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Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of August 16, 1999, by and between Venator
Group, Inc., a New York corporation, having its principal place of business at
000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and Xxxx X. Xxxxxxx (the
"Executive").
W I T N E S S E T H :
WHEREAS, the Executive is employed by the Company as its President and
Chief Operating Officer pursuant to the provisions of an employment agreement
dated as of April 14, 1999 (the "April Agreement"), the term of which ends on
January 31, 2002; and
WHEREAS, the Company desires the Executive to serve its President and
Chief Executive Officer for a period commencing on the date hereof, and the
Executive is willing to serve in such capacity; and
WHEREAS, the Company and the Executive desire to set forth the terms
and conditions of such employment; and
WHEREAS, the Executive and the Company desire to terminate the April
Agreement as of August 15, 1999, so that, from and after August 16, 1999, the
terms and conditions of the employment of the Executive with the Company shall
be governed by the provisions of this agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the Company and the Executive agree
as follows:
1. Employment. (a) The Company hereby agrees to employ the Executive as
its President and Chief Executive Officer, and the Executive hereby agrees to
accept such continued employment with the Company, on the terms and conditions
herein contained.
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The Executive shall serve as President and Chief Executive Officer and as a
member of the Board of Directors of the Company (the "Board").
(b) Except for earlier termination as provided pursuant to
this Agreement, the Executive's employment under this Agreement shall be for a
period commencing on August 16, 1999 (the "Commencement Date"), and ending on
August 31, 2004 (the "Employment Period").
2. Duties. (a) The Executive shall serve during the Employment Period
as President and Chief Executive Officer of the Company, reporting only to the
Board. The Executive agrees that in such offices he shall perform such duties
and functions as are commensurate with his status as President and Chief
Executive Officer of the Company as may from time to time be determined or
directed by the Board. The Executive shall devote substantially all of his
working time, attention, skill, and efforts to the performance of his duties
hereunder; provided, however, that the Executive may serve on the boards of
directors of other for-profit corporations, if such service does not conflict
with his duties hereunder or his fiduciary duty to the Company. It is further
understood and agreed that nothing herein shall prevent the Executive from
managing his passive personal investments (subject to applicable Company
policies on permissible investments), and (subject to applicable Company
policies) participating in charitable and civic endeavors, so long as such
activities do not interfere in more than a de minimis manner with the
Executive's performance of his duties hereunder. The services to be performed by
the Executive pursuant to the terms of this Agreement shall be rendered
principally at the Company's principal offices; provided, however, that the
Executive agrees to travel for reasonable periods of time for business purposes
whenever such travel is necessary or appropriate to the performance of his
duties hereunder.
(b) The Executive shall also serve as an officer and director
of subsidiaries and affiliates of the Company without additional compensation.
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3. Compensation and Benefits. As full compensation for his services
hereunder, and subject to all the provisions hereof:
(a) During the Employment Period, the Company shall pay the
Executive, in accordance with its normal payroll practices and subject to
required withholding, a salary calculated at such rate per annum as may be fixed
by the Compensation Committee of the Board from time to time, but in no event at
a rate of less than $950,000 per annum ("Base Salary").
(b) During the Employment Period, the Executive shall be eligible to
participate in all bonus, incentive and equity plans that are maintained by the
Company from time to time for its senior executive employees in accordance with
the terms of such plans at the time of participation. Executive shall be
eligible to earn a bonus, at target, under the Annual Incentive Compensation
Plan equal to no less than 75 percent of his Base Salary.
(c) During the Employment Period, the Executive shall be eligible to
participate in all pension, welfare and fringe benefit plans, as well as
perquisites, maintained by the Company from time to time for its senior
executive employees in accordance with their respective terms as in effect from
time to time (other than any special arrangement entered into by contract with
an executive). In addition, during the Executive's active employment during the
Employment Period, the Company shall provide the Executive with life insurance,
with its group term life insurance plan or otherwise, on the life of the
Executive for the benefit of his designated beneficiaries in amount of
$5,000,000.
