EXHIBIT 10.1
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Agreement"), dated October 20, 2005, is between
and among Xxxxx Xxxxxxxx ("Xxxxxxxx"), Xxxx Xxxxxxxxxx ("Xxxxxxxxxx") (sometimes
referred to collectively herein as "DC/MW"), on the one hand, and Payless
ShoeSource, Inc., a Delaware corporation ("Payless"), and its subsidiaries,
affiliates, successors, and assigns, and its agents and representatives
(collectively, with Payless, "PSS"), on the other hand (collectively, with
DC/MW, the "Parties").
WHEREAS, Xxxxxxxx and Xxxxxxxxxx are former executives with Payless who were
terminated on or about October 2004;
WHEREAS, both Xxxxxxxx and Xxxxxxxxxx had employment agreements with Payless,
the most recent of which for Xxxxxxxx was made and entered into as of July 1,
2004 (the "Xxxxxxxx Agreement") and for Xxxxxxxxxx as of July 1, 2004 (the
"Xxxxxxxxxx Agreement") (collectively, the "Employment Agreements");
WHEREAS, Xxxxxxxx and Xxxxxxxxxx have asserted various claims and/or potential
claims relating to their employment with and/or termination of employment by
Payless, including claims of age discrimination and claims that they were
entitled to Supplementary Retirement Plan ("SERP"), severance and other
benefits;
WHEREAS, Payless vigorously disputes and denies Xxxxxxxx and Xxxxxxxxxx'x
claims, and firmly believes that its terminations and treatment of Xxxxxxxx and
Xxxxxxxxxx were proper and that Xxxxxxxx and Xxxxxxxxxx'x claims are without
merit;
WHEREAS, both DC/MW and Payless recognize (among other things) that litigation
would be very expensive and time-consuming for the Parties, and would involve
the commitment of time and resources that could be used more productively
elsewhere;
WHEREAS, in an attempt to resolve their disputes, the Parties have engaged in a
mediation (the "Mediation"); and
WHEREAS, the Parties have resolved their differences, in accordance with the
terms set forth below;
NOW, THEREFORE, in consideration of the payments and mutual promises contained
in this Agreement, the Parties hereto agree as follows:
1.(a) Payless agrees to pay DC/MW a total of Nine Hundred Fifty Thousand
and 00/100 dollars ($950,000.00). Of the $950,000 total, (i)
$290,000.00 will be allocated to attorneys' fees, and Xxxxxxxx and
Xxxxxxxxxx will each receive 1099's for their 1/2 share of the
attorneys fees, i.e., for $145,000.00 each; and (ii) the $660,000.00
balance will be divided equally between Xxxxxxxx and Xxxxxxxxxx, with
each to receive $330,000.00, less all applicable withholdings, and
Payless will provide W-2's to Xxxxxxxx and Xxxxxxxxxx with respect to
these payments. The payments will be
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made within twenty-one (21) days after this Agreement is fully
executed, unless Xxxxxxxx or Xxxxxxxxxx revoke the Agreement in
accordance with section 10 of this Agreement. The settlement amount
is being paid in connection with alleged claims of unlawful
discrimination as defined in 26 U.S.C. Section 62(e).
(b) Except as and only to the extent specifically listed in this
Agreement, the payment set forth in Paragraph 1(a) above is in full
consideration and in full and complete satisfaction and settlement of
all claims that Xxxxxxxx and/or Xxxxxxxxxx, individually,
collectively, and/or with others, have and/or may have relating to,
arising out of or resulting from the Employment Agreements, Xxxxxxxx
and/or Xxxxxxxxxx'x employment thereunder, Xxxxxxxx and/or
Xxxxxxxxxx'x terminations, and all claims and potential claims of
Xxxxxxxx and/or Xxxxxxxxxx whether or not listed in Paragraph 3
below, and including all claims asserted and/or which could have been
asserted in connection with the Mediation and all claims for
attorneys fees leading up to this Agreement and/or in connection with
the Mediation.
