SEVERANCE AGREEMENT
Exhibit
10.5
This
SEVERANCE AGREEMENT (the “Agreement”) is effective as of April 1, 2006
(“Effective Date”) by and between Xxxxx X. Xxxxxxxx (“Employee”) and Xxxxx Shoe
Company, Inc., a New York corporation (“Xxxxx Shoe” and, together with its
subsidiaries, the “Company”).
WHEREAS,
Xxxxx Shoe is engaged, directly and indirectly through its subsidiaries, in
the
sourcing and retail and wholesale sale of footwear in the United States and
throughout the world;
WHEREAS,
Employee is employed by Xxxxx Shoe or a wholly-owned subsidiary of Xxxxx Shoe
in
an executive capacity, possesses intimate knowledge of the business and affairs
of the Company, and has acquired, and will continue to acquire, certain
confidential, proprietary and trade secret information and data with respect
to
the Company;
WHEREAS,
Employee and Xxxxx Shoe are currently parties to a severance agreement which
Employee and Xxxxx Shoe desire to terminate and replace with this Agreement
(the
“Prior Agreement”);
WHEREAS,
Xxxxx Shoe desires to insure, insofar as possible, that the Company will
continue to have the benefit of Employee’s services and to protect the
confidential information and goodwill of the Company; and
WHEREAS,
the Company recognizes that circumstances may arise in which a change in the
control of Xxxxx Shoe occurs, through acquisition or otherwise, thereby causing
uncertainty of employment without regard to Employee’s competence or past
contributions which uncertainty may result in the loss of valuable services
of
Employee to the detriment of the Company and Xxxxx Shoe’s shareholders, and the
Company and Employee wish to provide reasonable security to Employee against
changes in Employee’s relationship with Xxxxx Shoe in the event of any such
change in control; and
WHEREAS,
both the Company and Employee are desirous that a proposal for any change of
control or acquisition will be considered by Employee objectively and with
reference only to the business interests of the Company and Xxxxx Shoe’s
shareholders; and
WHEREAS,
Employee will be in a better position to consider the best interests of the
Company if Employee is afforded reasonable security, as provided in this
Agreement, against altered conditions of employment which could result from
any
such change in control or acquisition.
NOW,
THEREFORE, in consideration of the foregoing and of the mutual covenants and
agreements hereinafter set forth, the parties hereto mutually covenant and
agree
as follows:
Section
1. Definitions
1.1 “Board”
means the Board of Directors of Xxxxx Shoe.
1.2 “Business
Unit” means any direct or indirect subsidiary, operating division or business
unit of Xxxxx Shoe.
1.3 “Cause”
means (i) engaging by Employee in willful misconduct which is materially
injurious to the Company; (ii) conviction of Employee of a felony; (iii)
engaging by Employee in fraud, material dishonesty or gross misconduct in
connection with the business of the Company; (iv) engaging by Employee in any
act of moral turpitude reasonably likely to materially and adversely affect
the
Company or its business; (v) engaging by Employee in the illegal use of a
controlled substance or using prescription medications unlawfully; or (vi)
abuse
by Employee of alcohol.
1.4 “Change
of Control” means the occurrence of any of the following events after the
Effective Date:
(a) The
acquisition by any Person of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 30% or more of either (x) the
then
outstanding shares of common stock of Xxxxx Shoe (the “Outstanding Company
Common Stock”) or (y) the combined voting power of the then outstanding voting
securities of Xxxxx Shoe entitled to vote generally in the election of directors
(the “Outstanding Company Voting Securities”); provided, however, that for
purposes of this paragraph (a)
the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company,
or
(iv) any acquisition by any corporation pursuant to a transaction which complies
with the exception set forth in paragraph (c)
below;
or
(b) Individuals
who, as of the Effective Date of this Agreement, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent
to
the Effective Date whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or
consents by or on behalf of a Person other than the Board; or
(c) Consummation
of a reorganization, merger or consolidation or sale or other disposition of
all
or substantially all of the assets of the Company or the acquisition of assets
of another corporation (a “Business Combination”), in each case, unless,
following such Business Combination, all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior
to such Business Combination beneficially own, directly or indirectly, more
than
65% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to
vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be;
or
(d) Approval
by the shareholders of the Company of a complete liquidation or dissolution
of
the Company.