(d) During the Employment Period, the Executive shall be reimbursed
for his out-of-pocket travel and entertainment expenses in accordance with the
Company's normal policy for senior executive officers, including appropriate
documentation.
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(e) The Executive shall be entitled to four weeks vacation for each
fiscal year during the Employment Period to be taken at such time as mutually
convenient to the Executive and the Company. Unused vacation shall be forfeited.
(f) Within 90 days of the date hereof, the Compensation Committee
shall grant the Executive 60,000 shares of restricted stock under the 1998 Stock
Option and Award Plan (the "Restricted Stock"), such shares to be subject to the
same restrictions as those shares of restricted stock granted to Executive on
February 1, 1999.
(g) The Company shall provide to Executive a transportation
allowance of $10,000 per year.
(h) The Company shall pay for personal financial planning services
for Executive up to an amount of $15,000 per year.
(i) The Company shall reimburse Executive for his legal fees in
connection with the negotiation and review of this agreement in an amount not to
exceed $15,000.
4. Termination. The Employment Period shall terminate upon the earliest
of the following:
(a) the Executive's death;
(b) the Executive's disability in accordance with Section 6;
(c) the Executive's termination for cause in accordance with Section 7;
(d) the termination of the Executive by the Company without cause;
(e) the termination by the Executive in accordance with Section 8; or
(f) the termination of the Executive in accordance with Section 10.
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5. Death. The death of the Executive shall serve to terminate the
Employment Period, in which event the Company shall have no liability or further
obligation except as follows:
(a) The Company shall pay the Executive's estate (or, if properly
designated under an applicable plan or arrangement, his beneficiary) when
otherwise due any unpaid Base Salary for the period prior to such termination of
the Employment Period, any declared but unpaid bonuses, any declared but unpaid
amounts due under any incentive plan, and any other unpaid amounts due the
Executive under employee benefit, fringe benefit or incentive plans
("Entitlements").
(b) The Executive shall have such rights under any employee benefit,
fringe benefit or incentive plan, including any stock option plan, as provided
in such plans and any grants thereunder ("Rights").
(c) The Executive's estate or his designated beneficiary shall be
entitled to receive those benefits afforded by the Company under its then
existing policies to employees who die while employed by the Company.
6. Disability. If the Company reasonably shall determine that the
Executive has become physically or mentally incapable of performing his material
duties as provided in Section 2 of this Agreement and such incapacity is likely
to last for a period of at least 180 days from the onset of such incapacity, the
Company may, at its election at any time after the date of such onset while the
Executive remains incapable of performing his duties, terminate the Executive's
employment hereunder effective immediately by giving the Executive written
notice of such termination. In such event, the Company shall continue the
Executive as an employee on payroll (but not as an officer hereunder) at his
same Base Salary until he qualifies for the Company's long term disability
policy and the Company shall have no other obligation to the Executive or his
dependents other than Entitlements, Rights, amounts due
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under the Company's long term disability plan, and any benefits offered by the
Company under its then policy to employees who become disabled while employed by
the Company.
7. Cause. (a) If the Board shall determine that there are
grounds for terminating the Employment Period and discharging the Executive for
"cause" (as hereinafter defined), the Company may, at its election at any time
within six months after the Company shall obtain knowledge of the grounds for
termination, give the Executive notice of its intention to terminate the
Executive for cause, stating the grounds for termination and specifying a
reasonable date (the "Meeting Date") on which the Executive shall be given an
opportunity if he desires to discuss such grounds for termination at a meeting
of the Board. In the event of any arbitration in accordance with Section 17
hereof with regard to the Company's determination of cause, the determination by
the Company shall be reviewed on a de novo basis by the arbitrator(s).
(b) If the grounds for termination are those specified in
clause (ii)(X), (iv) or (vi) of paragraph (d) hereof, the Executive shall have a
period of ten days from giving of the notice to cure the neglect, refusal, or
breach, as the case may be, provided that if similar grounds arise again within
one year of such cure, no new notice need be given and the Company, at its
option, may immediately terminate the Executive for cause.
