-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RZpHG8TrSWCY6YTqQo45+8DPBU0+YSywSs+mZKYTZBOL9fQYA8O3Ar7CjNNk1w9Q hx3VJG7E/XOyPYmx+MuSJg== 0000950134-04-019745.txt : 20041222 0000950134-04-019745.hdr.sgml : 20041222 20041222150928 ACCESSION NUMBER: 0000950134-04-019745 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041220 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041222 DATE AS OF CHANGE: 20041222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GADZOOKS INC CENTRAL INDEX KEY: 0000924140 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FAMILY CLOTHING STORES [5651] IRS NUMBER: 742261048 STATE OF INCORPORATION: TX FISCAL YEAR END: 0127 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26732 FILM NUMBER: 041220603 BUSINESS ADDRESS: STREET 1: 4121 INTERNATIONAL PKWY CITY: CARROLLTON STATE: TX ZIP: 75007 BUSINESS PHONE: 9723075555 MAIL ADDRESS: STREET 1: 4121 INTERNTIONAL PKWY CITY: CARROLLTON STATE: TX ZIP: 75007 8-K 1 d21118e8vk.htm FORM 8-K e8vk
 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):
December 20, 2004

Gadzooks, Inc.

(Exact name of registrant as specified in charter)
         
Texas   0-26732   74-2261048
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)

4121 International Parkway
Carrollton, Texas 75007

(Address and zip code of principal executive offices)

(972) 307-5555
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



 


 

TABLE OF CONTENTS

Item 1.01 Entry into a Material Definitive Agreement
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers
Item 9.01 Financial Statements and Exhibits
SIGNATURE
EXHIBIT INDEX
Employment Agreement
Severance Agreement
Press Release

Item 1.01 Entry into a Material Definitive Agreement

     The text set forth in Item 5.02 regarding the employment agreement and severance agreement with Monty R. Standifer is incorporated into this section by reference.

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

     (a) On December 20, 2004, the Company’s Board of Directors appointed Monty R. Standifer, 64, to serve as Executive Vice President, Chief Financial Officer and Secretary of Gadzooks, Inc. Mr. Standifer has an extensive retail background and has previously been chief financial officer for several national companies. Since 2003, Mr. Standifer has been a partner and served as Executive Vice President and CFO of Buffet Partners, L.P., a privately held investment group. Prior to that, Mr. Standifer served as a consultant to various companies in connection with business planning and capital formation from 2000 to 2002. Mr. Standifer previously served as a Senior Vice President and CFO of the Company from 1992 to 1999. A copy of the press release is attached as Exhibit 99.1 to this report.

     (b) In connection with his employment, Mr. Standifer and Gadzooks entered into an employment agreement that provides for a monthly base salary of $20,000. In addition to the base salary, Mr. Standifer is entitled to an annual bonus based on his service and the Company’s performance, as determined by the Company’s Board of Directors or Compensation Committee. Additionally, Mr. Standifer will be granted options to acquire 1.5% of the Company’s common stock outstanding after the consummation by the Company of its proposed rights offering. The options will have an exercise price equal to the volume weighted average price of the Company’s common stock over a 30 day period commencing on the 31st day after the effective date of the Company’s plan of reorganization, with one-third of the grant vesting at the end of each year after such effective date. The options are exercisable for five years from the date of grant. The employment agreement also contains non-competition and non-solicitation provisions, which apply during the term of the employment agreement and for a period of 12 months thereafter. A copy of the employment agreement is attached as Exhibit 10.1 to this report and incorporated herein by reference.

     The Company also entered into a severance agreement with Mr. Standifer, dated December 20, 2004. Pursuant to the severance agreement, Mr. Standifer’s employment may be terminated by either party at any time upon 30 days written notice. If the Company terminates the employment agreement without cause, death or disability (as defined therein) or if Mr. Standifer terminates the employment agreement for good reason, Mr. Standifer is entitled to severance compensation equal to his accrued but unpaid base salary, earned bonus through the termination date, plus an additional severance payment equal to one year of his base salary. Further, any stock options that would have vested at the end of the year of termination shall vest upon the termination date. In addition, if the Company terminates the employment agreement after the effective date of the plan of reorganization, the amount of additional severance payment set forth above shall be doubled. A copy of the severance agreement is attached as Exhibit 10.2 to this report and incorporated herein by reference.

 


 

     There is no family relationship between Mr. Standifer and any director or executive officer and there is no arrangement between Mr. Standifer and any other person pursuant to which he was appointed as an officer. Additionally, Mr. Standifer does not have a direct or indirect interest in any prior or currently proposed transaction to which the Company is or was a party.

Item 9.01 Financial Statements and Exhibits

     (c) Exhibits

  10.1*   Employment Agreement entered into December 20, 2004, by and between Gadzooks and Monty Standifer.
 
  10.2*    Severance Agreement entered into December 20, 2004, by and between Gadzooks and Monty Standifer.
 
  99.1*    Press Release entitled “Gadzooks Announces Appointment of Monty Standifer as Executive Vice President and Chief Financial Officer” dated December 21, 2004.


*   Filed herewith.

[SIGNATURE PAGE TO FOLLOW]

 


 

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  GADZOOKS, INC.
 
