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Exhibit
10.3
AMENDED AND RESTATED EMPLOYMENT AND
NONCOMPETITION
AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT
AND NONCOMPETITION AGREEMENT (the "Agreement") is an amendment and
complete restatement of the Employment and Noncompetition Agreement
made and entered into as of the 31st day of December, 2006, by and
between SHOE CARNIVAL, INC ., an Indiana corporation with
its principal offices located at 7500 East Columbia Street,
Evansville, Indiana (the "Company"), and CLIFTON E. SIFFORD
, an individual residing at 3255 Brookfield Drive, Newburgh,
Indiana (the "Employee"). This restatement is intended to conform
the Agreement to the applicable provisions of the final regulations
interpreting Section 409A of the Internal Revenue Code of 1986, as
amended ("Code") and Revenue Ruling 2008-13.
RECITALS
WHEREAS , the Company
is one of the leading retailers of family shoes in the United
States;
WHEREAS , the Company
desires to retain the services of the Employee upon the terms and
conditions set forth herein; and
WHEREAS , the Employee
desires to be so employed by the Company, to be eligible for
opportunities of advancement, potential compensation increases and
the potential payments provided for herein; and
WHEREAS , the Company
and the Employee desire to enter into this Agreement to set forth
the terms and conditions of the employment relationship between the
Company and the Employee; and
WHEREAS , in
connection with its business, the Company has expended a
substantial amount of time, money, and effort to develop and
maintain its confidential, proprietary and trade secret
information, and that this information, if misused or disclosed,
could be very harmful to Company’s business and its
competitive position in the marketplace.
AGREEMENT
1. Term of
Employment . The Company hereby agrees to employ
Employee and Employee hereby agrees to be employed by the Company,
in accordance with the terms and conditions herein, for a period
commencing on the effective date of this Agreement up to and
through January 31, 2009, subject, however, to earlier termination
as expressly provided in this Agreement (such term, including any
extension thereof, shall herein be referred to as the "Term"). This
Agreement shall be renewed automatically for successive terms of
one (1) year each unless either party provides written notice of
non-renewal to the other party not more than ninety (90) days and
not less than thirty (30) days before the end of the then current
Term.
2. Scope of Duties
. The Employee is currently serving in the position of
Executive Vice President, General Merchandise Manager. During the
Term, the Employee agrees to perform such other services for the
Company as may be directed by any superior officer of the Company,
and to assume such other title, duties and/or responsibilities as
the Board of Directors may determine. The Employee shall be
supportive of the Company's business and its best interests and
shall not, directly or indirectly, take any action which could
reasonably be expected to have an adverse effect upon the business
or best interests of the Company. The Employee covenants that he
will at all times honestly and fairly conduct his duties, and will
at all times maintain the highest of professional standards in
representing the interests of the Company. The Employee will comply
with Company policies, decisions, and instructions, which may be
changed by the Company over time. Employee shall perform all duties
incident to his position, as well as any other duties as may from
time to time be assigned by the President of the Company or his
designee, and agrees to abide by all By-laws, policies, practices,
procedures or rules of the Company.
3. Compensation of
Employee . For all services rendered by the Employee
under this Agreement, the Company shall compensate the Employee as
follows:
3.1 Base Salary
. The base salary payable to the Employee under this Agreement
shall be that amount of base salary payable as of the effective
date of this Agreement ("Base Salary"), payable in accordance with
the Company's usual payroll procedures, and subject to all taxes,
withholdings and deductions as required by law and as the Employee
may authorize. The Company will review the Base Salary on a
periodic basis, approximately annually, during the Term to
determine, in the discretion of the Company, whether the Base
Salary should be adjusted, and if so, the amount of such adjustment
and the time at which such adjustment should take
effect.
3.2 Incentive Bonus
. The Employee is entitled to participate in the
Company’s 2006 Executive Incentive Compensation Plan in
accordance with the terms contained therein, and in any successor
plan adopted by the Company from time to time. However, Employee
agrees that the failure of the Company to award any such bonus
and/or other incentive compensation shall not give rise to any
claim against the Company.
4. Additional Compensation,
Benefits, and Obligations . During the Term, and so
long as the Employee serves in the position of Executive Vice
President, Employee is entitled to participate in any and all
employee welfare and health benefit plans (including, but not
limited to, life insurance, health and medical, dental and
disability plans, and executive supplemental medical coverage) and
other employee benefit plans, including but not limited to,
qualified pension plans, stock purchase plans, and nonqualified
deferred compensation plans, established by the Company from time
to time for the benefit of executives at his level and position;
provided, however, the Employee's participation in such plans is
subject to the eligibility requirements and other terms of such
plans. The Company may change, amend or discontinue any of its
employee welfare and health benefit plans at any time during the
Term, and nothing in this Agreement shall obligate the Company to
institute, maintain or refrain from changing, amending or
discontinuing any such plans or programs.
