EXHIBIT 10.01
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is dated as of September 9, 1998 by and between ▇▇▇▇▇▇▇
▇▇▇▇ (the "Employee") and ▇. ▇▇▇▇▇, INC., a Massachusetts corporation together
with any subsidiaries of the Company (the "Company").
WHEREAS, the Employee and the Company desire to set forth in writing
the terms and conditions of the Employee's employment agreement with the Company
from the date hereof;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Employment. Under and subject to the terms and conditions set forth
herein, the Company hereby agrees to employ the Employee during the Term (as
defined in Section 6 hereof) as its Executive Vice President and President of
its JBI Footwear division (the "Division") and/or in such other senior executive
management position(s) with the Company, or any parent or subsidiary of the
Company, as the Board of Directors of the Company (the "Board") may determine
from time to time, and the Employee hereby accepts such employment.
2. Duties. The Employee agrees, during the Term and any extension of
the Term, faithfully to perform for the Company, such duties as may be assigned
to him from time to time by the Company. The Employee further agrees to devote
his entire business time, attention and energies exclusively to such employment
and to conform to the rules, regulations, instructions, personnel practices and
policies of the Company and its subsidiaries, as existing and amended from time
to time. The Employee may be required to relocate his principal residence only
to an area in which the Company or a subsidiary of the Company has or determines
to have significant operations.
3. Compensation.
(a) Base Salary. The Company shall pay the Employee during the Term an
annual base salary of not less than $400,000, payable no less often than
monthly, in equal installments.
(b) Cash Incentive Compensation. In addition to his annual base salary
as determined pursuant to Section 3(a), during the Term, the Employee shall also
be paid such amounts, if any, to which the Employee is entitled, as an officer
of the Company, under the Company's Cash Incentive Plan (the "Incentive Plan"),
as from time to time such Incentive Plan may be amended, participating with a
"target" level of incentive compensation of forty percent (40%) of base salary.
4. Other Benefits.
(a) Fringe Benefits. The Employee shall be entitled to
participate in all benefit programs that the Company establishes and makes
available to management generally and in any event shall be entitled to receive
benefits at least substantially comparable to those provided pursuant to the
present practices of the Company and its subsidiaries.
(b) Paid Vacations. The Employee shall be entitled to an
annual paid vacation of four (4) weeks in each calendar year, to be taken at
such time or times as the Employee and the Company shall mutually agree,
provided, however, that no more than two weeks shall be taken during any three
month period unless otherwise agreed upon by the Company's Chief Executive
Officer.
5. Expenses. The Company shall reimburse the Employee for all
reasonable travel, entertainment and other business expenses incurred or paid by
the Employee in performing his duties under this Agreement upon presentation by
the Employee of expense statements or vouchers and such other supporting
information as the Company may from time to time request, provided, however,
that the amount available for such expenses may be fixed in advance by the Board
after consultation with the Employee. The Company shall also pay or reimburse
the reasonable relocation expenses of the Employee (consistent with the present
policies of the Company) in connection with a relocation of the Employee's
principal residence outside of the greater Boston area required by the Company
pursuant to Section 2 hereof.
6. Effective Date and Term. This Agreement shall become effective as of
the date hereof and the Employee's employment under this Agreement shall
commence on such date and, unless sooner terminated as provided herein or
extended, shall continue for a term (the "Term") ending on September 9, 2000.
The Employee and the Company have obligations hereunder extending past the Term.
7. Non-competition.
(a) During the Employee's employment under this Agreement or
otherwise and for a period of eighteen months after the date of termination of
such employment (the "Termination Date"), the Employee will not, without the
express written consent of the Company, anywhere in the United States or any
territory or possession thereof or in any foreign country in which the Company
was active as of the Termination Date: (i) compete with the Company or any other
entity directly or indirectly controlled by the Company (each an "Affiliate"),
in the Company's Business (as defined in Section 7(c) hereof); or (ii) otherwise
interfere with, disrupt or attempt to interfere with or disrupt the relationship
between the Company or an Affiliate and any person or business that was a
customer, supplier, lessor, licensor, manufacturer, contractor, designer or
employee of the Company or such Affiliate on the Termination Date or within
eighteen months prior to the Termination Date.
