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EXHIBIT 10.19
FLORSHEIM GROUP INC.
EMPLOYMENT SECURITY AGREEMENT
This Employment Security Agreement (the "Agreement") is entered into as of
this Eleventh day of December, 2000, by and between Florsheim Group Inc., a
Delaware corporation (the "Employer"), and Xxxx X. Xxxxxx (the "Executive").
WITNESSETH
WHEREAS, the Employer desires to employ the Executive as its Senior Vice
President, National Sales Manager of its domestic Wholesale 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:
2. DEFINITIONS. For purposes of this Agreement the following definitions shall
apply:
(l) "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.
(m) "Base Pay" means the Executive's annual base salary rate.
(n) "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.
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(o) "Effective Date" means the date of this Agreement as set forth above.
(p) "Cause" means:
(7) 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;
(8) The Executive willfully engages in conduct that is materially
injurious to the Employer, monetarily or otherwise;
(9) 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;
(10) The Board of Directors, in its reasonable discretion,
determinates that the Executive is either habitually drunk or
using illegal substances;
(11) The Executive violates the Employer's sexual harassment policy;
or
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(12) 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.
(q) "Good Reason" means:
(4) There is a material reduction in the Executive's Aggregate
Compensation from one fiscal year to the next; or
(5) There is a material reduction in the Executive's
responsibilities.
(r) "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.
(s) "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.
(t) "Severance Period" means the period beginning on the date the
Executive's employment with the Employer terminates under
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circumstances described in Section 3 and ending on the date that is
twelve (12) months thereafter as specified in Section 6.
(u) "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.
(v) "Equity Interest" means prior to March 31, 2001, the Executive shall
purchase in the open market the lesser of (i) 25,000 shares of Common
Stock of the Employer or (ii) shares of Common Stock of the Employer
having an aggregate purchase price (including commissions) of $50,000.
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 100,000 shares of the Employer's Common Stock
as follows:
(1) 50,000 shares at Market,
(4) 25,000 shares at an exercise price of $5.00 per share, and
(5) 25,000 shares at an exercise price of $7.50 per share.
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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 33-1/3%
Second 33-1/3%
Third 33-1/3%
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.
For purposes hereof Change in Control shall mean:
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(1) The acquisition (other than (i) from the Company or (ii) by
Apollo (as hereinafter defined)) by any person, entity or
"group", within the meaning of Section 13(d)(3) or 14(d)(2) of
the 1934 Act, excluding, for this purpose, the Company or its
subsidiaries, or any employee benefit plan of the Company or its
subsidiaries, of beneficial ownership (within the meaning of Rule
17d-3 promulgated under the 0000 Xxx) of 50% or more of either
the then outstanding shares or the combined voting power of the
Company's then outstanding voting securities entitled to vote
generally in the election of directors; or
(2) Individuals who, as of the Effective Date constitute the Board
(as of such date, the "Incumbent Board"), cease to constitute at
least a majority of the Board as a result of an actual or
threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the 1934 Act (a "Proxy
Vote"); provided, that any person becoming a director subsequent
to the first anniversary of the Effective Date whose election, or
nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than as a result of a Proxy
Vote) shall be considered as
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though such person were a member of the Incumbent Board; or
(3) Approval by the stockholders of the Company of a reorganization,
merger or consolidation, in each case, with respect to which
persons who were the stockholders of the Company immediately
prior to such reorganization, merger or consolidation do not,
immediately thereafter, own, directly or indirectly, more than
50% of the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, and,
as a result of any of these transactions, Apollo ceases to be the
largest shareholder of the reorganized, merge or consolidated
company or ceases to own at least 20% of the remaining
outstanding shares of the reorganized, merged or consolidated
company; or
(4) Approval by the stockholders of the Company of a sale of all or
substantially all of the assets of the Company; or
(5) Approval by the stockholders of the Company of a liquidation or
dissolution of the Company and, as a result of either of these
transactions, Apollo ceases to be the largest shareholder of the
Company, in each case, unless the transaction was approved by a
majority of the directors then comprising the Incumbent Board.
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For purposes of the definition of "Change of Control", the term
"Apollo" shall mean Apollo Advisors, L.P., Lion Advisors, L.P.,
Artemis America Partnership and any entity that controls, is
controlled by or is under common control with Apollo Advisors,
L.P., Lion Advisors, L.P. and Artemis America Partnership,
including accounts under common management.
2. TERM OF EMPLOYMENT. The employment hereunder shall be for a term of twelve
(12) months commencing on the date hereof (the "Effective Date") and ending
on the day immediately preceding the twelve (12) 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.
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
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his employment with the Employer for Good Reason, the following provisions
will apply:
(e) 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.
(f) 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 Employer during, the Severance Period, notwithstanding
that he is not an employee of the Employer during the Severance
Period.
(g) 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
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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).
(h) The Executive shall be entitled to a payment attributable to
compensation for unused vacation periods accrued as of the date of his
termination of 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.
13. DEATH. If the Executive dies during the Severance Period, the following
rules shall apply:
(e) 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,
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payments shall be made to the Executive's estate.
(f) 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.
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.
14. 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.
15. 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
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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 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 twelve (12) 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 twelve (12)
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.
16. MITIGATION. The Executive shall not have a duty to mitigate damages.
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17. 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, 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.
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(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 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.
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(g) 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, 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;
(iii) operating similar retail operations engaged in the sale of
footwear; 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.
(h) 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,
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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, 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.
18. 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.
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19. 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.
20. SUCCESSORS. This Agreement shall be binding upon an inure to the benefit of
the parties hereto and their respective heirs, representatives and
successors.
XXXX X. XXXXXX FLORSHEIM GROUP INC.
/s/ Xxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxxx,Xx.
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Senior Vice President,
National Sales Manager Name: Xxxxx X. Xxxxxxxxx, Xx.
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Domestic Wholesale Division
Its: Chairman & CEO
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