NS GROUP, INC. DECEMBER 31, 2003 FORM 10-K EXHIBIT 10.6
FORM OF CHANGE OF CONTROL SEVERANCE AGREEMENT
AGREEMENT by and between NS Group, Inc., a Kentucky Corporation (the
"Company"), and _____ (the "Employee"), dated as of the ____ day of _____, 2000.
The Company wishes to assure that it will have the continued dedication
of the Employee notwithstanding the possibility, threat or occurrence of a
Change of Control (as defined below) of the Company. The Company believes it is
imperative to diminish the inevitable distraction of the Employee by virtue of
the personal uncertainties and risks created by a pending or threatened Change
of Control, to encourage the Employee's full attention and dedication to the
Company upon a Change of Control, and to provide the Employee with compensation
arrangements upon a Change of Control which provide the Employee with individual
financial security and which are competitive with those of other corporations
and, in order to accomplish these objectives, the Company desires to enter into
this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS
(a) "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 percent 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) "Agreement Period" shall mean the period as defined
in Section 2 of this Agreement.
(c) "Board of Directors"' shall mean the Board of
Directors of the Company as constituted from time to
time.
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(d) "Change of Control" shall mean:
(i) the direct or indirect sale, lease, exchange
or other transfer of all or substantially
all of the assets of the Company to any
Person or entity or group of Persons or
entities acting in concert as a partnership
or other group ("Group of Persons") other
than a Person described in clause (i) of the
definition of Affiliate;
(ii) 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;
(iii) the stockholders of the Company shall
approve any plan or proposal for the
liquidation or dissolution of the Company;
(iv) 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
(the "Exchange Act") ("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;
(v) 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 (i), (iv)
and (v) 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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(e) "Cause" shall be defined as (i) Conviction
or judicial admission by the Employee of any
felony criminal act, a crime involving moral
turpitude, or a crime of fraud or
dishonesty; (ii) acts by Employee
constituting gross negligence or willful
misconduct to the detriment of the Company;
(iii) Employee's misfeasance, nonfeasance or
malfeasance in the performance of his
duties; [OR] (iv) Employee'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) EMPLOYEE'S
BREACH OF SECTIONS 4, 5, 6, 7, AND 9 OF THE
EMPLOYMENT AGREEMENT].
(f) "Company" as used herein includes NS Group,
Inc. and any of its subsidiaries and
divisions and, as provided by Section 12(b)
hereof, any successor.
(g) "Date of Termination" shall be the date on
which the Notice of Termination is actually
received by the addressee, or alternatively,
if the Notice of Termination specifies a
date other than the date of receipt of such
notice then that specified date shall be the
Date of Termination.
(h) "Effective Date" shall mean the first date
on which a Change of Control occurs;
provided, however, that if the Employee's
employment is terminated by the Company
prior to the date on which a Change of
Control occurs, and the Employee can
reasonably demonstrate that such termination
by the Company was in contemplation of a
Change of Control, then for all purposes of
this Agreement the "Effective Date" shall
mean the date immediately prior to the date
of such termination.
(i) "Good Reason" means: (i) any material
adverse change in compensation to the
Employee; (ii) substantial decrease in the
nature or scope of the Employee's duties,
responsibilities, powers, authority, title,
position or status; (iii) unreasonable
travel requirements; (iv) any relocation
required on the part of Employee, without
his consent, outside of a 50-mile radius
from his primary residence on the Effective
Date; or (v) material breach by the Company
of an employment, compensation or similar
agreement between the Employee and the
Company.
(j) "Person" means any 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) or 14(d) (2) of the Exchange Act.
(k) "Voting Power" shall mean the voting power
of all securities of a Person then
outstanding generally entitled to vote for
the election of directors of
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the Person (or, where appropriate, for the
election of persons performing similar
functions).
2. AGREEMENT PERIOD
The Company hereby agrees to provide the Employee with the protections
and benefits enumerated in Section 3 of this Agreement for the period commencing
on the Effective Date and ending on the third anniversary of the Effective Date.
3. OBLIGATIONS OF THE COMPANY UPON TERMINATION
(a) Notice of Termination. Any termination after the
Effective Date by the Company or by the Employee
shall be communicated by Notice of Termination,
within ten (10) business days after the later of the
date of employment termination or the date of Change
of Control, to the other party hereto given in
accordance with Section 13(c) of this Agreement. For
purposes of this Agreement, a "Notice of Termination"
means a written notice which (i) sets forth in
reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Employee's
employment, and (ii) if the termination date is other
than the date of receipt of such notice, specifies
the termination date.
