EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of the
3rd day of April 1997, by and between Parisian, Inc. ("Company"), a
wholly owned subsidiary of Proffitt's, Inc., and William D. Cappiello
("Executive").
Company and Executive agree as follows:
1. Employment. Company hereby employs Executive as President
and Chief Executive Officer of Company, reporting to the President of
the Proffitt's Merchandising Group, or in such other position mutually
agreeable by Executive, Company and Proffitt's. Executive shall also
be elected to Company's Board of Directors.
2. Duties. During his employment, Executive shall devote
substantially all of his working time, energies, and skills to the
benefit of Company's business. Executive agrees to serve Company
diligently and to the best of his ability and to use his best efforts
to follow the policies and directions of Company's and Proffitt's
Boards of Directors. Executive shall be based at the Parisian home
office in Birmingham, Alabama, and shall be required to travel
temporarily from time to time on Company business. Executive's duties
shall be consistent with the duties of a chief executive officer of a
company of a comparable size to Parisian.
3. Compensation. Executive's compensation and benefits under
this Agreement shall be as follows:
(a) Base Salary. Company shall pay Executive a base salary
("Base Salary") at a rate of no less than $450,000 per year; provided,
however, Executive's Base Salary shall be increased by at least 10%
annually (over the then existing Base Salary) during the term of this
Agreement. Executive's Base Salary shall be paid in installments in
accordance with Company's normal payment schedule for its senior
management. All payments shall be subject to the deduction of payroll
taxes and similar assessments as required by law.
(b) Bonus. In addition to the Base Salary, Executive shall
be eligible for a yearly cash bonus of up to 50% of the Base Salary
then in effect, based upon his performance in accordance with specific
annual objectives, set in advance, all as approved by Proffitt's Board
of Directors. Executive shall be guaranteed a minimum bonus for his
fiscal year 1997 performance in the amount of $100,000.
(c) Initial Bonus. Company shall pay Executive $175,000 on
his first date of employment, and shall cause Proffitt's to issue
Executive 10,000 shares of unrestricted common stock as soon as
practicable, but in no event later than 30 days after Executive's
first day of employment with the Company.
(d) Incentive Compensation. Executive shall be and hereby
is granted a non-qualified option as of his first date of employment
("Option") to purchase seventy-five thousand (75,000) shares of
Proffitt's common stock at an option price equal to the closing price
of the stock on Executive's first day of employment, as reported in
the Wall Street Journal. The Option will be granted pursuant either
to Proffitt's 1994 Long-Term Incentive Plan ("1994 LTIP") or 1997
Long-Term Incentive Plan ("1997 LTIP"), and shall be subject to the
terms and conditions thereof. The Option shall be exercisable on or
after the grant date (the "Grant Date") to the extent of 20% of the
shares covered thereby; exercisable to the extent of an additional 20%
of the shares covered thereby on and after the first anniversary of
the Grant Date; exercisable to the extent of an additional 20% of the
shares covered thereby on and after the second anniversary of the
Grant Date; exercisable to the extent of an additional 20% of the
shares covered thereby on an after the third anniversary of the Grant
Date; and exercisable to the extent of any remaining shares on and
after the fourth anniversary of the Grant Date; provided, however,
that no portion of the Option shall be exercisable any earlier than
six months from the Grant Date. The Option may be exercised up to ten
(10) years from the Grant Date. Any portion of the Option not
exercised within said ten (10) year period shall expire.
(e) Effect of Change of Control on Options. In the event
of a Change of Control (as defined in the 1994 LTIP), any Options
granted to Executive prior to such Change of Control shall immediately
vest.
(f) Service Stock Grant. In addition to the shares of
unrestricted common stock referred to Section 3(c), Company shall
cause Proffitt's to issue to Executive a total of 20,000 shares of
Proffitt's unrestricted common stock in the following amounts and at
the following times, provided that Executive shall have completed
continuous and uninterrupted service with Company at the time of each
grant: 5,000 shares on each of the first four anniversary dates of
Executive's first date of employment with Company. These numbers
shall be adjusted in the event of any change in the outstanding stock
of Proffitt's of the type set forth in paragraph 20 of the 1994 LTIP.
4. Insurance and Benefits. Company shall provide those
benefits to Executive and allow Executive to participate in each
employee benefit plan and to receive executive benefits that Company
and Proffitt's provide for their senior most executives.
5. Term. The term of this Agreement shall be for three years.
6. Company's Early Termination and Severance. Company shall
have the right, at its election, to terminate Executive's employment
prior to the termination date, without cause, upon 30 days prior
written notice to Executive, In the event of such termination by
Company, Executive shall be entitled to receive as severance his base
salary, with the yearly increases referred to in Paragraph 3(a) for
the greater of: (i) the end of the Term; or (ii) two years. Should
Company elect to terminate Executive's employment without cause,
Company shall also guarantee that 80% of all options granted to
Employee under Section 3(d) of this Agreement shall be vested, and 80%
of the stock to be issued under Section 3(f) of this Agreement shall
be issued. Employee shall also be entitled to receive all benefits
under Section 4 of this Agreement for two years after termination.