 
Date: December 22, 2004  By:   /s/ Monty Standifer    
    Name:   Monty Standifer   
    Title:   Executive Vice President, Chief Financial Officer and Secretary   
 

 


 

EXHIBIT INDEX

     
Exhibit
Number
Exhibit
10.1*
  Employment Agreement entered into December 20, 2004, by and between Gadzooks and Monty Standifer.
10.2*
  Severance Agreement entered into December 20, 2004, by and between Gadzooks and Monty Standifer.
99.1*
  Press Release entitled “Gadzooks Announces Appointment of Monty Standifer as Executive Vice President and Chief Financial Officer” dated December 21, 2004.


*   Filed herewith.

 

EX-10.1 2 d21118exv10w1.htm EMPLOYMENT AGREEMENT exv10w1
 

Exhibit 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

     THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of the 20th day of December, 2004 (the “Effective Date”) by and between Gadzooks, Inc. (the “Company”) and Monty Standifer (the “Executive”).

PRELIMINARY STATEMENTS

     A. The Company desires to employ Executive as Executive Vice President and Chief Financial Officer (“CFO”), and Executive desires to be employed by the Company in said capacity; and

     B. Each party desires to set forth in writing the terms and conditions of their understandings and agreements.

     NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, the Company hereby agrees to employ Executive and Executive hereby accepts such employment upon the terms and conditions set forth in this Agreement and the Severance Agreement (as defined herein):

STATEMENT OF AGREEMENT

     1.      Position.

            (a)      The Company agrees to employ Executive in the position of Executive Vice President and CFO. Executive shall serve and perform the duties which may from time to time be assigned to him by the Chief Executive Officer (“CEO”) or the Board of Directors of the Company (the “Board”), provided, however, that such duties shall be similar to the duties of an Executive Vice President of a company of similar size and function as the Company.

            (b)      Executive agrees to serve as CFO and agrees that he will devote his best efforts and all of his business time and attention to all facets of the business of the Company and will faithfully and diligently carry out the duties of CFO. Executive agrees to comply with all Company policies in effect from time to time, and to comply with all laws, rules and regulations, including, but not limited to, those applicable to the Company.

            (c)      Executive agrees to travel as necessary to perform his duties under this Agreement.

     2.      Term. The initial term of this Agreement shall be one (1) year from the date stated above (“Initial Term”), unless otherwise terminated pursuant to Section 5 of this Agreement. This Agreement shall automatically renew for successive two (2) year terms unless either party gives written notice of its or his intent not to renew this Agreement at least ninety (90) days prior to the expiration of the Initial Term or the then-current term (the Initial Term and any renewal thereof

1


 

being the “Term”). Executive’s continued employment after the expiration of the Initial Term shall be in accord with and governed by this Agreement, unless modified by the parties to this Agreement, in writing.

     3.      Compensation & Benefits.

            (a)      Base Salary. The Company shall pay Executive a base salary of $20,000.00 per month (“Base Salary”). The Board, or the Company’s Compensation Committee, if applicable, may review and adjust Executive’s Base Salary periodically, but the salary shall not be reduced below $20,000.00 per month during the Term.

            (b)      Bonus Opportunities. In addition to the Base Salary, Executive shall also be eligible to receive a discretionary bonus based on exceptional service and/or the performance of the Company, as determined by the Board, or the Company’s Compensation Committee, if applicable, in the sole discretion of the Board or the Compensation Committee, as applicable (“Discretionary Bonus”). In addition, during the Term, Executive shall be eligible to participate in any bonus, incentive, and/or equity incentive plan provided by the Company to its executive level employees. Executive shall receive stock options exercisable for 1.5% of the Common stock of the Company to be outstanding immediately after the consummation of the Rights Offering (“Total Grant”). Such stock options shall vest in equal one-third (1/3) increments at the end of each year after the effective date of the Company’s plan of reorganization so long as Executive remains employed by Company. Executive may exercise such options for five (5) years after the date they are granted. The exercise price shall be equal to the volume weighted average price (“VWAP”) of the company’s common shares over a 30-day period commencing on the 31st day after the effective date of the Company’s plan of reorganization and ending on the 60th day after the effective date of the Company’s plan of reorganization. The calculation of the VWAP shall be completed in the ordinary and customary manner for making such calculations. In no event shall the exercise price be less than the fair market value of the stock of the Company on the date of grant of the stock option. The options will be granted pursuant to a stock option plan applicable to employees of the Company generally. The obligations under this Section 3(b) are conditioned upon the Effective Date of the Company’s Plan of Reorganization, as on file currently in the Bankruptcy Court.

            (c)      Payment. Payment of all compensation to Executive hereunder shall be made in accordance with the terms of this Agreement and applicable Company policies in effect from time to time, including normal payroll practices, and shall be subject to all applicable withholdings and taxes.

