EARLY RETIREMENT AGREEMENT
EXHIBIT
10.1
THIS
EARLY RETIREMENT AGREEMENT (the “Agreement”), is made and entered into as of the
9th day of October, 2006 (the “Effective Date”), by and between XXXXX SHOE
COMPANY, INC., a New York corporation (the “Company”), and XXXXXX X. XXXXX
(“Executive”).
WITNESSETH
THAT:
WHEREAS,
Executive currently serves as Executive Vice President and Chief Financial
Officer of the Company;
WHEREAS,
Executive wishes to voluntarily retire as an employee of the Company effective
on such date as is mutually agreeable to the Company and Executive, but no
later
than February 3, 2007 (the “Retirement Date”);
WHEREAS,
the Company desires to set forth the terms under which Executive’s duties will
be transitioned in an orderly fashion;
WHEREAS,
Executive possesses skills and leadership experience which the Company wishes
to
call upon from time to time during the time period following his Retirement
Date
until January 31, 2009 (the “Advisory Period”); and
WHEREAS,
Executive is willing to provide his skills and the benefit of his leadership
from time to time during the Advisory Period.
NOW,
THEREFORE, in consideration of the mutual undertakings contained herein, and
for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Company and Executive agree as follows:
1. Duties
Until Retirement.
Executive shall continue in his current role as Executive Vice President and
Chief Financial Officer until the earlier of the Retirement Date or the date
the
Company hires an individual to fill the Executive’s role. If the Company retains
such an individual before the Retirement Date, Executive shall remain an
employee of the Company until the Retirement Date in the capacity of a senior
advisor. Notwithstanding anything herein to the contrary, if Executive
voluntarily terminates his employment before the Retirement Date or is
terminated for cause before the Retirement Date, Executive (or his beneficiaries
or estate) shall not be entitled to receive any of the payments or benefits
described in Sections 3 through 9 below. For purposes of this section, the
term
“cause” means (a) engaging by Executive in willful misconduct which is
materially injurious to the Company; (b) conviction of Executive of a felony;
(c) engaging by Executive in fraud, material dishonesty or gross misconduct
in
connection with the business of the Company; (d) engaging by Executive in any
act of moral turpitude reasonably likely to materially and adversely affect
the
Company or its business; (e) engaging by Executive in the illegal use of a
controlled substance or using prescription medications unlawfully; or (f) abuse
by Executive of alcohol.
2. Duties
Following Retirement Date.
It is
anticipated that the Chief Executive Officer and other officers of the Company
may from time to time request Executive to provide his skills and leadership
to
support the Company during the Advisory Period. Without limiting the foregoing,
Executive will be expected to advise the Company’s Investment Committee, which
currently meets quarterly, assist in the defense of any litigation against
the
Company and/or prosecution of any claims by the Company, participate in the
preparation of the annual report, proxy, financial statements, and other
documents relating to the Company’s fiscal year ending February 3, 2007, and
provide financial and investor relations consulting as required. Executive
shall
not be required to hold himself available for the performance of these services
at any fixed time, but shall be available on a reasonable basis. Executive’s
presence shall not be required at any particular office or place in order to
render the services unless such services could not reasonably be performed
in
another location or by telephone or letter. For purposes of this Agreement,
available on a reasonable basis shall mean, for each 12-month period during
the
Advisory Period, either (i) up to a total of 100 days or (ii) eight days per
month during each month of such 12-month period. Notwithstanding the foregoing,
Executive will not be required to perform the services described in this Section
during any period in which he is disabled as defined in the Company’s long-term
disability plan. The Company will reimburse Executive for his reasonable
expenses associated with performing these services.
3. Payments
to Executive.
Subject
to the next sentence, the Company shall pay Executive an amount equal to (a)
$9,600 per week during the time period beginning with the Retirement Date until
February 3, 2007, and (b) $110,416.67 per month, payable on the first day of
each calendar month, from February 3, 2007 through the end of the Advisory
Period. In order to comply with Section 409A of the Internal Revenue Code of
1986, as amended, all payments due during the first six months following the
Retirement Date shall be paid in a single lump sum on the date that is six
months and one day following the Retirement Date, with interest added at the
rate of 5.43% per annum from the date payments would have been made under the
preceding sentence.
4. Fiscal
2006 Annual Bonus.
The
Company shall pay Executive, on the date that is six months and one day
following the Retirement Date, the 2006 fiscal year annual bonus that the
Company would have paid Executive in March 2007 but for the fact that he will
no
longer be an employee of the Company when the bonus would have been paid.
5. Pension
Benefits.
As of
the Retirement Date, pension payments to which Executive is entitled under
the
Xxxxx Shoe Company, Inc. Retirement Plan and the Xxxxx Shoe Company, Inc.
