EXHIBIT 10.35
EMPLOYMENT AGREEMENT
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This agreement (the "Agreement") is made as of the ____ day of April, 1998
(the "Effective Date"), by and between Xxxx X. Xxxxxxx (the "Employee") and
Xxxxxxx Shoe Company Inc., a Delaware corporation (the "Company").
WHEREAS, the Board of Directors of the Company (the "Board") recognizes the
Employee's past and continuing contribution to the growth and success of the
Company and desires to assure the Company of the Employee's continued employment
in an executive capacity and to compensate him therefor; and
WHEREAS, the Company and the Employee each wishes that this Agreement
supersede and render void the terms of that certain Employment Agreement dated
as of January 26, 1994 by and between the Company and the Employee; and
WHEREAS, the Employee wishes to continue his employment by the Company and
to commit himself to serve the Company on the terms herein provided;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:
1. Position, Responsibilities and Term of Employment.
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1.01 Position and Responsibilities. The Employee shall serve as Chairman
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of the Board, Chief Executive Officer and President of the Company and in such
additional management position(s) as the Board shall designate. In this
capacity the Employee shall, subject to the by-laws of the Company and to the
direction of the Board, have general supervisory responsibility for the
operations of the Company's business. The Employee shall be accountable to the
Board and shall perform and discharge, faithfully, diligently and to the best of
his ability, his duties and responsibilities hereunder. The Employee shall
devote substantially all of his working time and efforts to the business and
affairs of the Company.
1.02 Term. Subject to the provisions of Sections 1.03, 1.04, 1.05 and
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1.06 hereof, the term of this Agreement shall commence on the Effective Date and
shall expire on the fifth anniversary of the Effective Date.
1.03 Termination on Account of the Employee's Death. In the event of the
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Employee's death during the term of this Agreement, this Agreement shall
terminate except as provided in this Section 1.03. Following the Employee's
death, the beneficiary or beneficiaries indicated below shall be entitled to the
following benefits:
(a) For a period of six months subsequent to the date of the Employee's
death, the Company shall continue to pay an amount equal to the Employee's
Base Salary (as defined in Section 2.01 hereof) to Xxxxx X. Xxxxxxx, the
Employee's beneficiary, or such other beneficiary or beneficiaries as he
may later designate (or to his estate, if he fails to make such
designation) at the salary rate in effect on the date of his
death, said payments to be made on the same periodic dates as salary
payments would have been made to the Employee had he not died.
(b) For a period of six months subsequent to the date of the Employee's
death, the Employee's surviving spouse, if any, shall continue to receive
all benefits described in Section 2.04 hereof in effect on the date of his
death. For purposes of determining the amount of such benefits, the
Employee shall be deemed to have remained in the employ of the Company,
with an annual salary at the rate in effect on the date of his death. In
addition, service credits under the benefit plans will continue to accrue
during such six-month period as if the Employee had remained an employee of
the Company. If benefits or service credits contemplated by the previous
two sentences cannot be provided under any benefit plan because of a
prohibition in the terms of the plan, the Company shall pay or provide
directly for payment of any benefits which would have been payable if the
terms of such benefit plan allowed for the crediting required by the two
previous sentences.
The Employee may change the beneficiary for the purposes of this Section 1.03 by
making a written designation and delivering such designation to the Secretary of
the Company. If the Employee makes more than one such written designation, the
designation last received by the Chairman of the Board before the Employee's
death shall control.
1.04. Termination for Cause. The Company shall have the right, after
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fourteen (14) days' written notice to the Employee, to terminate his employment
for cause. For purposes of this Agreement, cause ("Cause") shall mean (a)
committing fraud, misappropriation or embezzlement in the performance of duties
as an employee of the Company, (b) conviction of a felony involving a crime of
moral turpitude, (c) willful disregard of any written directive of the Board
that is not inconsistent with the Company's Certificate of Incorporation, by-
laws or applicable law, (d) an act of the Employee constituting willful material
breach by the Employee of any material provision of this Agreement or (e) the
Employee willfully engaging in any business activity that materially conflicts
with Employee's duties owed to the Company. Any termination of the Employee for
Cause after a Change of Control occurs (as defined in Section 4.03(a) hereof)
must relate to an act or omission of the Employee occurring after the Change of
Control occurs.