(b) Termination by the Company for Cause; Termination by
the Employee for Other Than Good Reason. If during
the Agreement Period, the Employee's employment is
terminated by the Company for Cause, by the Employee
other than for Good Reason, or by reason of death or
disability, this Agreement shall terminate without
further obligations to the Employee.
(c) Termination by the Company other than for Cause;
Termination by the Employee for Good Reason. If,
during the Agreement Period, the Company shall
terminate the Employee's employment other than for
Cause, or the employment of the Employee shall be
terminated by the Employee for Good Reason, the
Employee shall be entitled to the following payments
and benefits:
(i) The Company shall pay to the Employee in a
lump sum in cash within thirty (30) days
after the Date of Termination the aggregate
of ______times the amount of the Employee's
base salary in effect on the Date of
Termination _______times the average amount
of the Employee's annual bonus payments made
in the ______years prior to the Date of
Termination, plus a payment equal to a pro
rata portion (based on the whole number of
months worked in the fiscal year by the
Employee prior to the Date of Termination
and, if applicable performance targets have
not been met on the Date of Termination,
based on a reasonable estimate of the amount
of
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bonus to be earned for the full year) of the
Employee's annual bonus for the year of
termination.
(ii) For ______years after the Date of
Termination, the Company shall continue
providing medical, dental, life and
disability insurance benefits to the
Employee in an amount equivalent to that
which would have been provided to the
Employee had the Employee's employment not
been terminated. The Employee shall not be
obligated to pay higher fees for such
benefits than he or she was paying, at the
Date of Termination. In the event it is not
possible to provide this continued coverage,
the Company shall provide the Employee with
a cash payment in the amount necessary for
the Employee to purchase equivalent
insurance for _____years after the Date of
Termination.
(iii) Within ten (10) business days after the
later of the date of employment termination
or the date of Change of Control, the
Company shall provide, at no cost to the
Employee, individual outside assistance for
the Employee in finding other employment.
Such obligation may be fulfilled by the
Company through the retention of an
outplacement service for use by the
Employee.
4. NON-REDUCTION OF TERMINATION BENEFITS
In the event the Company's independent auditors (the "Accounting Firm")
shall determine that any payment or distribution by the Company to or for the
benefit of the Employee made pursuant to Section 3 of this Agreement would be
nondeductible by the Company for Federal income tax purposes because of Section
280G of the Internal Revenue Code of 1986 ("Code"), as amended, then the Company
shall nonetheless pay to Employee all payments and distributions under Section
3. If the Accounting Firm makes such a determination, the Company shall promptly
provide the Employee with notice to that effect with a copy of the detailed
calculation thereof. The Employee shall pay all taxes on all such payments and
distributions under Section 3 that are imposed on Employee, including the excise
tax under Section 280G of the Code.
5. FUNDING OF GRANTOR TRUST
The Board of Directors of the Company shall have the option to
establish a so-called "Rabbi Trust" upon the occurrence, or in anticipation, of
a Change of Control to secure for the Employee the benefits provided pursuant to
Section 3 of this Agreement. If the Board of Directors elects to do so, the
Company shall, immediately upon the occurrence of a Change of Control, make an
irrevocable contribution to the Rabbi Trust in an amount that is sufficient to
pay the Employee the benefits to which such Employee would be entitled pursuant
to the terms of this Agreement as of the date on which the Change of Control
occurred.
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6. NON-EXCLUSIVITY OF RIGHTS
Nothing in this Agreement shall prevent or limit the Employee's
continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its affiliated companies and
for which the Employee may qualify, nor shall anything herein limit or otherwise
affect such rights that the Employee may have under any stock option or other
agreements with the Company. Amounts which are vested benefits or which the
Employee is otherwise entitled to receive under any plan or program of the
Company at or subsequent to the Date of Termination shall be payable in
accordance with such plan or program.
7. NO SETOFF; COOPERATION
The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Employee or others.
8. CONFIDENTIAL INFORMATION
Employee specifically agrees that he will not at any time, whether
during his employment or for a period of two (2) years after such employment
ends for any reason, disclose or communicate to any third party or use for any
purpose (other than during his employment by the Company for proper business
purposes) any secret, proprietary or confidential information, or trade secret,
relating to the business of Company, or any subsidiary or affiliate of Company,
including business methods and techniques, research data, marketing and sales
information, customer lists, know-how, and any other information, process or
technique or information, customer lists, know-how, and any other information,
process or technique or information concerning the business of Company, or any
subsidiary or affiliate of Company, their manner and method of operation, their
plans or other data not disclosed to the general public or known within the
industry, regardless of whether such information or trade secret was acquired
prior to or after execution of this Agreement.