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5. Termination of
Employment . Employee’s employment may be
terminated as follows:
5.1 For Cause .
The Company may terminate Employee’s employment at any time
effective immediately for "Cause." As used in this Agreement, the
term "Cause" means the occurrence of any one or more of the
following events: (i) Employee's conviction for a felony or other
crime involving moral turpitude; (ii) Employee's engaging in
illegal conduct or gross misconduct which is injurious to the
Company; (iii) Employee's engaging in any fraudulent or dishonest
conduct in his dealings with, or on behalf of, the Company; (iv)
Employee's failure or refusal to follow the lawful and reasonable
instructions of the Company's Chief Executive Officer, President,
or other executive officer to whom Employee reports, if such
failure or refusal continues for a period of ten (10) days after
the Company delivers to Employee a written notice stating the
instructions which Employee has failed or refused to follow; (v)
Employee's material breach of any of his obligations under this
Agreement; (vi) Employee's material breach of the Company's
policies; (vii) Employee's use of alcohol or drugs which interferes
with the performance of his duties for the Company or which
compromises the integrity or reputation of the Company; or (viii)
Employee's engaging in any conduct tending to bring the Company
into public disgrace or disrepute.
5.2 Unilateral - The
Company . The Company may terminate Employee’s
employment at any time without Cause.
5.3 Unilateral -
Employee . Employee may terminate his employment at
any time with the Company by providing the Company with thirty (30)
days' advance written notice of such termination. At the sole
option of the Company, such termination will be considered
effective on the date such notice is given.
5.4 For Good Reason -
Employee . At any time during the Term, Employee may
terminate this Agreement for Good Reason if all of the following
conditions are satisfied: (a) Employee gives the Company a written
notice of termination, which describes in reasonable detail the
condition claimed to constitute Good Reason, within thirty (30)
calendar days of the initial existence of the condition claimed to
constitute Good Reason; (b) the Company does not remedy the
condition within thirty (30) calendar days of the Company’s
receipt of Employee’s written notice of termination (the
"Good Reason Cure Period"); and (c) Employee gives the Company a
second written notice of termination within thirty (30) calendar
days following the expiration of the Good Reason Cure Period. For
purposes of this Agreement, for "Good Reason" means the occurrence,
without Employee’s written consent, of a material reduction
by the Company in Employee’s Base Salary . Termination of
this Agreement without Cause or for Good Reason shall not be deemed
to be a voluntary termination by Employee for purposes of any stock
option or equity incentive plans of the Company.
5.5 Disability or
Death . If Employee suffers a "Disability," the
Company shall have the right to terminate Employee's employment by
delivering to
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Employee a written
notice of the Company's intent to terminate for Disability,
specifying in such notice a termination date not less than ten (10)
calendar days after the giving of the notice (the "Disability
Notice Period"). The Employee's employment shall terminate at the
close of business on the last day of the Disability Notice Period.
For purpose of this Agreement, the term "Disability" shall mean
either (a) when Employee is deemed disabled in accordance with the
long-term disability insurance policy or plan of the Company in
effect at the time of the illness or injury causing the Disability,
or (b) the inability of Employee, because of injury, illness,
disease or bodily or mental infirmity, to perform the essential
functions of his job (with reasonable accommodation) for more than
one hundred twenty (120) consecutive days. The existence of a
Disability shall be determined by the Company. If the Employee
should die during the Term, this Agreement shall terminate as of
the date of Employee's death.
5.6 Compensation Upon
Termination . In the event of termination of
Employee’s employment as set forth herein, and subject to any
lawful right of offset the Company may have against any such
benefits, compensation, or severance amounts owed to Employee,
whether the result of promissory notes, loans, or other financial
arrangements the Company may have entered into with or on the
Employee’s behalf, and which are or would become due and
payable on or after the termination date, to include the principal
and interest pursuant to such arrangements (which right of offset
cannot be inconsistent with the standards for nonqualified deferred
compensation plans under Code Section 409A, to the extent
applicable), the Parties agree that the following terms shall be
the exclusive severance arrangements:
5.6.1 In the event of termination of Employee's employment
by the Company for Cause pursuant to Section 5.1 or unilateral
termination by the Employee pursuant to Section 5.3, the Company's
obligation to pay and provide Employee compensation and benefits
under this Agreement shall immediately terminate, except: (a)
Employee shall be entitled to receive that portion of his then Base
Salary which shall have been earned through the termination date;
and (b) the Company shall pay or provide Employee such other
payments and benefits, if any, which had accrued hereunder before
the termination date. Other than the foregoing, the Company shall
have no further obligations to Employee under this
Agreement.