1.5 “Code”
means the Internal Revenue Code of 1986, as amended.
1.6 “Competitor”
means any Person which (a) in its prior fiscal year had annual gross sales
volume or revenues of more than $20,000,000 attributable to the sale of footwear
or (b) is reasonably expected to have such level of footwear sales or revenues
in either the current fiscal year or the next following fiscal
year.
1.7 “Confidential
Information” shall have the meaning set forth in Section
10.
1.8 “Customer”
means any wholesale customer of Xxxxx Shoe and/or any Business Unit which either
purchased from Xxxxx Shoe and/or any Business Unit during the one (1) year
immediately preceding the Termination Date, or is reasonably expected by Xxxxx
Shoe and/or any Business Unit to purchase from Xxxxx Shoe and/or any Business
Unit in the one (1) year period immediately following the Termination Date,
more
than $1,000,000 in footwear.
1.9 “ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
1.10 “Good
Reason,” when used with reference to a voluntary termination by Employee of
Employee’s employment with the Company, means (i) a reduction in Employee’s base
salary as in effect on the date hereof, or as the same may be increased from
time to time; (ii) a reduction in Employee’s status, position, responsibilities
or duties; (iii) the required relocation of Employee’s principal place of
business, without Employee’s consent, to a location which is more than fifty
(50) miles from Employee’s principal place of business on the Effective Date, or
from such location to which Employee may transfer with Employee’s consent after
the Effective Date; (iv) a material increase in the amount of time Employee
is
required to travel on behalf of the Company; (v) the failure of any successor
of
Xxxxx Shoe to assume this Agreement, or (vi) a material breach of this Agreement
by the Company.
1.11 “Person”
means any individual, entity or group (within the meaning of Section 13(d)(3)
or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)).
1.12 “Termination
Date” means the effective date as provided in this Agreement of the termination
of Employee’s employment with the Company.
Section
2. Term
2.1 Subject
to Section 2.2,
the
term of this Agreement (the “Term”) shall be a period of three (3) years
commencing on the Effective Date.
2.2 The
Term
shall be automatically extended for successive one (1) year periods unless
either party to this Agreement provides the other party with notice of
termination at least ninety (90) days prior to the expiration of the original
three-year period or any one-year period thereafter.
Section
3. Termination
of Employment
3.1 The
Company may
terminate Employee’s employment at any time for Cause, effective upon written
notice to Employee specifying in reasonable detail the particulars of Employee’s
conduct deemed by the Company and/or such subsidiary to justify such termination
for Cause.
3.2 The
Company may terminate Employee’s employment without Cause at any time, effective
upon written notice to Employee of termination specifying that such termination
is without Cause.
3.3 Employee
may terminate Employee’s employment with the Company at any time, with or
without Good Reason.
Section
4. Separation
Benefits
4.1 If
Employee’s employment is terminated by the Company for any reason other than for
Cause, death or disability and Section 4.2
does not
apply, Employee shall be entitled to the following separation
benefits:
(a) The
Company shall pay, or cause to be paid, to Employee within 30 days of the
Termination Date (i) the full base salary earned by Employee through, but unpaid
at, the Termination Date, plus (ii) credit for any vacation earned by Employee
but not used at the Termination Date, plus (iii) all other amounts owed by
the
Company to Employee (other than any bonus payment of any kind) but unpaid as
of
the Termination Date.
(b) The
Company shall pay, or cause to be paid, to Employee (i) in a lump sum not later
than thirty (30) days after the Termination Date an amount equal to 200% of
the
sum of (A) Employee’s base annual salary at the highest rate in effect at any
time during the twelve (12) months immediately preceding the Termination Date,
and (B) Employee’s targeted bonus for the current year, and (ii) Employee’s
targeted bonus payment for the year of termination prorated to the Termination
Date.
