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Exhibit
10.1
JAMES G.
DELFS
AGREEMENT
WITH
STEIN MART,
INC.
This Agreement (this “
Agreement ”) entered into in the City of
Jacksonville and State of Florida between Stein Mart, Inc., a
Florida corporation and its divisions, subsidiaries and affiliates
(the “ Company ”), and JAMES G.
DELFS (“ Executive ”), is made as of
the 1 st day
of July, 2008 (the “ Effective Date
”).
In consideration of the
promises and mutual covenants contained herein, the parties,
intending to be legally bound, agree as follows:
SECTION 1. TERM OF
EMPLOYMENT
(a) Term . The Company
agrees to employ Executive, and Executive agrees to be employed by
the Company, for a period of two (2) year(s) beginning on the
Effective Date (the “ Term ”).
SECTION 2. DEFINITIONS
“Board of
Directors” means the Board of Directors of Stein
Mart, Inc. and any of its divisions, affiliates or
subsidiaries.
“Cause” means the occurrence of any
one or more of the following:
(a) Executive has been
convicted of, or pleads guilty or nolo contendere to, a
felony involving dishonesty, theft, misappropriation, embezzlement,
fraud crimes against property or person, or moral turpitude which
negatively impacts the Company; or
(b) Executive intentionally
furnishes materially false, misleading, or omissive information to
the Company or persons to whom the Executive reports; or
(c) Executive intentionally
fails to fulfill any assigned responsibilities for compliance with
the Sarbanes-Oxley Act of 2002 or violates the same; or
(d) Executive intentionally
and wrongfully damages material assets of the Company;
or
(e) Executive intentionally
and wrongfully discloses material Confidential Information of the
Employer; or
(f) Executive intentionally
and wrongfully engages in any competitive activity which would
constitute a material breach of the duty of loyalty; or
(g) Executive intentionally
breaches any stated material employment policy or any material
provision of the Company’s Ethics Policy, or
(h) Executive intentionally
commits a material breach of this Agreement, or
(i) Executive intentionally
engages in acts or omissions which constitute failure to follow
reasonable and lawful directives of the Company, provided, however,
that such acts or omissions are not cured within five (5) days
following the Company’s giving notice to Executive that the
Company considers such acts or omissions to be “Cause”
under this Agreement.
No act, or failure to act, on
the part of Executive shall be deemed “intentional” if
it was due primarily to an error in judgment or negligence, but
shall be deemed “intentional” only if done, or omitted
to be done, by the Executive not in good faith and without
reasonable belief that his action or omission was in or not opposed
to the best interests of the Company. Failure to meet performance
standards or objectives shall not constitute Cause for purposes
hereof.
“Change in
Control” means the occurrence of any of the
following: (a) the Board approves the sale of all or
substantially all of the assets of the Company in a single
transaction or series of related transactions; (b) the Company
sells and/or one or more shareholders sells a sufficient amount of
its capital stock (whether by tender offer, original issuance, or a
single or series of related stock purchase and sale agreements
and/or transactions) sufficient to confer on the purchaser or
purchasers thereof (whether individually or a group acting in
concert) beneficial ownership of at least 35% of the combined
voting power of the voting securities of the Company; (c) the
Company is party to a merger, consolidation or combination, other
than any merger, consolidation or combination that would result in
the holders of the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity) more than 50% of the combined voting power
of the voting securities of the Company (or such surviving entity)
outstanding immediately after such merger, consolidation or
combination; or (d) a majority of the board of directors
consists of individuals who are not Continuing Directors (for this
purpose, a Continuing Director is an individual who (i) was a
director of the Company on July 1, 2008 or (ii) whose
election or nomination as a director of the Company is approved by
a vote of at least a majority of the directors then comprising the
Continuing Directors).
“Compensation
Committee” means the Company’s Compensation
Committee or, if no such committee exists, the term Compensation
Committee shall mean the Company’s Board of
Directors.
“ Competing
Business ” means any business which (i) at the
time of determination, is substantially similar to the whole or a
substantial part of the business conducted by the Company or any of
its divisions or affiliates; (ii) at the time of
determination, is operating a store or stores which, during its or
their fiscal year preceding the determination, had aggregate net
sales, including sales in leased and licensed departments, in
excess of $10,000,000, if such store or any such stores is or are
located in a city or within a radius of 25 miles from the outer
limits of a city where the Company, or any of its divisions or
affiliates, is operating a store or stores which, during their
fiscal year preceding the determination, had aggregate net sales,
including sales in leased and licensed departments, in excess of
$10,000,000; and (iii) had aggregate net sales at all
locations, including sales in leased and licensed departments and
sales by its divisions and affiliates, during its fiscal year
preceding that in which the Executive first rendered personal
services thereto, in excess of $25,000,000.