(c) If the grounds for termination are those specified in
clauses (i), (ii)(Y), (ii)(Z), (iii) or (v) of paragraph (d) hereof, it is
understood and agreed that no satisfactory cure is available and such
termination shall be effective immediately upon notice by the Company.
(d) For purposes of this Section 7 and Section 9 hereof, the
term "cause" shall mean:
(i) the conviction (or plea of guilty or nolo contendere)
of the Executive of any felony, or of any crime involving fraud, dishonesty or
misappropriation, or
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moral turpitude or, if any of the foregoing involves the Company or any
subsidiary or affiliate (collectively the "Control Group"), the commission of
any of the foregoing (other than good faith disputes involving expense account
items);
(ii) the Executive's (X) continued willful neglect of his
duties and responsibilities under this Agreement; (Y) grossly negligent conduct
in connection with his duties and responsibilities under this Agreement; or (Z)
gross negligence in connection with his handling of the assets of the Company or
any other member of the Control Group;
(iii) the Executive's willful misconduct with regard to
the Control Group;
(iv) the Executive's refusal to follow the written
direction of the Board with regard to the Executive's responsibilities as set
forth herein;
(v) the Executive's willful failure to comply with the
covenants in Section 13 hereof; or
(vi) material breach of any of the provision of this
Agreement by the Executive.
(e) If the Company shall terminate the Executive's employment
pursuant to this Section 7, it shall have no further liability or obligation
hereunder except as follows:
(i) The Company shall promptly pay the Executive his then
current Base Salary through the effective date of such termination;
(ii) The Executive shall receive the benefits, if any, and
have the rights afforded by the Company under its then existing policies to
employees whose
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employment is terminated for cause or under the specific terms of any welfare,
pension, fringe benefit or incentive plan.
8. Good Reason. In the event that the Company shall (i) fail to
continue the appointment of the Executive as Chief Executive Officer of the
Company, or (ii) reduce the Executive's annual salary below the Base Salary, or
(iii) materially diminish the duties and responsibilities of the Executive as
President and Chief Executive Officer, assign to the Executive duties and
responsibilities inconsistent with his positions, or materially diminish his
authority, or (iv) locate the Executive at other than at the Company's principal
executive office, or (v) relocate the Company's principal executive office
outside the New York metropolitan area, or (vi) breach any payment provision of
this Agreement (to the extent not disputed in good faith) or any other material
provision of this Agreement (each of the foregoing hereinafter referred to as a
"Triggering Event"), then the Executive may give notice to the Company of his
election to terminate the Employment Period pursuant to this Section 8,
effective thirty (30) days from the date of such notice, unless the Company
shall have cured prior thereto the default giving rise to his notice of election
to terminate. Such notice from the Executive shall state the Triggering Event
which provides the grounds for his termination, and such notice must be given,
if at all, within 90 days of the date the Executive obtains knowledge of the
Triggering Event referred to as providing such grounds for termination. Within
the 30 day period specified in the Executive's notice to the Company, the
Company shall have the opportunity to cure the default involved in the
Triggering Event specified by the Executive. If the Employment Period is
terminated pursuant to this Section 8, the Company shall have no liability or
further obligation hereunder except as provided in Section 9 hereof. If the
Executive does not give notice to the Company of his election to terminate
within 90 days following the occurrence of a Triggering Event, then the
Executive shall be deemed to have waived his right to terminate the Employment
Period based on such Triggering Event, but such waiver shall not prejudice his
right to terminate pursuant to this Section 8 based on the occurrence of another
Triggering Event occurring subsequent in time, whether of the same or a
different type.