(c) The
Company shall provide to Employee for a period of eighteen (18) months after
the
Termination Date medical and/or dental coverage under the Company’s medical
and/or dental plans, without any cost to Employee in excess of any employee
contribution that would be payable by Employee if Employee remained employed
by
a member of the Company; provided, however, that if Employee becomes employed
with another employer during such eighteen (18)-month period and is eligible
to
receive medical and/or dental coverage under another employer-provided plan,
the
medical and/or dental coverage described herein shall be secondary to those
provided under such other plan. In addition, on the last day of such eighteen
(18)-month period, the Company shall pay, or cause to be paid, to Employee
an
amount in cash equal to the aggregate amount that would be payable by the
Company for such medical and/or dental coverage for six (6) months if Employee
remained employed by the Company for such period.
(d) The
restrictions applicable to each share of non-vested restricted stock of Xxxxx
Shoe held by Employee that would have vested within the two (2) year period
following the Termination Date had Employee remained employed by the Company
shall lapse as of the Termination Date.
(e) Each
non-vested option to purchase Xxxxx Shoe stock held by Employee that would
have
vested within the two (2) year period following the Termination Date had
Employee remained employed by the Company shall vest as of the Termination
Date.
(f) The
Company shall pay the reasonable costs of outplacement services selected by
the
Company for a reasonable period of time following the Termination Date;
provided, however, that no such outplacement services shall be provided after
the last day of the second calendar year following the calendar year in which
the Termination Date occurs.
4.2 If
Employee’s employment is terminated within twenty-four (24) months after a
Change of Control (x) by the Company for any reason other than for Cause, death
or disability, or (y) by Employee within ninety (90) days after the occurrence
of Good Reason, Employee shall be entitled to the following separation benefits
in place of, and not in addition to, the benefits set forth in Section
4.1:
(a) The
Company shall pay, or cause to be paid, to Employee within 30 days of the
Termination Date (i) the full base salary earned by Employee through, but unpaid
at, the Termination Date, plus (ii) credit for any vacation earned by Employee
but not taken at the Termination Date, plus (iii) all other amounts owed by
the
Company to Employee (other than any bonus payment of any kind) but unpaid as
of
the Termination Date.
(b) The
Company shall pay, or cause to be paid, to Employee (i) in a lump sum six (6)
months after the Termination Date an amount equal to 300% of the sum of (A)
Employee’s base annual salary at the highest rate in effect at any time during
the twelve (12) months immediately preceding the Termination Date, and (B)
Employee’s targeted bonus for the current year; and (ii) Employee’s targeted
bonus payment for the year of termination prorated to the Termination
Date.
(c) The
Company shall provide to Employee for a period of eighteen (18) months after
the
Termination Date medical and/or dental coverage under the Company’s medical and
dental plans, without any cost to Employee in excess of any employee
contribution that would be payable by Employee if Employee remained employed
by
the Company; provided, however, that if Employee becomes employed with another
employer during such eighteen (18)-month period and is eligible to receive
medical and/or dental coverage under another employer-provided plan, the medical
and/or dental coverage described herein shall be secondary to those provided
under such other plan. In addition, on the last day of such eighteen (18)-month
period, the Company shall pay, or cause to be paid, to Employee an amount in
cash equal to the aggregate amount that would be payable by the Company for
such
medical and/or dental coverage for eighteen (18) months if Employee remained
employed by the Company for such period.
(d) The
restrictions applicable to each share of non-vested restricted stock of Xxxxx
Shoe held by Employee shall lapse and be exercisable as of the Termination
Date.
(e) Each
non-vested option to purchase Xxxxx Shoe stock held by Employee shall vest
and
be exercisable as of the Termination Date.
(f) For
purposes of determining Employee’s benefit under the Company’s Supplemental
Employment Retirement Plan, an additional three (3) years of Credited Service
shall be credited to Employee’s actual or deemed Credited Service.
(g) The
Company shall pay the reasonable costs of outplacement services selected by
the
Company for a reasonable period of time following the Termination Date;
provided, however, that no such outplacement services shall be provided after
the last day of the second calendar year following the calendar year in which
the Termination Date occurs.
4.3 If
Employee’s employment is terminated for any reason other than such reasons
specified in Sections 4.1
and
4.2,
the
Company shall pay, or cause to be paid, to Employee within 30 days of the
Termination Date (i) the full base salary earned by Employee through, but unpaid
at, the Termination Date, plus (ii) credit for any vacation earned by Employee
but not taken at the Termination Date, plus (iii) all other amounts owed by
the
Company to Employee (other than any bonus payment of any kind) but unpaid as
of
the Termination Date.