            (d)      Benefits Generally. The Company shall make available to Executive, throughout the Term of this Agreement, such benefits, if any, as are generally provided by the Company to its executive level employees, including but not limited to any group life, health, dental, vision, disability or accident insurance (any such insurance coverage shall begin on the first of the month of the first month after Executive completes his ninetieth (90th) day of employment with the Company), pension plan, profit-sharing plan, retirement savings plan, 401(k) plan participation ability beginning January 1, 2006, an automobile allowance of $1,000 per month, or other such benefit plan or policy that may presently be in effect or that may

2


 

hereafter be adopted during the Term by the Company for its executive level officers and key management personnel; provided, however, that nothing herein contained shall be deemed to require the Company to adopt or maintain any particular plan or policy.

            (e)      Vacation. Executive shall be entitled to paid vacation during each calendar year, consistent with the policies then applicable to executive level officers of the Company, but in no event fewer than two (2) weeks.

            (f)      Holidays. Executive shall further be entitled to paid holidays, personal days and sick days consistent with the policies then applicable to executive level officers of the Company.

            (g)      In Lieu of KERP. It is expressly understood that the compensation and benefits provided to Executive herein shall be in lieu of any participation in the Key Employee Retention Plan previously approved by the United States Bankruptcy Court for the Northern District of Texas in favor of the Company’s management.

     4.      Reimbursement of Expenses. The Company shall reimburse Executive for all business related expenses, which are reasonable and necessary and are incurred by Executive while performing his duties under this Agreement, upon presentation of expense statements, receipts and/or vouchers, or such other information and documentation as the Company may reasonably require. The Company shall reimburse Executive for the aforementioned business related expenses within thirty (30) days after he has submitted the required documentation to the Company. Any trip, or combination of expenditures exceeding $3,000 must be approved in writing by the CEO prior to incurring such expense. Executive shall provide the CEO with, upon reasonable request, an explanation of the purpose of any particular business related expense and an estimate of the cost of the same, prior to incurring any expense related to the same. The CEO reserves the right to reject any business related expense.

     5.      Termination. This Agreement and Executive’s employment with the Company are subject to termination as set forth in that certain Severance Protection Agreement by and between the Company and the Executive, dated as of the date hereof (the “Severance Agreement”). Upon termination or expiration of this Agreement or the Severance Agreement for any reason, Executive’s employment shall also terminate and cease.

     6.      Release. The Executive agrees that after termination of employment for any reason payment of any severance pay or benefits hereunder or under the Severance Agreement is conditioned upon the execution of a full, general release in favor of the Company, its officers, directors, employees, and representatives (“Release”) in a form acceptable to the Company.

     7.      Nondisclosure.

            (a)      The Company shall provide Executive, immediately after executing this Agreement, some or all of the Company’s various trade secrets and confidential or proprietary information (the “Confidential Information”), including information he has not received before. Confidential Information consists of, but is not limited to, information relating to (i) business

3


 

operations and methods, (ii) existing and proposed business strategies, (iii) financial performance, (iv) compensation arrangements and amounts (whether relating to the Company or to any of its employees, including the CEO), (v) contractual relationships (including the terms of this Agreement), (vi) business partners and relationships, (vii) shareholders of the Company, (viii) marketing strategies, (ix) lists with information related to existing or prospective customers, vendors, suppliers, service providers, partners or investors, including, but not limited to particular business objectives, and (x) computerized business approaches, methodologies, systems or programs, mathematical models, simulated results, simulation software, price or research databases, other research, algorithms, numerical techniques, analytical results, technical data, regardless of the medium in which any such information is contained. Confidential Information shall not include: (1) information that Executive may furnish to third parties regarding his obligations under Sections 7 and 8 or (2) information that (A) becomes generally available to the public by means other than Executive’s breach of Section 7 (for example, not as a result of Executive’s unauthorized release of marketing materials), (B) that is in Executive’s possession, or becomes available to Executive, on a non-confidential basis, from a source other than the Company, or (C) that Executive is required by law, regulation, court order or discovery demand to disclose; provided, however, that in the case of clause (C), Executive gives the Company reasonable notice prior to the disclosure of the Confidential Information and the reasons and circumstances surrounding such disclosure to provide the Company an opportunity to seek a protective order or other appropriate request for confidential treatment of the applicable Confidential Information.

            (b)      Executive agrees that all Confidential Information, whether prepared by Executive or otherwise coming into his possession, shall remain the exclusive property of the Company during Executive’s employment with the Company. Executive agrees that he will use the Confidential Information for the sole benefit of the Company and that he will exercise all reasonable measures to maintain it as confidential. Executive further agrees that Executive shall not, without the prior written consent of the Company, publish or disclose to any third party or use for the benefit of any third party or of Executive any of the Confidential Information described herein, directly or indirectly, either during Executive’s employment with the Company or at any time following the termination of Executive’s employment with the Company.

            (c)      Upon termination or expiration of this Agreement for any reason, Executive agrees that all Confidential Information and other files, documents, materials, records, notebooks, customer lists, business proposals, contracts, agreements and other repositories containing information concerning the Company or the business of the Company (including all copies thereof) in Executive’s possession, custody or control, whether prepared by Executive or others, shall remain with or be returned to the Company promptly (within twenty-four (24) hours) after the termination or expiration date.