1.05 Termination for Other than Cause. Subject to the provisions of
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Section 4 hereof, the Employee's employment may be terminated by either party by
giving thirty (30) days written notice to the other party. If the Employee
terminates his employment, it shall be considered to be a termination of the
Employee's employment by the Company for other than Cause if any of the
following events shall occur: if the Company (a) fails to appoint (or elect)
the Employee to the position or positions listed in Section 1.01 hereof; (b)
fails to comply with the provisions of Section 2 hereof; (c) engages in conduct
that, against the Employee's volition, would cause the Employee to commit
fraudulent acts or would expose the Employee to criminal liability; (d) reduces
or attempts to reduce the Employee's annual compensation (as described in
Section 2 hereof); (e) takes or attempts to take from the Employee a title or an
office; or (f) effects or attempts to effect a significant change in the
Employee's responsibilities and/or duties which constitutes a demotion in the
judgment of the Employee (such judgment being exercised in good faith).
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1.06 Extensions. On the fifth anniversary of the Effective Date, and on
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each subsequent annual anniversary of the Effective Date thereafter, this
Agreement shall be automatically extended for an additional year unless either
party notifies the other in writing more than six months prior to the relevant
anniversary date that this Agreement is no longer to be extended.
2. Compensation.
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2.01 Base Salary. For the period beginning with the date hereof through
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October 31, 1998, the Company shall pay to the Employee for the services to be
rendered hereunder a base salary (the "Base Salary") at an annual rate of
$525,000 and, for periods beginning after October 31, 1998, the Base Salary
shall be determined by the Company's Compensation and Stock Option Committee;
provided, however, that such Base Salary shall be paid at an annual rate not
less than $525,000. The Employee's Base Salary shall be payable in periodic
instruments in accordance with the Company's usual practice for its senior
executive officers.
2.02 Performance Bonus. The Employee shall be eligible to receive an
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annual performance bonus (the "Performance Bonus"), the amount of which shall be
determined pursuant to the Company's Senior Management Incentive Plan
established by the Company's Compensation and Stock Option Committee. Any
Performance Bonus earned under this Section 2.02 shall be payable in accordance
with the Company's normal practices with respect to bonus payments made to the
Company's senior executive officers; provided, however, that any such
Performance Bonus shall be paid not later than thirty (30) days after audited
financial statements with respect to the Company's fiscal year during which such
bonus was earned become available.
2.03 Stock Option. The Company and the Employee acknowledge that, on the
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Effective Date, the Company granted a nonqualified stock option to the Employee
to purchase 75,000 shares of the Company's Class A Common Stock at an exercise
price per share equal to the fair market value on the Effective Date and subject
to certain time and stock price performance vesting provisions as set forth in
that certain Stock Option Agreement between the Company and the Employee, dated
as of April ___, 1998 (the "Stock Option Agreement"), a copy of which is
attached hereto as Exhibit A.
2.04 Participation in Benefit Plans. The Employee shall be entitled to
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participate in, and receive benefits under, all the Company employee benefit
plans and arrangements in effect on the Effective Date for as long as such plans
and arrangements may remain in effect (including, but not limited to,
participation in any pension and profit-sharing plan adopted by the Company, any
employee stock option plan and all group life, health, dental, disability and
other insurance) or any substitute or additional plans, policies or arrangements
made available in the future to the executives and key management employees of
the Company, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans, policies and arrangements. Nothing paid
to the Employee under any plan, policies or arrangement presently in effect or
made available in the future shall be deemed to be in lieu of other compensation
to the Employee hereunder as described in this Section 2.
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2.05 Vacation Days; Sick Leave. The Employee shall be entitled to annual
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vacation time and sick leave without reduction in Base Salary in the same amount
and manner as other senior executive officers of the Company.
2.06 Expenses. During the term of his employment hereunder, the Employee
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shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by him (in accordance with the policies and procedures established by
the Board for its senior executive officers) in performing services hereunder,
provided that the Employee properly accounts therefor in accordance with Company
policy.
3. Rights and Obligations Binding on Employee, the Company and its
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Successor(s).
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This Agreement and the rights and obligations of the parties hereto shall
bind and inure to the benefit of each of the parties hereto and shall also bind
and inure to the benefit of any successor or successors, or assignee or
assignees, of the Company. Except as to any such successor or assignee of the
Company, neither this Agreement nor any rights, obligations or benefits
hereunder may be assigned by the Company or by the Employee. As used in this
Agreement, a "successor" or "assignee" of the Company shall include but not be
limited to (a) any person or entity succeeding the Company, whether by sale or
exchange of stock or assets, merger, consolidation, recapitalization, or a
reorganization of any kind, including but not limited to all reorganizations
defined in section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"), or (b) any person or entity receiving, directly or indirectly, any
substantial portion of the business, properties or assets of the Company, in any
type of transfer, including, but not limited to, any sale, exchange or other
transfer of any assets of the Company, or any transfer in connection with the
liquidation and/or dissolution of the Company, or the bankruptcy of the Company.
