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Exhibit
10.1
Employment
Agreement
[ Date
]
This Employment Agreement
(this “Agreement”) is entered into as of the [ ] day of
[ ] (the “Effective Date”) by and between Saks
Incorporated (the “Company”) and [Name of Executive]
(the “Executive”).
WHEREAS, the Company and the
Executive desire that the Company commence or continue the
employment of the Executive as [Executive’s Title] pursuant
to the terms of this Agreement;
NOW, THEREFORE, in
consideration of the premises and the mutual agreements contained
herein, the Company and the Executive hereby agree as
follows:
1. Employment; Term .
The Company shall continue to employ the Executive, and during the
Executive’s employment the Executive shall continue to serve,
as [Executive’s Title]. The Executive shall report to the
Company’s [Chief Executive Officer] [Executive Vice
President, ] and the Executive’s place of business shall be
located in [New York, New York]. The term of this Agreement shall
commence on the Effective Date and shall continue until the fifth
anniversary of the Effective Date (the “Initial Term
Date”), provided that the term of this Agreement shall
automatically be extended for an additional year on each
anniversary thereafter unless the Board of Directors of the Company
(the “Board”) notifies the Executive of its intention
to amend or terminate the Agreement. If the Board decides to amend
or terminate the Agreement, it must notify the Executive within the
(30) days prior to the applicable anniversary of the Effective
Date, provided that the Board may not notify the Executive of any
amendment or termination of the Agreement earlier than the thirty
(30) days prior to the fourth anniversary of the Effective
Date or amend or terminate the Agreement prior to the Initial Term
Date. If the Board notifies the Executive of an amendment adverse
to the Executive or terminates the Agreement, any such adverse
amendment or termination shall be effective no earlier than the
second anniversary (i.e., 2 years) following such notification. The
Executive shall have thirty (30) days following any such
notification of an adverse amendment to accept such amendment or
terminate the Agreement, provided that the date of termination
shall be mutually agreed to by the Company and the Executive and
shall be no later than 120 days from the date on which the
Executive provides notice to the Company. Notwithstanding the
foregoing, this Agreement may be terminated prior to or after the
Initial Term Date pursuant to Section 4, 5, 6, 7, 8 or 9 of
this Agreement. The date on which employment is terminated pursuant
to the terms of this Agreement shall be the “Employment
Termination Date.” On the Effective Date, all prior
agreements and arrangements shall terminate and shall be of no
further force or effect.
2. Duties . During his
employment, the Executive shall devote substantially all of his
working time, energies and skills to the benefit of the
Company’s business. The Executive shall serve the Company
diligently and to the best of his ability and use his best efforts
to follow the policies and directions of the Company’s Chief
Executive Officer and of the Board. The Executive may engage in
charitable, civic or community activities, manage his personal
investments and, with prior approval of the Board of Directors of
the Company (the “Board”), may serve as a director of
any other business corporation, provided that such activities or
service do not materially interfere with the Executive’s
duties hereunder or violate the terms of any of the covenants
contained in Section 12 hereof.
3. Compensation .
During his employment, the Executive’s compensation and
benefits under this Agreement shall be as follows:
(a) Base Salary . The
Company shall pay to the Executive a base salary at a rate of not
less than $ [ ] per
year (such base salary at that rate or any higher rate from time to
time in effect, “Base Salary”). Base Salary shall be
paid in installments in accordance with the Company’s normal
payment schedule for its senior executives but not less frequently
than monthly. The level of Base Salary shall be reviewed at such
times as the levels of the salaries of other senior executives are
reviewed.
(b) Bonus . The
Executive shall be eligible for an annual cash bonus. The bonus for
plan achievement at the threshold level shall be not less than [ ]%
of Base Salary, the bonus for plan achievement at the target level
shall be not less than [ ]% of Base Salary and the bonus for plan
achievement at the maximum level shall be not less than [ ]% of
Base Salary or such higher maximum as may be provided by the
Company’s bonus program, in all circumstances in accordance
with, and subject to, the terms and conditions of the
Company’s bonus program in effect from time to
time.
(c) Long-Term Equity
Incentive . The Executive shall be eligible for a long-term
equity incentive award, to be granted annually, with specified
values for achievement at the threshold, target and maximum
levels.