     8.      Noncompete and Nonsolicitation.

            (a)      Business Relationships and Goodwill. Executive acknowledges and agrees that as an employee and representative of the Company, Executive will be given Confidential Information. Executive acknowledges and agrees that this creates a special relationship of trust and confidence between the Company, Executive and the Company’s current and prospective

4


 

customers, business partners, consumers, suppliers, shareholders, vendors, and investors. Executive further acknowledges and agrees that there is a risk and opportunity for any person given such responsibility, specialized training, and Confidential Information, to misappropriate the relationship and goodwill existing between the Company and the Company’s current and prospective customers, business partners, consumers, suppliers, shareholders, vendors and investors. Executive therefore acknowledges and agrees that it is fair and reasonable for the Company to take steps to protect itself from the risk of such misappropriation. In consideration of the Company’s promise to provide Confidential Information to Executive, this Agreement, and the severance payments to be made under the Severance Agreement, and in order to protect the Company’s interests in the Confidential Information and special relationships, Executive agrees to the following noncompetition and nonsolicitation covenants.

            (b)     Scope of Noncompetition Obligation.

                 (i)      Executive acknowledges and agrees that the period of twelve (12) months following the termination or expiration of this Agreement for any reason, will constitute the non-compete, non-solicit and non-divert period (the “Non-Interference Period”). During his employment and during the Non-Interference Period, Executive will not engage in duties or provide services to a Competitor which are substantially similar to those Executive provided to the Company under this Agreement, in any capacity, within the United States. The term “Competitor” means another retail business with a business model similar to the Company’s, engaged in the sale of apparel or other products similar to those sold or marketed by the Company or any product lines or lines of business under development or consideration by the Company during the Term; provided, however, a general department store that includes as less than 10% of its sales revenues merchandise competitive with that offered by the Company will not be deemed a Competitor.

                 (ii)      Executive acknowledges and agrees that he shall not at any time during his employment divert away or attempt to divert away any business from the Company to another company, business, or individual. Additionally, Executive shall not, during the Non-interference Period, contact, solicit, attempt to solicit, divert away, or attempt to divert away business, either directly or indirectly, from any customer, vendor, service provider, or supplier who conducts business with the Company at any time during the Term of this Agreement and who Executive contacted, solicited, serviced, or had access to Confidential Information about.

                 (iii)      During the Term and during the Non-Interference Period, Executive agrees and covenants that, without the prior written approval of the Board, Executive will not, directly or indirectly, either as an individual or as an employee, partner, officer, director, shareholder, advisor, or consultant or in any other capacity whatsoever of any entity (A) recruit, hire, assist others in recruiting or hiring, discuss employment with, or refer to others for employment, any person who is, or within the six month period immediately preceding the date of any such activity was, an employee, representative or agent of Company or its affiliates; or to otherwise entice or induce such person to terminate his or her relationship with the Company, (B) approach any such person for any of the foregoing purposes; (C) authorize, solicit or assist in the taking of such actions by any third party, or (D) hire or retain any such person.

5


 

            (c)      Acknowledgement. Executive acknowledges that the compensation, specialized training, and the Confidential Information provided to Executive pursuant to this Agreement gives rise to the Company’s interest in restraining Executive from competing with the Company, that the noncompetition and nonsolicitation covenants are designed to enforce such consideration and that any limitations as to time, geographic scope and scope of activity to be restrained as defined herein are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the Company.

            (d)      Consent to Disclosure. Executive agrees that if he engages in any employment during the Non-Interference Period, he will notify the Company of the identity and address of each of his employers and of the nature of such employer’s business. Executive consents and agrees that the Company can contact any of Executive’s subsequent employers or prospective employers and inform such entities of Executive’s obligations under Sections 7 and 8 of this Agreement.

            (e)      Survival of Covenants. Sections 7 and 8 shall survive the expiration or termination of this Agreement for any reason. Executive agrees not to challenge the enforceability and/or the scope of Sections 7 and 8. Executive further agrees to notify all future persons or businesses, with which he becomes affiliated with or employed by, of the restrictions set forth in Sections 7 and 8, prior to the commencement of any such affiliation or employment.

     9.      Severability and Reformation. If any one or more of the terms, provisions, covenants or restrictions of this Agreement shall be determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect, and the invalid, void or unenforceable provisions shall be deemed severable. Moreover, if any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be reformed by limiting and reducing it to the minimum extent necessary, so as to be enforceable to the extent compatible with the applicable law as it shall then appear.

     10.      Entire Agreement. This Agreement, the Severance Agreement set forth the entire agreement between the parties hereto and fully supersedes any and all prior agreements or understandings, written or oral, between the parties hereto pertaining to the subject matter hereof, including such terms and conditions set forth in that certain offer letter from the Company to Executive dated as of September 20, 2004.

