NS GROUP, INC. JUNE 30, 2002 FORM 10-Q EXHIBIT 10.2
SALARY CONTINUATION AGREEMENT
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THIS AGREEMENT is entered into between NS Group, Inc., a corporation
having its corporate office in Newport, Kentucky ("Company"), and Xxxxxx X.
Xxxxxxxx ("Participant") effective June 25, 2002.
WITNESSETH:
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WHEREAS, Participant is employed by the Company, and by reason thereof,
has acquired experience and knowledge of considerable value to the Company; and
WHEREAS, the Company wishes to offer an inducement to Participant to
remain in its employ by compensating him beyond his regular salary for services
which he had rendered or will hereafter render; and
WHEREAS, Participant is willing to continue in the employ of the
Company until his retirement, or until it is mutually agreed by both the Company
and Participant that his services are no longer necessary.
NOW, THEREFORE, it is mutually agreed as follows:
1. As of the date of this Agreement, Participant is employed by the
Company, and Participant hereby agrees to continue such employment upon the
terms and conditions set forth in this Agreement. Participant is an "at will"
employee of the Company and this Agreement does not impose any obligation for
the employment relationship to continue for a specified period of time.
2. As compensation for his services, the Company hereby agrees to pay
Participant and Participant hereby agrees to accept from the Company, a yearly
salary to be determined by the Board of Directors of the Company.
3. Subject to the limitations set forth in Sections 9 and 11 below, in
the event that Participant retires from active employment with the Company after
attaining age 62, the Company shall pay Participant a monthly amount for life
commencing on the first day of the month following the date of such retirement
equal to fifty-percent (50%) of the Participant's monthly base salary for the
month prior to the month in which the Participant retires from active employment
with the Company (the "Monthly Payment"); provided, however, that such Monthly
Payment shall be no less than one-twenty-fourth (1/24th) of the Participant's
annualized base salary for the calendar year immediately preceding the
Participant's retirement from active employment with the Company. The Company
may, in its sole discretion, provide that Participant may begin receiving the
benefits provided for in this Agreement before attaining age 62, subject to such
actuarial reductions as the Company may deem appropriate to reflect the early
commencement of benefits.
4. In the event that Participant dies (a) while in the active employ of
the Company, or (b) after becoming fully vested in the benefits provided
pursuant to this Agreement because of either a permanent disability or a Change
of Control (as provided for in Sections 6 and 7) but prior to the commencement
of payments hereunder, Participant's spouse at the time of death shall be
entitled to receive Monthly Payments commencing on the first day of the month
following Participant's death and ending on the earlier of (i) the first day of
the month during which the spouse dies and (ii) the date on which the 120th
Monthly Payment is made. In the event that Participant dies (and is survived by
a spouse) while receiving Monthly Payments hereunder but prior to receipt of at
least 120 such payments, the spouse shall be entitled to continue receiving such
payments until the earlier of (i) the first day of the month during which the
spouse dies and (ii) the date on which the 120th Monthly Payment is made.
5. Upon retirement from the Company at or following attainment of age
62, continued health insurance coverage shall be provided for Participant and
the person (if any) who is his spouse at the time of retirement. The coverage
will be the same as that which may be provided from time to time to active
employees, and will be paid for by the Company. Such coverage will continue for
Participant until Participant reaches the age at which he is eligible for
Medicare and for Participant's spouse until she reaches the age at which she is
eligible for Medicare; provided, however, for any period during which the
Participant or the Participant's spouse is eligible for any other group health
plan, as an employee or otherwise, the health insurance coverage provided under
this Section shall be the secondary plan and the group health plan under which
the Participant or Participant's spouse is eligible shall be the primary plan.
6. In the event that Participant becomes permanently disabled (as
defined in the Company's long-term disability plan which covers the Participant)
while in the active employ of the Company, Participant shall become fully vested
in the benefits provided pursuant to Section 3 of this Agreement, and shall
begin receiving such benefits at the later of age 62 or when long-term
disability benefits are no longer payable to Participant.
7. In the event of a Change of Control (as defined herein) of the
Company while Participant is in the active employ of the Company, Participant
shall become fully vested in the benefits provided pursuant to Section 3 of this
Agreement. Participant must wait until age 62 to begin receiving these benefits.
Change of Control shall mean the happening of any of the following:
(a) the direct or indirect sale, lease, exchange or other
transfer of all or substantially all of the assets of the Company to
any Person (i.e., 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) of 14(d)(2) of the
Securities Exchange Act of 1934) or entity or group of Persons or
entities acting in concert as a partnership or other group ("Group of
Persons") other than a Person described in clause (i) of the
definition of Affiliate, as set forth herein. 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
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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% or greater voting or economic interest or
the power to control. 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) 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;
(c) the stockholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company;
(d) 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) ("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;
(e) a Person or Group of Persons, together with any Affiliate
thereof, shall succeed in having 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 (a), (d) and
(e) 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.
8. Notwithstanding any other provision of the Agreement, the Company
has an unconditional right to offset any amounts which Participant owes the
Company against amounts due under this Agreement.