Executive Retirement Plan (the “SERP”) shall be determined, and paid, in
accordance with the terms of the plans, except that, solely for purposes of
calculating retirement benefits under the SERP, (a) Executive shall receive
service credit through the end of the Advisory Period and will be assumed to
be
age 58 as of the Retirement Date, (b) with respect to the additional years
of
service credited, Executive shall be assumed to have earned $825,000 in eligible
compensation per year, and (c) a discount rate of 4.68% shall be used to
calculate the present value of his SERP benefit.
6. Non-Vested
Restricted Stock and Stock Options.
Any of
Executive’s options or restricted stock that have not vested as of the
Retirement Date shall be forfeited on such Retirement Date in accordance with
the terms of such awards.
7. Medical
and Dental Benefits.
The
Company shall provide to Executive and his eligible dependents for a period
of
18 months after the Retirement Date medical and dental coverage under the
Company’s medical and dental plans, without any cost to Executive in excess of
any employee contribution that would be payable by Executive if Executive
remained employed by the Company; provided, however, that if Executive becomes
employed with another employer during such 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 terminate. In addition,
on
the last day of such 18-month period, if medical and/or dental coverage has
not
previously terminated, the Company shall pay to the Executive an amount in
cash
equal to the aggregate amount above the employee contribution that would be
payable by the Company for such medical and dental coverage (using the COBRA
rate) during the then remaining period of time during the Advisory Period.
8. Perquisites.
The
Company shall pay Executive’s regular, monthly dues to the St. Louis Club during
the Advisory Period. The Company shall pay Executive $2,000 on August 6, 2007
and $2,000 on April 1, 2008 to compensate him for any expenses for financial
planning and/or tax preparation services that Executive may incur.
9. Death.
(a) In
the
event of the death of Executive on or before the Retirement Date, the Company
shall pay the Executive’s beneficiary or estate only those amounts that would
otherwise be payable upon his death as an employee. For the avoidance of doubt,
neither the Executive, the Executive’s beneficiary, nor his estate will be
entitled to any amounts described in this Agreement upon Executive’s death
before the Retirement Date.
(b) In
the
event of the death of Executive during the Advisory Period, the Company’s
obligation to provide the payments, benefits and perquisites described in
Sections 7 and 8 of this Agreement shall cease as of the date of such death.
Any
remaining amounts which have not yet been paid under Section 3 or 4 of this
Agreement shall be paid to Executive’s designated beneficiary, or if Executive
leaves no designated beneficiary, to his estate, in a lump sum upon Executive’s
death. Any remaining amounts that have not yet been paid under Section 5 shall
be paid out in accordance with the Xxxxx Shoe Company, Inc. Retirement Plan
and
the SERP.
10. Covenant
Not to Compete.
10.1 In
General.
During
Executive’s employment with the Company and during the Advisory Period (the
“Restricted Period”), Executive will not, directly or indirectly, on Executive’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 the Company and/or any Business Unit (i)
in
the United States and/or (ii) in any other country in which the Company and/or
any Business Unit is doing business in the one year immediately preceding the
Retirement Date (each a “Foreign Country”) if Executive 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 Executive 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 the Company and/or any
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 the Company
and/or any Business Unit;
(g) cause
or
attempt to cause any footwear supplier or manufacturer of the Company and/or
any
Business Unit to divert, terminate, limit, modify or fail to enter into any
existing or potential relationship with the Company and/or any 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 the Company
and/or any Business Unit to divert, terminate, limit, modify or fail to enter
into any existing or potential relationship with the Company and/or any 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,
the
Company and/or any Business Unit.
10.2 Acknowledgement.
Executive recognizes and agrees that the restraints contained in Section 10.1
are reasonable and should be fully enforceable in view of, among other things,
the high level positions Executive has had with the Company and/or any 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
and their respective customer goodwill and relationships. Executive specifically
hereby acknowledges and confirms that Executive is willing and intends to,
and
will, abide fully by the terms of Section 10.1. Executive further agrees that
the Company would not have adequate protection if Executive 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)
Executive was involved in diverting or helping to divert the Company’s customers
and/or customer goodwill. Executive agrees to disclose, during the Restricted
Period, the terms of Section 10 to any potential future employer.
10.3 Definitions.
For
purposes of this Section:
(a) “Business
Unit” means any direct or indirect subsidiary, operating division or business
unit of the Company.
(b) “Competitor”
means any Person which (i) 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 (ii) is reasonably expected to have such level of footwear sales or revenues
in either the current fiscal year or the next following fiscal
year.
(c) “Customer”
means any wholesale customer of the Company and/or any Business Unit which
either purchased from the Company and/or any Business Unit during the one (1)
year immediately preceding the Retirement Date, or is reasonably expected by
the
Company and/or any Business Unit to purchase from the Company and/or any
Business Unit in the one (1) year period immediately following the Retirement
Date, more than $1,000,000 in footwear.
(d) “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.
11. Confidential
Information.
11.1 In
General.