(b) The term "compete" as used in this Section 7 means
directly or indirectly, or by association with any entity or business, either as
a proprietor, partner, employee, agent, consultant, director, officer,
shareholder (provided that the Employee may make passive investments in
competitive enterprises the shares of which are listed on a national securities
exchange if the Employee at no time owns directly or indirectly more than 2% of
the outstanding equity ownership of such enterprise) or in any other capacity or
manner (i) to solicit, hire, purchase from, sell to, rent from, or otherwise
conduct business related to the Company's Business with any party that is a
customer or supplier of the Company or an Affiliate or (ii) operate any retail
store or licensed footwear department ("Licensed Department") which sells
products related to the Company's Business (as defined in Section 7(c) hereof).
(c) The term "Company's Business" as used in this Section 7
means the operation of or employment in either of the following retail
businesses, as a principal business unit, either alone or in combination: (i)
the merchandising, sourcing, production, marketing, distribution or sale of
footwear for any or all of Footstar, Inc.,; Wal-Mart, or Payless ShoeSource,
Inc.; or (ii) retail stores offering casual clothing for "Big and Tall" men. The
term shall also include any additional specialty retail businesses which the
Company may acquire subsequent to the date hereof and which are operated as
principal business units of the Company on the Termination Date.
(d) The term "supplier" as used in this Section 7 shall mean
any party or affiliate of a party from which, on the Termination Date or within
eighteen months prior to the Termination Date, the Company or an Affiliate
purchased products sold by the Company or an Affiliate or was in contact or
actively planning to contact in connection with the purchase of products sold by
the Company or an Affiliate on or before the Termination Date or which the
Company or an Affiliate was contemplating the sale of at some time after the
Termination Date.
(e) The term "customer" as used in this Section 7 shall mean
any party or affiliate of a party, that on the Termination Date or within
eighteen months prior to the Termination Date, was a wholesale vendee or
prospective wholesale vendee of the Company or an Affiliate or in connection
with whose business the Company or an Affiliate operated a Licensed Department,
a retail store for the sale of casual clothing for "Big and Tall" men, work
related clothing and uniforms for medical and laboratory purposes or any other
specialty retail business which the Company operated as a principal business
unit on the Termination Date, had contacted in connection with the potential
operation of such businesses within two years prior to the Termination Date or
which the Company or an Affiliate was actively planning to contact in connection
with the potential operation of any such businesses on the Termination Date.
8. Confidential Information. The Employee will never use for his own
advantage or disclose any proprietary or confidential information relating to
the business operations or properties of the Company, any Affiliate or any of
their respective customers, suppliers, landlords, licensors or licensees. Upon
termination of the Employee's employment, the Employee will surrender and
deliver to the Company all documents and information of every kind relating to
or connected with the Company and Affiliates and their respective businesses,
customers, suppliers, landlords, licensors and licensees.
9. Termination.
(a) Death. In any event of the death of the Employee during
the Term, his employment shall terminate and the Company shall pay to the
Employee's surviving spouse, or to the Employee's estate if their is no
surviving spouse, (i) the Employee's base salary for one year from the date of
death, and (ii) amounts under the Incentive Plan, if any, payable with respect
to the fiscal year in which his death occurs which otherwise would have been
paid to the Employee on the basis of the results for such fiscal year, prorated
to the date of his death. Upon the death of the Employee, the rights of the
Employee's surviving spouse or estate hereunder, as the case may be, shall be
limited solely to the benefits set forth in this Section 9(a).
