Exhibit 10.9
FORM OF
CHANGE OF CONTROL SEVERANCE AGREEMENT
AGREEMENT by and between NS Group, Inc., a
Kentucky Corporation (the "Company"), and
____________________ (the "Employee"), dated as of the
_______ day of ________________.
The Company wishes to assure that it will have the
continued dedication of the Employee, notwithstanding the
possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Company believes it is
imperative to diminish the inevitable distraction of the
Employee by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control, to
encourage the Employee's full attention and dedication to
the Company upon a Change of Control, and to provide the
Employee with compensation arrangements upon a Change of
Control which provide the Employee with individual financial
security and which are competitive with those of other
corporations and, in order to accomplish these objectives,
the Company desires to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
Certain Definitions
(a) "Affiliate" of any specified Person means (i)
any other Person which, directly or indirectly, is in
control of, is controlled by or is under common control with
such specified Person or (ii) any other person who is a
director or officer (A) of such specified Person, (B) of any
subsidiary of such specified Person or (C) of any Person
described in clause (i) above or (iii) any person in which
such Person has, directly or indirectly, a 5 percent or
greater voting or economic interest or the power to control.
For the purposes of this definition, "control" of a Person
means the power, direct or indirect, to direct or cause the
direction of the management or policies of such Person
whether through the ownership of voting securities, or by
contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
(b) "Agreement Period" shall mean the period as
defined in Section 2 of this Agreement.
(c) "Board of Directors" shall mean the Board of
Directors of the Company as constituted from time to time.
(d) "Change of Control" shall mean:
(i) the direct or indirect sale, lease,
exchange or other transfer of all or substantially all of
the assets of the Company to any Person or entity or group
of Persons or entities acting in concert as a partnership or
other group (a "Group of Persons") other than a Person
described in clause (i) of the definition of Affiliate:
(ii) the consummation of any consolidation or
merger of the Company with or into another corporation with
the effect that the stockholders of the Company immediately
prior to the date of the consolidation or merger hold less
than 51% of the combined voting power of the outstanding
voting securities of the surviving entity of such merger or
the corporation resulting from such consolidation ordinarily
having the right to vote in the election of directors (apart
from rights accruing under special circumstances)
immediately after such merger or consolidation;
(iii) the stockholders of the Company shall
approve any plan or proposal for the liquidation or
dissolution of the Company;
(iv) a Person or Group of Persons acting in
concert as a partnership, limited partnership, syndicate or
other group shall, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases
or otherwise, have become the direct or indirect beneficial
owner (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended ("the Exchange Act"))
("Beneficial Owner") of securities of the Company
representing 30% or more of the combined voting power of the
then outstanding securities of the Company ordinarily (and
apart from rights accruing under special circumstances)
having the right to vote in the election of directors;
(v) a Person or Group of Persons, together
with any Affiliates thereof, shall succeed in having a
sufficient number of its nominees elected to the Board of
Directors of the Company such that such nominees, when added
to any existing director remaining on the Board of Directors
of the Company after such election who is an Affiliate of
such Person or Group of Persons, will constitute a majority
of the Board of Directors of the Company; provided that the
Person or Group of Persons referred to in clauses (i), (iv)
and (v) shall not mean Xxxxxxxx Xxxxxxx or any Group of
Persons with respect to which Xxxxxxxx Xxxxxxx is the
Beneficial Owner of the majority of the voting equity
interests.
(e) "Cause" for termination of the Employee's
employment shall be deemed to exist if the Board of
Directors of the Company should determine that the Employee
has committed any of the following: (i) fraud; (ii)
misappropriation of Company property or funds; (iii)
embezzlement; (iv) malfeasance in office; (v) misfeasance in
office which is willful or grossly negligent; or (vi)
nonfeasance in office which is willful or grossly negligent.
(f) "Company" as used herein includes NS Group,
Inc. and any of its subsidiaries and divisions and, as
provided by Section 12(b) hereof, any successor.
