SEVERANCE AGREEMENT
Exhibit
10.12
This
SEVERANCE AGREEMENT (the “Agreement”) is effective as of April 1, 2006
(“Effective Date”) by and between Xxxxxxx X. Xxxxxx (“Employee”) and Xxxxx Shoe
Company, Inc., a New York corporation (“Xxxxx Shoe” and, together with its
subsidiaries, the “Company”).
WHEREAS,
Xxxxx Shoe is engaged, directly and indirectly through its subsidiaries, in the
sourcing and retail and wholesale sale of footwear in the United States and
throughout the world;
WHEREAS,
Employee is employed by Xxxxx Shoe or a wholly-owned subsidiary of Xxxxx Shoe in
an executive capacity, possesses intimate knowledge of the business and affairs
of the Company, and has acquired, and will continue to acquire, certain
confidential, proprietary and trade secret information and data with respect to
the Company;
WHEREAS, Employee
and Xxxxx Shoe are currently parties to a severance agreement which Employee and
Xxxxx Shoe desire to terminate and replace with this Agreement (the “Prior
Agreement”);
WHEREAS,
Xxxxx Shoe desires to insure, insofar as possible, that the Company will
continue to have the benefit of Employee’s services and to protect the
confidential information and goodwill of the Company; and
WHEREAS,
the Company recognizes that circumstances may arise in which a change in the
control of Xxxxx Shoe occurs, through acquisition or otherwise, thereby causing
uncertainty of employment without regard to Employee’s competence or past
contributions which uncertainty may result in the loss of valuable services of
Employee to the detriment of the Company and Xxxxx Shoe’s shareholders, and the
Company and Employee wish to provide reasonable security to Employee against
changes in Employee’s relationship with Xxxxx Shoe in the event of any such
change in control; and
WHEREAS,
both the Company and Employee are desirous that a proposal for any change of
control or acquisition will be considered by Employee objectively and with
reference only to the business interests of the Company and Xxxxx Shoe’s
shareholders; and
WHEREAS,
Employee will be in a better position to consider the best interests of the
Company if Employee is afforded reasonable security, as provided in this
Agreement, against altered conditions of employment which could result from any
such change in control or acquisition.
NOW,
THEREFORE, in consideration of the foregoing and of the mutual covenants and
agreements hereinafter set forth, the parties hereto mutually covenant and agree
as follows:
Section
1. Definitions
1.1 “Board”
means the Board of Directors of Xxxxx Shoe.
1.2 “Business
Unit” means any direct or indirect subsidiary, operating division or business
unit of Xxxxx Shoe.
1.3 “Cause”
means (i) engaging by Employee in willful misconduct which is materially
injurious to the Company; (ii) conviction of Employee of a felony; (iii)
engaging by Employee in fraud, material dishonesty or gross misconduct in
connection with the business of the Company; (iv) engaging by Employee in any
act of moral turpitude reasonably likely to materially and adversely affect the
Company or its business; (v) engaging by Employee in the illegal use of a
controlled substance or using prescription medications unlawfully; or (vi) abuse
by Employee of alcohol.
1.4 “Change
of Control” means the occurrence of any of the following events after the
Effective Date:
(a) The
acquisition by any Person of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 30% or more of either (x) the then
outstanding shares of common stock of Xxxxx Shoe (the “Outstanding Company
Common Stock”) or (y) the combined voting power of the then outstanding voting
securities of Xxxxx Shoe entitled to vote generally in the election of directors
(the “Outstanding Company Voting Securities”); provided, however, that for
purposes of this paragraph (a) the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company, or
(iv) any acquisition by any corporation pursuant to a transaction which complies
with the exception set forth in paragraph (c) below; or
(b) Individuals
who, as of the Effective Date of this Agreement, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the Effective Date whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation
of a reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Company or the acquisition of assets
of another corporation (a “Business Combination”), in each case, unless,
following such Business Combination, all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
65% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be;
or
(d) Approval
by the shareholders of the Company of a complete liquidation or dissolution of
the Company.