For any such transaction in which the successor or assignee does not succeed to
the obligations of the Company under this Agreement by operation of law, the
Company agrees that it shall be a precondition to the closing of such
transaction that the successor or assignee expressly assume the Company's
obligations under this Agreement. Except as provided in Section 4.03 hereof,
the rights and obligations of the parties to this Agreement shall not be limited
in any way or affected by a Change of Control (as defined in Section 4.03 (a)
hereof).
4. Consequences of Early Termination of Agreement.
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4.01 Termination by the Company Other than for Cause. If the Company
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terminates this Agreement other than for Cause (including if the Employee
terminates this Agreement under the circumstances described in the second
sentence of Section 1.05 hereof), then the Employee (or the Employee's
beneficiary designated pursuant to Section 1.03 hereof if the Employee is
deceased at the time of payment) shall continue, throughout the remainder of
what would have been the normal term of this Agreement, to receive such
compensation and benefits as are provided to the Employee pursuant to Section 2
hereof; provided, however, that in no event shall the Employee receive, during
the period beginning with the date of termination of the Employee's employment
and the end of what would have been the normal term of this Agreement, an
aggregate amount of compensation and benefits less than one and one-half (11/2)
times the Employee's total compensation (including, for purposes of computing
total compensation under this Section 4.01, the amount of any bonus or employee
benefits accrued during the relevant
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period) earned during the twelve-month period immediately preceding the
effective date of such termination. The Employee's right to receive such
compensation and benefits shall not be subject to any obligations on the part of
the Employee to perform any work or other obligations on behalf of the Company,
its successor(s) or assignee(s), or to mitigate his damages; provided, however,
that if the Employee actually receives compensation for services rendered to any
person other than the Company, which services were rendered after the date the
Employee was terminated by the Company and before the date constituting the end
of what would have been the normal term of this Agreement, then the amount of
any such compensation shall be subtracted from the amount otherwise owed to the
Employee by the Company pursuant to this Section 4.01. For the purposes of
determining the amount of benefits to which the Employee shall continue to be
entitled pursuant to Section 2.04 above, the Employee shall be deemed,
throughout the period of his entitlement pursuant to this Section 4.01, to have
remained in the employ of the Company with an annual salary at the rate in
effect on the date of his termination of employment. If continuation of any of
the benefits described in Section 2.04 cannot be provided as contemplated by
this Section 4.01 on account of a prohibition in the terms of a benefit plan,
the Company shall pay or provide directly for payment of any benefits which
would have been payable if the terms of such plan allowed for the crediting
anticipated in this Section 4.01.
4.02 Termination by the Company for Cause. If the Company terminates this
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Agreement for Cause, then the Company shall thereafter have no further
obligations or liability to the Employee under this Agreement; provided,
however, that the Employee shall be entitled to receive within thirty (30) days
after the effective date of such termination such compensation and benefits as
are accrued and unpaid on the effective date of such termination.
4.03 Termination Following Change of Control. If there is a Change of
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Control while this Agreement is in effect, the provisions of this Section 4.03
shall apply and shall continue to apply for a one-year period following the
Change of Control, regardless of whether or not this Agreement is terminated.
If during the one-year period following a Change of Control the Employee's
employment is terminated by the Company without Cause, the Employee (or the
Employee's beneficiary designated pursuant to Section 1.03 hereof if the
Employee is deceased at the time of payment) shall receive such compensation as
is provided to the Employee pursuant to subsection (b) of this Section 4.03.
After said one-year period following said Change of Control, this Section 4.03
shall no longer apply, and all of the other provisions of this Agreement shall
apply and remain in full force and effect.
(a) For the purposes of this Section 4.03, Change of Control shall mean the
occurrence of one or more of the following three events:
(i) any one beneficial stockholder or affiliated group of beneficial
stockholders becomes at any time the beneficial holder of twenty-five
percent (25%) or more of the aggregate voting power of the issued and
outstanding securities of the Company with rights to vote for the
election of directors of the Company;
(ii) at any time after any "reorganization" involving the Company, as
such term is defined in section 368 of the Code, or any other type of
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reorganization, recapitalization, merger, consolidation or sale of
assets involving the Company, or a contested election of a Company
director, or any combination of the foregoing, the individuals who
were directors of the Company immediately prior thereto shall cease to
constitute a majority of the Board; or
(iii) at any time after a tender offer or exchange offer for voting
securities of the Company (other than by the Company), the individuals
who were directors of the Company immediately prior thereto shall
cease to constitute a majority of the Board.