5.6.2 In the event the Company terminates Employee's
employment without Cause pursuant to Section 5.2 or Employee
terminates for Good Reason pursuant to Section 5.4 within thirty
(30) calendar days of the expiration of the Good Reason Cure
Period, at any time other than the two (2) year period immediately
following a "Change in Control," the Company's obligation to pay
and provide Employee compensation and benefits under this Agreement
shall immediately terminate, except: (a) Employee shall be entitled
to receive that portion of his then Base Salary which shall have
been earned through the termination date; (b) the Company shall pay
to Employee, within thirty (30) calendar days following the date of
termination, a lump sum amount equal to fifty-five percent (55%) of
the product of (i) times (ii), where (i) is his annual
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Base Salary for the
fiscal year in which the termination occurs, and (ii) is a
fraction, the numerator of which is the number of days elapsed in
such fiscal year through the date of termination and the
denominator of which is 365; (c) the Company shall pay or provide
Employee such other payments and benefits, if any, which had
accrued hereunder before the termination date; (d) the Company
shall pay to Employee, within thirty (30) calendar days following
the termination date, a lump sum payment in an amount equal to one
hundred fifty percent (150%) of Employee's Base Salary for the
fiscal year in which the termination occurs; (e) the Company shall
pay Employee, within thirty (30) calendar days following the
termination date, a lump sum payment in an amount equal to the
total of (i) plus (ii), where (i) equals eighteen (18) times the
monthly "COBRA Premium Rate" (which is the monthly amount charged,
as of the termination date, for COBRA continuation coverage under
the Company's group medical and dental plans for the coverage
options and coverage levels applicable to Employee and his covered
dependents immediately prior to the termination date); and (ii) is
an additional amount equal to the additional state and federal
taxes that the Company determines Employee will incur as a result
of the payment of the lump sum payment provided under this Section
5.6.2(e); (f) with respect to Company stock options granted after
the date of this Agreement, Employee would immediately vest in any
option that would have vested within twelve (12) months of
Employee’s termination date had Employee not been terminated,
and such option may be exercised pursuant to the provisions of the
then current Company Stock Option and Incentive Plan ("Stock Option
Plan") as if the option were vested at the date of termination; and
(g) all shares of restricted stock granted to the Employee after
the date of this Agreement, which are not intended to qualify as
"performance based compensation" under Section 162(m) of the Code
shall contain provisions which shall provide for immediate vesting
upon Termination without Cause or for Good Reason. Payment of the
severance compensation described in subpart (d) and (e) of this
Section 5.6.2 is subject to the requirements of Sections 5.9 and
5.10. Other than the foregoing, the Company shall have no further
obligations to Employee under this Agreement.
5.6.3 In the event Employee's employment is terminated as
a result of Employee's Death or Disability pursuant to Section 5.5,
the Company's obligation to pay and provide the Employee
compensation and benefits under this Agreement shall immediately
terminate except: (a) Employee shall be entitled to receive that
portion of his then Base Salary which shall have been earned
through the termination date; and (b) the Company shall pay or
provide Employee such other payments and benefits, if any, which
had accrued hereunder before the termination date. Other than the
foregoing, the Company shall have no further obligations to
Employee under this Agreement.
5.6.4 In the event of a "Qualifying Termination" within
two (2) years immediately following a "Change In Control," then, in
lieu of all other benefits under this Agreement, the Company's
obligation to pay and provide Employee compensation and benefits
under this Agreement shall immediately terminate,
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except: (a) Employee
shall be entitled to receive that portion of his then Base Salary
which shall have been earned through the termination date; (b) the
Company shall pay or provide Employee such other payments and
benefits, if any, which had accrued hereunder before the
termination date; (c) the Company shall pay to Employee in a lump
sum not later than thirty (30) calendar days after the termination
date an amount equal to two times one hundred fifty-five percent
(155%) of his annual Base Salary for the fiscal year in which the
termination occurs; (d) the Company shall pay Employee, in a lump
sum not later than thirty (30) calendar days after the termination
date, an amount equal to (i) plus (ii), where (i) equals eighteen
(18) times the COBRA Premium Rate; and (ii) is an additional amount
equal to the additional state and federal taxes that the Company
determines Employee will incur as a result of the payment of the
lump sum payment provided under this Section 5.6.4(d); (e) the
Company shall provide Employee with reasonable and appropriate
out-placement services, as determined and coordinated by the
Company, by paying a fee, not to exceed Two Thousand Five Hundred
Dollars ($2,500.00), to an outplacement services provider selected
by the Company, provided that such services shall not extend past
the end of the second taxable year following the taxable year in
which the Qualifying Termination occurs; and (f) Employee shall be
allowed to exercise available stock options in accordance with the
Stock Option Plan as if he were terminated without cause pursuant
to the Stock Option Plan. Payment or provision of the severance
compensation or benefits described in subparts (c), (d) and (e) of
this Section 5.6.4 is subject to the requirements of Sections 5.9
and 5.10. Other than the foregoing, the Company shall have no
further obligations to Employee under this Agreement.
For purposes of this Agreement, a "Qualifying
Termination" shall mean either (i) a unilateral termination of
Employee by the Company without Cause pursuant to Section 5.2 or
(ii) a termination by Employee for
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