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9. Termination. In the event of a termination of the Employment Period
pursuant to Section 8 hereof, or in the event the Company shall terminate the
Employment Period without cause, then, except as provided in Section 10 hereof,
the Company shall have no obligation to the Executive except as follows:
(a) The Executive shall receive his Entitlements and have his
Rights. Thereafter, and during the period until the earliest of (i) the
Severance Period Termination Date, as hereinafter defined, (ii) the Executive's
death, or (iii) the Executive's violation of the post employment requirements of
Section 13 hereof, and subject to paragraph (f) below, following the date of
such termination (hereinafter referred to as the "Severance Period"), the
Company shall make payments to the Executive, either bi-weekly or monthly as the
Company shall elect, calculated at the annual rate of Base Salary which the
Executive was receiving pursuant to Section 3(a) hereof immediately prior to
such termination. As used herein, the "Severance Period Termination Date" shall
mean that date which is the later of August 31, 2004 or the second anniversary
of the date of termination of Executive's employment with the Company.
(b) During the Severance Period the Executive shall not be an
employee and shall not be entitled to receive any fringes, perquisites or
benefits from the Company, except the Company shall pay the premiums for his and
his dependents' health coverage under COBRA until the earliest of (i) such time
as he commences other employment, (ii) such time as he or a dependent, as the
case may be, is no longer entitled to COBRA coverage, or (iii) as provided in
paragraph (f) below.
(c) The Company shall provide the Executive, at no cost to the
Executive, with out-placement at a level commensurate with the Executive's
position.
(d) The Executive shall not be required to mitigate the amount
of any payment provided for in the second sentence of paragraph (a) or in
paragraph (b) by seeking
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other employment nor shall any amounts to be received by the Executive hereunder
be reduced by any other compensation earned.
(e) The Company shall be entitled to withhold from any
payments made to the Executive under this Section 9 any amounts required to be
withheld by applicable federal, state or local tax law.
(f) Any amounts being paid to or on behalf of the Executive
under this Section 9 (other than vested benefits that are required to be paid
under the Company's tax-qualified pension plans pursuant to the provisions of
the Employee Retirement Income Security Act of 1974, as amended) shall
immediately cease if the Executive enters into Competition with the Control
Group. For purposes of this Agreement, "Competition" shall mean the:
(i) participating, directly or indirectly, as an
individual proprietor, stockholder, officer, employee, director, joint venturer,
investor, lender, or in any capacity whatsoever (within the United States of
America, or in any country where the Control Group does business) in any of the
entities listed on Exhibit A hereto or any successor to any such entity,
provided, however, that such participation shall not include (x) the mere
ownership of not more than one percent (1%) of the total outstanding stock of a
publicly held company; or (y) any activity engaged in with the prior written
approval of the Board; or
(ii) intentionally recruiting, soliciting or inducing, any
employee or employees of the Control Group to terminate their employment with,
or otherwise cease their relationship with, the Control Group where such
employee or employees do in fact so terminate their employment.
If any restriction set forth with regard to Competition is found by any
court of competent jurisdiction, or an arbitrator, to be unenforceable because
it extends for too long a period of time or over too great a range of activities
or in too broad a geographic area, it shall
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be interpreted to extend over the maximum period of time, range of activities,
or geographic area as to which it may be enforceable.
10. Change in Control. In the event of a Change in Control, as
defined in Exhibit B hereto, the Executive shall have the right to terminate the
Employment Period by written notice given within the thirty (30) day period
following three (3) months after such Change in Control. Such Employment Period
shall cease upon the giving of such notice. In such event, or in the event the
Company shall terminate the Executive's employment without cause or the
Executive shall terminate his employment for Good Reason during the two year
period after the Change in Control, the Company shall have no obligation to the
Executive except as follows:
(a) The Executive shall receive all amounts and benefits under
Section 9 hereof as if he had terminated his employment for Good Reason pursuant
to Section 8 hereof, except that subpart (ii) of paragraph (a), subpart (iii) of
paragraph (a), and paragraph (f) of Section 9 shall not apply; provided,
however, that all such amounts shall be payable as a lump sum, without
adjustment for the time value of money, within five business days of the date of
termination of the Employment Period (the "Section 9(a) Payment").