(b) If the Employee becomes entitled to receive compensation pursuant to
this Section 4.03, then, in addition to any payments to which the Employee
is entitled under Section 4.01 hereof, the Employee shall receive within
thirty (30) days of the termination of his employment a lump-sum payment
equal to three (3) times the Employee's average annual total compensation
(including, for purposes of computing total compensation under this Section
4.03, the amount of any bonus and employee benefits accrued during the
relevant period) earned during the five-year period immediately preceding
the effective date of the change of control (such payment hereinafter
referred to as the "Termination Payment"). If any amount payable to the
Employee pursuant to this Section 4.03 would subject the Employee to the
excise tax imposed by section 4999 of the Code, then the amount of the
Termination Payment that the Employee would otherwise have been entitled to
receive under this Section 4.03 shall be reduced to the amount that
maximizes the amount of the Termination Payment net of such excise tax.
4.04 Other Terminations. If the Employee terminates his employment under
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this Agreement under such circumstances as would not cause the Employee to be
deemed to be terminated by the Company for other than Cause as provided in the
second sentence of section 1.05 hereof, and Section 4.03 does not apply to such
termination, then the Employee shall be entitled to receive within thirty (30)
days after the effective date of such termination such compensation and benefits
as are accrued and unpaid on the effective date of such termination, and neither
party to this Agreement shall thereafter have any further liability to the other
under this Agreement.
5. Miscellaneous.
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5.01 Governing Law. This Agreement shall be construed in accordance with
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and governed for all purposes by the laws of The Commonwealth of Massachusetts.
5.02 Interpretation. In case any one or more of the provisions contained
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in this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
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5.03 Legal Fees. Any legal expenses incurred by either party to this
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Agreement in enforcing its rights hereunder (including any legal expenses
incurred with respect to any arbitration proceeding pursuant to Section 5.04
hereof) shall be borne and paid solely by such party. Notwithstanding the
foregoing or anything to the contrary contained in this Agreement, no provision
of this Agreement shall be construed as a limitation on or waiver of any rights
that one party to this Agreement may have to be reimbursed by the other party to
this Agreement for such first party's attorneys' fees pursuant to any statute or
other applicable law.
5.04 Arbitration of Disputes. Any controversy or claim arising out of, or
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relating to, any provision of this Agreement shall be settled by binding
arbitration in accordance with the laws of The Commonwealth of Massachusetts by
three arbitrators, one of whom shall be appointed by the Company, one by the
Employee, and the third by the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association in
the City of Boston. Such arbitration shall be conducted in the City of Boston in
accordance with the rules of the American Arbitration Association, except with
respect to the selection of arbitrators, which shall be as provided in this
Section 5.04. Judgment on the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof.
5.05 Notices. Any notice required or permitted to be given hereunder
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shall be effective when received and shall be sufficient if in writing and if
personally delivered or sent by certified or registered mail, return receipt
requested, to the party to receive such notice at its address set forth below or
at such other address as a party may by notice specify to the other.
If to the Company: If to the Employee:
Xxxxxxx Shoe Company Inc. Xxxx X. Xxxxxxx
000 Xxxxxxx Xxxxxx 0 Xxxxxxx Xxxxx
X.X. Xxx 00 Xxxxxxx, XX 00000
Xxxxxxxxx (Xxxxxx), XX 00000
Attn: Xxxxx X. Xxxxxxxx,
Executive Vice President
With a copy to: With a copy to:
Xxxxxxxx X. Xxxxx, Esq. Xxxxxx X. Xxxxxxx, Esq.
Xxxxxx, Xxxx & Xxxxxxxx LLP Peckham, Lobel, Xxxxx, Prince & Tye
000 Xxxxx Xxxxx Xxxxxx Xxxxxx, XX 00000
Xxx Xxxxxxx, XX 00000
5.06 Confidential Information. The Employee will not disclose to any
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other person or entity (except as required by applicable law or in connection
with the performance of his responsibilities hereunder), or use for his own
benefit, any confidential information of the Company obtained by him incident to
his employment with the Company. The term "confidential information" includes,
without limitation, financial information, business plans, prospects and
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opportunities which have been discussed or considered by the Company's
management but does not include any information which has become public other
than on account of the Employee's failure to comply with the provisions of this
Section 5.06.