1.5 “Code”
means the Internal Revenue Code of 1986, as amended.
1.6 “Competitor”
means any Person which (a) in its prior fiscal year had annual gross sales
volume or revenues of more than $20,000,000 attributable to the sale of footwear
or (b) is reasonably expected to have such level of footwear sales or revenues
in either the current fiscal year or the next following fiscal
year.
1.7 “Confidential
Information” shall have the meaning set forth in Section 10.
1.8 “Customer”
means any wholesale customer of Xxxxx Shoe and/or any Business Unit which either
purchased from Xxxxx Shoe and/or any Business Unit during the one (1) year
immediately preceding the Termination Date, or is reasonably expected by Xxxxx
Shoe and/or any Business Unit to purchase from Xxxxx Shoe and/or any Business
Unit in the one (1) year period immediately following the Termination Date, more
than $1,000,000 in footwear.
1.9 “ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
1.10 “Good
Reason,” when used with reference to a voluntary termination by Employee of
Employee’s employment with the Company, means (i) a reduction in Employee’s base
salary as in effect on the date hereof, or as the same may be increased from
time to time; (ii) a reduction in Employee’s status, position, responsibilities
or duties; (iii) the required relocation of Employee’s principal place of
business, without Employee’s consent, to a location which is more than fifty
(50) miles from Employee’s principal place of business on the Effective Date, or
from such location to which Employee may transfer with Employee’s consent after
the Effective Date; (iv) a material increase in the amount of time Employee is
required to travel on behalf of the Company; (v) the failure of any successor of
Xxxxx Shoe to assume this Agreement, or (vi) a material breach of this Agreement
by the Company.
1.11 “Person”
means any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)).
1.12 “Termination
Date” means the effective date as provided in this Agreement of the termination
of Employee’s employment with the Company.
Section
2. Term
2.1 Subject
to Section 2.2, the term of this Agreement (the “Term”) shall be a period of
three (3) years commencing on the Effective Date.
2.2 The Term
shall be automatically extended for successive one (1) year periods unless
either party to this Agreement provides the other party with notice of
termination at least ninety (90) days prior to the expiration of the original
three-year period or any one-year period thereafter.
Section
3. Termination
of Employment
3.1 The
Company may terminate Employee’s employment at any time for Cause, effective
upon written notice to Employee specifying in reasonable detail the particulars
of Employee’s conduct deemed by the Company and/or such subsidiary to justify
such termination for Cause.
3.2 The
Company may terminate Employee’s employment without Cause at any time, effective
upon written notice to Employee of termination specifying that such termination
is without Cause.
3.3 Employee
may terminate Employee’s employment with the Company at any time, with or
without Good Reason.
Section
4. Separation
Benefits
4.1 If
Employee’s employment is terminated by the Company for any reason other than for
Cause, death or disability and Section 4.2 does not apply, Employee shall be
entitled to the following separation benefits:
(a) The
Company shall pay, or cause to be paid, to Employee within 30 days of the
Termination Date (i) the full base salary earned by Employee through, but unpaid
at, the Termination Date, plus (ii) credit for any vacation earned by Employee
but not used at the Termination Date, plus (iii) all other amounts owed by the
Company to Employee (other than any bonus payment of any kind) but unpaid as of
the Termination Date.
(b) The
Company shall pay, or cause to be paid, to Employee (i) in a lump sum not later
than thirty (30) days after the Termination Date an amount equal to 200% of the
sum of (A) Employee’s base annual salary at the highest rate in effect at any
time during the twelve (12) months immediately preceding the Termination Date,
and (B) Employee’s targeted bonus for the current year, and (ii) Employee’s
targeted bonus payment for the year of termination prorated to the Termination
Date.