(g) "Date of Termination" shall be the date on
which the Notice of Termination is actually perceived by the
addressee, or alternatively, if the Notice of Termination
specifies a date other than the date of receipt of such
notice then that specified date shall be the Date of
Termination.
(h) "Effective Date" shall mean the first date on
which a Change of Control occurs; provided, however, that if
the Employee's employment is terminated by the Company prior
to the date on which a Change of Control occurs, and the
Employee can reasonably demonstrate that such termination by
the Company was in contemplation of a Change of Control,
then for all purposes of this Agreement the "Effective Date"
shall mean the date immediately prior to the date of such
termination.
(i) "Good Reason" means: (i) any material change
in compensation; (ii) substantial decrease in the nature or
scope of the Employee's duties, responsibilities, powers,
authority, title, position or status; (iii) unreasonable
travel requirements; (iv) any relocation required on the
part of Employee, without his consent, outside of a 50-mile
radius from the place of his employment on the Effective
Date; or (v) material breach by the Company of an
employment, compensation or similar agreement between the
Employee and the Company.
(j) "Person" means any individual, corporation,
partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, government or
any agency or political subdivision thereof or any other
entity within the meaning of Section 13(d)(3) or 14(d) (2)
of the Exchange Act.
(k) "Reduce Amount" as used herein shall mean the
maximum amount which could be paid to the Employee under
this Agreement without any portion of such amount being
nondeductible by the Company by virtue of Section 280G of
the Internal Revenue Code of 1986, as amended.
(l) "Voting Power" shall mean the voting power of
all securities of a Person then outstanding generally
entitled to vote for the election of directors of the Person
(or, where appropriate, for the election of persons
performing similar functions).
2. Agreement Period
The Company hereby agrees to provide the
Employee with the protections and benefits enumerated in
Section 3 of this Agreement for the period commencing on the
Effective Date and ending on the second anniversary of the
Effective Date.
3. Obligations of the Company Upon Termination
(a) Notice of Termination. Any termination
after the Effective Date by the Company or by the Employee
shall be communicated by Notice of Termination, within ten
(10) business days after the later of the date of employment
termination or the date of Change of Control, to the other
party hereto given in accordance with Section 13(c) of this
Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) sets forth in
reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Employee's
employment, and (ii) if the termination date is other than
the date of receipt of such notice, specifies the
termination date.
(b) Termination by the Company for Cause;
Termination by the Employee for Other Than Good Reason. If
during the Agreement Period, the Employee's employment is
terminated by the Company for Cause, by the Employee other
than for Good Reason, or by reason of death or disability,
this Agreement shall terminate without further obligation to
the Employee.
(c) Termination by the Employee for Good Reason:
Termination by the Company for Other Than for Cause. If,
during the Agreement Period, the Company shall terminate the
Employee's employment other than for Cause, or the
employment of the Employee shall be terminated by the
Employee for Good Reason, the Employee shall be entitled to
the following payments and benefits:
(i) The Company shall pay to the
Employee in a lump sum in cash within thirty (30) days after
the Date of Termination the aggregate of two (2) times the
amount of the Employee=s base salary in effect on the Date
of Termination and two (2) times the average amount of the
Employee's bonus payments made in the five (5) years prior
to the Date of Termination, plus a payment equal to a pro
rata portion (based on the whole number of months worked in
the fiscal year by the Employee prior to the Date of
Termination and, if applicable performance targets have not
been met on the Date of Termination, based on a reasonable
estimate of the amount of bonus to be earned for the full
year) of the Employee's annual bonus for the year of
termination.
(ii) For two (2) years after the Date of
Termination, the Company shall continue providing medical,
dental, life and disability insurance benefits to the
Employee in an amount equivalent to that which would have
been provided to the Employee had the Employee's employment
not been terminated. The Employee shall not be obligated to
pay higher fees for such benefits than he or she was paying
at the Date of Termination. In the event it is not possible
to provide this continued coverage, the Company shall
provide the Employee with a cash payment in the amount
necessary for the Employee to purchase equivalent insurance
for two (2) years after the Date of Termination.
