1
Exhibit 10.3
SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is entered into between NS Group, Inc., a
corporation having its corporate office in Newport, Kentucky
("Company"), and Xxxxxxx X. Xxxxxx, Xx. ("Participant")
effective May 8, 2000.
WITNESSETH:
WHEREAS, Participant is employed by the Company, and by
reason thereof, has acquired experience and knowledge of
considerable value to the Company; and
WHEREAS, the Company wishes to offer an inducement to
Participant to remain in its employ by compensating him beyond
his regular salary for services which he had rendered or will
hereafter render; and
WHEREAS, Participant is willing to continue in the employ
of the Company until his retirement, or until it is mutually
agreed by both the Company and Participant that his services
are no longer necessary.
NOW, THEREFORE, it is mutually agreed as follows:
1. As of the date of this Agreement, and subject to the
terms of the employment agreement, dated May 8, 2000, and any
subsequent or successor agreement between Participant and the
Company ("Employment Agreement"), Participant is employed by
the Company, and Participant hereby agrees to continue such
employment upon the terms and conditions set forth in this
Agreement. Except as provided for in the Employment Agreement
between the Participant and the Company, Participant is an "at
will" employee of the Company and this Agreement does not
impose any obligation for the employment relationship to
continue for a specified period of time.
2. As compensation for his services, the Company hereby
agrees to pay Participant and Participant hereby agrees to
accept from the Company, a yearly salary to be determined by
the Board of Directors of the Company.
3. Subject to the limitations set forth in Sections 9 and 11
below, in the event that Participant retires from active
employment with the Company after attaining age 62, the
Company shall pay Participant $10,416.67 per month (the
"Monthly Payment") for life commencing on the first day of the
month following the date of such retirement. The Company may,
in its sole discretion, provide that Participant may begin
receiving the benefits provided for in this Agreement before
attaining age 62, subject to such actuarial reductions as the
Company may deem appropriate to reflect the early commencement
of benefits.
4. In the event that Participant dies (a) while in the
active employ of the Company, or (b) after becoming fully
vested in the benefits provided pursuant to this Agreement
because of either a permanent disability or a Change of
Control (as provided for in Sections 6 and 7) but prior to the
commencement of payments hereunder, Participant's spouse at
the time of death shall be entitled to receive Monthly
Payments commencing on the first day of the month following
Participant's death and ending on the earlier of (i) the first
day of the month during which the spouse dies and (ii) the
date on which the 120th Monthly Payment is made. In the event
that Participant dies (and is survived by a spouse) while
receiving Monthly Payments hereunder but prior to receipt of
at least 120 such payments, the spouse shall be entitled to
continue receiving such payments until the earlier of (i) the
first day of the month during which the spouse dies and (ii)
the date on which the 120th Monthly Payment is made.
5. Upon retirement from the Company at or following
attainment of age 62, continued health insurance coverage
shall be provided for Participant and the person (if any) who
is his spouse at the time of retirement. The coverage will be
the same as that which may be provided from time to time to
active employees, and will be paid for by the Company. Such
coverage will continue for Participant until Participant
reaches the age at which he is eligible for Medicare and for
Participant's spouse until she reaches the age at which she is
eligible for Medicare.
6. In the event that Participant becomes permanently
disabled (as defined in the Company's long-term disability
plan which covers the Participant) while in the active employ
of the Company, Participant shall become fully vested in the
benefits provided pursuant to Section 3 of this Agreement, and
shall begin receiving such benefits at the later of age 62 or
when long-term disability benefits are no longer payable to
Participant.