(c) The
Company shall provide to Employee for a period of eighteen (18) months after the
Termination Date medical and/or dental coverage under the Company’s medical
and/or dental plans, without any cost to Employee in excess of any employee
contribution that would be payable by Employee if Employee remained employed by
a member of the Company; provided, however, that if Employee becomes employed
with another employer during such eighteen (18)-month period and is eligible to
receive medical and/or dental coverage under another employer-provided plan, the
medical and/or dental coverage described herein shall be secondary to those
provided under such other plan. In addition, on the last day of such
eighteen (18)-month period, the Company shall pay, or cause to be paid, to
Employee an amount in cash equal to the aggregate amount that would be payable
by the Company for such medical and/or dental coverage for six (6) months if
Employee remained employed by the Company for such period.
(d) The
restrictions applicable to each share of non-vested restricted stock of Xxxxx
Shoe held by Employee that would have vested within the two (2) year period
following the Termination Date had Employee remained employed by the Company
shall lapse as of the Termination Date.
(e) Each
non-vested option to purchase Xxxxx Shoe stock held by Employee that would have
vested within the two (2) year period following the Termination Date had
Employee remained employed by the Company shall vest as of the Termination
Date.
(f) The
Company shall pay the reasonable costs of outplacement services selected by the
Company for a reasonable period of time following the Termination Date;
provided, however, that no such outplacement services shall be provided after
the last day of the second calendar year following the calendar year in which
the Termination Date occurs.
4.2 If
Employee’s employment is terminated within twenty-four (24) months after a
Change of Control (x) by the Company for any reason other than for Cause, death
or disability, or (y) by Employee within ninety (90) days after the occurrence
of Good Reason, Employee shall be entitled to the following separation benefits
in place of, and not in addition to, the benefits set forth in Section
4.1:
(a) The
Company shall pay, or cause to be paid, to Employee within 30 days of the
Termination Date (i) the full base salary earned by Employee through, but unpaid
at, the Termination Date, plus (ii) credit for any vacation earned by Employee
but not taken at the Termination Date, plus (iii) all other amounts owed by the
Company to Employee (other than any bonus payment of any kind) but unpaid as of
the Termination Date.
(b) The
Company shall pay, or cause to be paid, to Employee (i) in a lump sum six (6)
months after the Termination Date an amount equal to 300% of the sum of (A)
Employee’s base annual salary at the highest rate in effect at any time during
the twelve (12) months immediately preceding the Termination Date, and (B)
Employee’s targeted bonus for the current year; and (ii) Employee’s targeted
bonus payment for the year of termination prorated to the Termination
Date.
(c) The
Company shall provide to Employee for a period of eighteen (18) months after the
Termination Date medical and/or dental coverage under the Company’s medical and
dental plans, without any cost to Employee in excess of any employee
contribution that would be payable by Employee if Employee remained employed by
the Company; provided, however, that if Employee becomes employed with another
employer during such eighteen (18)-month period and is eligible to receive
medical and/or dental coverage under another employer-provided plan, the medical
and/or dental coverage described herein shall be secondary to those provided
under such other plan. In addition, on the last day of such eighteen
(18)-month period, the Company shall pay, or cause to be paid, to Employee an
amount in cash equal to the aggregate amount that would be payable by the
Company for such medical and/or dental coverage for eighteen (18) months if
Employee remained employed by the Company for such period.
(d) The
restrictions applicable to each share of non-vested restricted stock of Xxxxx
Shoe held by Employee shall lapse and be exercisable as of the Termination
Date.
(e) Each
non-vested option to purchase Xxxxx Shoe stock held by Employee shall vest and
be exercisable as of the Termination Date.
(f) For
purposes of determining Employee’s benefit under the Company’s Supplemental
Employment Retirement Plan, an additional three (3) years of Credited Service
shall be credited to Employee’s actual or deemed Credited Service.
(g) The
Company shall pay the reasonable costs of outplacement services selected by the
Company for a reasonable period of time following the Termination Date;
provided, however, that no such outplacement services shall be provided after
the last day of the second calendar year following the calendar year in which
the Termination Date occurs.
4.3 If
Employee’s employment is terminated for any reason other than such reasons
specified in Sections 4.1 and 4.2, the Company shall pay, or cause to be
paid, to Employee within 30 days of the Termination Date (i) the full base
salary earned by Employee through, but unpaid at, the Termination Date, plus
(ii) credit for any vacation earned by Employee but not taken at the Termination
Date, plus (iii) all other amounts owed by the Company to Employee (other than
any bonus payment of any kind) but unpaid as of the Termination
Date.