4.4 The
benefits set forth in Sections 4.1(c)
and
4.2(c)
shall
run concurrently with any period of continuation coverage to which Employee
is
entitled under Section 601 of ERISA. Upon Employee’s re-employment during the
period specified in each such Section, to the extent covered by the new
employer’s plan, coverage under the Company’s plan shall lapse, subject to any
continuation of coverage rights under Section 601 of ERISA. Employee’s
participation in and/or coverage under all other employee benefit plans,
programs or arrangements sponsored or maintained by the Company shall cease
effective as of the Termination Date except as otherwise provided in such
employee benefit plan, program or arrangement.
Section
5. Mitigation
or Reduction of Benefits
Employee
shall not be required to mitigate the amount of any payment provided for in
Section
4
by
seeking other employment or otherwise. Except as otherwise specifically set
forth herein, the amount of any payment or benefits provided in Section
4
shall
not be reduced by any compensation or benefits or other amounts paid to or
earned by Employee as the result of employment by another employer after the
Termination Date or otherwise.
Section
6. Employee
Expenses After Change in Control
If
Employee’s employment is terminated by the Company within twenty-four (24)
months after a Change in Control and there is a dispute with respect to this
Agreement, then all Employee’s costs and expenses (including reasonable legal
and accounting fees) incurred by Employee (a) to defend the validity of this
Agreement, (b) to contest any termination for Cause, (c) to contest any
determinations by the Company concerning the amounts payable by or on behalf
of
the Company under this Agreement, or (d) to otherwise obtain or enforce any
right or benefit provided to Employee by this Agreement, shall be paid by the
Company to the extent Employee is the prevailing party with respect to such
claim. Any such payments shall be paid no later than two and one-half months
following the close of the calendar year in which any such dispute is
final.
Section
7. Release
Notwithstanding
anything to the contrary stated in this Agreement, no benefits will be paid
pursuant to Section
4
except
under Section 4.1(a),
4.2(a)
or
4.3
prior to
execution by Employee of a release of the Company substantially in the form
attached as Exhibit
A,
with
such changes as may be made by the Company in its sole discretion in order
to
comply with and stay current with applicable laws and regulations.
Section
8. Certain
Additional Payments
8.1 Notwithstanding
anything to the contrary contained herein and except as set forth below, in
the
event it shall be determined that any payment or distribution by or on behalf
of
the Company to or for the benefit of Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section
8)
(a
“Payment”) would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties are incurred by Employee with respect to
such
excise tax (such excise tax, together with any such interest and penalties,
are
hereinafter collectively referred to as the “Excise Tax”), then Employee shall
be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by Employee of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, Employee retains an amount
of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 8.1,
if it
shall be determined that Employee is entitled to a Gross-Up Payment, but that
the Payments do not exceed 110% of the greatest amount (the “Reduced Amount”)
that could be paid to Employee such that the receipt of Payments will not give
rise to any Excise Tax, then no Gross-Up Payment shall be made to Employee
and
the Payments, in the aggregate, shall be reduced to the Reduced
Amount.
8.2 Subject
to the provisions of Section 8.3,
all
determinations required to be made under this Section
8,
including whether and when a Gross-Up Payment is required and the amount of
such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Ernst & Young LLP or such other certified
public accounting firm, human resources consulting firm, or other consulting
firm in the business of performing such calculations as may be designated by
Employee with the consent of the Company, which consent shall not be
unreasonably withheld (the “Consulting Firm”), which shall provide detailed
supporting calculations both to the Company and Employee within fifteen (15)
business days of the receipt of notice from Employee that there has been a
Payment, or such earlier time as is requested by the Company. In the event
that
the Consulting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, Employee, with the consent
of
the Company, which consent shall not be unreasonably withheld, shall appoint
another nationally recognized accounting firm, human resources consulting firm,
or other consulting firm in the business of performing such calculations to
make
the determinations required hereunder (which such firm shall then be referred
to
as the Consulting Firm hereunder). All fees and expenses of the Consulting
Firm
shall be borne solely by the Company. Any Gross- Up Payment, as determined
pursuant to this Section
8,
shall
be paid by the Company to Employee no later than two and one-half months
following the Termination Date. Any determination by the Consulting Firm shall
be binding upon the Company and Employee. As a result of the uncertainty in
the
application of Section 4999 of the Code at the time of the initial determination
by the Consulting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 8.3
and
Employee thereafter is required to make a payment of any Excise Tax, the
Consulting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of Employee within two and one-half months after the date the Company
exhausts such remedies.
