NS Group, Inc. Form 10-Q March 31, 2002 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 Xxxx X.
Xxxxxxxxx ("Participant"), effective as of March 1, 2002.
WITNESSETH
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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 as of March 1, 2002, 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 in the Employment Agreement, 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 a monthly amount for life
commencing on the first day of the month following the date of such retirement
equal to fifty-percent (50%) of the Participant's monthly base salary for the
month prior to the month in which the Participant retires from active employment
with the Company (the "Monthly Payment"); provided, however, that such Monthly
Payment shall be no less than one-twenty-fourth (1/24th) of the Participant's
annualized base salary for the calendar year immediately preceding the
Participant's retirement from active employment with the Company. 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 paragraphs 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 on the same basis as such
coverage is provided to other salaried employees of 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; provided, however, for any period during
which the Participant or the Participant's spouse is eligible for any other
group health plan, as an employee or otherwise, the health insurance coverage
provided under this Section shall be the secondary plan and the group health
plan under which the Participant or Participant's spouse is eligible shall be
the primary plan.
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 paragraph 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 paragraph 3 of this Agreement,
and such benefits shall be based upon Participant's monthly base salary for the
month prior to the month of such Change of Control. 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,
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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) or 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 Affiliates thereof,
shall succeed in having a 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.
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8. Notwithstanding any other provision of this 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 for "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) Conviction or judicial admission by
the 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)
Participant's misfeasance, nonfeasance or malfeasance in the performance of his
duties; (iv) Participant's failure or refusal to comply with the lawful
directions of Company's Board of Directors or with the policies, standards and
regulations of the Company after notice and failure to cure within thirty (30)
days; or (v) Participant's breach of Sections 4, 5, 6, 7, or 9 of the Employment
Agreement, 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 paragraph 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 paragraph
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 paragraph 10 after the Participant's termination of
employment with the Company.
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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 paragraph, 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,
and if the issue in question has been initiated by Participant, then Participant
shall have fifteen (15) days in which to provide the Company written notice that
he elects to have
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the question resolved by a court and not to submit the question for final
resolution by binding arbitration. If the issue in question has been initiated
by the Company or if Participant shall not elect to have the question resolved
by a court, 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 and shall be governed by the
laws of the Commonwealth of 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 Commonwealth of
Kentucky, and Participant and the Company hereby consent to the filing and
conduct of any litigation concerning this Agreement exclusively in the
Commonwealth 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.
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IN WITNESS WHEREOF, Participant and the Company, by its duly authorized
officer, have executed this Agreement as of March 1, 2002.
NS Group, Inc.
By: /s/ Xxxxxx X. Xxxxxxxxxx
Title: Secretary
Participant
/s/ Xxxx X. Xxxxxxxxx
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