4.4 The
benefits set forth in Sections 4.1(c) and 4.2(c) shall run concurrently with any
period of continuation coverage to which Employee is entitled under Section 601
of ERISA. Upon Employee’s re-employment during the period specified
in each such Section, to the extent covered by the new employer’s plan, coverage
under the Company’s plan shall lapse, subject to any continuation of coverage
rights under Section 601 of ERISA. Employee’s participation in and/or
coverage under all other employee benefit plans, programs or arrangements
sponsored or maintained by the Company shall cease effective as of the
Termination Date except as otherwise provided in such employee benefit plan,
program or arrangement.
Section
5. Mitigation
or Reduction of Benefits
Employee
shall not be required to mitigate the amount of any payment provided for in
Section 4 by seeking other employment or otherwise. Except as
otherwise specifically set forth herein, the amount of any payment or benefits
provided in Section 4 shall not be reduced by any compensation or benefits
or other amounts paid to or earned by Employee as the result of employment by
another employer after the Termination Date or otherwise.
Section
6. Employee
Expenses After Change in Control
If
Employee’s employment is terminated by the Company within twenty-four (24)
months after a Change in Control and there is a dispute with respect to this
Agreement, then all Employee’s costs and expenses (including reasonable legal
and accounting fees) incurred by Employee (a) to defend the validity of this
Agreement, (b) to contest any termination for Cause, (c) to contest any
determinations by the Company concerning the amounts payable by or on behalf of
the Company under this Agreement, or (d) to otherwise obtain or enforce any
right or benefit provided to Employee by this Agreement, shall be paid by the
Company to the extent Employee is the prevailing party with respect to such
claim. Any such payments shall be paid no later than two and one-half
months following the close of the calendar year in which any such dispute is
final.
Section
7. Release
Notwithstanding
anything to the contrary stated in this Agreement, no benefits will be paid
pursuant to Section 4 except under Section 4.1(a), 4.2(a) or 4.3 prior to
execution by Employee of a release of the Company substantially in the form
attached as Exhibit
A, with such changes as may be made by the Company in its sole discretion
in order to comply with and stay current with applicable laws and
regulations.
Section
8. Certain
Additional Payments
8.1 Notwithstanding
anything to the contrary contained herein and except as set forth below, in the
event it shall be determined that any payment or distribution by or on behalf of
the Company to or for the benefit of Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 8) (a “Payment”) would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by
Employee with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then Employee shall be entitled to receive an additional payment
(a “Gross-Up Payment”) in an amount such that after payment by Employee of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing provisions
of this Section 8.1, if it shall be determined that Employee is entitled to
a Gross-Up Payment, but that the Payments do not exceed 110% of the greatest
amount (the “Reduced Amount”) that could be paid to Employee such that the
receipt of Payments will not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to Employee and the Payments, in the aggregate, shall be
reduced to the Reduced Amount.
8.2 Subject
to the provisions of Section 8.3, all determinations required to be made under
this Section 8, including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by Ernst & Young LLP or such
other certified public accounting firm, human resources consulting firm, or
other consulting firm in the business of performing such calculations as may be
designated by Employee with the consent of the Company, which consent shall not
be unreasonably withheld (the “Consulting Firm”), which shall provide detailed
supporting calculations both to the Company and Employee within fifteen (15)
business days of the receipt of notice from Employee that there has been a
Payment, or such earlier time as is requested by the Company. In the
event that the Consulting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, Employee, with the
consent of the Company, which consent shall not be unreasonably withheld, shall
appoint another nationally recognized accounting firm, human resources
consulting firm, or other consulting firm in the business of performing such
calculations to make the determinations required hereunder (which such firm
shall then be referred to as the Consulting Firm hereunder). All fees
and expenses of the Consulting Firm shall be borne solely by the
Company. Any Gross- Up Payment, as determined pursuant to this
Section 8, shall be paid by the Company to Employee no later than two and
one-half months following the Termination Date. Any determination by
the Consulting Firm shall be binding upon the Company and
Employee. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Consulting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made (“Underpayment”), consistent
with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 8.3 and Employee
thereafter is required to make a payment of any Excise Tax, the Consulting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Employee within two and one-half months after the date the Company exhausts such
remedies.