(d) Benefits . During
the Executive’s employment the Company shall
(i) reimburse the Executive for his costs incurred for annual
financial and tax planning services and for annual personal income
tax preparation services, in an amount not to exceed $9,999
annually, (ii) pay the costs for annual physical examinations
at a medical facility selected by the Company, (iii) reimburse
the Executive for all reasonable travel and entertainment expenses
incurred in accordance with the Company’s policies in effect
from time to time with respect to its senior executives, and
(iv) make available to the Executive each employee benefit
applicable to senior executives. The amount of any expenses
eligible for reimbursement during any taxable year of the Executive
shall have no effect upon the amount of expenses eligible for
reimbursement in any other taxable year of the Executive, and each
such expense reimbursement shall be made on or before the last day
of the taxable year of the Executive following the taxable year of
the Executive in which such expense was incurred.
(e) Withholding Taxes
. The Company shall deduct from the amounts payable to the
Executive pursuant to this Agreement the amount of all required
federal, state and local withholding taxes in accordance with the
Executive’s Form W-4 on file with the Company, and all
applicable federal employment taxes.
4. Termination without
Cause or for Good Reason . The Company may terminate the
Executive’s employment at any time without
“Cause” and the Executive may terminate his employment
at any time for “Good Reason” (as such terms are
defined in Section 4(c) hereof), in the case of termination
without Cause, upon 14 days prior written notice given by the
Company
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to the Executive, and in the case of
termination for Good Reason, upon 30 days prior written notice
given by the Executive to the Company within 90 days following the
first day on which the Executive is aware of the action giving rise
to Good Reason, subject to the Company’s right to remedy the
action giving rise to Good Reason during such 30-day period. The
notice given by the Executive shall specify in detail the reasons
for the termination of employment. Upon termination of the
Executive’s employment in accordance with this
Section 4, this Agreement shall terminate, except for the
obligations of the Company in this Section 4 and in Sections
10, 11, 13(f) and 13(h) hereof, and except for the obligations of
the Executive in Sections 11, 12 and 13(h) hereof, each of which
will continue in effect in accordance with its terms.
(a) Prior to a Change in
Control . If the Executive’s employment is terminated
prior to a “Change in Control” (as such term is defined
in Section 4(c) hereof), either by the Company without Cause
or by the Executive for Good Reason, the Company shall make the
payments and provide the benefits to the Executive as
follows:
(i) The Company shall pay to
the Executive within 10 days following the Employment Termination
Date:
(A) the Executive’s
current base salary through the Employment Termination Date to the
extent not theretofore paid;
(B) any accrued vacation pay
due the Executive as of the Employment Termination Date to the
extent not theretofore paid; and
(C) any expense reimbursement
due the Executive as of the Employment Termination Date to the
extent not theretofore paid.
(ii) Provided that the
Executive has executed and delivered to the Company, and has not
revoked, the general release in substantially the form attached
hereto as Attachment A (the “Release”), the Company
shall make the following payments and shall provide the following
benefits, provided that if the Executive directly or indirectly
engages in conduct that constitutes an Association (as defined in
Section 12(b)(iv)(D) hereof), the Company’s obligation
to make the following payments and to provide the following
benefits shall immediately terminate:
(A) an amount equal to the
sum of two times the Executive’s Base Salary and one times
the Executive’s target bonus potential amount of [ ]% of Base
Salary for the fiscal year during which the termination of
employment occurs, which amount shall, except as otherwise provided
in Section 10 hereof, be paid to the Executive by the Company
in 24 equal monthly installments commencing with the month
following the month in which the Employment Termination Date
occurs;
(B) the amount of any annual
cash bonus earned by the Executive and payable, but not yet paid,
for the fiscal year prior to the fiscal year in which the
Employment Termination Date occurs, with the entire amount of such
bonus being determined in accordance with the applicable formula or
the achievement of the corporate objectives applicable to the
Executive and his direct reports, which bonus shall be paid to the
Executive by the Company at the time that bonuses for such fiscal
year are paid to the other senior executives of the
Company;
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(C) if the Employment
Termination Date occurs during the second six months of the
Company’s fiscal year, the amount of any annual cash bonus
earned by the Executive for the fiscal year in which the Employment
Termination Date occurs, determined following the end of such
fiscal year, with the entire amount of such bonus being determined
in accordance with the applicable formula or the achievement of the
corporate objectives applicable to the Executive and his direct
reports, which bonus amount shall be (1) multiplied by a
fraction the numerator of which is the number of days that have
elapsed during the fiscal year in which the Employment Termination
Date occurs to and including the Employment Termination Date and
the denominator of which is 365, and (2) paid to the Executive
by the Company at the time that bonuses for such fiscal year are
paid to the other senior executives of the Company; but if the
Employment Termination Date occurs during the first six months of
the Company’s fiscal year, no bonus amount shall be payable
for such fiscal year;
(D) the Executive’s
unexercisable stock options, unvested shares of restricted stock
and unvested performance shares shall vest as follows:
(1) performance shares that
have been fully earned but are subject to restrictions on vesting
based on time shall vest immediately;
(2) performance shares that
have not been earned and are subject to restrictions on vesting