8.3 Employee
shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as practicable but no later
than thirty (30) days after Employee is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date on which
such
claim is requested to be paid. Employee shall not pay such claim prior to the
expiration of the thirty (30)-day period following the date on which Employee
gives such notice to the Company (or such shorter period ending on the date
that
any payment of taxes with respect to such claim is due). If the Company notifies
Employee in writing prior to the expiration of such period that it desires
to
contest such claim, Employee shall:
(a) give
the
Company any information reasonably requested by the Company relating to such
claim;
(b) take
such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably
selected by the Company;
(c) cooperate
with the Company in good faith in order to effectively contest such claim;
and
(d) permit
the Company to participate in any proceedings relating to such
claim;
provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Employee harmless, on an after-tax basis,
for any Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section
8.3,
the
Company shall control all proceedings taken in connection with such contest
and,
at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of
such claim and may, at its sole option, either direct Employee to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner,
and
Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if
the
Company directs Employee to pay such claim and xxx for a refund, the Company
shall advance the amount of such payment to Employee, on an interest-free basis
and shall indemnify and hold Employee harmless, on an after tax basis, from
any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income
with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of Employee
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company’s control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Employee shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service
or
any other taxing authority.
8.4 If,
after
the receipt by Employee of an amount advanced by the Company pursuant to Section
8.3,
Employee becomes entitled to receive any refund with respect to such claim,
Employee shall (subject to the Company’s complying with the requirements of
Section 8.3)
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the
receipt by Employee of an amount advanced by the Company pursuant to Section
8.3,
a
determination is made that Employee shall not be entitled to any refund with
respect to such claim and the Company does not notify Employee in writing of
its
intent to contest such denial of refund prior to the expiration of thirty (30)
days after such determination, then such advance shall be forgiven and shall
not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
Section
9. Covenant
Not to Compete
9.1 During
Employee’s employment with Xxxxx Shoe and/or any Business Unit and for a period
of two (2) years after the Termination Date (collectively, the “Restricted
Period”), Employee will not, directly or indirectly, on Employee’s own behalf or
on behalf of any other Person (whether as owner, partner, consultant, employee
or otherwise):
(a) provide
any executive, managerial, supervisory, and/or consulting services with respect
to the footwear industry and/or the footwear business in the United States
for
any Competitor;
(b) hold
any
executive, managerial and/or supervisory position with any Competitor in the
United States;
(c) assist
any Competitor in competing against Xxxxx Shoe and/or any Business Unit for
which Employee performs or performed substantial work and/or has or had access
to Confidential Information (each a “Relevant Business Unit”) (i) in the United
States and/or (ii) in any other country in which Xxxxx Shoe and/or any Relevant
Business Unit is doing business in the one year immediately preceding the
Termination Date (each a “Foreign Country”) if Employee had access to
Confidential Information regarding the Company’s business in such Foreign
Country;
(d) engage
in
any research, development and/or planning activities or efforts for a
Competitor, whether as an employee, consultant, independent contractor or
otherwise, to assist the Competitor in competing (i) in the footwear industry
in
the United States or (ii) in any Foreign Country if Employee had access to
Confidential Information regarding the Company’s business in such Foreign
Country;
(e) cause
or
attempt to cause any Customer to divert, terminate, limit, modify or fail to
enter into any existing or potential relationship with Xxxxx Shoe and/or any
Relevant Business Unit;
(f) assist
any Competitor in connection with any plan, effort, activity or undertaking
to
cause or attempt to cause any Customer to divert, terminate, limit, modify
or
fail to enter into any existing or potential relationship with Xxxxx Shoe and/or
any Relevant Business Unit;
(g) cause
or
attempt to cause any footwear supplier or manufacturer of Xxxxx Shoe and/or
any
Relevant Business Unit to divert, terminate, limit, modify or fail to enter
into
any existing or potential relationship with Xxxxx Shoe and/or any Relevant
Business Unit;
(h) assist
any Competitor in connection with any plan, effort, activity or undertaking
to
cause or attempt to cause any footwear supplier or manufacturer of Xxxxx Shoe
and/or any Relevant Business Unit to divert, terminate, limit, modify or fail
to
enter into any existing or potential relationship with Xxxxx Shoe and/or any
Relevant Business Unit; and/or
(i) solicit,
entice, employ or seek to employ, in the footwear industry, any executive,
managerial and/or supervisory employee of, or any consultant or advisor to,
Xxxxx Shoe and/or any Relevant Business Unit.