(b) Disability. In the event that the Employee shall become
disabled (as hereinafter defined) during the Term, the Company shall have the
right to terminate the Employee's employment upon written notice, provided,
however, that in such event the Company shall (i) continue to pay the Employee's
base salary for one year from the date such termination occurs, and (ii) pay to
the Employee amounts under the Incentive Plan, if any, which otherwise would
have been paid to the Employee on the basis of the results for the fiscal year
in which such termination occurs, prorated to the date of such termination. For
purposes of this Agreement, the Employee shall be considered disabled on the
date when any physical or mental illness or other incapacity shall, in the
judgment of a majority of the members of the Board, after consulting with or
being advised by one or more physicians (it being understood that one of such
physicians may be the Employee's physician but that the Board shall not be bound
by his views), have prevented the performance in a manner reasonably
satisfactory to the Company of the Employee's duties under this Agreement for a
period of six consecutive months.
(c) For Cause. "Cause" shall mean the occurrence of one or
more of the following: (i) Optionee is convicted of, pleads guilty to, or
confesses to any felony or any act of fraud, misappropriation or embezzlement
which has an immediate and materially adverse effect on the Company or any
Subsidiary, as determined by the Board in good faith in its sole discretion,
(ii) Optionee engages in a fraudulent act to the material damage or prejudice of
the Company or any subsidiary or in conduct or activities materially damaging to
the property, business or reputation of the Company or any Subsidiary, all as
determined by the Board in good faith in its sole discretion, (iii) any material
act or omission by Optionee involving malfeasance or negligence in the
performance of Optionee's duties to the Company or any Subsidiary to the
material detriment of the Company or any Subsidiary, as determined by the Board
in good faith in its sole discretion, which has not been corrected by Optionee
within 30 days after written notice from the Company of any such act or
omission, (iv) failure by Optionee to comply in any material respect with the
terms of his employment agreement, if any, or any written policies or directives
of the Board as determined by the Board in good faith in its sole discretion,
which has not been corrected by Optionee within 30 days after written notice
from the Company of such failure, or (v) material breach by Optionee of his
non-competition agreement with the Company, if any, as determined by the Board
in good faith in its sole discretion. In such event all obligations of the
Company hereunder shall thereupon terminate, including the obligation to pay any
amounts under the Incentive Plan with respect to the fiscal year in which such
termination occurs, but the Employee shall be entitled to receive any accrued
salary and other amounts under the Incentive Plan accrued with respect to any
prior fiscal years.
(d) Without Cause. During the Term hereof and prior to any
Change of Control of the Company, the Company may terminate this Agreement at
any time without cause. In such event, and subject to the provisions of
subparagraph (e) hereof with respect to the sale or liquidation of the Division,
the Company shall pay to the Employee, in accordance with the Company's regular
pay intervals for its senior executives, an amount equal to the greater of (i)
the amount of Base Salary the Employee would have received through the last day
of the Term or (ii) one (1) year of Base Salary.
(e) Change of Control/Change of Management. (i) In the event
the Employee's employment with the Company is terminated (A) by the Company or
(B) by the Employee for "good reason" within three (3) years after a Change in
Control of the Company occurring during the Term hereof (regardless of whether
such Employee's termination occurs after the expiration of the Term), or (ii) in
the event the Employee's employment is terminated (C) by the Company (except if
such termination is for "Cause" as defined in subparagraph 9(c) hereof) or (D)
by the Employee for "good reason" within three (3) years after the employment of
▇▇. ▇▇▇▇▇▇▇▇▇ with the Company has terminated during the Term hereof for any
reason including, without limitation, dismissal, resignation, retirement, death
or termination for any other reason, then, in such event, the Company shall pay
to the Employee an amount, in cash, (the "Severance Payment") equal to the
greater of (i) the amount of Base Salary the Employee would have received
through the last day of the Term or (ii) one (1) year of Base Salary.
In the event the Company determines, during the Term hereof, to either
sell the Division in its entirety as a going concern, or to discontinue
operation of the Division and to liquidate the Division's licenses, inventory
and fixed assets, then, upon the occurrence of such sale or discontinuance, the
Company shall exercise all reasonable efforts to offer the Employee an executive
position of comparable responsibility within the Company. If the Company is
unable to offer the Employee such a position, the Company shall pay to the
Employee an amount equal to the greater of (i) the amount of Base Salary the
Employee would have received through the last day of the Term plus one (1) year
of additional salary or (ii) two (2) years Base Salary payable in accordance
with the regular pay intervals for senior executives of the Company; provided,
however, that any such salary in excess of the greater of the amount of Base
Salary payable through the last day of the Term or one (1) year shall be offset
by any salary or other compensation earned by the Employee from other
employment; it being understood that the Employee shall use reasonable efforts
to find new employment suitable to his training and performance.