based on the achievement of performance goals shall vest based on
the achievement of such performance goals, such achievement to be
determined following the end of the performance period, with the
number of such performance shares determined to have vested being
multiplied by a fraction, the numerator of which is the number of
days between the date of grant of such performance shares and the
Employment Termination Date and the denominator of which is the
number of days between the date of grant of such performance shares
and the date of the end of the performance period, which
performance shares shall be paid to the Executive by the Company at
the time that performance shares for such performance period are
paid to the other senior executives of the Company;
(3) unvested shares of
restricted stock and unexercisable stock options that are subject
to cliff vesting shall vest prorata, with the number of such
unvested shares of restricted stock or shares subject to such
unexercisable stock options being multiplied by a fraction, the
numerator of which is the number of days between the date of grant
of such award and the Employment Termination Date and
denominator
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of which is the number of
days between the date of grant of such award and the date on which
shares of restricted stock or stock options are scheduled to cliff
vest;
(4) unvested shares of
restricted stock and unexercisable stock options that vest in
installments shall vest prorata, with the number of shares in each
unvested installment being multiplied by a fraction, the numerator
of which is the number of days between the date of grant of such
award and the Employment Termination Date and the denominator of
which is the number of days between the date of grant of such award
and the date on which such installment is scheduled to
vest;
(E) reimbursement of the
Executive for the amount expended by the Executive for the cost of
medical insurance coverage under COBRA for the Executive and the
Executive’s dependents during the 18-month period following
the Employment Termination Date; and
(F) for the remainder of the
Executive’s lifetime, provided that the Executive has been
employed by the Company for at least one year, the Executive shall
be entitled to the normal associate discount in effect from time to
time applicable to active associates of the Company or its
successors, provided that the benefit of such discount shall not
exceed $25,000 in any calendar year and no portion of the unused
discount for any calendar year may be carried over to any
succeeding calendar year.
(b) In Anticipation of,
Upon or Following a Change in Control . If the
Executive’s employment is terminated in anticipation of, upon
or following a Change in Control either by the Company without
Cause or by the Executive for Good Reason, the Company shall make
the payments and provide the benefits to the Executive as
follows:
(i) the Company shall make
the payments to the Executive in the amounts and at the times
described in Sections 4(a)(i)(A) (B) and (C); and
(ii) provided that the
Executive has executed and delivered to the Company, and has not
revoked, the Release, the Company shall make the following payments
and shall provide the following benefits, provided that if the
Executive directly or indirectly engages in conduct that
constitutes an Association (as defined in Section 12(b)(iv)(D)
of this Agreement), the Company’s obligation to make such
payments and to provide such benefits shall immediately
terminate:
(A) not less than eight, and
not more than 10, days following the Executive’s execution
and delivery of the Release, or at such other time provided
pursuant to Section 10 hereof, a lump sum amount equal to the
sum of two times the Executive’s Base Salary and one times
the Executive’s target bonus potential amount of [ ]% of Base
Salary for the fiscal year during which the Employment Termination
Date occurs;
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(B) not less than eight, and
not more than 10, days following the Executive’s execution
and delivery of the Release, the amount of any annual cash bonus
earned by the Executive and payable, but not yet paid, for the
fiscal year prior to the fiscal year in which the Employment
Termination Date occurs, with the portion of the bonus that is
based on corporate objectives being paid in accordance with the
applicable formula or the achievement of the corporate objectives
applicable to the Executive and his direct reports, and the portion
of the bonus that is based on personal objectives being paid at the
target level of the achievement;
(C) not less than eight, and
not more than 10, days following the Executive’s execution
and delivery of the Release, an amount equal to the product of the
Executive’s target bonus potential amount of [ ]% of Base
Salary for the fiscal year during which the Employment Termination
Date occurs multiplied by a fraction the numerator of which is the
number of days that have elapsed during the fiscal year in which
the termination of employment occurs to and including the
Employment Termination Date and denominator of which is
365;
(D) the amounts and at the
times described in Sections 4(a)(ii)(E) and (F);
(E) all of the
Executive’s unexercisable stock options, unvested shares of
restricted stock and fully earned performance shares subject to
restrictions on vesting based on time and the target number of
performance shares that have not been earned and are subject to
restrictions on vesting based on performance shall immediately vest
in full, provided that all such equity awards shall vest in full
upon a Change in Control in which the shareholders of the Company
receive consideration other than publicly-traded stock;
and
(c) For purposes of this
Agreement:
“Cause” shall
mean and be strictly limited to: (i) serious willful
misconduct; (ii) commission of a felony arising from specific
conduct of the Executive and having, in the reasonable judgment of
the Board, an adverse effect upon the Executive’s
qualifications or ability (personal or professional) to perform his
duties hereunder; (iii) perpetration of a fraud against the
Company; or (iv) the refusal of the Executive to testify, if
requested to do so, in any proceeding in which the testimony
requested relates in any manner to the duties of the Executive as
an officer or director of the Company.
