EMPLOYMENT AGREEMENT
Exhibit
10.1
AGREEMENT, made and entered
into as of the 9th day of December, 2008 (the “Effective Date”) by
and between Footstar, Inc., a Delaware corporation (the “Company”), and
Xxxxxxxx X. Xxxxxxxx (the “Executive”).
WITNESSETH:
WHEREAS, Executive currently
serves as the Chairman of the Board of Directors of the Company (the “Board”);
and
WHEREAS, the Company is
winding up its affairs and plans to liquidate in the 2009 calendar year;
and
WHEREAS, the Company desires
to employ Executive to manage the wind down process pursuant to this Employment
Agreement effective as of the Effective Date and to the extent determined by the
Company to serve as Chief Executive Officer and President of the Company as of
January 1, 2009 (or such other date as the Company may specify and as Executive
may agree (such date, the “CEO Appointment Date”)) and Executive desires to
accept such employment, subject to the terms and provisions of this
Agreement.
NOW, THEREFORE, in
consideration of the premises and mutual covenants contained herein and for
other good and valuable consideration, the receipt of which is mutually
acknowledged, the Company and Executive (individually a “Party” and together
the “Parties”)
agree as follows:
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1.
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Term of
Employment.
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The term
of Executive’s employment under this Agreement shall commence on the Effective
Date and end on the one-year anniversary thereof (the “Term”) or, if sooner,
the date Executive’s employment is terminated pursuant to Section 7 hereof;
provided, that, the parties
hereto may mutually decide to extend the Term. Unless extended,
Executive’s employment shall terminate upon expiration of the Term.
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2.
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Position, Duties and
Responsibilities.
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(a)
Generally. In
addition to his position as Chairman of the Board, for which he will be provided
no additional compensation, during the period commencing on the Effective Date
and ending on the CEO Appointment Date, Executive shall serve as the Company’s
Chief Wind Down Officer and shall be responsible for managing the wind down of
the Company including, without limitation, the disposition of the Company’s
assets and any other administrative matters required in furtherance of the final
dissolution of the Company. Effective as of the CEO Appointment Date
and for the remainder of the Term, Executive shall cease to serve as the
Company’s Chief Wind Down Officer and shall replace Xx. Xxxxxxx X. Xxxxxxx as
the Company’s Chief Executive Officer and President and shall have and perform
such duties, responsibilities, and authorities as shall be specified by the
Company from time to time and as are customary for a Chief Executive Officer and
President of a publicly held corporation of the size, type, and nature of the
Company as they may exist from time to time and as are consistent with such
position and status. During the Term, Executive shall devote
substantially all of his business time and attention (except for periods of
vacation or absence due to illness), and his best efforts, abilities,
experience, and talent to his position and the businesses of the
Company. For avoidance of doubt, the determination of whether and
when to appoint the Executive to the position of Chief Executive Officer and
President shall be made by the Company.
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(b)
Other
Activities. Anything herein to the contrary notwithstanding,
nothing in this Agreement shall preclude Executive from (i) engaging in
charitable activities and community affairs and (ii) managing his personal
investments and affairs; provided, that, such activities
do not materially interfere with the proper performance of his duties and
responsibilities under this Agreement.
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3.
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Base
Salary.
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During
the Term, Executive shall be paid a base salary of $41,667 per month (pro rated
for partial months) payable in accordance with the regular payroll practices of
the Company, subject to periodic review for increase or decrease at the
discretion of the Compensation Committee of the Board (“Base
Salary”).
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4.
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Restricted Stock
Award.
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On the
Effective Date or as soon as administratively practicable thereafter, the
Company shall grant Executive 169,492 restricted shares (the “Restricted Shares”)
of the Company’s common stock and to the extent determined by the Company, under
and subject to the terms of the 1996 Incentive Compensation Plan (the “Plan”), which
restrictions shall lapse in accordance with the following schedule:
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Percentage
of Restricted Shares
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Vesting
Date
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50%
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February
28, 2009
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25%
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May
31, 2009
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15%
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August
30, 2009
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10%
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November
30, 2009
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Notwithstanding
the foregoing, if Executive voluntarily terminates his employment hereunder
prior to the expiration of the Term, he shall forfeit any unvested portion of
the Restricted Shares. The award contemplated under this Section 4
award shall be evidenced by a restricted stock award agreement with terms that
are consistent with this Agreement and to the extent issued under the Plan
consistent with the terms of the Plan.
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5.
