NS Group, Inc. Form 10-Q March 31, 2002 Exhibit 10.1
EMPLOYMENT AGREEMENT
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Agreement made as of the 1st day of March, 2002, between NS Group,
Inc., a Kentucky corporation ("Employer"), and Xxxx X. Xxxxxxxxx ("Employee").
WITNESSETH:
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WHEREAS, Employer and Employee executed an Employment Agreement dated
as of June 21, 1999, ("1999 Agreement"); and
WHEREAS, Employer and Employee wish to execute a new employment
agreement to replace and supersede the 1999 Agreement; and
WHEREAS, Employer desires to continue to employ Employee in an
executive position with significant executive and administrative
responsibilities and Employee desires to continue to be employed by Employer in
such capacity upon the terms and conditions hereinafter provided; and
WHEREAS, Employee and Employer are desirous of entering into this
Employment Agreement ("Agreement") which sets forth the rights and obligations
of the parties during the continuation of such employment, as well as following
any termination thereof;
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained and in pursuance of the above, Employee and Employer agree as
follows:
1. EMPLOYMENT
(a) Employer shall employ Employee as President and Chief
Executive Officer, to perform all duties that are customarily
performed by one holding such position, and Employee agrees to
such employment, subject to the general supervision and
direction by the Board of Directors of Employer and pursuant
to the terms and conditions hereof. In connection with
Employee's employment, Employee will be based at the principal
executive office of Employer at 000 X. Xxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx.
(b) Employee covenants and agrees that he will, at all times,
faithfully and industriously perform any and all duties
conferred upon him by Employer, and Employee further agrees
that he will devote all necessary working time and attention
thereto.
2. TERM; TERMINATION; EXTENSION
The term of this Agreement commences March 1, 2002 and shall continue
for a period ending February 28, 2005. Unless terminated prior to that
date, the term of the
Agreement shall automatically be extended for one year and from year to
year thereafter, unless either Employer or Employee shall give written
notice to the other not less than one hundred eighty (180) days before
the end of the term or an extended term that they do not wish to extend
the term of the Agreement further. Notwithstanding the foregoing, this
Agreement shall terminate upon the earliest to occur of the following:
(a) Employer terminates the Agreement for Cause, upon thirty (30)
days prior written notice to Employee. For purposes of this
Agreement, "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
Employer; (iii) Employee's misfeasance, nonfeasance or
malfeasance in the performance of his duties; (iv) Employee's
failure or refusal to comply with the lawful directions of
Employer's Board of Directors or with the policies, standards
and regulations of the Employer after notice and failure to
cure within thirty (30) days; or (v) Employee's breach of
Sections 4, 5, 6, 7, or 9 of this Agreement.
In the event that Employee's employment is terminated for
Cause, Employer's obligation to pay Employee's salary, fringe
benefits or any other element of compensation will immediately
cease as of the date of termination of employment, including
but not limited to, all payments and benefits listed in
Schedule A hereto or any amendment to this Agreement. Employer
will have no further obligation to Employee other than as set
forth in this subparagraph.
(b) Employee terminates Agreement for any reason or no reason upon
thirty (30) days prior written notice to Employer.
In the event Employee so terminates this Agreement (other than
for Good Reason, as defined below), Employer's obligation to
pay Employee's salary, fringe benefits or any other element of
compensation will immediately cease as of the date of
termination of employment, including but not limited to, all
payments and benefits listed in Schedule A hereto or any
amendment to this Employment Agreement. Employer will have no
further obligation to Employee other than as set forth in this
subparagraph.
In the event Employee terminates this Agreement for Good
Reason, such termination shall be considered termination
pursuant to Section 2(d) below. "Good Reason" means; (i)
Employee's basic annual salary is reduced by five percent (5%)
or more; (ii) Employee is assigned duties which are
inconsistent with the duties of President and Chief Executive
Officer of an operation that is at least similar in size and
complexity of Employer on the date of this Agreement; (iii)
unreasonable travel requirements which are not consistent with
Employee's position and responsibilities; (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 of this Agreement; or (v) material breach by
Employer of this Agreement or any other compensation related
agreement between Employee and Employer and failure to cure
such breach within thirty (30) days after written notice
thereof.
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(c) At Employer's option, due to Employee's inability to perform
his duties due to physical or mental disability for a period
of ninety (90) days or more.