7. In the event of a "Change of Control" of the Company
while Participant is in the active employ of the Company,
Participant shall become fully vested in the benefits provided
pursuant to Section 3 of this Agreement. Participant must
wait until age 62 to begin receiving these benefits. For
purposes of this Agreement, "Change of Control" shall mean the
happening of any of the following:
(a) the direct or indirect sale, lease, exchange or
other transfer of all or substantially all of the assets
of the Company to any Person (i.e., individual,
corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof
or any other entity within the meaning of
Section 13(d)(3) of 14(d)(2) of the Securities Exchange
Act of 1934) or entity or group of Persons or entities
acting in concert as a partnership or other group (a
"Group of Persons") other than a Person described in
clause (i) of the definition of "Affiliate," as set forth
below. For purposes of the definition of Change of
Control, an "Affiliate" of any specified Person means:
(i) any other Person which, directly or indirectly, is in
control of, is controlled by or is under common control
with such specified Person or (ii) any other Person who
is a director or officer (a) of such specified Person,
(b) of any subsidiary of such specified Person or (c) of
any Person described in clause (i) above or (iii) any
Person in which such person has, directly or indirectly,
a 5% or greater voting or economic interest or the power
to control. For the purposes of this definition,
"control" of a Person means the power, direct or
indirect, to direct or cause the direction of the
management or policies of such Person whether through the
ownership of voting securities, or by contract or
otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing:
(b) the consummation of any consolidation or merger
of the Company with or into another corporation with the
effect that the stockholders of the Company immediately
prior to the date of the consolidation or merger hold
less than 51% of the combined voting power of the
outstanding voting securities of the surviving entity of
such merger or the corporation resulting from such
consolidation ordinarily having the right to vote in the
election of directors (apart from rights accruing under
special circumstances) immediately after such merger or
consolidation;
(c) the stockholders of the Company shall approve
any plan or proposal for the liquidation or dissolution
of the Company;
(d) a Person or Group of Persons acting in concert
as a partnership, limited partnership, syndicate or other
group shall, as a result of a tender or exchange offer,
open market purchases, privately negotiated purchases or
otherwise, have become the direct or indirect beneficial
owner (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) ("Beneficial
Owner") of securities of the Company representing 30% or
more of the combined voting power of the then outstanding
securities of the Company ordinarily (and apart from
rights accruing under special circumstances) having the
right to vote in the election of directors;
(e) a Person or Group of Persons, together with any
Affiliate thereof, shall succeed in having sufficient
number of its nominees elected to the Board of Directors
of the Company such that such nominees, when added to any
existing director remaining on the Board of Directors of
the Company after such election who is an Affiliate of
such Person or Group of Persons, will constitute a
majority of the Board of Directors of the Company;
provided that the Person or Group of Persons referred to in
clauses (a), (d) and (e) shall not mean Xxxxxxxx Xxxxxxx or
any Group of Persons with respect to which Xxxxxxxx Xxxxxxx is
the Beneficial Owner of the majority of the voting equity
interests.
8. Notwithstanding any other provision of the Agreement, the
Company has an unconditional right to offset any amounts which
Participant owes the Company against amounts due under this
Agreement.
9. Participant agrees that if his employment with the
Company is terminated with "Cause" (as defined below and
regardless of whether Participant has attained the age of 62),
Participant shall not be entitled to any benefits whatsoever
provided under this Agreement and the Company shall have no
liability or obligation to provide any such benefits to
Participant pursuant to this Agreement. "Cause" shall be
defined as (i) commission by Participant of any felony
criminal act, a crime involving moral turpitude, or a crime of
fraud or dishonesty; (ii) acts by Participant constituting
gross negligence or willful misconduct to the detriment of the
Company; (iii) conduct which is detrimental to the reputation,
goodwill or business operation of the Company; (iv)
Participant's misfeasance or nonfeasance in the performance of
his duties; (v) Participant's failure or refusal to comply
with the lawful directions of the Company's Board of Directors
or with the policies, standards and regulations of the
Company; or (vi) Participant's breach of Sections 4, 5, 6, 7
or 9 of the Employment Agreement dated May ___, 2000 between
Participant and Company, or any similar provisions contained
in any subsequent or successor agreement between Participant
and Company.
10. Participant agrees that, without the written consent of
the Board of Directors of the Company, he will not, during the
term of his employment with the Company or any business entity
controlling, controlled by or under common control with the
Company (an "Affiliate"), directly or indirectly (a) engage in
any activity, or in any manner be connected with or employed
by any person, firm, corporation, or any other entity, in
competition with the Company or any Affiliate, or (b) call
upon, solicit, divert, or take away or attempt to solicit,
divert, or take away any of the customers or employees of the
Company or any Affiliate. The parties agree that these
restrictions against competition and solicitation will
continue to apply after Participant's employment with the
Company ends if and only if Participant's benefits are vested
(i.e. Participant is entitled to receive Monthly Payments
hereunder either immediately or upon the attainment of age
62), and in such event will remain in effect for 5 years after
Participant's termination of employment. Participant further
agrees that he will not, during the term of his employment
with the Company or any Affiliate and for a period of 5 years
thereafter, use or disclose to anyone not legally entitled
thereto any confidential or proprietary information or trade
secrets relating to the business of the Company. The
covenants contained in this Section 10 are enhanced covenants
not to compete that relate specifically to the salary
continuation benefits provided under this Agreement and are
not intended to supersede any covenants not to compete
contained in any employment agreement between Participant and
the Company.
11. Participant agrees that, if he breaches any covenant of
Section 10 above, no further payments shall be due or payable
by the Company hereunder either to Participant or to
Participant's spouse and the Company shall have no further
liability or obligation hereunder. Solely with respect to
this Agreement, the Company waives the right to injunctive
relief with respect to a breach of any covenant of Section 10
after the Participant's termination of employment with the
Company.