A termination for "good reason" shall be deemed to have occurred, and
the Employee shall be entitled to the benefits set forth in this paragraph 9, if
the Employee voluntarily terminates his employment after the occurrence of any
of the following events, if either the circumstances set forth in paragraphs
(e)(i) or (e)(ii) has occurred: (i) the assignment to the Employee of any duties
inconsistent with the highest position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities attained by the
Employee during the period of his employment by the Company; (ii) a relocation
of the Employee outside the metropolitan Boston area; or (iii) a decrease in the
Employee's compensation (including base salary, bonus or fringe benefits). For
purposes hereof, "Change of Control of the Company" shall have the meaning set
forth in the Company's 1994 Equity Incentive Plan, as approved by the
Stockholders of the Company on June 7, 1994 (and without regard to any
subsequent amendments thereto).
For purposes of this Agreement "Base Salary" shall mean the Employee's
Base Salary as set forth in subparagraph 3(a) of this Agreement, as such Base
Salary may be increased from time to time. If any of the termination events set
forth in this subparagraph (e) shall occur during the Term hereof or other
applicable time periods, the provisions of paragraph 7 hereof shall be null and
void and have no further force or effect.
(f) In the event the Employee's employment is terminated as
described in Paragraph 9(e)(i) above, the Severance Payment shall be made to the
Employee in a single lump sum cash payment. In the event the Employee's
employment is terminated as described in Paragraph 9(e)(ii) above, the Severance
Payment shall be made to the Employee in accordance with the Company's regular
pay intervals for its senior executives beginning immediately following the
Employee's termination of employment with the Company.
(g) Severance Payment Limitation Upon Change of Control. If
all or part of the Severance Payment payable to the Employee pursuant to
subparagraph 9(e) hereof, when added to other payments payable to the Employee
as a result of a Change of Control, constitute Parachute Payments, the following
limitation shall apply. If the Parachute Payments, net of the sum of the Excise
Tax, Federal income and employment taxes and state and local income taxes on the
amount of the Parachute Payments in excess of the Threshold Amount, are greater
than the Threshold Amount, the Employee shall be entitled to the full Severance
Payment payable under subparagraph 9(e) of this Agreement. If the Threshold
Amount is greater than the Parachute Payments, net of the sum of the Excise Tax,
Federal income and employment taxes and state and local income taxes on the
amount of the Parachute Payments in excess of the Threshold Amount, then the
Severance Payment payable under subparagraph 9(e) of this Agreement shall be
reduced to the extent necessary so that the maximum Parachute Payments shall not
exceed the Threshold Amount. The Company shall select a firm of independent
certified public accountants to determine which of the foregoing alternative
provisions shall apply. For purposes of determining the amount of the Federal
income and employment taxes, and state and local income taxes on the amount of
the Parachute Payments in excess of the Threshold Amount, the Employee shall be
deemed to pay Federal income taxes at the highest marginal rate of Federal
income taxation applicable to individuals for the calendar year in which the
Severance Payments under subparagraph 9(e) of this Agreement are payable and
state and local income taxes at the highest marginal rates of individual
taxation in the state and locality of the Employee's residence for the calendar
year in which the Severance Payments under Subparagraph 9(e) of this Agreement
are payable, net of the maximum reduction in Federal income taxes which could be
obtained from deduction of such state and local taxes.
For purposes of this Agreement:
"Parachute Payments" shall mean any payment or provision by the Company
of any amount or benefit to and for the benefit of the Employee, whether paid or
payable or provided or to be provided under the terms of this Agreement or
otherwise, that would be considered "parachute payments" within the meaning of
Section 280G(B)(2)(A) of the Internal Revenue Code and the regulations
promulgated thereunder.