(b) Upon a Change in Control, the forfeiture period with
regard to the Restricted Stock shall terminate and such shares shall become
immediately vested.
(c) In addition to any payments to which the Executive may be
entitled pursuant to the provisions of paragraph (a) of this section, if the
Section 9(a) Payment is less than 3 multiplied by Executive's Base Salary (at
the rate payable immediately prior to such Change in Control) plus bonus payable
under the Annual Incentive Compensation Plan at target in the year of the
termination of the Employment Period (the "Change-in-Control Amount"), then the
Company shall make a lump sum cash payment of the difference between the
Change-in-Control Amount and the Section 9(a) Payments to Executive within five
business days of the date of the termination of the Employment Period.
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11. Gross-up. (a) In the event that the Executive shall become
entitled to the payments and/or benefits provided by Section 10 or any other
amounts (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any person whose actions result in a
change of ownership covered by Section 280G(b)(2) of the Internal Revenue Code
of 1986, as amended (the "Code") or any person affiliated with the Company or
such person) (collectively the "Company Payments"), and such Company Payments
will be subject to the tax (the "Excise Tax") imposed by Section 4999 of the
Code (and any similar tax that may hereafter be imposed), the Company shall pay
to the Executive at the time specified in paragraph (d) below an additional
amount (the "Gross-up Payment") such that the net amount retained by the
Executive, after deduction of any Excise Tax on the Company Payments and any
federal, state and local income tax and Excise Tax upon the Gross-up Payment
provided for by this paragraph (a), but before deduction for any federal, state
or local income tax on the Company Payments, shall be equal to the Company
Payments.
(b) For purposes of determining whether any of the Company
Payments and Gross-up Payments (collectively the "Total Payments") will be
subject to the Excise Tax and the amount of such Excise Tax, (a) the Total
Payments shall be treated as "parachute payments" within the meaning of section
280G(b)(2) of the Code, and all "parachute payments" in excess of the "base
amount" (as defined under Code Section 280G(b)(3)) shall be treated as subject
to the Excise Tax, unless and except to the extent that, in the opinion of the
Company's independent certified public accountants appointed prior to any change
in ownership (as defined under Code Section 280G(b)(2)) or tax counsel selected
by such accountants (the "Accountants") such Total Payments (in whole or in
part) either do not constitute "parachute payments", represent reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the "base amount" or are otherwise not
subject to the Excise Tax, and (b) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Accountants in accordance
with the principles of Section 280G of the Code.
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(c) For purposes of determining the amount of the Gross-up
Payment, the Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in which
the Gross-up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive's
residence for the calendar year in which the Company Payment is to be made, net
of the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes if paid in such year. In the event that
the Excise Tax is subsequently determined by the Accountants to be less than the
amount taken into account hereunder at the time the Gross-up Payment is made,
the Executive shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the prior Gross-up
Payment attributable to such reduction net of any federal, state, or local
income tax incurred on the original receipt of such portion of the prior
Gross-up Payment (after taking into account the tax benefit, if any, that the
Executive receives on such repayment) (plus the portion of the Gross-up Payment
attributable to the Excise Tax and federal and state and local income tax
imposed on the portion of the Gross-up Payment being repaid by the Executive if
such repayment results in a reduction in Excise Tax or a federal and state and
local income tax deduction), plus interest on the amount of such repayment at
the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the
foregoing, in the event any portion of the Gross-up Payment to be refunded to
the Company has been paid to any federal, state or local tax authority,
repayment thereof (and related amounts) shall not be required until actual
refund or credit of such portion has been made to the Executive, and interest
payable to the Company shall not exceed the interest received or credited to the
Executive by such tax authority for the period it held such portion. The
Executive and the Company shall mutually agree upon the course of action to be
pursued (and the method of allocating the expense thereof) if the Executive's
claim for refund or credit is denied.