12. The benefits provided hereunder shall not affect the
right of the Participant to participate in any current or
future Company retirement plan or in any supplemental
compensation arrangement which constitutes a part of the
Company's regular compensation structure. Upon Participant's
termination of employment, his annual base salary and other
benefits shall cease upon commencement of the benefits
provided hereunder, except as required by applicable law or
the applicable benefit plan.
13. It is agreed that neither Participant nor Participant's
spouse shall have any right to commute, sell, assign, transfer
or otherwise convey the right to receive any payments
hereunder, which payments and the right thereto are expressly
declared to be non-transferable. In the event that
Participant or Participant's spouse takes any action or agrees
to take any action in violation of this Section, the Company
shall have no further liability or obligation hereunder.
14. If the Company acquires an insurance policy or any other
asset in connection with the liabilities assumed by it
hereunder, it is expressly understood by Participant and
agreed to by him that neither Participant nor Participant's
spouse shall have any right with respect to, or claim against,
such policy or asset. Such policy or asset: (a) shall not be
deemed to be held under any trust for the benefit of
Participant or Participant's spouse; (b) shall not be held in
any way as collateral security for the fulfillment of the
obligations of the Company under this Agreement; and (c) shall
be, and remain, a general unpledged, unrestricted asset of the
Company.
15. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their
respective successors, permitted assigns and other legal
representatives. Nothing in this Agreement, whether expressed
or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any other persons other than
the Company, each of the Company's Affiliates, Participant or
Participant's spouse, and their respective successors,
permitted assigns and other legal representatives.
16. This Agreement sets forth the entire agreement and
understanding of the parties in respect of the transactions
contemplated hereby and supersedes all prior agreements,
arrangements and understandings relating to the subject matter
hereof.
17. This Agreement may be executed simultaneously in two
counterparts, each of which shall be deemed an original but
both of which taken together shall constitute one and the same
instrument.
18. If any question shall arise in regard to the
interpretation of any provision of this Agreement or as to the
rights and obligations of either of the parties hereunder, the
Participant and a designated representative of the Company
shall meet to negotiate and attempt to resolve such question
in good faith. The Participant and such representative may,
if they so desire, consult outside experts for assistance in
arriving at a resolution. In the event that a resolution is
not achieved within fifteen (15) days after their first
meeting, then either party may submit the question for final
resolution by binding arbitration in accordance with the rules
and procedures of the American Arbitration Association
applicable to commercial transactions, and judgment upon any
award thereon may be entered in any court having jurisdiction
thereof. The arbitration shall be held in Covington,
Kentucky. In the event of any arbitration, the Participant
shall select one arbitrator, the Company shall select one
arbitrator and the two arbitrators so selected shall select a
third arbitrator, any two of which arbitrators together shall
make the necessary determinations. All out-of-pocket costs
and expenses of the parties in connection with such
arbitration, including, without limitation, the fees of the
arbitrators and any administration fees and reasonable
attorney's fees and expenses, shall be borne by the parties in
such proportions as the arbitrators shall decide that such
expenses should, in equity, be apportioned.
19. If any provision of this Agreement is determined by a
court of competent jurisdiction to be unenforceable because it
is overbroad, the other provisions hereof shall not be
effected, and this agreement shall be modified to the extent
necessary to make the invalid or unenforceable provision valid
and enforceable to the maximum extent permissible under
applicable law. This Agreement shall be construed in
accordance with the laws of the State of Kentucky, and
Participant and the Company hereby consent to the filing and
conduct of any litigation concerning this Agreement
exclusively in the State of Kentucky.
20. Whenever the singular number is used herein it shall
include the plural if the context so requires and reference to
the masculine gender herein shall be deemed to refer to all
genders.
21. The Company, or any successor thereto, may not amend or
terminate this Agreement, without the written consent of
Participant.
22. The Company shall use its best efforts to cause this
Agreement to be assumed by any successor to the Company by
virtue of a sale of substantially all of its assets or
otherwise.
23. This Agreement shall supersede any previous agreement
between Participant and the Company with regard to salary
continuation benefits, which is deemed to be terminated.
I HAVE READ THIS SALARY CONTINUATION AGREEMENT AND,
UNDERSTANDING ALL ITS TERMS, INCLUDING THAT THIS AGREEMENT
CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED
BY THE PARTIES, I SIGN IT AS MY FREE ACT AND DEED.
IN WITNESS WHEREOF, Participant and the Company, by its
duly authorized officer, have executed this Agreement as of
May 8, 2000.
NS GROUP, INC.
By: /s/Xxxx X. Xxxxxxxxx
Xxxx X. Xxxxxxxxx
President and Chief Executive Officer
Participant
/s/Xxxxxxx X. Xxxxxx, Xx.
Xxxxxxx X. Xxxxxx, Xx.