8.3 Employee
shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as practicable but
no later than thirty (30) days after Employee is informed in writing of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. Employee shall not pay such
claim prior to the expiration of the thirty (30)-day period following the date
on which Employee gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due). If the Company notifies Employee in writing prior to the
expiration of such period that it desires to contest such claim, Employee
shall:
(a) give the
Company any information reasonably requested by the Company relating to such
claim;
(b) take such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably
selected by the Company;
(c) cooperate
with the Company in good faith in order to effectively contest such claim;
and
(d) permit
the Company to participate in any proceedings relating to such
claim;
provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Employee harmless, on an after-tax basis,
for any Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 8.3, the Company shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
Employee to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and Employee agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Employee to pay such
claim and xxx for a refund, the Company shall advance the amount of such payment
to Employee, on an interest-free basis and shall indemnify and hold Employee
harmless, on an after tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Employee with respect to which such contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Employee shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
8.4 If, after
the receipt by Employee of an amount advanced by the Company pursuant to Section
8.3, Employee becomes entitled to receive any refund with respect to such claim,
Employee shall (subject to the Company’s complying with the requirements of
Section 8.3) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by Employee of an amount advanced by
the Company pursuant to Section 8.3, a determination is made that Employee shall
not be entitled to any refund with respect to such claim and the Company does
not notify Employee in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
Section
9. Covenant
Not to Compete
9.1 During
Employee’s employment with Xxxxx Shoe and/or any Business Unit and for a period
of two (2) years after the Termination Date (collectively, the “Restricted
Period”), Employee will not, directly or indirectly, on Employee’s own behalf or
on behalf of any other Person (whether as owner, partner, consultant, employee
or otherwise):
(a) provide
any executive, managerial, supervisory, and/or consulting services with respect
to the footwear industry and/or the footwear business in the United States for
any Competitor;
(b) hold any
executive, managerial and/or supervisory position with any Competitor in the
United States;
(c) assist
any Competitor in competing against Xxxxx Shoe and/or any Business Unit for
which Employee performs or performed substantial work and/or has or had access
to Confidential Information (each a “Relevant Business Unit”) (i) in the United
States and/or (ii) in any other country in which Xxxxx Shoe and/or any Relevant
Business Unit is doing business in the one year immediately preceding the
Termination Date (each a “Foreign Country”) if Employee had access to
Confidential Information regarding the Company’s business in such Foreign
Country;
(d) engage in
any research, development and/or planning activities or efforts for a
Competitor, whether as an employee, consultant, independent contractor or
otherwise, to assist the Competitor in competing (i) in the footwear industry in
the United States or (ii) in any Foreign Country if Employee had access to
Confidential Information regarding the Company’s business in such Foreign
Country;
(e) cause or
attempt to cause any Customer to divert, terminate, limit, modify or fail to
enter into any existing or potential relationship with Xxxxx Shoe and/or any
Relevant Business Unit;
(f) assist
any Competitor in connection with any plan, effort, activity or undertaking to
cause or attempt to cause any Customer to divert, terminate, limit, modify or
fail to enter into any existing or potential relationship with Xxxxx Shoe and/or
any Relevant Business Unit;
(g) cause or
attempt to cause any footwear supplier or manufacturer of Xxxxx Shoe and/or any
Relevant Business Unit to divert, terminate, limit, modify or fail to enter into
any existing or potential relationship with Xxxxx Shoe and/or any Relevant
Business Unit;
(h) assist
any Competitor in connection with any plan, effort, activity or undertaking to
cause or attempt to cause any footwear supplier or manufacturer of Xxxxx Shoe
and/or any Relevant Business Unit to divert, terminate, limit, modify or fail to
enter into any existing or potential relationship with Xxxxx Shoe and/or any
Relevant Business Unit; and/or
(i) solicit,
entice, employ or seek to employ, in the footwear industry, any executive,
managerial and/or supervisory employee of, or any consultant or advisor to,
Xxxxx Shoe and/or any Relevant Business Unit.