(c) Payless shall continue to pay Xxxxxxxx and Xxxxxxxxxx their basic
compensation, through the balance of their respective Contract Terms,
in accordance with the terms of their respective Employment
Agreements, i.e., through May 31, 2007 for Xxxxxxxx and May 31, 2006
for Xxxxxxxxxx. Payless shall also pay Xxxxxxxx and Xxxxxxxxxx any
long-term award(s) to which they are entitled, if any, under the
Payless Incentive Compensation Plan (the "ICP"), subject to and in
accordance with the terms and conditions of such ICP and Paragraphs
1(c) and 5(d) of their respective Employment Agreements. Other than
these obligations and that set forth in Paragraph 1(a) above, Payless
has no other compensation obligations to Xxxxxxxx or Xxxxxxxxxx,
under the Employment Agreements, this Agreement, or otherwise.
Xxxxxxxx and Xxxxxxxxxx'x obligations under Paragraph 5(d)(v) of
their respective Employment Agreements to use their best efforts to
find other employment and the provision that all basic compensation
otherwise payable under Paragraph 5(d) for the remainder of the
Contract Term shall be reduced to the extent of the compensation
received by Xxxxxxxx or Xxxxxxxxxx, respectively, from their other
employment is hereby waived. Nothing herein, however, shall waive
Xxxxxxxx and Xxxxxxxxxx'x obligations (including their noncompetition
obligations) under Paragraphs 3 and 6 through 12 of their respective
Employment Agreements, and those obligations remain in full force and
effect. To make sure there is no misunderstanding, although Xxxxxxxx
and Xxxxxxxxxx need not use their best efforts to find other
employment, any such employment found must not violate the
noncompetition provisions in Section 3 of their respective Employment
Agreements. Provided, however, that Xxxxxxxx and Xxxxxxxxxx will not
be precluded from approaching Payless on a case by case basis to
request that the noncompetition provisions be modified.
2. Xxxxxxxx and Xxxxxxxxxx hereby expressly acknowledge having been advised
to and given an opportunity to discuss all aspects of this Agreement with
an attorney before signing it, and Xxxxxxxx and Xxxxxxxxxx further
acknowledge that they have consulted with an attorney prior to signing
this Agreement.
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3. Xxxxxxxx and Xxxxxxxxxx, and each of them, hereby fully release and
forever discharge PSS and all of PSS' past parents, or present parent,
subsidiaries, affiliates, successors and assigns, and all of their
respective officers, directors, shareholders, employees, agents,
insurers, benefit plans, representatives, and otherwise related parties
(collectively the "Released Parties"), from any and all claims, actions,
causes of action, demands, liabilities or obligations (including
attorney's fees), whether known or unknown, discovered or undiscovered,
matured or unmatured, which relate to, have arisen or may arise out of,
or are in any way connected with Xxxxxxxx and/or Xxxxxxxxxx'x employment
with or termination from PSS. This total and unlimited release includes,
but is not limited to, any claims based on any local, state or federal
statute, or other regulations or laws (including common law), including
any such claims or potential claims: (a) relating to bias, age, sex,
religion, religious creed, citizenship, color, race, ancestry, national
origin, veteran, familial or marital status, sexual orientation or
preference, genetic predisposition or carrier status, physical or mental
disability or past or present history of the same or any other form of
discrimination (including, without limitation, the Age Discrimination in
Employment Act of 1967, as amended (the "ADEA")), except that Xxxxxxxx
and Xxxxxxxxxx do not waive ADEA rights or claims that may arise after
the date of this Agreement, (b) relating to the Worker Adjustment and
Retraining Notification Act, (c) for wrongful discharge, harassment or
retaliation, (d) relating to any implied or express contract (whether
oral or written), (e) for intentional or negligent infliction of
emotional harm, defamation or any other tort, (f) for fraud or
conversion, (g) for or based upon any invasion of privacy, estoppel, or
breach of duty claim, (h) that were asserted, or could have asserted, in
connection with the Mediation, including all claims that were asserted or
could have been asserted under the ADEA, the Kansas Age Discrimination in
Employment Act, as amended ("KADEA"), the Kansas Wage Payment Act, as
amended ("KWPA"), the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the Payless SERP and/or any other benefit plans,
federal common law and/or Kansas common law, and (i) for costs, fees, or
other expenses, including attorneys' fees and disbursements. Xxxxxxxx and
Xxxxxxxxxx each agree not to xxx or bring any action before any
regulatory body or agency against any of the Released Parties with
respect to any such claims, demands, liabilities or obligations. Xxxxxxxx
and Xxxxxxxxxx each waive any right to file any charge, complaint or
other action, and Xxxxxxxx or Xxxxxxxxxx will not seek, claim entitlement
to, or accept any relief or recovery from any charge, complaint or other
action before any federal, state or local administrative agency or court
against the Released Parties. As part of this general release, Xxxxxxxx
and Xxxxxxxxxx each specifically waive any and all rights or claims which
either of them might have under Title VII of the Civil Rights Act of
1964, as amended, the Civil Rights Act of 1991, the ADEA, the KADEA, the
KWPA, the Americans with Disabilities Act of 1990, the Family and Medical
Leave Act of 1993, any and all state or local civil/human rights laws and
any other similar laws, and any similar state, local or municipal
statutes. Nothing herein, however, shall relieve Payless of its
obligations under this Agreement.