5.07 Non-Competition. The Employee agrees that, for a period of eighteen
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(18) months following the date of termination of this Agreement (other than a
termination that results solely from the expiration of the initial or extended
normal term of this Agreement contemplated by Sections 1.02 and 1.06 hereof), he
will not directly or indirectly own, manage, operate, control or participate in
the ownership, management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any financial
interest in, or aid or assist anyone else in the conduct of, or solicit any
employees of the Company on behalf of, any entity or business which competes
directly with the footwear or retail businesses conducted by the Company or by
any group, division or subsidiary of the Company, in any area where such
business is being conducted or is proposed to be conducted at such date of
termination; provided, however, that this provision shall not apply if this
Agreement is terminated as provided in the parenthetical phrase set forth above
in this sentence. It is understood and agreed that, for the purposes of the
foregoing provisions of this Section 5.07, (i) no business shall be deemed to be
a business conducted by the Company, or any group, division or subsidiary of the
Company, unless not less than five percent (5%) of the Company's consolidated
gross sales or operating revenues is derived from, or not less than five percent
(5%) of the Company's consolidated assets is devoted to, such business; and (ii)
no business conducted by any entity by which the Employee is employed or in
which he is interested or with which he is connected or associated shall be
deemed competitive with any business conducted by the Company unless it is one
from which five percent (5%) or more its consolidated gross sales or operating
revenues is derived, or to which five percent (5%) or more of its consolidated
assets is devoted; provided, however, that if the actual gross sales or
operating revenues or assets of such entity derived from or devoted to such
business is equal to or in excess of ten percent (10%) of the most nearly
comparable figure for the Company, such business of such entity shall be deemed,
to be competitive with a business of the Company. Furthermore, ownership of five
percent (5%) or less of the voting stock of any publicly held corporation shall
not constitute a violation of this Section 5.07.
5.08 Amendment and Waiver. This Agreement may not be amended, supplemented
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or waived except by a writing signed by the party against which such amendment,
supplement or waiver is to be enforced. The waiver by any party of a breach of
any provision of this Agreement shall not operate to waive, or be construed as a
waiver of, any other breach of that provision nor as a waiver of any breach of
another provision.
5.09 Binding Effect. Subject to the provisions of Section 3 hereof, this
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Agreement shall be binding on the successors and assigns of the parties hereto.
5.10 Other Agreements. This Agreement supersedes and renders void the terms
of any previously executed employment, including but not limited to that certain
Employment Agreement dated January 26, 1994 between the Company and the
Employee, and/or compensation agreements between the parties, which shall no
longer be considered to have any force or effect.
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5.11 Counterparts. This Agreement may be executed in two counterparts,
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each of which is an original but which shall together constitute one and the
same instrument.
Upon execution below by both parties, this Agreement will enter into full
force and effect as of April ___, 1998.
XXXXXXX SHOE COMPANY INC. THE EMPLOYEE
By:
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Xxxxx X. Xxxxxxxx Xxxx X. Xxxxxxx
Executive Vice President
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Exhibit A
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Stock Option Agreement
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XXXXXXX SHOE COMPANY INC.
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EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT
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PURSUANT TO THE
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1994 STOCK INCENTIVE PLAN
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This Employee Nonqualified Stock Option Agreement (this "Agreement") is
made and entered into as of the Date of Grant indicated below by and between
Xxxxxxx Shoe Company Inc., a Delaware corporation (the "Company"), and the
person named below as Employee.
WHEREAS, Employee is an employee of the Company and/or one or more of its
subsidiaries; and
WHEREAS, pursuant to the Company's 1994 Stock Incentive Plan (the "Plan"),
the committee of the Board of Directors of the Company administering the Plan
(the "Committee") has approved the grant to Employee of an option to purchase
shares of the Class A Common Stock, par value $.01 per share, of the Company
(the "Common Stock"), on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. GRANT OF OPTION; CERTAIN TERMS AND CONDITIONS. The Company hereby
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grants to Employee, and Employee hereby accepts, as of the Date of Grant, an
option to purchase the number of shares of Common Stock indicated below (the
"Option Shares") at the Exercise Price per share indicated below, which option
shall expire at 5:00 o'clock p.m., Boston time, on the Expiration Date indicated
below and shall be subject to all of the terms and conditions set forth in this
Agreement (the "Option"). The Option shall become exercisable to purchase
("Vesting Rate") that number of Option Shares (rounded to the nearest whole
share) equal to the total number of Option Shares multiplied by the Vesting Rate
indicated below.