“Change in
Control” shall have the meaning set forth in the definition
of such term in Section 18(a) of the Saks Incorporated 2004
Long-Term Incentive Plan.
“Good Reason”
shall mean: (i) a material diminution in the Executive’s
duties, responsibilities or authority; (ii) any other material
breach of the terms of this Agreement by the Company, it being
understood that (A) in anticipation of, upon or
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following a Change in
Control, any reduction in the Executive’s Base Salary, annual
bonus opportunity or severance payment upon a termination of
employment, without the substitution of an equivalent benefit,
shall constitute a material breach of the terms of this Agreement,
and (B) not in anticipation of, upon or following a Change in
Control, any reduction in the Executive’s Base Salary, annual
bonus opportunity or severance payment upon a termination of
employment, in any such case below the level specified by this
Agreement without the substitution of an equivalent benefit, shall
constitute a material breach of the terms of this Agreement;
(iii) a relocation of the Executive’s principal place of
business that increases the Executive’s commute to his
principal place of business by more than 35 miles; (iv) the
failure of the Company to obtain the assumption agreement from any
successor as contemplated in Section 13(g) hereof, it being
understood that if the Executive terminates his employment for Good
Reason as a result of the Company’s failure to obtain such
assumption agreement, the obtaining of such assumption agreement
subsequent to such termination of employment shall have no effect
upon the Executive’s rights to receive payments and benefits
upon his termination of employment for Good Reason; (v) an
amendment of the terms of this Agreement by the Board in a manner
adverse to the Executive pursuant to Section 1; or
(vi) the termination of this Agreement by the Board other than
in compliance with Section 1. Following a Change in Control,
or with respect to an action taken by the Company in anticipation
of a Change in Control, any good faith determination of Good Reason
made by the Executive shall be conclusive, provided that any action
that is remedied by the Company within 30 days after receipt of
notice of Good Reason given by the Executive shall not constitute
Good Reason.
5. Termination Due to
Retirement . This Agreement shall terminate upon the
Executive’s retirement upon or after the date on which the
Executive attains age 65, except that (a) the Executive shall
have the right to receive the payments in the amounts and at the
times described in Sections 4(a)(i)(A), (B) and
(C) hereof and described in Section 4(b)(ii)(B) hereof;
(b) the Executive’s unexercisable stock options,
unvested shares of restricted stock and unvested performance shares
shall vest as described in Section 4(b)(ii)(E) hereof;
(c) the Executive shall have the right to receive all benefits
in accordance with Section 3(d) hereof that would be payable
upon the Executive’s retirement; and (d) the
Company’s obligations in Sections 11, 13(f) and 13(h) of this
Agreement, and the Executive’s obligations in Sections 11, 12
and 13(h) of this Agreement, shall continue in effect in accordance
with their respective terms.