In the event that the Excise Tax is later determined by the
Accountant or the Internal Revenue Service to exceed the amount taken into
account hereunder at the time the Gross-up Payment is made (including by reason
of any payment the existence or amount of
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which cannot be determined at the time of the Gross-up Payment), the Company
shall make an additional Gross-up Payment in respect of such excess (plus any
interest or penalties payable with respect to such excess) at the time that the
amount of such excess is finally determined.
(d) The Gross-up Payment or portion thereof provided for
in paragraph (c) above shall be paid not later than the thirtieth day following
an event occurring which subjects the Executive to the Excise Tax; provided,
however, that if the amount of such Gross-up Payment or portion thereof cannot
be finally determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined in good faith by the
Accountant, of the minimum amount of such payments and shall pay the remainder
of such payments (together with interest at the rate provided in Code Section
1274(b)(2)(B) of the Code), subject to further payments pursuant to paragraph
(c) hereof, as soon as the amount thereof can reasonably be determined, but in
no event later than the ninetieth day after the occurrence of the event
subjecting the Executive to the Excise Tax. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive, payable on
the fifth day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
(e) The Company shall be responsible for all charges of
the Accountant.
12. Supplemental Executive Retirement Plan. During the Employment
Period, Executive shall participate in the Company's Supplemental Executive
Retirement Plan (the "SERP"). If, at the time of a termination of the Employment
Period (a) pursuant to Section 8 hereof, (b) without cause, (c) pursuant to
Section 10 hereof, or (d) on August 31, 2004 (if the Company and Executive have
not entered into an employment agreement extending Executive's employment with
the Company beyond such date) (the "Retirement Events"), the Total Retirement
Benefit, as hereinafter defined, is less than $1,300,000, the Company shall,
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effective as of the date of such termination of the Employment Period, increase
the amount of Executive's Account in the SERP by the difference between the
Total Retirement Benefit and $1,300,000. Further, if at any time during the
Employment Period the Board freezes or terminates the SERP or terminates the
participation of Executive thereunder, (i) Executive shall, as of the day
preceding such action, if it is not the case, be deemed to be at least 55 years
of age and have at least five "Years of Service" as defined in the SERP and (ii)
the Company shall, if the Total Retirement Benefit to which the Executive would
be entitled, as of the day preceding such action, is less than $1,300,000,
increase the amount of Executive's Account in the SERP by the difference between
the Total Retirement Benefit, calculated as of such date, and $1,300,000. For
purposes of this section, Total Retirement Benefit shall be the sum of (a) the
lump sum benefit to which Executive is entitled under the provisions of Section
4.03 (C) (2) of the Venator Group Retirement Plan plus (b) the amount of the
lump sum Excess Cash Balance Benefit payable under the provisions of the Excess
Cash Balance Plan plus (c) the amount of Executive's Account under the SERP,
prior to any adjustment provided for herein. In the event a Retirement Event
occurs and either (i) such Retirement Event occurs before the Executive reaches
age 55 or (ii) such Retirement Event occurs after the Executive has reached age
55 and the Compensation Committee of the Board does not provide the consent
required by Section 2(v) of the SERP to permit Executive's "Retirement", as
defined therein, to occur before he attains age 65, then the Company shall make
a payment to Executive equal to the amount that would have been in Executive's
Account in the SERP following the adjustment, if any, provided for in this
section, such payment to be made to Executive in the same manner, and subject to
the same restrictions, as provided for in the SERP.
13. Confidential Information, Nondisparagement; Non-competition. (a) In
consideration of the covenants by the Company contained herein, the Executive
undertakes and agrees that during the Employment Period and thereafter he shall
hold in a fiduciary capacity for the benefit of the Control Group all secret or
confidential information, knowledge, or data relating to the Control Group or
its business (which shall be defined as all such information, knowledge, and
data coming to the Executive's attention by virtue of his
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employment at the Company except that which is otherwise public knowledge or
known within the Company's industry). During such period, the Executive shall
not, without prior written consent of the Company, unless compelled pursuant to
the order of a court or other body having jurisdiction over such matter or
unless required by lawful process or subpoena, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. The foregoing shall not limit the disclosure by the Executive
of such information in the course of the performance of his duties as President
and Chief Operating Officer so long as such disclosure is in good faith.