Employee: Xxxx X. Xxxxxxx
Date of Grant: April ___, 1998
Number of shares purchasable: 75,000
Exercise Price per share: $ __________
Expiration Date: April ___, 2008
Vesting Rate:
(A) With respect to 35,000 Option Shares, the Vesting Rate shall be as
follows: 17% on 4/___/1999, 17% on 4/___/2000, 33% on 4/___/2001 and 33% on
4/___/2002.
(B) With respect to 40,000 Option Shares, the Vesting Rate shall be as
follows:
(i) 13,333 Option Shares shall vest on the date, if ever, when the last
sale price of the Common Stock equals or exceeds the sum of (x) the average of
the last sale prices of the Common Stock during the period commencing on the
Date of Grant and ending on May ___, 1998 (thirty days after the Date of Grant)
and (y) two dollars.
(ii) 13,333 Option Shares shall vest on the date, if ever, when the last
sale price of the Common Stock equals or exceeds the sum of (x) the average of
the last sale prices of the Common Stock during the period commencing on the
Date of Grant and ending on May ___, 1998 (thirty days after the Date of Grant)
and (y) four dollars.
(iii) 13,334 Option Shares shall vest on the date, if ever, when the last
sale price of the Common Stock equals or exceeds the sum of (x) the average of
the last sale prices of the Common Stock during the period commencing on the
Date of Grant and ending on May ___, 1998 (thirty days after the Date of Grant)
and (y) six dollars.
The Option is not intended to qualify as an incentive stock option under
Section 422 of the Internal Revenue Code.
2. ACCELERATION OF VESTING AND TERMINATION OF OPTION.
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(a) Termination of Employment.
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(i) Retirement. If Employee ceases to be employed by reason of Employee's
retirement in accordance with the Company's then-current retirement policy
("Retirement"), then (A) the portion of the Option that has not vested on or
prior to the date of such Retirement shall terminate on such date and (B) the
remaining vested portion of the Option shall terminate upon the earlier of the
Expiration Date or the first anniversary of the date of such Retirement.
(ii) Death or Permanent Disability. If Employee ceases to be
employed by reason of the death or Permanent Disability (as hereinafter
defined) of Employee, then (A) the portion of the Option that has not
vested on or prior to the date of such Termination of Employment shall
terminate on such date and (B) the remaining vested portion of the Option
shall terminate upon the earlier of the Expiration Date or the first
anniversary of the date of Employee's death or Permanent Disability.
"Permanent
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Disability" shall mean the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than 12 months.
Employee shall not be deemed to have a Permanent Disability until proof of
the existence thereof shall have been furnished to the Board in such form
and manner, and at such times, as the Board may require. Any determination
by the Board that Employee does or does not have a Permanent Disability
shall be final and binding upon the Company and Employee.
(iii) Termination for Cause. If Employee is terminated for
Cause, both the vested and unvested portions of the Option shall terminate
immediately. "Cause" shall mean Employee's (A) conviction by a court of
competent jurisdiction of a felony or serious misdemeanor involving moral
turpitude, (B) willful disregard of any written directive of the Board that
is not inconsistent with the Certificate of Incorporation or Bylaws of the
Company or applicable law, (C) breach of his or her fiduciary duty
involving personal profit, or (D) neglect of his or her duties that has a
material adverse effect on the Company.
(iv) Other Termination. If Employee is terminated without
Cause, then (A) the portion of the Option that has not vested on or prior
to the date of such termination of employment shall terminate on such date
and (B) the remaining vested portion of the Option shall terminate upon the
earlier of the Expiration Date or the 90th day following the date of such
termination of employment; provided, however, that if Employee is
terminated without Cause within one year after a Change of Control, then
(x) the portion of the Option that has not vested on or prior to the date
on which Employee is terminated shall fully vest as of such date and (y)
the Option shall terminate upon the earlier of the Expiration Date or the
90th day following the date on which Employee is terminated. A "Change of
Control" shall mean the first to occur of the following:
(1) the date upon which the directors of the Company who were
nominated by the Board for election as directors cease to constitute a
majority of the directors of the Company;
(2) the consummation of a reorganization, merger or
consolidation of the Company (other than a reorganization, merger or
consolidation the sole purpose of which is to change the Company's
domicile solely within the United States) (a) as a result of which the
outstanding securities of the class then subject to the Option are
exchanged for or converted into cash, property and/or securities not
issued by the Company and (b) the terms of which provide that the
Option shall continue in effect thereafter; or
(3) the date of the first public announcement that any person
or entity, together with all Affiliates and Associates (as such
capitalized terms are defined in Rule 12b-2 promulgated under the
Exchange Act of 1934, as
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amended (the "Exchange Act")) of such person or entity, shall have
become the Beneficial Owner (as defined in Rule 13d-3 promulgated
under the Exchange Act) of voting securities of the Company
representing more than 50% of the voting power of the Company (a "50%
Stockholder"); provided, however, that the term "50% Stockholder"
shall not include (a) the Company or any of its subsidiaries, (b) any
employee benefit plan of the Company or any of its subsidiaries, (c)
any entity holding voting securities of the Company for or pursuant to
the terms of any such plan, (d) any person or entity who held shares
of the Company's Class B Common Stock, par value $.01 per share, as of
the completion of an initial public offering of shares of the Common
Stock and any Permitted Transferee (as defined in the Company's
Certificate of Incorporation) of such person or entity, or (e) any
person or entity if the transaction that resulted in such person or
entity becoming a 50% Stockholder was approved in advance by the
Board.