     11.      Notices. All notices and other communications required or permitted to be given hereunder or in the Severance Agreement shall be in writing and shall be deemed to have been duly given if delivered personally, mailed by certified mail (return receipt requested) or sent by overnight delivery service, or electronic mail, or facsimile transmission (with electronic confirmation of successful transmission) to the parties at the following addresses or at such other addresses as shall be specified by the parties by like notice, in order of preference of the recipient:

     
If to the Company:   Gadzooks, Inc.
  4121 International Parkway
  Carrollton, Texas 75007

6


 

     
  Attention: Chief Executive Officer
  Facsimile: 972-662-4290
 
With a copy to:   Chairman of the Compensation Committee of the Board of Directors
  c/o Gadzooks, Inc.
  4121 International Parkway
  Carrollton, Texas 75007
  Facsimile: 972-662-4290
 
If to Executive:   Monty Standifer
  1829 Kinsale Drive
  Roanoke, Texas 76262
  Facsimile: 817-741-1840

Notice so given shall, in the case of mail, be deemed to be given and received on the fifth calendar day after posting, in the case overnight delivery service, on the date of actual delivery and, in the case of facsimile transmission, telex or personal delivery, on the date of actual transmission or, as the case may be, personal delivery.

     12.      Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Texas, without regard to any conflict of laws rule or principle which might refer the governance or construction of this Agreement to the laws of another jurisdiction.

     13.      Assignment. This Agreement is personal to Executive and may not be assigned in any way by Executive without the prior written consent of the Company. The Company may assign its rights and obligations under this Agreement.

     14.      Counterparts. This Agreement may be executed in counterparts, each of which will take effect as an original, and all of which shall evidence one and the same Agreement.

     15.      Amendment. This Agreement may be amended only in a writing signed by Executive and by a representative of the Company authorized by the Board (other than Executive).

     16.      Construction. The headings and captions of this Agreement are provided for convenience only and are intended to have no effect in construing or interpreting this Agreement. The language in all parts of this Agreement shall be in all cases construed in accordance to its fair meaning and not strictly for or against the Company or Executive.

     17.      Non-Waiver. The failure by either party to insist upon the performance of any one or more terms, covenants or conditions of this Agreement shall not be construed as a waiver or relinquishment of any right granted hereunder or of any future performance of any such term, covenant or condition, and the obligation of either party with respect hereto shall continue in full force and effect, unless such waiver shall be in writing signed by the Company (other than Executive) and the Executive.

7


 

     18.      Announcement. Company shall have the right to make public announcements concerning the execution of this Agreement and the terms contained herein, at the Company’s discretion.

     19.      Use of Name, Likeness and Biography. Company shall have the right (but not the obligation) to use, publish and broadcast, and to authorize others to do so, the name, approved likeness and approved biographical material of Executive to advertise, publicize and promote the business of Company and its affiliates, but not for the purposes of direct endorsement, and for use in any filings with the Securities Exchange Commission as may be required by rules and regulations of the Securities Exchange Commission or any applicable listing standards, without Executive’s consent. This right shall terminate upon the termination or expiration of this Agreement for any reason. An “approved likeness” and “approved biographical material” shall be, respectively, any photograph or other depiction of Executive, or any biographical information or life story concerning the professional career of Executive.

     20.      Right to Insure. Company shall have the right to secure, in its own name or otherwise, and at its own expense, life, health, accident or other insurance covering Executive, and Executive shall have no right, title or interest in and to such insurance. Executive shall assist Company in procuring such insurance by submitting to examinations and by signing such applications and other instruments as may be required by the insurance carriers to which application is made for any such insurance.

     21.      Assistance in Litigation. During his employment and following the termination of his employment for any reason, Executive shall reasonably cooperate with the Company in the defense or prosecution of any claims or actions now in existence or that may be brought in the future against or on behalf of the Company that relate to events or occurrences that transpired while Executive was employed by the Company. Executive’s cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times. Executive also shall cooperate fully with the Company in connection with any investigation or review by any federal, state, or local regulatory authority as any such investigation or review relates, to events or occurrences that transpired while Executive was employed by the Company. During the Non-Interference Period, the Company will pay Executive’s reasonable out-of-pocket expenses incurred in connection with such assistance. Following the Non-Interference Period, the Company will pay Executive an agreed upon hourly rate for Executive’s cooperation pursuant to this Section 21. Executive’s obligations under this Section 21 shall survive the termination or expiration of this Agreement.

8


 

     22.      No Inconsistent Obligations. Executive represents and warrants that to his knowledge he has no obligations, legal, in contract, or otherwise, inconsistent with the terms of this Agreement or with his undertaking employment with the Company to perform the duties described herein. Executive will not disclose to the Company, or use, or induce the Company to use, any confidential, proprietary, or trade secret information of others. Executive represents and warrants that to his knowledge he has returned all property and confidential information belonging to all prior employers, if he is obligated to do so.

     23.      Binding Agreement. This Agreement shall inure to the benefit of and be binding upon Executive, his heirs and personal representatives, and the Company, its successors and assigns.

     24.      Arbitration. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be resolved by arbitration administered by the American Arbitration Association (“AAA”) under its Commercial Arbitration Rules. AAA’s Optional Rules for Emergency Measures of Protection shall also apply to the proceedings. The arbitration will take place in Dallas, Texas. All disputes shall be resolved by one (1) arbitrator. The arbitrator will have the authority to award the same remedies, damages, and costs that a court could award (including, but not limited to, injunctive relief, declaratory relief, specific performance, and damages). The arbitrator shall issue a reasoned award explaining the decision, the reasons for the decision, and any damages awarded. The arbitrator’s decision will be final and binding. The judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitration proceedings, any record of the same, and the award shall be considered Confidential Information under this Agreement. This provision can be enforced under the Federal Arbitration Act.