(b) During the Employment Period and thereafter while the
Executive is receiving any amounts pursuant to Section 9(a), Section 10, or
Section 12 hereof, the Executive shall not make any statements or comments (i)
to any form of media or likely to come to the attention of any form of media of
a negative nature that reasonably could be considered to have an adverse impact
on the business or reputation of the Control Group, the Board or any senior
officer of the Control Group, or (ii) to any employee of the Control Group or to
any supplier or customer of the Control Group of a negative nature that
reasonably could be considered to have an adverse impact on the business or
reputation of the Control Group or the Board or any senior officer of the
Control Group, provided that in no event shall the foregoing limitation apply to
(i) compliance with legal process or subpoena, (ii) statements in response to
inquiry from a court or regulatory body, (iii) in rebuttal of media stories with
regard to the Executive, (iv) to a possible future employer in connection with
employment discussions, or (v) in response to inquiry from the Board.
(c) Furthermore, (i) during the period from the date hereof to
August 31, 2004, and (ii) thereafter while the Executive is receiving any
amounts pursuant to Section 9(a) hereof, the Executive shall not enter into
Competition with the Control Group, as defined in Section 9(f) hereof.
(d) Notwithstanding any other provision of this Agreement, in
the event of a breach or threatened breach by the Executive of any provision of
this Section, the Executive
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and the Company agree that the Company shall be entitled to injunctive and
declaratory relief from a court of competent jurisdiction to restrain the
Executive from committing such breach of the Agreement. Nothing in this
Agreement shall be construed as prohibiting the Company from pursuing any other
remedy or remedies including, without limitation, the recovery of damages.
(e) The provisions of this section shall survive the
expiration of this Agreement or the termination of the Agreement for any reason.
14. Indemnification. The Company agrees that the Executive shall be
entitled to the benefits of the indemnity provisions set forth in the By-laws
from time to time in accordance with their terms both during his employment and
thereafter with regard to his actions as an officer or director of the Company
and that the Company shall enter into an indemnification agreement with the
Executive in the form of its standard indemnification agreement with executive
officers. In addition, the Company agrees to continue in effect for the benefit
of the Executive during the Employment Period directors' and officers' liability
insurance of the type and in the amount currently maintained by the Company to
the extent such insurance is available at a premium cost which the Company
considers reasonable and, thereafter, with regard to his prior activities as an
officer or director, such insurance as is maintained for active directors and
officers.
15. Assignment. This Employment Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
heirs (in the case of the Executive) and permitted assigns. This Agreement is
personal to the Executive and neither this Agreement nor any rights hereunder
may be assigned by the Executive. No rights or obligations of the Company under
this Employment Agreement may be assigned or transferred by the Company except
that such rights or obligations may be assigned or transferred pursuant to a
merger or consolidation in which the Company is not the continuing entity, or
pursuant to a sale of all or substantially all of the assets of the
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Company, provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in
this Employment Agreement, either contractually or as a matter of law. The
Company further agrees that, in the event of a sale as described in the
preceding sentence, it shall use its best efforts to cause such assignee or
transferee to expressly assume the liabilities, obligations, and duties of the
Company hereunder.
16. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, other than injunctive relief pursuant to
Section 13(d) hereof, shall be settled by arbitration in the City of New York,
in accordance with the rules of the American Arbitration Association (the "AAA")
before three arbitrators. The decision of the arbitrators shall be final and
binding on the parties hereto and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. The costs
assessed by the AAA for arbitration shall be borne equally by both parties.