(iii) Within ten (10) business days
after the later of the date of employment termination or the
date of Change of Control, the Company shall provide, at no
cost to the Employee, individual outside assistance for the
Employee in finding other employment. Such obligation may
be fulfilled by the Company through the retention of an
outplacement service for use by the Employee.
4. Reduction of Termination Benefits
In the event the Company's independent
auditors (the "Accounting Firm") shall determine that any
payment or distribution by the Company to or for the benefit
of the Employee made pursuant to Section 3 of this Agreement
would be nondeductible by the Company for Federal income tax
purposes because of Section 280G of the Internal Revenue
Code of 1986, as amended, then the aggregate present value
of amounts payable or distributable to or for the benefit of
the Employee pursuant to this Agreement shall be limited to
the Reduced Amount. If the Accounting Firm makes such a
determination, the Company shall promptly provide the
Employee with notice to that effect as well as a copy of
both the detailed calculation thereof and the Reduced
Amount.
5. Funding of Grantor Trust
The Board of Directors of the Company shall
have the option to establish a so-called "Rabbi Trust" upon
the occurrence, or in anticipation, of a Change of Control
to secure for the Employee the benefits provided pursuant to
Section 3 of this Agreement. If the Board of Directors
elects to do so, the Company shall, immediately upon the
occurrence of a Change of Control, make an irrevocable
contribution to the Rabbi Trust in an amount that is
sufficient to pay the Employee the benefits to which such
Employee would be entitled pursuant to the terms of this
Agreement as of the date on which the Change of Control
occurred.
6. Non-exclusivity of Rights
Nothing in this Agreement shall prevent or
limit the Employee's continuing or future participation in
any benefit, bonus, incentive or other plan or program
provided by the Company or any of its affiliated companies
and for which the Employee may qualify, nor shall anything
herein limit or otherwise affect such rights that the
Employee may have under any stock option or other agreements
with the Company. Amounts which are vested benefits or
which the Employee is otherwise entitled to receive under
any plan or program of the Company at or subsequent to the
Date of Termination shall be payable in accordance with such
plan or program.
7. No Setoff; Cooperation
The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Employee or
others.
8. Confidential Information
The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the
Company and its businesses, which shall have been obtained
by the Employee during the Employee's employment by the
Company and which shall not be public knowledge. After
termination of the Employee's employment with the Company,
the Employee shall not, without the prior written consent of
the Company, communicate or divulge any secret or
confidential information, knowledge or data to anyone other
than the Company and those designated by it.
9. Non-Solicitation
(a) The Employee agrees that, during the
Agreement Period, the Employee will not: (i) solicit, raid,
entice, or induce any present or prospective employee of the
Company to be employed by any competitor of the Company, or
(ii) assist a competitor in taking such action.
(b) Remedies. The Employee agrees that any
breach or threatened breach or alleged breach or alleged
threatened breach by the Employee of any provision of
Sections 8 or 9 will entitle the Company, in addition to any
other legal remedies available to it, to apply to any court
of competent jurisdiction to enjoin the breach or threatened
breach or alleged breach or alleged threatened breach, it
being acknowledged and agreed that any such material breach
will cause irreparable injury to the Company and that any
damages will not provide adequate remedies to the Company.
The parties understand and intend that each restriction
agreed to by the Employee will be construed as separable and
divisible from every other restriction, and that the
unenforceability, in whole or in part, of any restriction
will not affect the enforceability of the remaining
restrictions and that one or more or all of such
restrictions may be enforced in whole or in part as the
circumstances warrant. No waiver of any one breach of the
restrictions contained herein will be deemed a waiver of any
future breach.
10. Exclusive Remedy
The Employee's rights to severance benefits
pursuant to Section 3 hereof shall be the Employee's sole
and exclusive remedy for any termination of the Employee's
employment by the Company without Cause or by the Employee
for Good Reason. The payments, severance benefits and
severance protections provided to the Employee pursuant to
this Agreement are provided in lieu of any severance
payments, severance benefits and severance protections
provided in any other plan or policy of the Company, except
as may be expressly provided in writing under the terms of
any plan or policy of the Company, or in a written agreement
between the Company and the employee entered into after the
date of this Agreement. In no event shall the Employee be
obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to the Employee
under any of the provisions of this Agreement.