This severance provision shall continue to apply after the term of
this Agreement if Executive remains employed by Company and has not
entered into another employment agreement with Company. It is the
intent of the parties to provide Employee with two years of severance,
with the yearly increases referred to in Section 3(a), in one lump sum
at the time of termination without cause. In all events, provided
Employee does not voluntarily terminate his employment with Company,
he shall nevertheless be entitled to all severance benefits set forth
herein.
7. Termination as a Result of Death. This Agreement shall
terminate upon the death of Executive, except as to: (a) Executive's
estate's right to exercise any unexercised stock options pursuant to
Company's stock option plan then in effect with a guarantee that at
least 40% of the options under Section 3(d) shall be vested, (b) at
least 8,000 shares of common stock under Section 3(f) shall have been
awarded Executive or his estate, (c) other entitlements under this
contract that expressly survive death, and (d) any rights which
Executive's estate or dependents may have under COBRA or any other
federal or state law or which are derived independent of this
Agreement by reason of his participation in any plan maintained by
Company.
8. Termination by Company for Cause. Company shall have the
right to terminate Executive's employment under this Agreement for
cause, in which event no salary or bonus shall be paid after
termination for cause. Termination for cause shall be effective
immediately upon notice sent or given to Executive. For purposes of
this Agreement, the term "cause" shall mean and be strictly limited
to: (i) Executive's conviction of any crime or criminal offense
involving monies or other property, or any felony, after applicable
rights of appeal have been exhausted or waived and which is materially
detrimental to the reputation or goodwill of the Company; (ii)
Executive's breach of any of his fiduciary duties of loyalty as an
officer of the Company after having received written notice from the
Board of Directors of Proffitt's, Inc. and Executive has been given a
reasonable opportunity to cure; or (iii) Executive's willful and
continual neglect or disregard of his duties as President and Chief
Executive Officer of the Company, after written notice of such neglect
or disregard has been given Executive by the Board of Directors of
Proffitt's, Inc. and Executive has been given a reasonable opportunity
to cure.
(b) In the event that Executive's employment is terminated
for cause or otherwise, Executive agrees to resign as an officer
and/or director of Company (or any of its subsidiaries or affiliates),
effective as of the date of such termination, and Executive agrees to
return to Company upon such termination any of the following which
contain confidential information: all documents, instruments, papers,
facsimiles, and computerized information which are the property of
Company or such subsidiary or affiliate.
9. Change in Control. If Executive's employment is terminated
primarily as a result of a Change in Control of Proffitt's or a
Potential Change in Control of Proffitt's, as defined below, Executive
shall receive all shares of common stock under Section 3(f) that have
not already been awarded, and his Base Salary then in effect for a
period of three years.
As used herein, the term "Change in Control" means the happening
of any of the following:
(a) Any person or entity, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
other than Proffitt's, a subsidiary of Proffitt's, or any employee
benefit plan of Proffitt's or its subsidiaries, becomes the beneficial
owner of Proffitt's securities having 25 percent or more of the
combined voting power of the then outstanding securities of Proffitt's
that may be cast for the election for directors of Proffitt's (other
than as a result of an issuance of securities initiated by Proffitt's
in the ordinary course of business); or
(b) As the result of, or in connection with, any cash
tender or exchange offer, merger or other businessc combination, sale
of assets or contested election, or any combination of the foregoing
transactions, less than a majority of the combined voting power of the
then outstanding securities of Proffitt's or any successor corporation
or entity entitled to vote generally in the election of directors of
Proffitt's or such other corporation or entity after such transaction,
are held in the aggregate by holders of Proffitt's securities entitled
to vote generally in the election of directors of Proffitt's
immediately prior to such transactions; or
(c) During any period of two consecutive years, individuals
who at the beginning of any such period constitute the Board of
Directors of Proffitt's cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for election
by Proffitt's stockholders, of each director of Proffitt's first
elected during such period was approved by a vote of at least
two-thirds of the directors of Proffitt's then still in office who
were directors of Proffitt's at the beginning of any such period.
