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EXHIBIT 10.15
FLORSHEIM GROUP INC.
EMPLOYMENT SECURITY AGREEMENT
This Employment Security Agreement (the "Agreement") is entered into as of
this twenty-fifth (25th) day of October, 2000, by and between Florsheim Group
Inc., a Delaware corporation (the "Employer"), and Xxxxxx X. Xxxxxx (the
"Executive").
WITNESSETH
WHEREAS, the Executive is currently employed by the Employer as its
Executive Vice President, President International Division, President Retail
Division;
WHEREAS, the Employer desires to attract and retain well-qualified
executives and key personnel and to provide the security of continuity of
management to both itself and the Executive; and
WHEREAS, the Executive and the Employer desire to enter into this
Agreement, which sets forth the terms of the security the Employer is providing
the Executive with respect to his employment;
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NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:
1. DEFINITIONS. For purposes of this Agreement the following definitions
shall apply:
(a) "Aggregate Compensation" means the sum of the
Executive's (i) Base Pay, (ii) Bonus, and (iii)
economic value of the Medical Plans, Retirement Plans
and Welfare Plans.
(b) "Base Pay" means the Executive's annual base salary
rate.
(c) "Bonus" means you shall receive an annual bonus in
accordance with the Employer's bonus plan. The plan is
based upon the Executive's achievement of budget, such
budget objectives to be determined by the Employer's
compensation committee in its sole discretion exercised
in good faith, after consultation with management. If
the Executive is terminated for any reason other than
Cause or the Executive terminates his employment with
the Employer for Good Reason, his bonus will be
pro-rated for the fiscal year in which his employment
terminates to the extent the Executive achieves budget
for such year. Notwithstanding the foregoing, in the
event the Executive's employment is terminated for Good
Reason pursuant to Section 1(f)(3), he shall receive
(i) his bonus for
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the year 2000 to the extent the Executive achieves
budget for such year and (ii) an amount equal to the
aggregate bonus paid to the Executive for the years
1999 and 2000 divided by 2.
(d) "Effective Date" means the date of this Agreement as
set forth above.
(e) "Cause" means:
(1) The Board of Directors, in its reasonable
discretion, concludes that the Executive has
willfully failed to follow directions communicated
to him by either an officer of the Employer to
whom the Executive directly or indirectly reports
or the Board of Directors;
(2) The Executive willfully engages in conduct that is
materially injurious to the Employer, monetarily
or otherwise;
(3) The Executive is convicted of, pleads nolo
contendere to, pleads guilty to or confesses to an
act of fraud, misappropriation or embezzlement or
any felony;
(4) The Board of Directors, in its reasonable
discretion, determinates that the Executive is
either habitually drunk or using illegal
substances;
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(5) The Executive violates the Employer's sexual
harassment policy; or
(6) The Executive commits an act of gross neglect or
gross misconduct which the Board of Directors, in
its reasonable discretion, determines is deemed
to be good and sufficient Cause.
(f) "Good Reason" means:
(1) There is a material reduction in the Executive's
Aggregate Compensation from one fiscal year to the
next; or
(2) There is a material reduction in the Executive's
responsibilities; or
(3) There is a material reduction in the Executive's
retirement benefits as a result of the
implementation of a new Retirement Plan established
by the Employer on or prior to December 31, 2001,
and, within thirty (30) days of notification,
the Executive informs the Employer in writing
that he chooses not to participate in such plan.
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(g) "Medical Plan" means any health and major medical plan
currently or hereafter made available by the Employer
in which the Executive is eligible to participate.
(h) "Retirement Plans" means any qualified or supplemental
defined benefit retirement plan or defined contribution
retirement plan currently or hereinafter made available
by the Employer in which the Executive is eligible to
participate, or any private retirement arrangement
maintained by the Employer solely for the Executive.
(i) "Severance Period" means the period beginning on the
date the Executive's employment with the Employer
terminates under circumstances described in Section 3
and ending on the date that is either eighteen (18) or
twelve (12) months thereafter as specified in Section
6.
(j) "Welfare Plan" means any vision or dental plan,
disability plan, survivor income plan or life insurance
plan or other arrangement currently or hereafter made
available by the Employer in which the Executive is
eligible to participate.