In the event that Employee's employment is terminated under
this provision, Employer shall continue to pay Employee's base
salary and fringe benefits (as set forth in Section 3, below,
and as may be provided in Schedule A or any amendment to this
Employment Agreement, and in accordance with the terms of any
fringe benefit plan) for the greater of two (2) years
following the date of Employee's termination of employment
with Employer or until the end of the then current term of
this Agreement. Employer will have no further obligation to
Employee other than as set forth in this subparagraph.
(d) Employer terminates this Agreement for any other reason or no
reason prior to the end of the term by providing written
notice to Employee. This provision also will cover termination
due to Employee's death (other than by suicide).
In such case, Employer shall continue to pay Employee's base
salary, bonus and fringe benefits (as set forth in Section 3
below, and as may be provided in Schedule A or any amendment
to this Agreement, and in accordance with the terms of any
fringe benefit plan) for the greater of two (2) years
following the date of such termination or until the end of the
then current term of this Agreement. In the event of such
termination, stock options shall remain effective in
accordance with stock option plans of Employer and Employee's
stock option agreements. Employer will have no further
obligation to Employee other than as set forth in this
subparagraph.
3. COMPENSATION; BENEFITS; VACATION; INDEMNIFICATION
(a) Employer shall pay Employee for Employee's services hereunder
a salary at the rate of not less than $380,000 per annum.
Employee shall also be entitled to participate in any bonus
plan, stock option program, retirement plan, and other fringe
benefits available to other employees of Employer or any of
its subsidiaries who are similarly situated in terms of (i)
position with Employer or any of its subsidiaries, (ii)
seniority and (iii) geographical location of employment.
Employee's participation in such plans, benefits and programs
shall be subject to the rules and regulations pertaining to
eligibility and participation therein.
(b) In addition, Employee shall be eligible for a minimum of four
(4) weeks of paid vacation each year during the term of this
Agreement.
(c) Employer will reimburse Employee for reasonable business
expenses incurred in the performance of his duties, in
accordance with Employer's reimbursement policy.
(d) Article VII of the By-Laws of Employer states that Employer
shall, to the fullest extent permitted by, and in accordance
with the provisions of the Kentucky Business Corporation Act,
indemnify Employee, both as a director and as an officer of
Employer.
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4. OTHER EMPLOYMENT
Employee shall devote substantially all of his normal working time,
attention, knowledge, and skills solely to the business and interests
of Employer. Employee shall not, directly or indirectly, in any manner
whatsoever, solicit, accept or serve, on behalf of himself or any other
third party, any similar or related business activities without
Employer's prior approval. Furthermore, Employee shall not, directly or
indirectly, act for the benefit or on behalf of any competitor of
Employer or in any way inconsistent with Employer's best interest.
This provision shall not be construed to prohibit Employee from
devoting non-business hours to the passive pursuit of personal business
interests not competitive with the business of Employer, or any
subsidiary or affiliate of Employer, provided that such interests do
not interfere with Employee's duties and responsibilities owed to
Employer.
5. DOCUMENTS
Employee shall have no right, title or interest in any reports,
studies, memoranda, correspondence, manuals, records, plans or other
written, printed or otherwise recorded materials of any kind whatsoever
belonging to or in the possession of Employer, or any subsidiary or
affiliate of Employer. Employee agrees that he will surrender all such
material to Employer, immediately upon the termination of his
employment or at any time prior thereto upon the request of Employer.
6. NON-DISCLOSURE OF 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 any material secret, private or confidential information or trade
secret relating to the business of Employer, or any subsidiary or
affiliate of Employer, including business methods and techniques,
research data, marketing and sales information concerning the business
of Employer, or any subsidiary or affiliate of Employer, their manner
and method of operation, their plans or other data not disclosed to the
general public or know within the industry, regardless of whether such
information or trade secret was acquired prior to or after execution of
this Agreement.
7. COVENANT NOT TO COMPETE
Employer and Employee recognize that Employer's industry is highly
competitive and that Employee will acquire special knowledge from
Employer. Employee, therefore, agrees that for twelve (12) months after
the employment relationship ends for any reason;
(a) He 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 customers or employees, or hire, retain or otherwise use
the services of any employees of Employer, or any subsidiary
or affiliate of Employer; and
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(b) He shall not engage in, or become an owner, stockholder,
partner, lender, investor, director, officer, employee,
consultant or act in any other capacity with respect to any
entity which engages in, a business that competes with, or is
substantially similar to, the business then being conducted by
Employer, or any subsidiary or affiliate of Employer, and
located within North America.