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No Participation in Benefit
Plans.
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Except as
otherwise provided in this Agreement, Executive shall not be entitled to
participate in the Company’s supplemental executive retirement plan, retention
bonus programs or long-term incentive plans which are generally provided to
employees of the Company. Executive also shall not be entitled to
participate in any pension and welfare benefit plans or programs of the Company
which are generally provided to employees of the Company, including, without
limitation, health, medical, dental, long-term disability, travel accident and
life insurance plans, participation in executive health, tax preparation and
financial planning programs. By executing this Agreement, Executive
expressly waives his right to participate in any such plans or
programs.
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6.
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Reimbursement of Business and Other
Expenses.
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Executive
is authorized to incur reasonable expenses in carrying out his duties and
responsibilities under this Agreement, and the Company shall promptly reimburse
him for all such expenses, subject to documentation in accordance with the
Company’s policy. Notwithstanding anything herein to the contrary or
otherwise, except to the extent any expense, reimbursement or in-kind benefit
provided pursuant to this Section 6 does not constitute a “deferral of
compensation” within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”): (i) the
amount of expenses eligible for reimbursement or in-kind benefits provided to
Executive during any calendar year will not affect the amount of expenses
eligible for reimbursement or in-kind benefits provided to Executive in any
other calendar year, (ii) the reimbursements for expenses for which Executive is
entitled to be reimbursed shall be made on or before the last day of the
calendar year following the calendar year in which the applicable expense is
incurred and (iii) the right to payment or reimbursement or in-kind benefits
hereunder may not be liquidated or exchanged for any other benefit.
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7.
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Termination of
Employment.
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(a)
Involuntary Termination by
the Company, Death or Disability. In the event Executive’s
employment with the Company is terminated due to his death, due to a termination
by the Company without Cause (as defined below) or by the Company as a result of
Disability (as defined in Section 22(e) of the Code), he (or his executor,
estate or beneficiaries, as the case may be), shall be entitled to and their
sole remedies under this Agreement shall be:
(i) Base
Salary through the date of termination which shall be paid in a single lump sum
not later than 15 days following Executive’s termination date; and
(ii) lapse of
all restrictions on any unvested portion of the Restricted Stock Award
contemplated by Section 4 of this Agreement.
The
Company shall provide Executive with no less than 30 days’ prior written notice
of its intention to terminate Executive’s employment hereunder due to Disability
or a termination without Cause.
(b)
Termination by the Company
for Cause, Expiration of the Term or Executive’s Voluntary Termination of his
Employment. In the event the Company terminates Executive’s
employment for Cause, the Executive voluntarily terminates his employment or
upon expiration of the Term, he shall be entitled to and his sole remedies under
this Agreement shall be:
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(i) Base
Salary through the date of the termination, which shall be paid in a single lump
sum not later than 15 days following Executive’s termination of employment;
and
(ii) Retention
of the Restricted Stock Award which have, or will, have vested as of the
termination date.
For
purposes of this Agreement, “Cause” shall mean:
(ii) Executive’s
willful and material breach of Section 2 of this Agreement;
(iii) Executive
is convicted of a felony; or
(iv) Executive
engages in conduct that constitutes willful gross neglect or willful gross
misconduct in carrying out his duties under this Agreement, resulting, in either
case, in material harm to the financial condition or reputation of the
Company.
For
purposes of this Agreement, an act or failure to act on Executive’s part shall
be considered “willful” if it was done or omitted to be done by him not in good
faith, and shall not include any act or failure to act resulting from any
incapacity of Executive.
(c)
No Additional Severance
Payments. Upon termination of Executive’s employment during the Term, he
shall not be entitled to any severance payments or severance benefits from the
Company or any payments by the Company on account of any claim by him of
wrongful termination, including claims under any federal, state or local human
and civil rights or labor laws, other than the payments and benefits provided in
this Section 7.
(d)
Resignation as Officer or
Director. Executive shall be deemed to resign as an officer of the
Company effective as of the date of any employment termination, without any
further action on his part. Executive agrees to execute any documents
requested by the Company confirming such resignation.
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8.
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Assignability; Binding
Nature.
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This
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors, heirs (in the case of Executive) and permitted
assigns. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that such rights or obligations
may be assigned or transferred in connection with the sale or transfer of all or
substantially all of the assets of the Company. No rights or
obligations of Executive under this Agreement may be assigned or transferred by
Executive other than his rights to compensation and benefits, which may be
transferred only by will or operation of law.