(k) "Equity Interest" means prior to March 31, 2001, the
Executive shall purchase in the open market the lesser
of 37,500 shares of Common Stock of the Employer or
shares of Common Stock of the Employer having an
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aggregate purchase price (including commissions) of
$75,000. In addition, upon the execution of this
Agreement, the Executive shall receive options pursuant
to the Employer's 1994 Stock Option Plan to purchase an
additional 155,000 shares of the Employer's Common
Stock as follows:
(1) 78,000 shares at Market,
(2) 38,000 shares at an exercise price of
$5.00 per share, and
(3) 39,000 shares at an exercise price of
$7.50 per share.
For purposes hereof, "Market" shall mean the average
closing price of the Employer's Common Stock on the
five (5) trading days immediately prior to the
Effective Date. Each tranche of options set forth
above shall vest and become exercisable in accordance
with the Employer's Stock Option Plan as detailed
below:
Anniversary Date % of Each Tranche to Vest
---------------- -------------------------
First 25%
Second 25%
Third 50%
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All of the Executive's options shall expire on the
tenth (10th) anniversary of the Effective Date and
when vested, shall remain exercisable until the
earlier to occur of (i) thirty (30) days after the
Executive's employment terminates for any reason,
including, but not limited to, the expiration of the
Term of Employment or (ii) the tenth (10th)
anniversary of the Effective Date or until such later
exercise date as is permitted under the provisions of
the Employer's 1994 Stock Option Plan.
In the event of a Change in Control, all of the
Executive's outstanding but unvested options will
become immediately vested and exercisable.
2. TERM OF EMPLOYMENT. The employment hereunder shall be for a term of
eighteen (18) months commencing on the date hereof (the "Effective Date")
and ending on the day immediately preceding the eighteen (18) month
anniversary of the Effective Date (the "Expiration Date"), unless
terminated earlier pursuant to Section 3 of this Agreement (the "Term of
Employment"). Beginning on the first anniversary of the Effective Date and
on each anniversary date thereafter (each, an "Anniversary Date"), the Term
of Employment shall automatically be extended for twelve (12) additional
months unless such extension is objected to by either the Employer or the
Executive in writing to the other party not less than ninety (90) days
prior to an Anniversary Date.
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3. BENEFITS UPON TERMINATION OF EMPLOYMENT. If, at any time on or after the
Effective Date and during the Term of this Agreement, (i) the employment of
the Executive with the Employer is terminated by the Employer (or any
successor to the Employer) for any reason other than Cause, or (ii) the
Executive terminates his employment with the Employer for Good Reason, the
following provisions will apply:
(a) The Employer shall pay the Executive, during the Severance Period, an
aggregate amount equal to one times the sum of the Executive's Base
Pay at the highest rate in effect during the Term of Employment. Such
amount shall be paid in substantially equal monthly installments over
the Severance Period. The first of such payments will commence as soon
as practicable following the date of the Executive's termination of
employment. Notwithstanding the foregoing, in the event the
Executive's employment is terminated for Good Reason pursuant to
Section 1(f)(3), the rate of pay used for purposes of this Section
3(a) shall be equal to $197,000.00, less all applicable withholdings,
and such amount shall be paid in substantially equal monthly
installments over a twelve (12) month Severance Period.
(b) For purposes of all Retirement Plans (to the extent permissible
thereunder), the Executive shall be given compensation credit and
service credit for all purposes for, and shall be deemed to be an
employee of the
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Employer during, the Severance Period, notwithstanding that he is
not an employee of the Employer during the Severance Period.
(c) During the Severance Period, the Executive and his spouse and other
dependents will continue to be covered by the Medical Plan and all
Welfare Plans maintained by the Employer in which the Executive or
spouse or dependents were participating immediately before the date of
the Executive's termination as if the Executive continued to be an
employee of the Employer. If, however, the Executive obtains
employment with another employer during the Severance Period, such
Medical Plan coverage shall cease for the Executive and his spouse and
other dependents. This Section 3(c) is not intended to impair the
Executive's rights as otherwise provided by law (e.g., rights under
Section 4980B of the Internal Revenue Code). Notwithstanding the
foregoing, in the event the Executive's employment is terminated for
Good Reason pursuant to Section 1(f)(3), the medical and welfare plans
referenced in this Section 3(c) shall be those plans maintained by the
Employer in which the Executive participated as of October 23, 2000
and such coverage shall continue for a twelve (12) month Severance
Period unless the Executive obtains employment with another employer
during such Severance Period.