     25.      Enforcement of Sections 7 and 8. Notwithstanding Section 24, the parties recognize and agree that in the event of an actual or threatened breach of Section 7 or 8 of this Agreement, money damages would be inadequate and the Company would not have an adequate remedy at law. Accordingly, the Company may at its option, in addition and supplementary to other rights and remedies existing in its favor, apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief to enforce or prevent any actual or threatened breach of Section 7 or 8 (without posting a bond or other security). In addition, Executive agrees that in the event a court of competent jurisdiction or an arbitrator finds that Executive violated Sections 7 or 8, the time periods set forth in those Sections shall be tolled until such breach or violation has been cured. Executive further agrees that the Company shall have the right to offset the amount of any damages resulting from a breach by Executive of Sections 7 or 8 against any payments due Executive under this Agreement and/or the Severance Agreement. The parties agree that if Executive is found to have breached Section 7 or 8, he shall be required to pay the Company’s attorney’s fees and costs incurred in prosecuting the violation.

     26.      Voluntary Agreement. Each party to this Agreement has read and fully understands the terms and provisions hereof, has had an opportunity to review this Agreement with legal counsel, has executed this Agreement based upon such party’s own judgment and advice of counsel (if any), and knowingly, voluntarily, and without duress, agrees to all of the terms set forth in this Agreement. The parties have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if

9


 

drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party because of authorship of any provision of this Agreement. Except as expressly set forth in this Agreement, neither the parties nor their affiliates, advisors and/or their attorneys have made any representation or warranty, express or implied, at law or in equity with respect of the subject matter contained herein. Without limiting the generality of the previous sentence, the Company, its affiliates, advisors, and/or attorneys have made no representation or warranty to Executive concerning the state or federal tax consequences to Executive regarding the transactions contemplated by this Agreement.

[Signature Page Follows]

10


 

     IN WITNESS WHEREOF, the Company and Executive have executed this Agreement, effective as of the day and year first above written.

         
    COMPANY:
 
GADZOOKS, INC.
         
Dated: December 20, 2004   By:
  Name: Title:
  /s/ Gerald R. Szczepanski
Gerald R. Szczepanski
Chief Executive Officer and Chairman of the Board
         
     
    EXECUTIVE:
     
Dated: December 20, 2004   /s/ Monty Standifer
Monty Standifer
    ADDRESS:
1829 Kinsale Drive
Roanoke, Texas 76262


 

EXHIBIT A

Release

EX-10.2 3 d21118exv10w2.htm SEVERANCE AGREEMENT exv10w2
 

Exhibit 10.2

SEVERANCE PROTECTION AGREEMENT

     THIS AGREEMENT made as of December 20, 2004, by and between Gadzooks, Inc. (the “Company”) and Monty Standifer (the “Executive”).

     WHEREAS, the Board of Directors of the Company (the “Board”) and the Executive desire to enter into this Agreement as a condition to the Executive’s employment with the Company and to provide certain benefits to the Executive upon the termination of employment of the Executive under certain conditions and upon termination of that certain Executive Employment Agreement by and between the Company and the Executive, dated as of the date hereof (the “Employment Agreement”);

     WHEREAS, in order to induce the Executive to accept a position with the Company, the Company desires to enter into this Agreement and the Employment Agreement with the Executive to provide the Executive with certain benefits in the event the Executive’s employment is terminated under certain conditions, including as a result of, or in connection with, a Change of Control (as defined herein); and

     WHEREAS, by entering into this Agreement and the Employment Agreement, the Executive will agree to certain restrictions on his ability to compete with the Company or solicit employees of the Company following his termination of employment, and the Company will benefit from said restrictions. Defined terms used herein and not otherwise defined herein shall have the meaning set forth in the Employment Agreement.

     NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein, it is agreed as follows:

     1.      Termination.

            (a)      Termination by Either Party. Either Executive or the Company may terminate the Employment Agreement for any reason upon thirty (30) days written notice (the “Notice Period”). If Executive terminates the Employment Agreement pursuant to this Section 1(a), the Company will pay Executive all accrued but unpaid Base Salary and earned bonus amounts through the termination date, if any (“Accrued Compensation”). If the Company terminates the Employment Agreement pursuant to this Section 1(a), the Company shall pay Executive: (1) his Accrued Compensation, and, if the termination is for reasons other than “Cause”, “Death”, or “Disability”, as defined below, (2) an additional severance payment equal to one year of Executive’s Base Salary then in effect, calculated from the date the Company gives written notice of termination to Executive (the “Additional Severance Payment”). If the Company terminates the Employment Agreement pursuant to this Section 1(a), after the effective date of a confirmed plan of reorganization in the Company’s bankruptcy case, then the amount of the Additional Severance Payment will be multiplied by two (2). Any Additional Severance Payment will be paid out in equal monthly installments during the Non-Interference Period. In addition, if the Company terminates the

1


 

Employment Agreement pursuant to this Section 1(a), the stock options, if any, that would otherwise vest at the end of the year in which the Executive is terminated, pursuant to paragraph 3(b) of the Employment Agreement, shall fully vest upon termination pursuant to this paragraph. Any Additional Severance Payment shall be reduced by the amount of compensation that Executive earns from any subsequent employer or through self employment during the Non-Interference Period.