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4. Xxxxxxxx and Xxxxxxxxxx shall treat the discussions and negotiations
relating to, and the terms of, this Agreement in a confidential manner
and will not disclose the same to any person (including any friend,
acquaintance or current or potential business associate) other than a
member of his immediate family (who must also agree to keep such
information confidential), except (i) as required by law, (ii) to the
limited extent necessary in DC/MW's income tax returns, (iii) to any
financial planner, accountant or other agent whose knowledge thereof is
necessary, and then only to the extent necessary, in order to prepare
such income tax returns (and then only upon such financial planner's,
accountant's or other agent's agreement to be bound by the terms of this
Paragraph), (iv) to any attorney representing DC/MW concerning this
Agreement, and (v) to the limited extent necessary to inform prospective
employers of DC/MW's obligations under Paragraphs 3 and 6 through 12 of
their respective Employment Agreements. DC/MW agree to respond to any
inquiry concerning their employment termination by utilizing a statement
such as: "All issues have been resolved to the mutual satisfaction of
both parties."
5. This Agreement may not be amended by the parties hereto, except in a
writing signed by all of the parties hereto.
6. This Agreement shall be interpreted in accordance with the plain
meaning of its terms and not strictly for or against any of the parties
hereto. Kansas law shall govern the validity, effect, and interpretation
of this Agreement. Any litigation arising out of or relating directly or
indirectly to this Agreement, Xxxxxxxx or Xxxxxxxxxx'x employment with
PSS and/or their employment termination shall be brought and pursued
exclusively in the Kansas District Court for Shawnee County, Kansas.
7. This Agreement shall be binding upon Xxxxxxxx and Xxxxxxxxxx and upon
PSS and its successors and assigns. Xxxxxxxx and Xxxxxxxxxx cannot assign
any of their obligations under this Agreement to anyone else.
8. The Parties further hereby agree that this Agreement shall not be
construed as an admission by any party hereto of any liability
whatsoever, or as an admission of any violation of the rights of any
party, violation of any order, law statute, duty, or contract on the part
of PSS, its employees, or agents, or related companies or their employees
or agents.
9. Xxxxxxxx and Xxxxxxxxxx understand that each has been given more than
twenty-one (21) days from October 20, 2005, to consider the meaning and
effect of this Agreement, and each has elected to execute this Agreement
on the date indicated below. Xxxxxxxx and Xxxxxxxxxx each agree that any
changes, whether material or not, to this Agreement did not and do not
restart the running of the twenty-one (21) day period.
10. Xxxxxxxx and Xxxxxxxxxx each understand that they may revoke this
Agreement at any time during a period of seven (7) days following the day
they execute this Agreement and said Agreement shall not become effective
or enforceable until the revocation period has expired. Any revocation
within this period must be submitted in writing to PSS and state: "I
hereby revoke my acceptance of our Agreement." Said revocation must be
personally delivered to Xxx Xxxxx, Senior Vice President, Human
Resources, or Employer's designee, or by certified mail to Payless
ShoeSource, Inc., X.X. Xxx 0000, Xxxxxx, Xxxxxx 00000, and postmarked
within seven (7) days of the execution of this Agreement. Any revocation
by either Xxxxxxxx or Xxxxxxxxxx will revoke this entire Agreement.
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/s/ Xxxx Xxxxxxxxxx Date: November 3, 2005
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/s/ Xxxxx Xxxxxxxx Date: November 3, 2005
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Payless ShoeSource, Inc.
By: /s/ Xxxxxxx X. Xxxxxx Date: November 7, 2005
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