9.2 Employee
recognizes and agrees that the restraints contained in Section 9.1
are
reasonable and should be fully enforceable in view of, among other things,
the
high level positions Employee has had with Xxxxx Shoe and/or any Relevant
Business Unit(s), the national and international nature of both the Company’s
collective business and competition in the footwear industry, and the legitimate
interests of the Company in protecting its confidential, proprietary and trade
secret information (“Confidential Information”) and their respective customer
goodwill and relationships. Employee specifically hereby acknowledges and
confirms that Employee is willing and intends to, and will, abide fully by
the
terms of Section 9.1.
Employee further agrees that the Company would not have adequate protection
if
Employee were permitted to work for its competitors in violation of the terms
of
this Agreement since the Company would, among other things, be unable to verify
whether (i) its Confidential Information was being disclosed and/or misused,
and/or (ii) Employee was involved in diverting or helping to divert the
Company’s customers and/or customer goodwill.
9.3 Employee
agrees to disclose, during the Restricted Period, the terms of this Section
9
to any
potential future employer.
Section
10. Confidential
Information.
10.1 Employee
acknowledges and agrees that during Employee’s employment, Employee has been
and/or will be provided and have access to certain Confidential Information
of
the Company. Employee agrees to keep secret and confidential, and not to use
or
disclose to any third-parties, except as directly required for Employee to
perform Employee's employment responsibilities for the Company, any of the
Company’s Confidential Information.
10.2 Confidential
Information includes all confidential and/or trade secret information of the
Company (regardless of the form or medium in which it may exist or be stored
or
preserved) and includes, but is not limited to, all such information containing
or reflecting any:
(a) lists
or
other identification of customers or prospective customers of Xxxxx Shoe and/or
any Relevant Business Unit (and/or key individuals employed or engaged by such
parties);
(b) lists
or
other identification of sources or prospective sources of Xxxxx Shoe’s and/or
any Relevant Business Unit’s products or components thereof (and/or key
individuals employed or engaged by such parties);
(c) compilations,
information, designs, drawings, files, formulae, lists, machines, maps, methods,
models, notes or other writings, plans, records, regulatory compliance
procedures, reports, specialized or technical data, schematics, source code,
object code, documentation, and software relating to the development,
manufacture, fabrication, assembly, marketing and/or sale of Xxxxx Shoe’s and/or
any Relevant Business Unit’s products;
(d) financial,
distribution, sales and marketing information, data, plans, and/or strategies
of
Xxxxx Shoe and/or any Relevant Business Unit;
(e) equipment,
materials, procedures, processes, and techniques used in, or related to, the
development, manufacture, assembly, fabrication or other production and quality
control of the Xxxxx Shoe’s and/or any Relevant Business Unit’s products and
services;
(f) Xxxxx
Shoe’s and/or any Relevant Business Unit’s relations and/or dealings with its
customers, prospective customers, suppliers and prospective suppliers and the
nature and type of products or services rendered to such customers (or proposed
to be rendered to prospective customers);
(g) Xxxxx
Shoe’s and/or any Relevant Business Unit’s relations with its employees
(including, without limitation, salaries, job classifications and skill levels);
and
(h) any
other
information designated by Xxxxx Shoe and/or any Relevant Business Unit to be
confidential, secret and/or proprietary (including without limitation,
information provided by customers or suppliers of Xxxxx Shoe and/or any Relevant
Business Unit).
Notwithstanding
the foregoing, the term “Confidential Information” shall not consist of any data
or other information which has been made publicly available or otherwise placed
in the public domain other than by Employee in violation of this
Agreement.