            (b)      Termination by the Company for Cause. The Company may terminate the Employment Agreement at any time for Cause. Upon termination by the Company for Cause, Executive shall only be entitled to his Accrued Compensation. “Cause” means any of the following:

                 (1)      Executive’s commission of theft, embezzlement, any other act of material dishonesty relating to his employment with the Company or any violation of any law, rules or regulation applicable to the Company, including, but not limited to, those established by the Securities and Exchange Commission, or any self-regulatory organization having jurisdiction or authority over Executive or the Company;

                 (2)      The Board’s reasonable determination that the Executive has committed a criminal act involving fraud, dishonesty, misappropriation or moral turpitude or the Board’s reasonable determination that the Executive has committed an act that would harm the reputation of the Company in its business relationships or the financial markets;

                 (3)      Executive’s conviction of, or pleading guilty or nolo contendere to, a felony or to any lesser crime having as its predicate element fraud, dishonesty, misappropriation or moral turpitude;

                 (4)      A reasonable determination by the Company that Executive has materially failed to perform his duties and obligations under the Employment Agreement (other than during any period of disability) which failure to perform is not remedied within thirty (30) days after written notice thereof to the Executive by the Company; or

                 (5)      Executive’s commission of an act or acts in the performance of his duties under the Employment Agreement amounting to gross negligence or willful misconduct, including, but not limited to, any breach of Sections 7 or 8 of the Employment Agreement.

            (c)      Termination by Executive for Good Reason. Executive may terminate the Employment Agreement for Good Reason, and thereby resign his employment, after providing thirty (30) days’ prior written notice to the Company. Upon termination of this Agreement for Good Reason, as defined herein, Executive shall be entitled to receive the Accrued Compensation and Additional Severance Payment due at the date of such termination. “Good Reason” means any of the following reasons:

                 (1)      Following a Change of Control which results in a substantial diminution of Executive’s duties and responsibilities or a any material reduction of Executive’s Base Salary then in effect; or

2


 

                 (2)      Executive’s removal from his position as Executive Vice President and CFO, other than for Cause or by death or disability, as set forth in Sections 1(d) and (e), during the Term; or

                 (3)      The Company failed to make any payment to Executive required to be made under the terms of the Employment Agreement, if the breach is not cured within twenty (20) days after Executive provides written notice to the Company which provides in reasonable detail the nature of the payment; or

                 (4)      Following the adoption or commencement of a plan of complete liquidation or dissolution of the Company.

As used herein, “Change of Control” shall mean any event, including any sale of more than fifty percent (50%) of the capital stock of the Company or more than fifty percent (50%) of the assets of the Company or any merger, conversion or consolidation of the Company, that results in any person or entity (or persons or entities acting in concert) acquiring the ability to elect a majority of the members of the Board, which lacked the ability to elect a majority of the members of the Board prior to the event. Provided however, no Change of Control shall be deemed to have occurred unless and until such person or entity exercises its authority to actually change the membership of the majority of the Board. It is expressly understood that a Change of Control shall not be deemed to occur as a result of the confirmation of a plan of reorganization in the Company’s bankruptcy case or as a result of any actions or transactions undertaken or required in conjunction with the terms of such confirmed plan or as a result of any action in any related transaction. Specifically, and without excluding any other actions excluded by the proceeding sentence, no Change of Control will be deemed to occur at or through the appointment of the Company’s post-confirmation board of directors.

            (d)      Disability. The Company may terminate the Employment Agreement at any time if Executive shall be deemed by the Board to have sustained a “disability.” Executive shall be deemed to have sustained a “disability” if he shall have been unable to perform his duties for a period of more than ninety (90) days in any twelve (12) month period. Upon termination of the Employment Agreement for disability, the Company shall pay Executive his Accrued Compensation.

            (e)      Death. The Employment Agreement will terminate automatically upon Executive’s death. Upon termination of the Employment Agreement because of Executive’s death, the Company shall pay Executive’s estate his Accrued Compensation.

            (f)      Termination COBRA Payment. Upon termination of the Employment Agreement for any reason by the Company pursuant to Section 1(a), the Executive pursuant to Section 1(c), and termination of the Employment Agreement pursuant to Section 1(d), the Company shall pay the cost to Executive as such costs become due for continuation coverage under COBRA (hereinafter referred to as the “Termination COBRA Payments”) during the Continuation Period (as hereafter defined). If and when the COBRA coverage ceases during the Continuation Period, the Company will reimburse Executive for comparable coverage as received under COBRA during the reminder of the Continuation Period. The “Continuation Period” shall be the period commencing on the date of termination of the Employment Agreement and ending on the earlier of the date

3


 

Executive becomes employed by another employer or twelve (12) months after the date of termination or expiration of the Employment Agreement for any reason. Executive acknowledges and agrees to give the Company written notice of receipt of an offer of employment.