“ Continuation
Period ” means a period following the Termination
Date of the Executive’s employment with the company equal
to:
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(a) |
twelve (12) months (a) following a termination by the
Company due to a non-renewal of the Term of this Agreement under
§5(a) hereof, or (b) following a termination by the
Company without Cause or by the Executive for Good Reason under
§5(b) hereof, or |
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(b) |
twenty-four (24) months following a termination
(a) by the Company without Cause following a Change in Control
under §5(f)(i) hereof, or (b) by the Executive for Good
Reason following a Change in Control under §5(b) as the
definition of Good Reason is expanded in §5(b)(i)
hereof. |
Notwithstanding anything herein to the
contrary, in the event any payment of compensation continuation
during a Continuation Period commencing upon termination of
employment shall result in Section 409A Adverse Treatment,
then the commencement of the payment of compensation continuation
shall be deferred until the expiration of six (6) months
following such termination, and the same amount which would have
been paid during the Continuation Period commencing on termination
of employment if there had not been a Section 409A Adverse
Treatment shall then be paid over the Continuation Period as
deferred. Nevertheless, any Current Insurance Coverage which is to
remain in effect during the Continuation Period shall be extended
to cover the time beginning on the Termination Date and continuing
through the end of the Continuation Period as deferred as a result
of the Section 409A Adverse Treatment deferral.
“ Current
Insurance Coverage ” means medical, dental, life and
accident and disability insurance with coverage consistent with the
lesser of (i) the coverage in effect at Executive’s
termination, or (ii) the coverage in effect from time to time
as applied to persons in positions similar to the position held by
Executive at the time of termination.
“
Disability shall mean Executive’s incapacity
due to physical or mental illness or cause, which results in the
Executive being unable to perform his duties with Company on a
full-time basis for a period of six (6) consecutive months.
Any dispute as to disability shall be conclusively determined by
written opinions rendered by two qualified physicians, one selected
by Executive, and one selected by Company.
“Earned
Bonus” means the bonus paid, if any, pursuant to the
Company’s incentive compensation plans in effect from time to
time. Earned Bonus shall be prorated based on the ratio of the
number of days during such year that Executive was employed to
365.
“ Good
Reason ” means the occurrence of any one or more of
the following:
| (a) |
a material and continuing failure to pay to Executive
compensation and benefits (as described in Section 4 )
that have been earned, if any, by Executive, except failure to pay
or provide compensation or benefits that are in dispute between the
Company and the Executive unless such failure continues following
the resolution of such dispute; or |
| (b) |
a material reduction in Executive’s compensation or
benefits (as described in Section 4 ) which is
materially more adverse to the Executive than similar reductions
applicable to other executives of a similar level of status within
the Company as Executive; or |
| (c) |
any failure by the Company to comply with any of the material
provisions of this Agreement and which is not remedied by the
Company within thirty (30) days after receipt of notice
thereof given by Executive; or |
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| (d) |
any requirement that Executive perform duties that, in the good
faith and reasonable professional judgment of Executive, after
consultation with the Board of Directors of the Company, are
inconsistent with ethical or lawful business practices;
or |
| (e) |
Executive’s being required to relocate to a principal
place of employment more than one-hundred (100) miles from his
current principal place of employment in Jacksonville, Florida
during the Term unless the Company shall pay all reasonable costs
and expenses related thereto; or |
| (f) |
If following a Change in Control only, there occurs a
material change in Executive’s duties, roles, or
responsibilities. For purposes of this subsection, “material
change” shall be of such a character that a reasonable person
serving in a like or similar executive capacity would feel
compelled to resign from employment. Examples of “material
change” include, but are not limited to substantial reduction
of Executive’s authority to make decisions relating to his or
her business responsibilities; Executive being required to assume
or perform substantially greater responsibilities (without
additional compensation) than previously required to perform;
substantial reduction of Executive’s responsibilities for
personnel matters relating to his or her business operations;
substantial alteration or change in Executive’s work
schedule; any restructuring or reassignment of any of the
Executive’s responsibilities, in a manner that diminishes
them or is materially adverse to the Executive, from that which was
in effect at the time of the Change in Control; and other
substantial changes in Executive’s terms or conditions of
employment not related to Executive’s principal business
responsibilities. Good Reason pursuant to this subsection shall not
exist unless (a) the Executive’s “material
change” has existed for a period of at least six months;
(b) Executive has consulted with management senior to
Executive and his or her supervisor, in a good faith effort to
resolve the issues giving Executive reason to believe a
“material change” has occurred; and (c) Executive
gives written notice of Executive’s resignation for Good
Reason under this paragraph within eight months following the
commencement of the “material change”. |
“ Section 409A Adverse
Treatment ” means the imposition on the Company or
the Executive of adverse tax consequences under Section 409A
of the Internal Revenue Code resulting in a loss of deductions or
an imposition of a higher tax than would apply if such
Section 409A were not applicable to the compensation in
question.
“ Termination
Date” means the last day Executive actively provides
services to Company or written notice by the Board of Directors or
Chief Executive Officer of the last date Executive is to be
employed, whichever is earlier.