9.2 Employee
recognizes and agrees that the restraints contained in Section 9.1 are
reasonable and should be fully enforceable in view of, among other things, the
high level positions Employee has had with Xxxxx Shoe and/or any Relevant
Business Unit(s), the national and international nature of both the Company’s
collective business and competition in the footwear industry, and the legitimate
interests of the Company in protecting its confidential, proprietary and trade
secret information (“Confidential Information”) and their respective customer
goodwill and relationships. Employee specifically hereby acknowledges
and confirms that Employee is willing and intends to, and will, abide fully by
the terms of Section 9.1. Employee further agrees that the Company
would not have adequate protection if Employee were permitted to work for its
competitors in violation of the terms of this Agreement since the Company would,
among other things, be unable to verify whether (i) its Confidential Information
was being disclosed and/or misused, and/or (ii) Employee was involved in
diverting or helping to divert the Company’s customers and/or customer
goodwill.
9.3 Employee
agrees to disclose, during the Restricted Period, the terms of this Section 9 to
any potential future employer.
Section
10. Confidential
Information.
10.1 Employee
acknowledges and agrees that during Employee’s employment, Employee has been
and/or will be provided and have access to certain Confidential Information of
the Company. Employee agrees to keep secret and confidential, and not
to use or disclose to any third-parties, except as directly required for
Employee to perform Employee's employment responsibilities for the Company, any
of the Company’s Confidential Information.
10.2 Confidential
Information includes all confidential and/or trade secret information of the
Company (regardless of the form or medium in which it may exist or be stored or
preserved) and includes, but is not limited to, all such information containing
or reflecting any:
(a) lists or
other identification of customers or prospective customers of Xxxxx Shoe and/or
any Relevant Business Unit (and/or key individuals employed or engaged by such
parties);
(b) lists or
other identification of sources or prospective sources of Xxxxx Shoe’s and/or
any Relevant Business Unit’s products or components thereof (and/or key
individuals employed or engaged by such parties);
(c) compilations,
information, designs, drawings, files, formulae, lists, machines, maps, methods,
models, notes or other writings, plans, records, regulatory compliance
procedures, reports, specialized or technical data, schematics, source code,
object code, documentation, and software relating to the development,
manufacture, fabrication, assembly, marketing and/or sale of Xxxxx Shoe’s and/or
any Relevant Business Unit’s products;
(d) financial,
distribution, sales and marketing information, data, plans, and/or strategies of
Xxxxx Shoe and/or any Relevant Business Unit;
(e) equipment,
materials, procedures, processes, and techniques used in, or related to, the
development, manufacture, assembly, fabrication or other production and quality
control of the Xxxxx Shoe’s and/or any Relevant Business Unit’s products and
services;
(f) Xxxxx
Shoe’s and/or any Relevant Business Unit’s relations and/or dealings with its
customers, prospective customers, suppliers and prospective suppliers and the
nature and type of products or services rendered to such customers (or proposed
to be rendered to prospective customers);
(g) Xxxxx
Shoe’s and/or any Relevant Business Unit’s relations with its employees
(including, without limitation, salaries, job classifications and skill levels);
and
(h) any other
information designated by Xxxxx Shoe and/or any Relevant Business Unit to be
confidential, secret and/or proprietary (including without limitation,
information provided by customers or suppliers of Xxxxx Shoe and/or any Relevant
Business Unit).
Notwithstanding
the foregoing, the term “Confidential Information” shall not consist of any data
or other information which has been made publicly available or otherwise placed
in the public domain other than by Employee in violation of this
Agreement.