(d) The Executive shall be entitled to a payment attributable to
compensation for unused vacation periods accrued as of the date of his
termination of
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employment. The Executive shall not be entitled to payment for
vacation periods that would have accrued had his employment continued
during the Severance Period. Payment for accrued vacation shall be
made to the Executive in a lump sum within ten (10) days following the
date of the Executive's termination of employment. This Section 3(d)
is not intended to impair the Executive's right to receive payment for
accrued vacation as otherwise provided by law. Notwithstanding the
foregoing, in the event the Executive's employment is terminated for
Good Reason pursuant to Section 1(f)(3), the rate of pay used to
calculate compensation for accrued vacation for purposes of this
Section 3(d) shall be equal to $197,000.00, less all applicable
withholdings.
4. DEATH. If the Executive dies during the Severance Period, the following
rules shall apply:
(a) All amounts payable hereunder to the Executive shall, during the
remainder of the Severance Period, be paid to his surviving spouse or
other beneficiary designated in writing by the Executive. On the death
of the survivor of the Executive and his spouse or other beneficiary,
payments shall be made to the Executive's estate.
(b) During the remainder of the Severance Period, the Executive's spouse
and dependents, if any, shall be covered under the Medical Plan and
Welfare Plans made available by the Employer to the Executive or his
spouse or dependents immediately before the date of the Executive's
death.
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Any benefits payable under this Section 4 are in addition to any other
death benefits due to the Executive or his spouse or other
beneficiaries or dependents from the Employer, including, but not
limited to, payments under any of the Retirement Plans.
5. TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If the Executive's employment
with the Employer is terminated by the Employer for Cause or by the
voluntary action of the Executive without Good Reason, the Executive's Base
Pay in effect on the date of termination shall be paid through the date of
termination, and the Employer shall have no further obligation to the
Executive or his spouse or other beneficiary under this Agreement, except
for payments or benefits under the terms of any compensation or benefits
plans or arrangements, including any Retirement Plans, Medical Plan and
Welfare Plans.
6. EXPIRATION OF THIS AGREEMENT. In the event that the Employer objects to an
extension of the Term of Employment, and the Executive continues to work
until the Term of Employment expires, the Employer shall pay the Executive
his then current Annual Base Salary for a period of twelve (12) months from
the date of termination of the Executive's employment. Such amount shall be
paid in substantially equal monthly installments over a twelve (12) month
Severance Period and during such period, the Employer shall continue to
provide the
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Executive with fringe benefits, perquisites and other benefits as set forth
in this Agreement. In addition, in the event that this Agreement expires
during any portion of a fiscal year, the Executive shall be entitled to
receive a pro-rated Bonus for such fiscal year, provided that the Executive
achieves budget for such fiscal year. Notwithstanding the foregoing, if the
Employer objects to an extension of the Term of Employment in conjunction
with or following a Change of Control and the Executive continues to work
until the Term of Employment expires, the Employer shall pay the Executive
(i) his then current Annual Base Salary during the eighteen (18) month
Severance Period, (ii) his pro-rated Bonus for the fiscal year in which his
employment terminates to the extent the Executive achieves budget for such
year, and (iii) during the eighteen (18) month Severance Period, the
Employer shall continue to provide the Executive with fringe benefits,
perquisites and other benefits as set forth in this Agreement. Thereafter,
the Employer shall have no further obligation to the Executive under this
Agreement.
7. MITIGATION. The Executive shall not have a duty to mitigate damages.
8. CONFIDENTIALITY AND RESTRICTIVE COVENANTS.
(a) The Executive acknowledges that:
(1) The business in which the Employer is engaged is intensely
competitive and that his employment by the Employer will require
that he have access to and knowledge of confidential information
of the Employer, including, but not limited to, certain/all of
the Employer's plans for creation, acquisition or disposition of
products, expansion plans,
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financial status and plans, products, improvements, formulas,
designs or styles, method of distribution, customer lists,
product development plans, rules and regulations, personnel
information and trade secrets of the Employer, all of which are
of vital importance to the success of the Employer's business
(collectively, "Confidential Information");
(2) The direct or indirect disclosure of any Confidential Information
would place the Employer at a serious competitive disadvantage
and would do serious damage, financial and otherwise, to the
Employer's business;
(3) By his training, experience and expertise, the Executive's
services to the Employer will be special and unique; and
(4) If the Executive leaves the Employer's employ to work for a
competitive business, in any capacity, it would cause the
Employer irreparable harm.