10.3 Employee
will not, directly or indirectly, copy, reproduce or otherwise duplicate,
record, abstract, summarize or otherwise use for Employee or use for, or
disclose to, any party other than Xxxxx Shoe, or any subsidiary or affiliate
of
Xxxxx Shoe, any Confidential Information, without Xxxxx Shoe’s prior written
permission or except as required for the proper performance of Employee’s duties
on behalf of the Company.
10.4 Employee
understands that Confidential Information may or may not be labeled as
“confidential” and will treat all information as confidential unless otherwise
informed by Xxxxx Shoe.
10.5 At
the
termination of Employee’s employment with the Company or at any other time Xxxxx
Shoe or any subsidiary or affiliate thereof may request, Employee shall promptly
deliver to Xxxxx Shoe all documents and other materials, whether in physical
or
electronic form (including all copies thereof), containing any Confidential
Information.
Section
11. Injunctive
Relief
In
the
event of a breach or threatened breach of any of Employee’s duties or
obligations under the terms and provisions of Section
9,
Section
10,
Section
12.2
or
Section 12.9,
the
Company shall be entitled, in addition to any other legal or equitable remedies
it may have in connection therewith (including any right to damages that it
may
suffer), to temporary, preliminary and permanent injunctive relief restraining
such breach or threatened breach. Employee hereby expressly acknowledges that
the harm that might result to the Company’s business as a result of
noncompliance by Employee with any of the provisions of Section
9,
Section
10,
Section
12.2
or
Section 12.9
would be
largely irreparable. Employee specifically agrees that if there is a question
as
to the enforceability of any of the provisions of Section
9,
Section
10,
Section
12.2
or
Section 12.9,
Employee will not engage in any conduct inconsistent with or contrary to such
Sections until after the question has been resolved by a final judgment of
a
court of competent jurisdiction. Employee undertakes and agrees that if Employee
breaches or threatens to breach the Agreement, Employee shall be liable for
any
attorneys’ fees and costs incurred by the Company in enforcing its rights
hereunder.
Section
12. Miscellaneous
12.1 Notice.
All
notices hereunder shall be in writing and shall be deemed to have been duly
given (a) when delivered personally or by courier, or (b) when received by
facsimile (including electronic mail), receipt confirmed, or (c) on the third
business day following the mailing thereof by registered or certified mail,
postage prepaid, or (d) on the first business day following the mailing thereof
by overnight delivery service, in each case addressed as set forth
below:
If
to the
Company:
Xxxxx
Shoe Company, Inc.
0000
Xxxxxxxx Xxxxxx
Xx.
Xxxxx, Xxxxxxxx 00000-0000
Attention:
General Counsel
If
to
Employee:
Xxxxx
X.
Xxxxxxxx
00
Xxxxxxxx Xxx, 0X
Xx.
Xxxxx, XX 00000
Any
party
may change the address to which notices are to be addressed by giving the other
party written notice in the manner herein set forth.
12.2 Successors;
Binding Agreement.
(a) Xxxxx
Shoe shall require any successor to all or substantially all of the business
and/or assets of the Company (whether such succession is direct or indirect,
by
purchase, merger, consolidation or otherwise), prior to or upon such succession,
to expressly assume and agree to perform this Agreement in the same manner
and
to the same extent that the Company would have been required to perform it
if no
such succession had taken place. Failure of Xxxxx Shoe to obtain such agreement
upon or prior to the effectiveness of any such succession shall be a breach
of
this Agreement and shall entitle Employee to benefits from the Company in the
same amounts and on the same terms as Employee would be entitled hereunder
if
Employee’s employment was terminated without Cause within twenty-four (24)
months after a Change of Control. For purposes of the preceding sentence, the
date on which any such succession becomes effective shall be deemed the
Termination Date.
(b) Xxxxx
Shoe shall also have the right, but not the obligation, to assign this
Agreement, without Employee’s consent, to any successor to all or substantially
all of the business and/or assets of a Business Unit for which Employee performs
substantially all of Employee’s duties (whether such succession is direct or
indirect, by purchase, merger, consolidation or otherwise). In the event, and
only in the event, Xxxxx Shoe elects to assign this Agreement to such successor
of a Business Unit, a Change of Control will be deemed to have occurred and
Xxxxx Shoe shall require such successor to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
have been required to perform it if no such succession had taken place. No
Change of Control shall be deemed to have occurred if Xxxxx Shoe does not elect
to assign this Agreement to such successor of a Business Unit.