Executive acknowledges and agrees that during Executive’s employment, Executive
has been and/or will be provided and have access to certain Confidential
Information of the Company. Executive agrees to keep secret and confidential,
and not to use or disclose to any third-parties, except as directly required
for
Executive to perform Executive’s employment responsibilities for the Company,
any of the Company’s Confidential Information.
11.2 Definition
of Confidential Information.
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 the Company and/or
any Business Unit (and/or key individuals employed or engaged by such
parties);
(b) lists
or
other identification of sources or prospective sources of the Company’s and/or
any 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 the Company’s
and/or any Business Unit’s products;
(d) financial,
distribution, sales and marketing information, data, plans, and/or strategies
of
the Company and/or any 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 Company and/or any Business Unit’s products and
services;
(f) the
Company and/or any 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) the
Company’s and/or any Business Unit’s relations with its employees (including,
without limitation, salaries, job classifications and skill levels);
and
(h) any
other
information designated by the Company and/or any Business Unit to be
confidential, secret and/or proprietary (including without limitation,
information provided by customers or suppliers of the Company and/or any
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 Executive in violation of this
Agreement.
11.3 No
Duplication of Confidential Information.
Executive will not, directly or indirectly, copy, reproduce or otherwise
duplicate, record, abstract, summarize or otherwise use for Executive or use
for, or disclose to, any party other than the Company, or any subsidiary or
affiliate of the Company, any Confidential Information, without the Company’s
prior written permission or except as required for the proper performance of
Executive’s duties on behalf of the Company.
11.4 No
Label Required.
Executive understands that Confidential Information may or may not be labeled
as
“confidential” and will treat all information as confidential unless otherwise
informed by the Company.
11.5 Delivery
of Confidential Information.
Upon
Executive’s retirement or at any other time the Company or any subsidiary or
affiliate thereof may request, Executive shall promptly deliver to the Company
all documents and other materials, whether in physical or electronic form
(including all copies thereof), containing any Confidential
Information.
12. Injunctive
Relief.
In the
event of a breach or threatened breach of any of Executive’s duties or
obligations under the terms and provisions of Sections 10, 11, 13.2 or 13.9,
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. Executive hereby expressly acknowledges that
the harm that might result to the Company’s business as a result of
noncompliance by Executive with any of the provisions of Sections 10, 11, 13.2
or 13.9 would be largely irreparable. Executive specifically agrees that if
there is a question as to the enforceability of any of the provisions of
Sections 10, 11, 13.2 or 13.9, Executive 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. Executive
undertakes and agrees that if Executive breaches or threatens to breach the
Agreement, Executive shall be liable for any attorneys’ fees and costs incurred
by the Company in enforcing its rights hereunder.
13. Miscellaneous.
13.1 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
Executive:
Xxxxxx
X.
Xxxxx
000
Xxxxxxxx Xxxxxxx
Xxxx
& Xxxxxxx, 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.
13.2 Assignment.
This
Agreement is personal to Executive and Executive may not assign or delegate
any
part of Executive’s rights or duties hereunder to any other person, except that
this Agreement shall inure to the benefit of and be enforceable by Executive’s
legal representatives, executors, administrators, heirs and
beneficiaries.
13.3 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.
13.4 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.
13.5 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.
13.6 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. 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.
13.7 Termination
of Severance Agreement.
This
instrument shall supersede any other agreement between the parties, oral or
written, concerning the same subject matter. The severance agreement between
the
parties dated as of April 1, 2006 is hereby terminated and deemed by the parties
to be void ab initio.
13.8 Amendment.
Subject
to Section 13.3, 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.
13.9 Governing
Law.
In
light of Company’s and Executive’s substantial contacts with the State of
Missouri, the facts that the Company is headquartered in Missouri and Executive
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 the
Company’s execution of, and the making of, this Agreement in Missouri, the
parties agree that: (a) 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 (b) 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. Executive agrees that Executive 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 Executive
hereby consents and agrees that any such litigation filed in any other court(s)
shall be dismissed and that Executive may be enjoined from filing and/or
pursuing any such action.
13.10 Third
Party Beneficiaries.
Executive agrees that the Company’s subsidiaries are third party beneficiaries
of this Agreement and hereby consents to the enforcement by any subsidiary
of
the Company of the provisions contained herein, including without limitation,
the provisions of Section 10 and Section 11.
IN
WITNESS WHEREOF, Executive and the Company have executed this Agreement as
of
the day and year first above written.
|
XXXXX
SHOE COMPANY, INC.
|
EXECUTIVE
|
||||
|
By
|
/s/ Xxxxxx X. Xxxxx | /s/ Xxxxxx X. Xxxxx | |||
|
Xxxxxx
X. Xxxxx
|
|||||
|
Title
|
Chairman and Chief Executive Officer | ||||
|
Date
|
10/9/06 |
Date
|
10/09/06 | ||
