Exhibit 10.1
GREGORY W.
KLEFFNER
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
Gregory W. Kleffner (“ Executive
”), is made as of July 31, 2009 (the “
Effective Date ”).
In consideration of the promises and
mutual covenants contained herein, the parties, intending to be
legally bound, agree as follows:
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SECTION 1.
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TERM OF
EMPLOYMENT
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(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”).
“ 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). For purposes hereof, the
definition of a Change of Control shall be construed and
interpreted so as to comply with the definition contained in Code
Section 409A.
“ Code ”
means the Internal Revenue Code of 1986, as amended. Any reference
to a specific provision of the Code shall be deemed to refer to any
successor provision thereto and the regulations promulgated
thereunder.
“ Commencement
Date ” means August 10, 2009, the date the
Executive shall report for work and assume Executive’s
responsibilities hereunder; provided, however that Executive shall,
except as expressly provided herein to the contrary, be deemed
employed for all purposes from the Effective Date.
“ 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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(i)
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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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(ii)
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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.
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“ 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
” means 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; provided that if such opinions are
conflicting, then such physicians shall select a mutually agreeable
third physician whose opinion shall be conclusive and
binding.
“ 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:
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(i)
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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
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(ii)
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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
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(iii)
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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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(iv)
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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
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(v)
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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
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(vi)
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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”.
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“ Termination
Date ” means the date of Executive’s
termination of employment, or if the Executive continues to provide
services to Stein Mart, Inc. or its 409A affiliates following his
termination of employment, such later date as is considered a
separation from service from Stein Mart, Inc. and its 409A
affiliates within the meaning of Code Section 409A. For
purposes of this Agreement, the Executive’s
“termination of employment” shall be presumed to occur
when Stein Mart, Inc. and the Executive reasonably anticipate that
no further services will be performed by the Executive for Stein
Mart, Inc. and its 409A affiliates or that the level of bona fide
services the Executive will perform as an employee of Stein Mart,
Inc. and its 409A affiliates will permanently decrease to no more
than 20% of the average level of bona fide services performed by
the Executive (whether as an employee or independent contractor)
for Stein Mart, Inc. and its 409A affiliates over the immediately
preceding 36-month period (or such lesser period of services).
Whether the Executive has experienced a termination of employment
shall be determined by Stein Mart, Inc. in good faith and
consistent with Section 409A of the Code. Notwithstanding the
foregoing, if the Executive takes a leave of absence for purposes
of military leave, sick leave or other bona fide reason, the
Executive will not be deemed to have experienced a termination of
employment for the first six (6) months of the leave of
absence, or if longer, for so long as the Executive’s right
to reemployment is provided either by statute or by contract,
including this Agreement; provided that if the leave of
absence is due to a medically determinable physical or mental
impairment that can be expected to result in death or last for a
continuous period of not less than six (6) months, where such
impairment causes the Executive to be unable to perform the duties
of his position of employment or any substantially similar position
of employment, the leave may be extended by Stein Mart, Inc. for up
to 29 months without causing a termination of employment. For
purposes hereof, the term “409A affiliate” means each
entity that is required to be included in Stein Mart, Inc.’s
controlled group of corporations within the meaning of
Section 414(b) of the Code, or that is under common control
with Stein Mart, Inc. within the meaning of Section 414(c) of
the Code; provided, however , that the phrase “at
least 50 percent” shall be used in place of the phrase
“at least 80 percent” each place it appears therein or
in the regulations thereunder.
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SECTION 3.
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TITLE,
POWERS AND RESPONSIBILITIES
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(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. Executive shall
assume those duties on the Commencement Date.
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(b) Powers and
Responsibilities .
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(i)
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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 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 Executive’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. None
of the above should be construed as to prevent Executive from
serving on civic and charitable boards or other industry
organizations, business boards and leadership positions as approved
by the Company’s Chief Executive Officer.
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(ii)
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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)(i) 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)(i) specifically or this Agreement
generally.
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SECTION 4
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COMPENSATION
AND BENEFITS
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(a) Annual Base Salary .
Executive’s base salary shall be $350,000.00 per year
(“ Annual Base Salary ”) beginning on the
Commencement Date, 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. In addition:
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(i)
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for fiscal
2009, Executive shall participate in the 2009 Stein Mart Management
Incentive Compensation Plan as though employed for one-half of the
entire year and will thus be eligible to receive fifty percent
(50%) of the benefits provided in that plan for 2009;
and
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(ii)
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Executive shall
receive options to acquire 30,000 shares of the Company’s
common stock under the Stein Mart, Inc. Omnibus Plan (the
“Option Plan”) on terms set by the Board of Directors
at an exercise price equal to the closing price of the
Company’s shares on NASDAQ as of the Effective Date; which
options shall have a term of ten years and to vest 33% on the third
anniversary of the Effective Date, 66% on the fourth anniversary of
the Effective Date and 100% on the fifth anniversary of the
Effective Date.
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(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.
(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 qu