11. Statement of Intention
It is the intention of the parties hereto
that, prior to the Effective Date, this Agreement shall not
create any rights or obligations in the Employee or the
Company , or require any payments by the Company to the
Employee.
12. Successors
(a) The Employee. This Agreement is personal
to the Employee and without the prior written consent of the
Company shall not be assignable by the Employee otherwise
than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable
by the Employee's legal representatives.
(b) The Company. This Agreement shall inure
to the benefit of and be binding upon the Company and its
successors. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such succession had taken place.
As used in this Agreement, "Company" shall
include any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
13. Miscellaneous
(a) Interpretation. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Kentucky, without reference to principles of
conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or
effect.
(b) Legal Fees. In the event of any
litigation involving this Agreement, and if the Employee is
successful in such litigation, the Company will reimburse
the Employee for all legal fees and expenses paid by the
Employee in prosecuting or defending such litigation.
(c) Notices. All notices and other
communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage
prepaid, addressed to the Employee at the Employee's address
on the payroll records of the Company and to the Company as
follows:
NS Group, Inc.
Ninth & Xxxxxx Streets
P.O. Box 1670
Newport, Kentucky 41072
Attention: President
And to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
(d) Severability. The invalidity or
unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other
provision of this Agreement.
(e) Withholding Taxes. The Company may
withhold from any amounts payable under this Agreement such
Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(f) No Waiver. The failure of the Employee
or the Company to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such
provision or any other provision thereof.
(g) Entire Agreement. This Agreement
contains the entire understanding of the Company and the
Employee with respect to the subject matter hereof. This
Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their
respective successors and legal representatives.
(h) Dispute to Resolution Procedures. If any
question shall arise in regard to the interpretation of any
provision of this Agreement or as to the rights and
obligations of either of the parties hereunder, the Employee
and a designated representative of the Company shall meet
with each other to negotiate and attempt to resolve such
question in good faith. The Employee and such
representative may, if they so desire, consult outside
experts for assistance in arriving at a resolution. In the
event that a resolution is not achieved within fifteen (15)
days after their first meeting, then either party may submit
the question for final resolution by binding arbitration in
accordance with the rules and procedures of the American
Arbitration Association applicable to commercial
transactions, and judgment upon any award thereon may be
entered in any court having jurisdiction thereof. The
arbitration shall be held in Covington, Kentucky. In the
event of any arbitration, the Employee shall select one
arbitrator, the Company shall select one arbitrator and the
two arbitrators so selected shall select a third arbitrator,
any two of which arbitrators together shall make the
necessary determinations. All out-of-pocket costs and
expenses of the parties in connection with such arbitration,
including, without limitation, the fees of the arbitrators
and any administration fees and reasonable attorney=s fees
and expenses, shall be borne by the parties in such
proportions as the arbitrators shall decide that such
expenses should, in equity, be apportioned.
IN WITNESS WHEREOF, the Employee and the Company
have executed this Agreement as of the day and year first
above written.
I HAVE READ THIS CHANGE OF CONTROL SEVERANCE AGREEMENT AND,
UNDERSTANDING ALL ITS TERMS, INCLUDING THAT THIS AGREEMENT
CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES, I SIGN IT AS MY FREE ACT AND DEED.
Employee:
_________________________________
Company:
NS GROUP, INC.
___________________________
SCHEDULE OF DOCUMENTS OMITTED
The following agreements are substantially identical to the
Form of Change of Control Severance Agreement shown here,
except for the identity of the employee, dates of execution
and, except that under paragraph 3.(c)(i), Messrs. X.X.
Xxxxxxx and X. X. Xxxxxxxxx'x payment would be the aggregate
of three times the amount of his then current base salary
and three times the average amount of his bonus payments in
the prior five years. These documents are not filed as
separate documents in accordance with Exchange Act rule 12b-
31.
Employee:
Xxxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxx
Xxxx X. Xxxxxx
Xxxx X. Xxxxxxxxx