10.3 Employee
will not, directly or indirectly, copy, reproduce or otherwise duplicate,
record, abstract, summarize or otherwise use for Employee or use for, or
disclose to, any party other than Xxxxx Shoe, or any subsidiary or affiliate of
Xxxxx Shoe, any Confidential Information, without Xxxxx Shoe’s prior written
permission or except as required for the proper performance of Employee’s duties
on behalf of the Company.
10.4 Employee
understands that Confidential Information may or may not be labeled as
“confidential” and will treat all information as confidential unless otherwise
informed by Xxxxx Shoe.
10.5 At the
termination of Employee’s employment with the Company or at any other time Xxxxx
Shoe or any subsidiary or affiliate thereof may request, Employee shall promptly
deliver to Xxxxx Shoe all documents and other materials, whether in physical or
electronic form (including all copies thereof), containing any Confidential
Information.
Section
11. Injunctive
Relief
In the
event of a breach or threatened breach of any of Employee’s duties or
obligations under the terms and provisions of Section 9, Section 10, Section
12.2 or Section 12.9, the Company shall be entitled, in addition to any other
legal or equitable remedies it may have in connection therewith (including any
right to damages that it may suffer), to temporary, preliminary and permanent
injunctive relief restraining such breach or threatened
breach. Employee hereby expressly acknowledges that the harm that
might result to the Company’s business as a result of noncompliance by Employee
with any of the provisions of Section 9, Section 10, Section 12.2 or Section
12.9 would be largely irreparable. Employee specifically agrees that
if there is a question as to the enforceability of any of the provisions of
Section 9, Section 10, Section 12.2 or Section 12.9, Employee will not engage in
any conduct inconsistent with or contrary to such Sections until after the
question has been resolved by a final judgment of a court of competent
jurisdiction. Employee undertakes and agrees that if Employee
breaches or threatens to breach the Agreement, Employee shall be liable for any
attorneys’ fees and costs incurred by the Company in enforcing its rights
hereunder.
Section
12. Miscellaneous
12.1 Notice. All
notices hereunder shall be in writing and shall be deemed to have been duly
given (a) when delivered personally or by courier, or (b) when received by
facsimile (including electronic mail), receipt confirmed, or (c) on the third
business day following the mailing thereof by registered or certified mail,
postage prepaid, or (d) on the first business day following the mailing thereof
by overnight delivery service, in each case addressed as set forth
below:
If to the
Company:
Xxxxx
Shoe Company, Inc.
0000
Xxxxxxxx Xxxxxx
Xx.
Xxxxx, Xxxxxxxx 00000-0000
Attention: General
Counsel
If to
Employee:
Xxxxxxx
X. Xxxxxx
0000
Xxxxxxxxx Xxxxx
Xxxxxx,
XX 00000
Any party
may change the address to which notices are to be addressed by giving the other
party written notice in the manner herein set forth.
12.2 Successors; Binding
Agreement.
(a) Xxxxx
Shoe shall require any successor to all or substantially all of the business
and/or assets of the Company (whether such succession is direct or indirect, by
purchase, merger, consolidation or otherwise), prior to or upon such succession,
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would have been required to perform it if no
such succession had taken place. Failure of Xxxxx Shoe to obtain such
agreement upon or prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle Employee to benefits from the Company
in the same amounts and on the same terms as Employee would be entitled
hereunder if Employee’s employment was terminated without Cause within
twenty-four (24) months after a Change of Control. For purposes of
the preceding sentence, the date on which any such succession becomes effective
shall be deemed the Termination Date.
(b) Xxxxx
Shoe shall also have the right, but not the obligation, to assign this
Agreement, without Employee’s consent, to any successor to all or substantially
all of the business and/or assets of a Business Unit for which Employee performs
substantially all of Employee’s duties (whether such succession is direct or
indirect, by purchase, merger, consolidation or otherwise). In the
event, and only in the event, Xxxxx Shoe elects to assign this Agreement to such
successor of a Business Unit, a Change of Control will be deemed to have
occurred and Xxxxx Shoe shall require such successor to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would have been required to perform it if no such succession had
taken place. No Change of Control shall be deemed to have occurred if
Xxxxx Shoe does not elect to assign this Agreement to such successor of a
Business Unit.