(b) Death Following Termination of Employment. Notwithstanding anything
-----------------------------------------
to the contrary in this Agreement, if Employee shall die at any time after the
termination of his or her employment and prior to the date on which the Option
is terminated pursuant to Section 2(a), then the vested portion of the Option
shall terminate on the earlier of the Expiration Date or the first anniversary
of the date of Optionee's death.
(c) Acceleration of Option of Option by Committee. The Committee, in
---------------------------------------------
its sole discretion, may accelerate the exercisability of the Option at any time
and for any reason.
(d) Other Events Causing Acceleration and Termination of Option.
-----------------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, the Option shall
become fully exercisable immediately prior to, and shall terminate upon, the
consummation of any of the following events:
(i) the dissolution or liquidation of the Company;
(ii) a reorganization, merger or consolidation of the Company
(other than a reorganization, merger or consolidation the sole purpose of
which is to change the Company's domicile solely within the United States)
the consummation of which results in the outstanding securities of any
class then subject to the Option being exchanged for or converted into
cash, property and/or a different kind of securities, unless such
reorganization, merger or consolidation shall have been affirmatively
recommended to the stockholders of the Company by the Board and the terms
of such reorganization, merger or consolidation shall provide that the
Option shall continue in effect thereafter on terms substantially similar
to those under the Plan; or
(iii) a sale of all or substantially all of the property and
assets of the Company, unless the terms of such sale shall provide
otherwise.
3. ADJUSTMENTS. In the event that the outstanding securities of the
-----------
class then subject to the Option are increased, decreased or exchanged for or
converted into cash,
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property and/or a different number or kind of securities, or cash, property
and/or securities are distributed in respect of such outstanding securities, in
either case as a result of a reorganization, merger, consolidation,
recapitalization, reclassification, dividend (other than a regular, quarterly
cash dividend) or other distribution, stock split, reverse stock split or the
like, or in the event that substantially all of the property and assets of the
Company are sold, then, unless such event shall cause the Option to terminate
pursuant to Section 2(d) hereof, the Committee shall make appropriate and
proportionate adjustments in the number and type of shares or other securities
or cash or other property that may thereafter be acquired upon the exercise of
the Option; provided, however, that any such adjustments in the Option shall be
made without changing the aggregate Exercise Price of the then unexercised
portion of the Option.
4. EXERCISE. The Option shall be exercisable during Employee's lifetime
--------
only by Employee or by his or her guardian or legal representative, and after
Employee's death only by the person or entity entitled to do so under Employee's
last will and testament or applicable intestate law. The Option may only be
exercised by the delivery to the Company of a written notice of such exercise
(the "Exercise Notice"), which notice shall specify the number of Option Shares
to be purchased (the "Purchased Shares") and the aggregate Exercise Price for
such shares, together with payment in full of such aggregate Exercise Price in
cash or by check payable to the Company; provided, however, that payment of such
aggregate Exercise Price may instead be made, in whole or in part, by one or
more of the following means:
(a) by the delivery to the Company of a promissory note in a form
and amount satisfactory to the Committee, provided that the principal
amount of such note shall not exceed the excess of such aggregate Exercise
Price over and above the aggregate par value of the Purchased Shares; or
(b) by (i) the delivery to the Company of a certificate or
certificates representing shares of Common Stock, duly endorsed or
accompanied by a duly executed stock powers, which delivery effectively
transfers to the Company good and valid title to such shares, free and
clear of any pledge, commitment, lien, claim or other encumbrance (such
shares to be valued on the basis of the aggregate Fair Market Value (as
defined in the Plan) thereof on the date of such exercise) and/or (ii)
"pyramiding" of shares issuable upon exercise of the Option, provided that
the Company is not then prohibited from purchasing or acquiring such shares
of Common Stock.