(b) Covenant Against Disclosure. The Executive therefore covenants and
agrees that all Confidential Information relating to the business
products and services of the Employer, any subsidiary, affiliate or
customer shall be and remain the sole property and confidential
business information of the Employer, free of any rights of the
Executive. The Executive further agrees not to make any use of the
Confidential Information or disclose Confidential Information to third
parties except in the performance of his duties hereunder or with the
prior written consent of the Employer. The
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obligations of the Executive under this Section 8 shall survive any
termination of this Agreement. The Executive agrees that, upon any
termination of his employment with the Employer, all Confidential
Information in his possession, directly or indirectly, that is in
written or other tangible form (together with all duplicates thereof)
will forthwith be returned to the Employer and will not be retained by
the Executive or furnished to any third party, either by sample,
facsimile, film, audio or video cassette, electronic data, verbal
communication or any other means of communication.
The Executive shall preserve the confidentiality of this Agreement and
its terms and conditions during the Term of Employment and thereafter.
If the Executive breaches the confidentiality of this Agreement and
its terms and conditions, the Executive will be liable to the Employer
for its actual damages and may be subject to injunctive relief. In
case of any such breach, the Employer may seek injunctive relief.
(c) Non-competition. The Executive agrees that, during the Term of
Employment and for the Severance Period following the termination of
employment for any reason (including, without limitation, the
expiration of this Agreement), the Executive will not, directly or
indirectly, own, manage, operate, control or participate in the
ownership, management or control of, or be connected as an officer,
employee, partner, director,
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consultant, or otherwise with, or have any financial interest in, or
aid or assist anyone else in the conduct of, any entity or business
which competes with any business conducted by the Employer or any of
its subsidiaries or affiliates either by (i) selling products to
customers of the Employer that are similar to the products sold by the
Employer; (ii) selling casual or dress footwear or apparel generally;
(iii) operating similar retail operations engaged in the sale of
footwear or apparel; or (iv) otherwise competing in a competitive
business. The Executive's ownership of securities of a public company
engaged in competition with the Employer not in excess of five (5)
percent of any class of such securities shall not be considered a
breach of the covenants set forth in this Section 8.
(d) Further Covenant. For the Severance Period following the date of the
termination of the Executive's employment hereunder for any reason,
the Executive will not, directly or indirectly, take any of the
following actions, and, to the extent the Executive owns, manages,
operates, controls, is employed by or participates in the ownership,
management, operation or control of, or is connected in any manner
with, any business, the Executive will use his best efforts to ensure
that such business does not take any of the following actions:
(1) Persuade or attempt to persuade any customer of the Employer to
cease doing business with the Employer or any of its subsidiaries
or affiliates,
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or to reduce the amount of business it does with the Employer or
any of its subsidiaries or affiliates;
(2) Solicit for himself or any entity the business of a customer of
the Employer or any of its subsidiaries or affiliates, or solicit
any business which was a customer of the Employer or any of its
subsidiaries or affiliates within six (6) months prior to the
termination of the Executive's employment; and
(3) Persuade, attempt to persuade or hire any employee of the
Employer or any of its subsidiaries or affiliates or any
individual who was an employee of the Employer or any of its
subsidiaries or affiliates during the two (2) years prior to the
Executive's termination of employment, to leave the employ of the
Employer or any of its subsidiaries or affiliates.
9. APPLICABLE LAW. This Agreement shall be subject to, construed and
interpreted pursuant to the laws of the State of Illinois without giving
effect to the choice of law provisions thereof.
10. ENTIRE AGREEMENT. This Agreement contains the entire Agreement between the
Employer and the Executive and supersedes any and all previous agreements,
written or oral, among the parties relating to the subject matter hereof.
No amendment or modification of the terms of this Agreement shall be
binding upon the parties hereto unless reduced to writing and signed by the
Employer and the Executive.
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11. NO EMPLOYMENT CONTRACT. Nothing contained in this Agreement shall be
construed to be an employment contract between the Executive and the
Employer. The Executive is employed at will, and (subject to the payments
to be made and the benefits to be provided by the Employer to the Executive
hereunder) the Employer may terminate the Executive's employment at any
time, with or without Cause.
12. SUCCESSORS. This Agreement shall be binding upon an inure to the benefit of
the parties hereto and their respective heirs, representatives and
successors.
XXXXXX X. XXXXXX XXXXXXXXX GROUP INC.
/s/ X. X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxxx, Xx.
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Executive Vice President,
President International Division, Name: Xxxxx X. Xxxxxxxxx, Xx.
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President Retail Division
Its: Chairman & CEO
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