(c) This
Agreement is personal to Employee and Employee may not assign or delegate any
part of Employee’s rights or duties hereunder to any other person, except that
this Agreement shall inure to the benefit of and be enforceable by Employee’s
legal representatives, executors, administrators, heirs and
beneficiaries.
12.3 Judicial
Modification. If and to the extent that any Section, term
and/or provision of this Agreement is determined by a court of competent
jurisdiction to be unenforceable under applicable law, then such Section(s),
term(s) and/or provision(s) shall not be void but instead shall be modified and,
to the maximum extent permissible under applicable law, enforced.
12.4 Headings. The
headings in this Agreement are inserted for convenience of reference only and
shall not in any way affect the meaning or interpretation of this
Agreement.
12.5 Counterparts. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
12.6 Waiver. Neither
any course of dealing nor any failure or neglect of either party hereto in any
instance to exercise any right, power or privilege hereunder or under law shall
constitute a waiver of such right, power or privilege or of any other right,
power or privilege or of the same right, power or privilege in any other
instance. Without limiting the generality of the foregoing,
Employee’s continued employment without objection shall not constitute
Employee’s consent to, or a waiver of Employee’s rights with respect to, any
circumstances constituting Good Reason. All waivers by either party
hereto must be contained in a written instrument signed by the party to be
charged therewith, and, in the case of the Company, by its duly authorized
officer.
12.7 Entire Agreement; Termination of
Prior Agreement. This instrument constitutes the entire
agreement of the parties in this matter and shall supersede any other agreement
between the parties, oral or written, concerning the same subject
matter. The Prior Agreement is hereby terminated and deemed by the
parties to be void ab
initio.
12.8 Amendment. Subject
to Section 12.3, no modification, amendment or waiver of any of the provisions
of this Agreement shall be effective unless in writing specifically referring
hereto, and signed by the parties hereto.
12.9 Governing Law. In
light of Company’s and Employee’s substantial contacts with the State of
Missouri, the facts that the Company is headquartered in Missouri and Employee
resides in and/or reports to Company management in Missouri, the parties’
interests in ensuring that disputes regarding the interpretation, validity and
enforceability of this Agreement are resolved on a uniform basis, and Xxxxx
Shoe’s execution of, and the making of, this Agreement in Missouri, the parties
agree that: (i) any litigation involving any noncompliance with or
breach of the Agreement, or regarding the interpretation, validity and/or
enforceability of the Agreement, shall be filed and conducted exclusively in the
state courts in St. Louis County, Missouri, or the U.S. District Court for the
Eastern District of Missouri; and (ii) this Agreement shall be interpreted in
accordance with and governed by the laws of the State of Missouri, without
regard for any conflict of law principles. Employee agrees that
Employee under no circumstances will, either alone or in conjunction with anyone
else, file or pursue any such litigation other than in such state or federal
courts in Missouri, and Employee hereby consents and agrees that any such
litigation filed in any other court(s) shall be dismissed and that Employee may
be enjoined from filing and/or pursuing any such action.
12.10 Third Party
Beneficiaries. Employee agrees that Xxxxx Shoe’s subsidiaries
are third party beneficiaries of this Agreement and hereby consents to the
enforcement by any subsidiary of Xxxxx Shoe of the provisions contained herein,
including without limitation, the provisions of Section 9 and Section
10.
IN
WITNESS WHEREOF, Employee and Xxxxx Shoe have executed this Agreement as of the
day and year first above written.
|
Xxxxx
Shoe Company, Inc.
|
Employee
|
|||
|
By:
|
/s/ Xxxxxxx X. Xxxx | /s/ Xxxxxxx X. Xxxxxx | ||
|
Name:
|
Xxxxxxx
X. Xxxx
|
Xxxxxxx
X. Xxxxxx
|
||
|
Title:
|
Senior
Vice President and
Chief
Talent Officer
|
|||
|
Date:
|
4/6/06 |
Date:
|
3/29/06 | |