5. PAYMENT OF WITHHOLDING TAXES. If the Company becomes obligated to
----------------------------
withhold an amount on account of any tax imposed as a result of the exercise of
the Option, including, without limitation, any federal, state, local or other
income tax, or any F.I.C.A., state disability insurance tax or other employment
tax (the "Withholding Liability"), then Employee shall, on the date of exercise
and as a condition to the issuance of the Option Shares, pay the Withholding
Liability to the Company in cash or by check payable to the Company. Employee
hereby consents to the Company withholding the full amount of the
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Withholding Liability from any compensation or other amounts otherwise payable
to Employee if Employee does not pay the Withholding Liability to the Company on
the date of exercise of the Option, and Employee agrees that the withholding and
payment of any such amount by the Company to the relevant taxing authority shall
constitute full satisfaction of the Company's obligation to pay such
compensation or other amounts to Employee.
6. NOTICES. All notices and other communications required or permitted
-------
to be given pursuant to this Agreement shall be in writing and shall be deemed
given if delivered personally or five days after mailing by certified or
registered mail, postage prepaid, return receipt requested, to the Company at
000 Xxxxxxx Xxxxxx, X.X. Xxx 00, Xxxxxxxxx (Boston), Massachusetts 02137,
Attention: President, or to Employee at the address set forth beneath his or her
signature on the signature page hereto, or at such other addresses as they may
designate by written notice in the manner aforesaid.
7. STOCK EXCHANGE OR NASDAQ REQUIREMENTS; APPLICABLE LAWS.
------------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, no shares of stock
purchased upon exercise of the Option, and no certificate representing all or
any part of such shares, shall be issued or delivered if (a) such shares have
not been admitted to listing upon official notice of issuance on each stock
exchange upon which shares of that class are then listed or (b) in the opinion
of counsel to the Company, such issuance or delivery would cause the Company to
be in violation of or to incur liability under any federal, state or other
securities law, or any requirement of any stock exchange listing agreement to
which the Company is a party, or any other requirement of law or of any
administrative or regulatory body having jurisdiction over the Company.
8. NON-TRANSFERABILITY. Neither the Option nor any interest therein
-------------------
may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner other than by will or the laws of descent and
distribution
9. PLAN. The Option is granted pursuant to the Plan, as in effect on
----
the Date of Grant, and is subject to all the terms and conditions of the Plan,
as the same may be amended from time to time; provided, however, that no such
amendment shall deprive Employee, without his or her consent, of the Option or
of any of Employee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon Employee. Until the
Option shall expire, terminate or be exercised in full, the Company shall, upon
written request therefor, send a copy of the Plan, in its then-current form, to
Employee or any other person or entity then entitled to exercise the Option.
10. STOCKHOLDER RIGHTS. No person or entity shall be entitled to
------------------
vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such Option
Shares in accordance with the provisions of this Agreement.
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11. EMPLOYMENT RIGHTS. No provision of this Agreement or of the Option
-----------------
granted hereunder shall (a) confer upon Employee any right to continue in the
employ of the Company or any of its subsidiaries, (b) affect the right of the
Company and each of its subsidiaries to terminate the employment of Employee,
with or without cause, or (c) confer upon Employee any right to participate in
any employee welfare or benefit plan or other program of the Company or any of
its subsidiaries other than the Plan. EMPLOYEE HEREBY ACKNOWLEDGES AND AGREES
THAT THE COMPANY AND EACH OF ITS SUBSIDIARIES MAY TERMINATE THE EMPLOYMENT OF
EMPLOYEE AT ANY TIME AND FOR ANY REASON, OR FOR NO REASON, UNLESS EMPLOYEE AND
THE COMPANY OR SUCH SUBSIDIARY ARE PARTIES TO A WRITTEN EMPLOYMENT AGREEMENT
THAT EXPRESSLY PROVIDES OTHERWISE.
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12. GOVERNING LAW. This Agreement and the Option granted hereunder
-------------
shall be governed by and construed and enforced in accordance with the laws of
the State of Delaware.
IN WITNESS WHEREOF, the Company and Employee have duly executed this
Agreement as of the Date of Grant.
XXXXXXX SHOE COMPANY INC.
By:________________________________
Title: President
EMPLOYEE:
__________________________________
Signature
__________________________________
Xxxxxx Xxxxxxx
__________________________________
City, State and Zip Code
__________________________________
Social Security Number
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