’s Residence in Arizona. In the event
Employee’s Residence in Arizona does not sell by December 31,
2008, the Company will pay monthly One Thousand Five Hundred
Dollars ($1,500), beginning on January 31, 2009 until the $20,000
has been paid in full. Should Employee’s Residence in Arizona
sell before the full $20,000 has been paid in cumulative monthly
amounts, the Company will reduce the $20,000 by the number of
months the $1,500 has been paid and allow the remainder to be paid
as reimbursement in a one-time lump sum to cover real estate
commission and closing cost associated with selling
Employee’s Residence in Arizona. If Employee’s
Residence in Arizona does not sell prior to the full $20,000 being
paid in monthly payments, then no coverage of selling costs will be
provided, except as stated above. The payments made under this
Section 3(e)(4) will be grossed up for necessary taxes.
(f) Subject to the approval and
authorization by the Compensation Committee of the Board of
Directors of the Company, Employee will be granted options to
purchase 10,000 shares of the company’s common stock as
provided in the Company’s 2003 Incentive Stock Option Plan.
The exercise price will be the closing sale price of the
Company’s Common Stock on the NASDAQ Global Market on the
date of the grant.
(g) Employee will be entitled to
three (3) weeks of paid annual vacation during Employee’s
employment.
SECTION 4.
COVENANTS
(a) Non-Interference . For a period ending on the second anniversary
of the Termination of Employment of the Employee, the Employee
agrees to refrain from, directly, indirectly or as an agent on
behalf of or in conjunction with any Person, (i) soliciting or
encouraging any Employee of the Company or its subsidiaries who is
employed in an executive, managerial, administrative or
professional capacity or who possesses Confidential Information (as
defined below), t