8. INJUNCTIVE RELIEF
In addition to, and not in lieu of, any other remedy to which Employer
may otherwise be entitled, the parties agree that a breach by Employee
of any covenant set forth in paragraphs 1, 4, 5, 6, 7, or 9 of this
Agreement shall result in irreparable injury, harm and damage to
Employer for which there is no adequate remedy at law, and the parties
further agree that, in the event of any violation or breach by Employee
of any of those provisions of this Agreement, Employer shall be
entitled to an immediate injunction and restraining order through
proper action filed in a court of competent jurisdiction to prevent
such violation or breach. Employee agrees to indemnify and hold
Employer harmless for any costs and expenses, including reasonable
attorneys' fees, which Employer may incur to remedy any violation or
breach by Employee of any covenant set forth in paragraphs 1, 4, 5, 6,
7, or 9 hereof.
9. INVENTIONS
Employee agrees that any and all inventions and discoveries, whether or
not patentable, which Employee has conceived or may conceive and which
pertain to work or business which he has performed or may perform on
behalf of Employer, whether or not during working hours, shall be the
sole and exclusive property of Employer.
Employee further agrees to inform Employer of all inventions and
discoveries promptly after they have been conceived or made in detail
sufficient to permit Employer to understand such inventions and
discoveries and practice them without the exercise of further inventive
skill. When requested to do so, Employee agrees, whether during the
term of this Agreement or within three (3) years thereafter, to execute
any and all documents necessary or desirable to convey title to such
inventions and discoveries to Employer and to assist Employer in
perfecting and enforcing Employer's right in and to any such invention
or discovery, including filing patent applications regarding such
inventions or discoveries in the United States or in foreign countries.
Employee agrees that any invention, product design, product improvement
or technological innovation which Employee, either individually or
jointly with others, has already conceived or during the term of this
Agreement may conceive, develop, create or suggest that directly
results from any work which Employee does or has done for Employer, or
any subsidiary or affiliate of Employer, shall be the absolute property
of Employer and shall promptly be disclosed by Employee to Employer.
10. REPRESENTATIONS BY EMPLOYEE
Employee represents that he is neither restricted nor prohibited in any
manner from employment and performance of his duties on behalf of
Employer as herein provided.
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11. SEVERABILITY
Employer and Employee agree that should any provision of this Agreement
be held to be illegal, invalid or unenforceable for any reason, such
term or provision shall be deemed to be modified to the extent
necessary to permit its enforcement to the maximum extent permitted by
applicable law, and any court making such determination shall have
power to modify any and all such provisions, and such provisions shall
then be applicable in modified form. If any provision of this Agreement
is invalid or unenforceable for any reason, the remainder of this
Agreement and all other provisions herein shall not be affected
thereby.
12. ENTIRE AGREEMENT AND AMENDMENTS
Employer and Employee agree that this Agreement constitutes the entire
agreement between them with respect to the subject matter hereof and
that any and all prior discussions, negotiations, commitments and
understandings relating thereto are superseded and merged herein. The
terms and provisions of this Agreement shall not be changed, amended,
waived, modified or terminated in any respect whatsoever except by a
written instrument executed by Employer and Employee.
13. INTERPRETATION
This Agreement shall be interpreted as written jointly by Employer and
Employee.
14. GOVERNING LAW, FORUM SELECTION AND CONSENT TO PERSONAL JURISDICTION
Employer and Employee hereby consent that any action arising from or to
enforce any provision of this Agreement shall be brought only in a
state or federal court located in the Commonwealth of Kentucky. This
Agreement shall be interpreted, governed and enforced in accordance
with the laws of the Commonwealth of Kentucky, including any
arbitration proceedings pursuant to Section 17 below.
15. ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of
Employer, its successors and assigns, and to the benefit of Employee,
his heirs, administrators and legal representatives, except that
Employee's duties to perform services hereunder are non-transferable.