17. Notice. Any notice to either party hereunder shall be in writing,
and shall be deemed to be sufficiently given to or served on such party, for all
purposes, if the same shall be personally delivered to such party, or sent to
such party by registered mail, postage prepaid, at, in the case of the Company,
the address first given above and, in the case of the Executive, his principal
residence address as shown in the records of the Company. Notices to the Company
shall be addressed to the General Counsel. Either party hereto may change the
address to which notices are to be sent to such party hereunder by written
notice of such new address given to the other party hereto. Notices shall be
deemed given when received if delivered personally or three days after mailing
if mailed as aforesaid.
18. Applicable Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York applicable to
contracts to be performed therein.
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19. April Agreement. The April Agreement is hereby terminated,
effective as of 12:00 Midnight on August 15, 1999, without further obligation of
either party to the other, and shall thereafter be of no force or effect.
20. Miscellaneous. (a) This Agreement represents the entire
understanding of the parties hereto, supersede any prior understandings or
agreements between the parties, and the terms and provisions of this Agreement
may not be modified or amended except in a writing signed by both parties.
(b) No waiver by either party of any breach by the
other party of any condition or provision contained in this Agreement to be
fulfilled or performed by such other party shall be deemed a waiver of a similar
or dissimilar condition or provision at the same or any prior or subsequent
time. Except to the extent otherwise specifically provided herein, any waiver
must be in writing and signed by the Executive or an authorized officer of the
Company, as the case may be.
21. Beneficiary. The Executive shall be entitled to select (and change,
to the extent permitted under any applicable law) a beneficiary or beneficiaries
to receive any compensation or benefit payable under this Agreement following
his death by giving the Company written notice thereof in accordance with
applicable Company policies. In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
VENATOR GROUP, INC.
By: /s/ Xxxxxx X. Xxx
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XXXXXX X. XXX
/s/ Xxxx X. Xxxxxxx
----------------------
XXXX X. XXXXXXX
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Exhibit A
List of Competitive Companies
- The Finish Line, Inc.
- Footstar, Inc.
- Xxxxxxxx Sporting Goods, Inc.
- Just For Feet, Inc.
- The Sports Authority, Inc.
- Any entity owning, operating, or franchising Athlete's Foot stores (not
including a general merchandise or department store that solely operates
Athlete's Foot departments as an incidental part of its stores)
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Exhibit B
Change in Control of the Company shall mean any of the following: (i)
(A) the making of a tender or exchange offer by any person or entity or group of
associated persons or entities (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934) (a "Person") (other than the
Company or its subsidiaries) for shares of Common Stock pursuant to which
purchases are made of securities representing at least twenty percent (20%) of
the total combined voting power of the Company's then issued and outstanding
voting securities; (B) the merger or consolidation of the Company with, or the
sale or disposition of all or substantially all of the assets of the Company to,
any Person other than (a) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving or parent entity) fifty percent (50%) or
more of the combined voting power of the voting securities of the Company or
such surviving or parent entity outstanding immediately after such merger or
consolidation; or (b) a merger or capitalization effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is
or becomes the beneficial owner, directly or indirectly (as determined under
Rule 13d-3 promulgated under the Securities Exchange Act of 1934), of securities
representing more than the amounts set forth in (C) below; (C) the acquisition
of direct or indirect beneficial ownership (as determined under Rule 13d-3
promulgated under the Securities Exchange Act of 1934), in the aggregate, of
securities of the Company representing twenty percent (20%) or more of the total
combined voting power of the Company's then issued and outstanding voting
securities by any Person acting in concert as of the date of this Agreement;
provided, however, that the Board of Directors of the Company (referred to
herein as the "Board") may at any time and from time to time and in the sole
discretion of the Board, as the case may be, increase the voting security
ownership percentage threshold of this item (C) to an amount not exceeding forty
percent (40%); or (D) the approval by the shareholders of the Company of any
plan or proposal for the complete liquidation or dissolution of the Company or
for the sale of all or
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substantially all of the assets of the Company; or (ii) during any period of not
more than two (2) consecutive years, individuals who at the beginning of such
period constitute the Board, and any new director (other than a director
designated by a person who has entered into agreement with the Company to effect
a transaction described in clause (i)) whose election by the Board or nomination
for election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof.
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