SECTION 3. TITLE, POWERS AND
RESPONSIBILITIES
(a) Title . Executive
shall be the Senior Vice President and Chief Financial Officer of
the Company or such other title as designated by the Chief
Executive Officer or the Company’s Board of
Directors.
(b) Powers and
Responsibilities .
(1) Executive shall use
Executives best efforts to faithfully perform the duties of his
employment and shall perform such duties as are usually performed
by a person serving in Executive’s position with a business
similar in size and scope as the Company
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and such other additional
duties as may be prescribed from time to time by the Company which
are reasonable and consistent with the Company’s operations,
taking into account officer’s expertise and job
responsibilities. Executive agrees to devote Executive’s full
business time and attention to the business and affairs of the
Company. Executive shall serve on such boards and in such offices
of the Company or its subsidiaries as the Company’s Board of
Directors reasonably requests without additional
compensation.
(2) Executive, as a condition
to his employment under this Agreement, represents and warrants
that he can assume and fulfill responsibilities described in
Section 3(b)(1) without any risk of violating any non-compete
or other restrictive covenant or other agreement to which he is a
party. During the Employment Term Executive shall not enter into
any agreement that would preclude, hinder or impair his ability to
fulfill responsibilities described in Section 3(b)(1)
specifically or this Agreement generally.
SECTION 4. COMPENSATION AND
BENEFITS
(a) Annual Base Salary
. Executive’s base salary shall be $353,800 per year (“
Annual Base Salary ”), which amount may be
periodically reviewed at the discretion of the Compensation
Committee. The Annual Base Salary and any payments to the Executive
during any Continuation Period shall be payable in accordance with
the Company’s standard payroll practices and policies (unless
otherwise expressly provided herein) and shall be subject to such
withholdings as required by law or as otherwise permissible under
such practices or policies.
(b) Earned Bonus;
Incentive Compensation . Executive shall be eligible to receive
an Earned Bonus. Executive shall also be eligible to participate in
such annual and long term incentive plans as are in effect from
time to time as applicable to persons at Executive’s level of
authority and position. Nothing in this Section 4(b)
guarantees that any Earned Bonus or other incentive compensation
will be paid.
(c) Employee Benefit
Plans . Executive shall be entitled to receive the benefits
described in Schedule A attached hereto, if and for as long as the
Company sponsors such plans and such plans remain in effect for
other executives with the same level of status as
Executive.
(d) Stock Options .
The Board of Directors, in its discretion, may grant rights to
Executive under the Stein Mart, Inc. Omnibus Plan (the “
Option Plan ”) on terms set by the Board of
Directors or the Compensation Committee.
(e) Deferred
Compensation . Executive will participate in the Stein Mart
Executive Deferred Compensation Plan (the “ Deferred
Compensation Plan ”). The Company reserves the right
to alter, modify, revise or eliminate the Deferred Compensation
Plan provided that any such change to the terms will apply to
Executive and similarly situated participants.
(f) Vacation, Holidays and
Salary Continuation . Executive shall receive a total of 27
days of paid vacation, or holidays on a pro rata basis
during any 365 day period of the Term. The amount may be adjusted
in accordance with the Company’s standard policy or as
directed by the Company’s Board of Directors. Any vacation or
holiday leave time not used during any 365 day period of the Term
will not carry forward to the next 365 period and will be
forfeited.
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(g) Expense
Reimbursements . Executive shall have the right to expense
reimbursements in accordance with the Company’s standard
policy on expense reimbursements as in effect from time to
time.
(h) Indemnification .
With respect to Executive’s acts or failures to act during
his employment in his capacity as an officer, employee or agent of
the Company, Executive shall be entitled to indemnification from
the Company, and to liability insurance coverage (if any), on the
same basis as other officers of the Company. Executive shall be
indemnified by Company, and Company shall pay Executive’s
related expenses when and as incurred, all to the full extent
permitted by law. Subject to applicable law, the Company reserves
the right to discontinue indemnification in the event the Company
determines that the Executive has breached this Agreement or the
Executive has advances, or intends to advance, a business or legal
position contrary to the Company’s interests. Notwithstanding
the foregoing, Executive shall not be entitled to any
indemnification if a judgment or other final adjudication
establishes that any act or omission of Executive was material to
the cause of action so adjudicated and that such act or omission
constituted: (i) a criminal violation, unless Executive had
reasonable cause to believe that Executive’s conduct was
lawful or had no reasonable cause to believe that such conduct was
unlawful, (ii) a transaction from which Executive derived an
improper personal benefit, or (iii) willful misconduct or a
conscious disregard for the best interests of the
Company.
(i) Automobile
Allowance . The Company will pay Executive $1,100 per month
(paid quarterly) which shall be used for the lease, purchase,
maintenance and/or operation of a vehicle that Executive is to use
for business travel or may use for personal travel. Executive shall
be solely responsible for any taxes associated with the automobile
allowance afforded to him.
(j) Othe
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