            (g)      Employment. Upon termination or expiration of the Employment Agreement for any reason, Executive’s employment shall also terminate and cease.

            (h)      Transition Period. Upon termination or expiration of the Employment Agreement for any reason, and for a period of ninety (90) days thereafter (the “Transition Period”), Executive agrees to make himself available to assist the Company with transition projects assigned to him by the Board. Executive will be paid at an agreed upon hourly rate for any work performed for the Company during the Transition Period.

     2.      Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be provided as set forth in the Employment Agreement.

     3.      Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Texas, without regard to any conflict of laws rule or principle which might refer the governance or construction of this Agreement to the laws of another jurisdiction.

     4.      Assignment. This Agreement is personal to Executive and may not be assigned in any way by Executive without the prior written consent of the Company. The Company may assign its rights and obligations under this Agreement.

     5.      Counterparts. This Agreement may be executed in counterparts, each of which will take effect as an original, and all of which shall evidence one and the same agreement.

     6.      Amendment. This Agreement may be amended only in a writing signed by Executive and by a representative of the Company duly authorized by the Board (other than Executive).

     7.      Construction. The headings and captions of this Agreement are provided for convenience only and are intended to have no effect in construing or interpreting this Agreement. The language in all parts of this Agreement shall be in all cases construed in accordance to its fair meaning and not strictly for or against the Company or Executive.

     8.      Non-Waiver. The failure by either party to insist upon the performance of any one or more terms, covenants or conditions of this Agreement or the Employment Agreement shall not be construed as a waiver or relinquishment of any right granted hereunder or of any future performance of any such term, covenant or condition, and the obligation of either party with respect hereto shall continue in full force and effect, unless such waiver shall be in writing signed by the Company (other than Executive) and the Executive.

4


 

     9.      Binding Agreement. This Agreement shall inure to the benefit of and be binding upon Executive, his heirs and personal representatives, and the Company, its successors and assigns.

     10.      Entire Agreement. This Agreement and the Employment Agreement set forth the entire agreement between the parties hereto and fully supersedes any and all prior agreements or understandings, written or oral, between the parties hereto pertaining to the subject matter hereof, including such terms and conditions set forth in that certain offer letter from the Company to Executive dated as of September 20, 2004.

     11.      Arbitration. The parties agree that any controversy or claim arising out of or relating to this Agreement or the Employment Agreement, or the breach thereof, shall be resolved by arbitration administered by the American Arbitration Association (“AAA”) under its Commercial Arbitration Rules. AAA’s Optional Rules for Emergency Measures of Protection shall also apply to the proceedings. The arbitration will take place in Dallas, Texas. All disputes shall be resolved by one (1) arbitrator. The arbitrator will have the authority to award the same remedies, damages, and costs that a court could award, and will have the additional authority to award those remedies set forth in Section 24 of the Employment Agreement. The arbitrator shall issue a reasoned award explaining the decision, the reasons for the decision, and any damages awarded, including those set forth in Section 24 of the Employment Agreement, where the arbitrator finds Executive violated Sections 7 or 8 of the Employment Agreement. The arbitrator’s decision will be final and binding. The judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitration proceedings, any record of the same, and the award shall be considered Confidential Information under this Agreement and the Employment Agreement. This provision can be enforced under the Federal Arbitration Act.

     12.      Severability and Reformation. If any one or more of the terms, provisions, covenants or restrictions of this Agreement shall be determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect, and the invalid, void or unenforceable provisions shall be deemed severable. Moreover, if any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be reformed by limiting and reducing it to the minimum extent necessary, so as to be enforceable to the extent compatible with the applicable law as it shall then appear.

     13.      Release. The Executive agrees that payment hereunder is conditioned upon the execution of a release (“Release”) in the form attached hereto.

5


 

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and Executive has executed this Agreement as of the day and year first above written.

         
    Gadzooks, Inc., a Texas corporation
         
    By:
  Name: Title:
  /s/ Gerald R. Szczepanski
Gerald R. Szczepanski
Chief Executive Officer and Chairman of the Board
         
    By:
  Name:
  /s/ Monty Standifer
Monty Standifer

6


 

Exhibit A

Release

7

EX-99.1 4 d21118exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1

 

News Release

         
FOR IMMEDIATE RELEASE
  CONTACT:   Jerry Szczepanski
CEO
972-307-5555

Gadzooks Announces Appointment of Monty Standifer as
Executive Vice President and Chief Financial Officer

Dallas, Texas, December 21, 2004 – Gadzooks, Inc. (OTC Pink Sheets: GADZQ) today announced that Monty Standifer has joined the Company as Executive Vice President and Chief Financial Officer. Mr. Standifer has an extensive retail background as a CFO for several national retailers. Previous financial management includes RadioShack (formerly Tandy Corporation) and BizMart Office Products. He also served as Gadzooks’ CFO from 1992 until 1999. He was most recently Executive Vice President and CFO of Buffet Partners, operators of the Furr’s Restaurants chain throughout the Southwest.

Dallas-based Gadzooks is a specialty retailer of casual clothing, accessories and shoes for 16-22 year-old females. Gadzooks now operates 243 stores in 40 states.

-----END PRIVACY-ENHANCED MESSAGE-----