"Threshold Amount" shall mean three times the Employee's "base amount"
within the meaning of Section 280(G)(b)(3) of the Internal Revenue Code and the
regulations promulgated thereunder, less one dollar.
"Excise Tax" shall mean the excise tax imposed by Section 4999 of the
Internal Revenue Code.
10. Approval of Board. The Company represents that this Agreement has
been duly approved by the Board and is in all respects valid and binding upon
the Company.
11. Key Person Insurance. The Employee agrees to take such actions as
may be reasonably required to permit the Company to maintain key person life
insurance on the Employee's life in such amounts and for such periods of time,
if any, as the Company deems appropriate, with all benefits being payable to the
Company. Upon payment by the Employee of the cash surrender value, if any, of
any such policy and any paid but unearned premiums for such policy, the Company
will assign such policy to the Employee upon termination (other than because of
the Employee's death) of the Employee's employment with the Company, provided,
however, that, in the event the Employee's employment is terminated by reason of
the disability of the Employee and the death of the Employee may reasonably be
expected within one year after such termination as a result of such disability,
the Company shall not be required to assign any such policy.
12. Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been given
and received when actually delivered, one business day after dispatch by
telegraphic means, two business days after dispatch by recognized overnight
delivery service, or five days after mailing by certified or registered mail
with proper postage affixed, return receipt requested and addressed as follows
(or to such other address as a party entitled to receive notice hereunder may
have designated by notice pursuant to this Section 12):
a) If to the Company:
▇. ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
b) If to the Employee:
▇▇▇▇▇▇▇ ▇▇▇▇
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13. Severability. If any provision of this Agreement or its application
to any person or circumstances is invalid or unenforceable, then the remainder
of this Agreement or the application of such provision to other persons or
circumstances shall not be affected thereby. Further, if any provision or
application hereof is invalid or unenforceable, then a suitable and equitable
provision shall be substituted therefor in order to carry out so far as may be
valid or enforceable the intent and purposes of the invalid and unenforceable
provision.
14. Applicable Law. This Agreement shall be interpreted and construed
in accordance with, and shall be governed by, the laws of the Commonwealth of
Massachusetts without giving effect to the conflict of law provisions thereof.
15. Assignment. Neither of the parties hereto shall, without the
written consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder, provided, however, that in the event that the Company
sells all or substantially all of its assets the Company may assign its rights
and transfer its obligations hereunder to the purchaser of such assets. A merger
of the Company with or into another corporation shall be deemed not to be an
assignment of this Agreement, and, in any such event, this Agreement shall inure
to the benefit of and be binding upon the surviving corporation and the
Employee. Subject to the foregoing, this Agreement shall be binding upon, and
shall inure to the benefit of, the parties and their respective successors,
heirs, administrators, executors, personal representatives and assigns.
16. Headings. This section and paragraph headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
17. Remedies. It is specifically understood and agreed that any breach
of the provisions of Section 7 or 8 of this Agreement is likely to result in
irreparable injury to the Company, that damages at law will be inadequate remedy
for such breach, and that in addition to any other remedy it may have, the
Company shall be entitled to enforce the specific performance of said Sections
and to seek both temporary and permanent injunctive relief therefor without the
necessity of proving actual damages.
18. Waiver of Breach. Any waiver by either the Company or the Employee
of a breach of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach.
19. Amendment of Agreement. This Agreement may be altered, amended or
modified, in whole or in part, only by a writing signed by both the Employee and
the Company.
20. Integration. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter thereof and supersedes
all prior agreements with respect to such subject matter between the parties
including, without limitation, that certain offer letter dated September 8, 1998
from the Company to ▇▇▇▇▇▇▇ ▇▇▇▇, as executed by the parties.
Intending to be legally bound, the Company and the Employee have signed
this Agreement as if under seal as of the date set forth at the head of the
first page.
▇. ▇▇▇▇▇, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
/s/▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