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9.
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Representation.
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The
Parties represent and warrant that each are fully authorized and empowered to
enter into this Agreement and that the performance of their respective
obligations under this Agreement will not violate any agreement between such
Party and any other person, firm or organization.
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10.
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Entire Agreement.
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This
Agreement contains the entire understanding and agreement between the Parties
concerning the subject matter hereof and supersedes all prior agreements,
understandings, discussions, negotiations and undertakings, whether written or
oral, between the Parties with respect thereto.
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11.
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Amendment or Waiver.
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No
provision in this Agreement may be amended unless such amendment is agreed to in
writing and signed by Executive and an authorized officer of the Company. No
waiver by either Party of any breach by the other Party of any condition or
provision contained in this Agreement to be performed by such other Party shall
be deemed a waiver of a similar or dissimilar condition or provision at the same
or any prior or subsequent time. Any waiver must be in writing and signed by
Executive or an authorized officer of the Company (other than Executive), as the
case may be.
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12.
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Severability.
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The
provisions of this Agreement are severable and the invalidity of any one or more
provisions shall not affect the validity of any other provision. In
the event that a court of competent jurisdiction shall determine that any
provision of this Agreement or the application thereof is unenforceable in whole
or in part because of the duration or scope thereof, the parties hereto agree
that said court in making such determination shall have the power to reduce the
duration and scope of such provision to the extent necessary to make it
enforceable, and that the Agreement in its reduced form shall be valid and
enforceable to the full extent permitted by law.
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13.
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Survivorship.
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The
respective rights and obligations of the Parties hereunder shall survive any
termination of Executive’s employment to the extent necessary to the intended
preservation of such rights and obligations.
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14.
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Beneficiaries/References.
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Executive
shall be entitled, to the extent permitted under any applicable law, to select
and change a beneficiary or beneficiaries to receive any compensation or benefit
payable hereunder following Executive’s death by giving the Company written
notice thereof. In the event of Executive’s death or a judicial determination of
his incompetence, reference in this Agreement to Executive shall be deemed,
where appropriate, to refer to his beneficiary, estate or other legal
representative.
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15.
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Governing Law/Jurisdiction.
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This
Agreement shall be governed by and construed and interpreted in accordance with
the laws of New Jersey without reference to principles of conflict of laws,
except insofar as the Delaware General Corporation Law, federal laws and
regulations may be applicable. The Company and Executive hereby
consent to the jurisdiction of any or all of the following courts for purposes
of resolving any dispute under this Agreement: (i) the United States District
Court for New Jersey, (ii) any of the courts of the State of New Jersey, or
(iii) any other court having jurisdiction. The Company and Executive further
agree that any service of process or notice requirements in any such proceeding
shall be satisfied if the rules of such court relating thereto have been
substantially satisfied. The Company and Executive hereby waive, to the fullest
extent permitted by applicable law, any objection which it or he may now or
hereafter have to such jurisdiction and any defense of inconvenient forum and to
a trial by jury.
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16.
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Notices.
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Any
notice given to a Party shall be in writing and shall be deemed to have been
given when delivered personally or sent by certified or registered mail, postage
prepaid, return receipt requested, duly addressed to the Party concerned at the
address indicated below or to such changed address as such Party may
subsequently give such notice of:
If to the
Company:
Footstar,
Inc.
000
XxxXxxxxx Xxxxxxxxx
Xxxxxx,
Xxx Xxxxxx 00000
Attention: General
Counsel
If to
Executive:
Xxxxxxxx
Xxxxxxxx
Footstar,
Inc.
000
XxxXxxxxx Xxxxxxxxx
Xxxxxx,
Xxx Xxxxxx 00000
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17.
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Headings.
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The
headings of the sections contained in this Agreement are for convenience only
and shall not be deemed to control or affect the meaning or construction of any
provision of this Agreement.
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18.
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Counterparts.
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This
Agreement may be executed in one or more counterparts. Once executed this
Agreement shall be in full force and effect without further corporate
action.
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IN WITNESS WHEREOF, the
undersigned have executed this Agreement as of the date first written
above.
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FOOTSTAR,
INC.
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By:
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/s/
Xxxxxxx Xxxxxxxx
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Name:
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Xxxxxxx
Xxxxxxxx
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Title:
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Senior
Vice President and
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General
Counsel
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EXECUTIVE
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/s/
Xxxxxxxx Xxxxxxxx
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Xxxxxxxx
Xxxxxxxx
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