9. Participant agrees that if his employment with the Company is
terminated with "Cause" (as defined below and regardless of whether Participant
has attained the age of 62), Participant shall not be entitled to any benefits
whatsoever provided under this Agreement and
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the Company shall have no liability or obligation to provide any such benefits
to Participant pursuant to this Agreement. "Cause" shall be defined as (i)
Conviction or judicial admission by the Employee of any felony criminal act, a
crime involving moral turpitude, or a crime of fraud or dishonesty; (ii) acts by
Employee constituting gross negligence or willful misconduct to the detriment of
the Company; (iii) Employee's misfeasance, nonfeasance or malfeasance in the
performance of his duties; or (iv) Employee's failure or refusal to comply with
the lawful directions of the Company's Board of Directors or with the policies,
standards and regulations of the Company after notice and failure to cure within
thirty (30) days.
10. Participant agrees that, without the written consent of the Board
of Directors of the Company, he will not, during the term of his employment with
the Company or any business entity controlling, controlled by or under common
control with the Company (an "Affiliate"), directly or indirectly (a) engage in
any activity, or in any manner be connected with or employed by any person,
firm, corporation, or any other entity, in competition with the Company or any
Affiliate, or (b) call upon, solicit, divert, or take away or attempt to
solicit, divert, or take away any of the customers or employees of the Company
or any Affiliate. The parties agree that these restrictions against competition
and solicitation will continue to apply after Participant's employment with the
Company ends if and only if Participant's benefits are vested (i.e. Participant
is entitled to receive Monthly Payments hereunder either immediately or upon the
attainment of age 62), and in such event will remain in effect for 5 years after
Participant's termination of employment. Participant further agrees that he will
not, during the term of his employment with the Company or any Affiliate and for
a period of 5 years thereafter, use or disclose to anyone not legally entitled
thereto any confidential or proprietary information or trade secrets relating to
the business of the Company. The covenants contained in this Section 10 are
enhanced covenants not to compete that relate specifically to the salary
continuation benefits provided under this Agreement and are not intended to
supersede any covenants not to compete contained in any employment agreement
between Participant and the Company.
11. Participant agrees that, if he breaches any covenant of Section 10
above, no further payments shall be due or payable by the Company hereunder
either to Participant or to Participant's spouse and the Company shall have no
further liability or obligation hereunder. Solely with respect to this
Agreement, the Company waives the right to injunctive relief with respect to a
breach of any covenant of Section 10 after the Participant's termination of
employment with the Company.
12. The benefits provided hereunder shall not affect the right of the
Participant to participate in any current or future Company retirement plan or
in any supplemental compensation arrangement which constitutes a part of the
Company's regular compensation structure. Upon Participant's termination of
employment, his annual base salary and other benefits shall cease upon
commencement of the benefits provided hereunder, except as required by
applicable law or the applicable benefit plan.
13. It is agreed that neither Participant nor Participant's spouse
shall have any right to commute, sell, assign, transfer or otherwise convey the
right to receive any payments hereunder, which payments and the right thereto
are expressly declared to be non-transferable. In the event
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that Participant or Participant's spouse takes any action or agrees to take any
action in violation of this Section, the Company shall have no further liability
or obligation hereunder.
14. If the Company acquires an insurance policy or any other asset in
connection with the liabilities assumed by it hereunder, it is expressly
understood by Participant and agreed to by him that neither Participant nor
Participant's spouse shall have any right with respect to, or claim against,
such policy or asset. Such policy or asset: (a) shall not be deemed to be held
under any trust for the benefit of Participant or Participant's spouse; (b)
shall not be held in any way as collateral security for the fulfillment of the
obligations of the Company under this Agreement; and (c) shall be, and remain, a
general unpledged, unrestricted asset of the Company.
15. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors,
permitted assigns and other legal representatives. Nothing in this Agreement,
whether expressed or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any other persons other than the Company, each
of the Company's Affiliates, Participant or Participant's spouse, and their
respective successors, permitted assigns and other legal representatives.
16. This Agreement sets forth the entire agreement and understanding of
the parties in respect of the transactions contemplated hereby and supersedes
all prior agreements, arrangements and understandings relating to the subject
matter hereof.
17. This Agreement may be executed simultaneously in two counterparts,
each of which shall be deemed an original but both of which taken together shall
constitute one and the same instrument.
18. 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 Participant and a designated representative of the
Company shall meet to negotiate and attempt to resolve such question in good
faith. The Participant 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 Participant 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.
19. If any provision of this Agreement is determined by a court of
competent jurisdiction to be unenforceable because it is overbroad, the other
provisions hereof shall not be effected, and this agreement shall be modified to
the extent necessary to make the invalid or
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unenforceable provision valid and enforceable to the maximum extent permissible
under applicable law. This Agreement shall be construed in accordance with the
laws of the State of Kentucky, and Participant and the Company hereby consent to
the filing and conduct of any litigation concerning this Agreement exclusively
in the State of Kentucky.
20. Whenever the singular number is used herein it shall include the
plural if the context so requires and reference to the masculine gender herein
shall be deemed to refer to all genders.
21. The Company, or any successor thereto, may not amend or terminate
this Agreement, without the written consent of Participant.
22. The Company shall use its best efforts to cause this Agreement to
be assumed by any successor to the Company by virtue of a sale of substantially
all of its assets or otherwise.
23. This Agreement shall supersede any previous agreement between
Participant and the Company with regard to salary continuation benefits, which
is deemed to be terminated.
I HAVE READ THIS SALARY CONTINUATION 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.
IN WITNESS WHEREOF, Participant and the Company, by its duly authorized
officer, have executed this Agreement as of June 25, 2002.
NS GROUP, INC.:
By: /s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx
President & Chief Executive Officer
PARTICIPANT:
/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
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