6. Termination Due to
Death . This Agreement shall terminate upon the
Executive’s death, except that (a) the Executive’s
estate shall have the right to receive the payments in the amounts
and at the times described in Sections 4(a)(i)(A), (B) and
(C) hereof and described in Section 4(b)(ii)(B) hereof,
but without regard to any delay in payment provided in
Section 10 hereof; (b) the Executive’s
unexercisable stock options, unvested shares of restricted stock
and unvested performance shares shall vest as described in
Section 4(b)(ii)(E) hereof; and (c) the Executive’s
estate shall have the right to receive all benefits in accordance
with Section 3(d) hereof that would be payable upon the
Executive’s death. In addition, the Executive’s estate
and dependents shall have any rights that they may have under COBRA
or any other federal or state law or that are derived independent
of this Agreement by reason of the Executive’s participation
in any employee benefit arrangement or plan maintained by the
Company.
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7. Termination Due to
Disability . If at any time prior to the termination of this
Agreement the Executive shall become disabled, this Agreement and
the Executive’s employment shall continue for a period of 12
months from the date on which the Executive becomes disabled. The
date on which Executive shall be deemed to have become disabled
shall be the date on which the Executive becomes entitled to
receive disability benefits in accordance with the Company’s
short-term disability/sick pay plan. During such 12-month period
the Executive shall continue to receive all payments and benefits
provided by this Agreement, including without limitation the
benefits described in Sections 3 and 11 of this Agreement and the
benefits that would be payable upon a termination of the
Executive’s employment as described in Sections 4, 5, 6, 8 or
9 of this Agreement, less all disability payments received pursuant
to the Company’s short-term disability/sick pay plan or its
Group Long-Term Disability Insurance Policy. If the
Executive’s disability continues after the end of such
12-month period, the Company may terminate this Agreement and the
Executive’s employment for disability (“Disability
Termination”). Disputes regarding the existence of the
Executive’s disability shall be resolved by the determination
of a physician selected by the Board who is reasonably acceptable
to the Executive. The Executive shall submit to appropriate medical
examinations for purposes of determining disability. Upon a
Disability Termination, the Executive shall be entitled to
(a) the payments in the amounts and at the times described in
Sections 4(a)(i)(A), (B) and (C) hereof and described in
Section 4(b)(ii)(B) hereof; (b) the Executive’s
unexercisable stock options, unvested shares of restricted stock
and unvested performance shares shall vest as described in
Section 4(b)(ii)(E) hereof; and (c) all other benefits in
accordance with Section 3(d) of this Agreement that would be
payable upon such Disability Termination. Upon a Disability
Termination, the Company’s obligations in Sections 11, 13(f)
and 13(h) of this Agreement, and the Executive’s obligations
in Sections 11, 12, and 13(h) of this Agreement, shall continue in
effect in accordance with their respective terms.
8. Termination by the
Executive without Good Reason . The Executive may terminate his
employment hereunder without Good Reason upon 60 days prior written
notice to the Company (or such shorter period as may be permitted
by the Board). Upon such termination, all of the obligations of the
Company hereunder shall cease, except that (a) the Executive
shall be entitled to the payments in the amounts and at the times
described in Sections 4(a)(i)(A), (B) and (C) hereof;
(b) the Executive shall be entitled to exercise unexercised
stock options, if any, in accordance with and subject to the plan
and the stock option agreement applicable to such stock options;
(c) the Executive’s unvested shares of restricted stock
and unvested performance shares shall be forfeited in accordance
with and subject to the applicable plan and the agreements
applicable to such awards; and (d) the Executive shall be
entitled to receive all of the benefits in accordance with
Section 3(d) of this Agreement that would be payable upon the
Executive’s termination of his employment without Good
Reason. Such termination of employment shall terminate the
Company’s obligations hereunder, but shall not terminate the
Executive’s obligations pursuant to Sections 12 or 13(h) of
this Agreement.
9. Termination by the
Company for Cause . The Company may at any time terminate the
Executive’s employment hereunder for Cause, effective upon
notice given to the Executive. Upon such termination, all of the
rights of the Executive hereunder shall cease,
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except as described in Sections
4(a)(i)(A) and (C) hereof and in clauses (b) and
(c) of Section 8 hereof, as applied to a termination for
Cause. Such termination shall terminate the Company’s
obligations hereunder, but shall not terminate the
Executive’s obligations under Sections 12 or 13(h) of this
Agreement.
10. Application of IRC
Code Section 409A . Notwithstanding any other provision of
this Agreement, if on the Employment Termination Date (a) the
Company is a publicly traded corporation and (b) the Company
determines that the Executive is a “specified
employee,” as defined in Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), then
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