(c) This
Agreement is personal to Employee and Employee may not assign or delegate any
part of Employee’s rights or duties hereunder to any other person, except that
this Agreement shall inure to the benefit of and be enforceable by Employee’s
legal representatives, executors, administrators, heirs and
beneficiaries.
12.3 Judicial
Modification.
If and
to the extent that any Section, term and/or provision of this Agreement is
determined by a court of competent jurisdiction to be unenforceable under
applicable law, then such Section(s), term(s) and/or provision(s) shall not
be
void but instead shall be modified and, to the maximum extent permissible under
applicable law, enforced.
12.4 Headings.
The
headings in this Agreement are inserted for convenience of reference only and
shall not in any way affect the meaning or interpretation of this
Agreement.
12.5 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
12.6 Waiver.
Neither
any course of dealing nor any failure or neglect of either party hereto in
any
instance to exercise any right, power or privilege hereunder or under law shall
constitute a waiver of such right, power or privilege or of any other right,
power or privilege or of the same right, power or privilege in any other
instance. Without limiting the generality of the foregoing, Employee’s continued
employment without objection shall not constitute Employee’s consent to, or a
waiver of Employee’s rights with respect to, any circumstances constituting Good
Reason. All waivers by either party hereto must be contained in a written
instrument signed by the party to be charged therewith, and, in the case of
the
Company, by its duly authorized officer.
12.7 Entire
Agreement; Termination of Prior Agreement.
This
instrument constitutes the entire agreement of the parties in this matter and
shall supersede any other agreement between the parties, oral or written,
concerning the same subject matter. The Prior Agreement is hereby terminated
and
deemed by the parties to be void ab
initio.
12.8 Amendment.
Subject
to Section 12.3,
no
modification, amendment or waiver of any of the provisions of this Agreement
shall be effective unless in writing specifically referring hereto, and signed
by the parties hereto.
12.9 Governing
Law.
In
light of Company’s and Employee’s substantial contacts with the State of
Missouri, the facts that the Company is headquartered in Missouri and Employee
resides in and/or reports to Company management in Missouri, the parties’
interests in ensuring that disputes regarding the interpretation, validity
and
enforceability of this Agreement are resolved on a uniform basis, and Xxxxx
Shoe’s execution of, and the making of, this Agreement in Missouri, the parties
agree that: (i) any litigation involving any noncompliance with or breach of
the
Agreement, or regarding the interpretation, validity and/or enforceability
of
the Agreement, shall be filed and conducted exclusively in the state courts
in
St. Louis County, Missouri, or the U.S. District Court for the Eastern District
of Missouri; and (ii) this Agreement shall be interpreted in accordance with
and
governed by the laws of the State of Missouri, without regard for any conflict
of law principles. Employee agrees that Employee under no circumstances will,
either alone or in conjunction with anyone else, file or pursue any such
litigation other than in such state or federal courts in Missouri, and Employee
hereby consents and agrees that any such litigation filed in any other court(s)
shall be dismissed and that Employee may be enjoined from filing and/or pursuing
any such action.
12.10 Third
Party Beneficiaries.
Employee agrees that Xxxxx Shoe’s subsidiaries are third party beneficiaries of
this Agreement and hereby consents to the enforcement by any subsidiary of
Xxxxx
Shoe of the provisions contained herein, including without limitation, the
provisions of Section
9
and
Section
10.
IN
WITNESS WHEREOF, Employee and Xxxxx Shoe have executed this Agreement as of
the
day and year first above written.
|
Xxxxx
Shoe Company, Inc.
|
Employee
|
|||
|
By:
|
/s/
Xxxxxxx X. Xxxx
|
/s/
Xxxxx X. Xxxxxxxx
|
||
|
Name:
|
Xxxxxxx
X. Xxxx
|
Xxxxx
X. Xxxxxxxx
|
||
|
Title:
|
Senior
Vice President and
Chief
Financial Officer
|
|||
|
Date:
|
April
5, 2006
|
Date:
|
April
5, 2006
|
|