As used herein, the term "Potential Change in Control" means the
happening of any of the following:
(a) The approval by stockholders of an agreement by
Proffitt's, the consummation of which would result in a Change of
Control of Proffitt's; or
(b) The acquisition of beneficial ownership, directly or
indirectly, by any entity, person or group (other than Proffitt's, a
wholly-owned subsidiary thereof or any employee benefit plan of
Proffitt's or its subsidiaries (including any trustee of such plan
acting as trustee) of securities of Proffitt's representing 5 percent
or more of the combined voting power of Proffitt's outstanding
securities and the adoption by the Board of Directors of Proffitt's of
a resolution to the effect that a Potential Change in Control of
Proffitt's has occurred for purposes of this Agreement.
10. Disability. If Executive becomes disabled at any time
during the term of this Agreement, he shall after he becomes disabled
continue to receive all payments and benefits provided under the terms
of this Agreement for a period of twelve consecutive months, or for
the remaining term of this Agreement, whichever period is longer. For
purposes of this Agreement, the term "disabled" shall mean the
inability of Executive (as the result of a physical or mental
condition) to perform the duties of his position under this Agreement
with reasonable accommodation and which inability is reasonably
expected to last at least one (1) full year.
11. Non-competition; Unauthorized Disclosure.
(a) Non-competition. During the period Executive is
employed under this Agreement, and for a period of one year
thereafter, Executive:
(i) shall not engage in any activities, whether as
employer, proprietor, partner, stockholder (other than the holder of
less than 5% of the stock of a corporation the securities of which are
traded on a national securities exchange or in the over-the-counter
market), director, officer, employee or otherwise, in competition with
(i) the businesses conducted at the date hereof by Company, or (ii)
any business in which Company is substantially engaged at any time
during the employment period; and
(ii) shall not induce or attempt to persuade any
employee of Company to terminate his or her employment relationship in
order to enter into competitive employment.
(b) Unauthorized Disclosure. During the period Executive
is employed under this Agreement, and for a further period of one year
thereafter, Executive shall not, except as required by any court or
administrative agency, without the written consent of the Board of
Directors, or a person authorized thereby, disclose to any person,
other than an employee of Company or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance
by Executive of his duties as an executive for Company, any
confidential information obtained by him while in the employ of
Company; provided, however, that confidential information shall not
include any information now known or which becomes known generally to
the public (other than as a result of unauthorized disclosure by
Executive).
(c) Scope of Covenants; Remedies. The following provisions
shall apply to the covenants of Executive contained in this Section
11:
(i) the covenants contained in paragraphs (i) and (ii)
of Section 11(a) shall apply within all the market areas in which
Company is actively engaged in the conduct of business during the
Executive's employment and for one year thereafter, and it is
expressly agreed that Company is not in competition in the same market
areas with Macy's West, Inc.;
(ii) without limiting the right of Company to pursue
all other legal and equitable remedies available for violation by
Executive of the covenants contained in this Section 11, it is
expressly agreed by Executive and Company that such other remedies
cannot fully compensate Company for any such violation and that
Company shall be entitled to injunctive relief to prevent any such
violation or any continuing violation thereof; provided, however,
Company shall be entitled to injunctive relief only to protect itself
from unfair competition of the type protected under Tennessee law.
(iii) each party intends and agrees that if, in any
action before any court or agency legally empowered to enforce the
covenants contained in this Section 11, any term, restriction,
covenant or promise contained therein is found to be unreasonable and
accordingly unenforceable, then such term, restriction, covenant or
promise shall be deemed modified to the extent necessary to make it
enforceable by such court or agency; and
(iv) the covenants contained in this Section 11 shall
apply only if Executive voluntarily terminates his employment with
Company, and in such case, the covenants shall survive the conclusion
of Executive's employment by Company.
12. General Provisions.
(a) Notices. Any notice to be given hereunder by either
party to the other may be effected by personal delivery, in writing or
by mail, registered or certified, postage prepaid with return receipt
requested. Mailed notices shall be addressed to the parties at the
addresses set forth below, but each party may change his or its
address by written notice in accordance with this Section 12(a).
Notices shall be deemed communicated as of the actual receipt or
refusal of receipt.
If to Executive: William E. Cappiello
750 Lakeshore Drive
Birmingham, AL 35211
If to Company: Brian J. Martin
Parisian, Inc.
750 Lakeshore Drive
Birmingham, AL 35211
(b) Partial Invalidity. If any provision in this Agreement
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions shall, nevertheless, continue
in full force and without being impaired or invalidated in any way.
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee.
(d) Attorney's Fees. If any action is necessary to enforce
the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees and costs, in addition to any other relief
to which he or it may be entitled.
(e) Modifications and Waivers. Any modification or waiver
of the provisions of this Agreement will be effective only if it is in
writing signed by the party to be charged.
(f) Headings. The Section, paragraph, and subparagraph
headings are for convenience or reference only and shall not define or
limit the provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
PARISIAN, INC.
BY: _____________________
Brian J. Martin
Senior Vice President
_____________________
William D. Cappiello
Executive
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