9. NON-SOLICITATION
Employee shall not, either directly or indirectly, by or for himself,
or as agent of another, or through others as his agent, in any way seek to
induce, bring about, promote, facilitate or encourage the discontinuance of or
in any way solicit for himself or others, those persons or entities who are
employees of the Company, or any subsidiary or affiliate of the Company.
[REMEDIES FOR ANY BREACH OF THIS SECTION 9 WILL BE THOSE SET FORTH IN SECTIONS 7
AND 8 OF THE EMPLOYMENT AGREEMENT BETWEEN EMPLOYEE AND THE COMPANY.]
10. EXCLUSIVE REMEDY
The Employee's rights to severance benefits pursuant to Section 3
hereof shall apply only in the events specified in this Agreement and shall be
the Employee's sole and exclusive remedy for any termination of the Employee's
employment by the Company other than for Cause or by
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the Employee for Good Reason. The payments, severance benefits and severance
protections provided to the Employee pursuant to this Agreement are provided in
lieu of any severance payments, severance benefits and severance protections
provided in any employment agreement or any other plan or policy of the Company,
except (i) as may be expressly provided in writing under the terms of any plan
or policy of the Company; or (ii) as provided in any Non-Qualified Stock Option
Agreement between the Company and the Employee and any Salary Continuation
Agreement between the Company and the Employee; or (iii) as may be provided in a
written agreement between the Company and the Employee entered into on or after
the date of this Agreement. In no event shall the Employee be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Employee under any of the provisions of this Agreement.
11. STATEMENT OF INTENTION
It is the intention of the parties hereto that, prior to the Effective
Date, this Agreement shall not create any rights or obligations in the Employee
or the company, or require any payments by the Company to the Employee.
12. SUCCESSORS
(a) The Employee. This Agreement is personal to the
Employee and without the prior written consent of the
Company shall not be assignable by the Employee
otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the
benefit of and be enforceable by the Employee's legal
representatives.
(b) The Company. This Agreement shall inure to the
benefit of and be binding upon the Company and its
successors. The Company will require any successor
(whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the
Company would be required to perform it if no such
succession had taken place.
As used in this Agreement, "Company" shall include any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
13. MISCELLANEOUS
(a) Interpretation. This Agreement shall be governed by
and construed in accordance with the laws of the
Commonwealth of Kentucky, without reference to
principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and
shall have no force or effect.
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(b) Legal Fees. In the event of any litigation involving
this Agreement, and if the Employee is successful in
such litigation, the Company will reimburse the
Employee for all legal fees and expenses paid by the
Employee in prosecuting or defending such litigation.
(c) Notices. All notices and other communications
hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or
certified mail, return receipt requested, postage
prepaid, addressed to the Employee at the Employee's
address on the payroll records of the Company and to
the Company as follows:
NS Group, Inc.
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: President
And to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(d) Severability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the
validity or enforceability of any other provision of
this Agreement.
(e) Withholding Taxes. The Company may withhold from any
amounts payable under this Agreement such Federal,
state or local taxes as shall be required to be
withheld pursuant to any applicable law or
regulation.
(f) No Waiver. The failure of the Employee or the Company
to insist upon strict compliance with any provision
hereof shall not be deemed to be a waiver of such
provision or any other provision thereof.
(g) Entire Agreement. This Agreement contains the entire
understanding of the Company and the Employee with
respect to the subject matter hereof. This Agreement
may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or
their respective successors and legal
representatives.
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(h) Dispute /Resolution Procedures. 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
Employee and a designated representative of the
Company shall meet to negotiate and attempt to
resolve such question in good faith. The Employee 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 any judgment 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 Employee 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.
(i) This Agreement shall supersede any previous agreement
between Employee and the Company with regard to the
change of control benefits, which is deemed to be
terminated.
IN WITNESS WHEREOF, the Employee and the Company have executed this
Agreement as of the day and year first above written.
I HAVE READ THIS CHANGE OF CONTROL SEVERANCE 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.
Employee:
_______________________________________
[EMPLOYEE NAME]
Company:
NS GROUP, INC.
By:____________________________________
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SCHEDULE OF DOCUMENTS OMITTED
The following agreements are substantially identical to the Form of Change of
Control Severance Agreement shown here, except for the identity of the employee,
dates of execution and, except that under paragraph 3. (c) (i), Messrs.
Xxxxxxxxx payment would be the aggregate of three times the amount his then
current base salary and three times the average amount of his bonus payments in
the prior five years. Messrs. Depenbrock, Golatzki, LaRosa, Xxxxxxxx and Xxxxx'x
payment would be the aggregate of two times the amount of their then current
base salary and two times the average amount of their bonus payments in the
prior five years. These documents are not filed as separate documents in
accordance with Exchange Act rule 12b-31.
Employee:
Xxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxx X. XxXxxx
Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxx
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