16. NO WAIVER OF RIGHTS
Neither failure nor delay on the part of a party in exercising any
right, power or privilege herein contained shall operate as a waiver
thereof on the part of such part, nor shall a single or partial
exercise thereof preclude any other or further exercise of any right,
power or privilege by a party to this Agreement.
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17. 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 Employer 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, and
if the issue in question has been initiated by Employee, then Employee
shall have fifteen (15) days in which to provide Employer written
notice that he elects to have the question resolved by a court and not
to submit the question for final resolution by binding arbitration. If
the issue in question has been initiated by Employer or if Employee
shall not elect to have the question resolved by a court, then either
party may submit the question for final resolution by binding
arbitration in accordance with the rules and procedures of the American
Arbitration Association applicable to commercial transactions, and
judgment upon any award thereon may be entered in any court having
jurisdiction thereof. The arbitration shall be held in Covington,
Kentucky and shall be governed by the laws of the Commonwealth of
Kentucky. In the event of any arbitration, the Employee shall select
one arbitrator, the Employer 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.
Notwithstanding the foregoing, any dispute for which money damages
would not be an adequate remedy and disputes arising under Sections 4,
5, 6, 7 and 9 are excluded from this Section 17, unless both parties
mutually agree in writing to elect arbitration.
18. NOTICE
All notices to be given by either party to the other party to this
Agreement shall be given in writing and sent by U.S. certified mail,
return receipt requested, as follows:
To Employee: Xxxx X. Xxxxxxxxx
0000 Xxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
To Employer: Secretary
NS Group, Inc.
000 X. Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Either party may change their mailing address set forth above by giving
written notice to the other party of such new address sent by U.S.
certified mail, return receipt requested. Written notices given
pursuant to this section shall be deemed to have been delivered on the
date reflected on such receipt.
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19. SCHEDULE A
More specific conditions of employment are described in attached
Schedule A to this Agreement.
19. This Agreement replaces and supersedes the 1999 Agreement, which is
terminated and no longer in effect as of March 1, 2002.
I HAVE READ THIS EMPLOYMENT AGREEMENT AND, UNDERSTANDING ALL OF 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.
IN WITNESS WHEREOF, the Employer and Employee have agreed upon and
executed this Agreement on the day and year first written above.
WITNESSES: EMPLOYEE:
/s/ Xxxxx Xxxxxx /s/ Xxxx X. Xxxxxxxxx
NS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
Its: Secretary
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SCHEDULE A
CONDITIONS OF EMPLOYMENT
EMPLOYMENT - President and Chief Executive Officer of the Company.
BONUS - Xx. Xxxxxxxxx will participate in the Company's bonus plan, which
provides possible bonus awards equal to 100% of annual salary, based upon
performance of the Company.
STOCK OPTIONS - Options for 550,000 shares have been awarded. Subsequent option
awards will be determined by the Board of Directors. In the event that Xx.
Xxxxxxxxx'x employment is terminated other than for cause, suicide or to accept
other employment, not less than 60% of his outstanding options will be vested as
of the date of such termination.
DIRECTORSHIP - Xx. Xxxxxxxxx has been elected a Director of the Company.
RETIREMENT - subject to the terms of the Salary Continuation Agreement between
Xx. Xxxxxxxxx and the Company dated March 1, 2002.
SAVINGS PLAN - Xx. Xxxxxxxxx is eligible to participate in the Company's
Salaried Employees' Retirement Savings Plan.
AUTOMOTIVE STIPEND - Xx. Xxxxxxxxx will receive $1,250 per month, or $15,000 per
year, to cover the costs of a leased car as well as fuel, oil and maintenance
costs. The Company will provide liability insurance coverage.
COUNTRY CLUB GOLF OR COUNTRY CLUB FEES - Xx. Xxxxxxxxx has joined a country
club. The Company will pay his membership fees during the term of this
Agreement.
BENEFITS - Benefits include health care and dental benefits for Xx. Xxxxxxxxx
and his family, employee life insurance, sickness and accident salary
continuation and long-term disability, supplemental sickness and accident
benefits, educational assistance, as well as paid vacations and holidays.
CHANGE OF CONTROL SEVERANCE AGREEMENT - this Agreement between Xx. Xxxxxxxxx and
the Company will be executed simultaneously with the Employment Agreement dated
March 1, 2002.
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