NS GROUP, INC. December 31, 2001 Form 10-K
EXHIBIT 10.8
FORM OF CHANGE OF CONTROL SEVERANCE AGREEMENT
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AGREEMENT by and between NS Group, Inc., a Kentucky Corporation (the
"Company"), and _____________________ (the "Employee"), dated as of the ____ day
of _____, 2000.
The Company wishes to assure that it will have the continued dedication
of the Employee notwithstanding the possibility, threat or occurrence of a
Change of Control (as defined below) of the Company. The Company believes it is
imperative to diminish the inevitable distraction of the Employee by virtue of
the personal uncertainties and risks created by a pending or threatened Change
of Control, to encourage the Employee's full attention and dedication to the
Company upon a Change of Control, and to provide the Employee with compensation
arrangements upon a Change of Control which provide the Employee with individual
financial security and which are competitive with those of other corporations
and, in order to accomplish these objectives, the Company desires to enter into
this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS
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(a) "Affiliate" of any specified Person means (i) any other Person
which, directly or indirectly, is in control of, is controlled
by or is under common control with such specified Person or (ii)
any other person who is a director or officer (A) of such
specified Person, (B) of any subsidiary of such specified Person
or (C) of any Person described in clause (i) above or (iii) any
person in which such Person has, directly or indirectly, a 5
percent or greater voting or economic interest or the power to
control. For the purposes of this definition, "control" of a
Person means the power, direct or indirect, to direct or cause
the direction of the management or policies of such Person
whether through the ownership of voting securities, or by
contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
(b) "Agreement Period" shall mean the period as defined in Section 2
of this Agreement.
(c) "Board of Directors"' shall mean the Board of Directors of the
Company as constituted from time to time.
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(d) "Change of Control" shall mean:
(i) the direct or indirect sale, lease, exchange or other
transfer of all or substantially all of the assets of the
Company to any Person or entity or group of Persons or
entities acting in concert as a partnership or other group
("Group of Persons") other than a Person described in
clause (i) of the definition of Affiliate;
(ii) the consummation of any consolidation or merger of the
Company with or into another corporation with the effect
that the stockholders of the Company immediately prior to
the date of the consolidation or merger hold less than 51%
of the combined Voting Power of the outstanding voting
securities of the surviving entity of such merger or the
corporation resulting from such consolidation ordinarily
having the right to vote in the election of directors
(apart from rights accruing under special circumstances)
immediately after such merger or consolidation;
(iii) the stockholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the
Company;
(iv) a Person or Group of Persons acting in concert as a
partnership, limited partnership, syndicate or other group
shall, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases or
otherwise, have become the direct or indirect beneficial
owner (within the meaning of Rule 13d-3) under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") ("Beneficial Owner") of securities of the Company
representing 30% or more of the combined Voting Power of
the then outstanding securities of the Company ordinarily
(and apart from rights accruing under special
circumstances) having the right to vote in the election of
directors;
(v) a Person or Group of Persons, together with any Affiliates
thereof, shall succeed in having a sufficient number of
its nominees elected to the Board of Directors of the
Company such that such nominees, when added to any
existing director remaining on the Board of Directors of
the Company after such election who is an Affiliate of
such Person or Group of Persons, will constitute a
majority of the Board of Directors of the Company;
provided that the Person or Group of Persons referred to
in clauses (i), (iv) and (v) shall not mean ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ or any Group of Persons with respect to which
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is the Beneficial Owner of the majority
of the voting equity interests.
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(e) "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 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; [OR (v) EMPLOYEE'S
BREACH OF SECTIONS 4, 5, 6, 7, AND 9 OF THE EMPLOYMENT
AGREEMENT].
(f) "Company" as used herein includes NS Group, Inc. and any of its
subsidiaries and divisions and, as provided by Section 12(b)
hereof, any successor.
(g) "Date of Termination" shall be the date on which the Notice of
Termination is actually received by the addressee, or
alternatively, if the Notice of Termination specifies a date
other than the date of receipt of such notice then that
specified date shall be the Date of Termination.
(h) "Effective Date" shall mean the first date on which a Change of
Control occurs; provided, however, that if the Employee's
employment is terminated by the Company prior to the date on
which a Change of Control occurs, and the Employee can
reasonably demonstrate that such termination by the Company was
in contemplation of a Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination.
(i) "Good Reason" means: (i) any material adverse change in
compensation to the Employee; (ii) substantial decrease in the
nature or scope of the Employee's duties, responsibilities,
powers, authority, title, position or status; (iii) unreasonable
travel requirements; (iv) any relocation required on the part of
Employee, without his consent, outside of a 50-mile radius from
his primary residence on the Effective Date; or (v) material
breach by the Company of an employment, compensation or similar
agreement between the Employee and the Company.
(j) "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof or any other entity within the meaning of Section
13(d)(3) or 14(d) (2) of the Exchange Act.
(k) "Voting Power" shall mean the voting power of all securities of
a Person then outstanding generally entitled to vote for the
election of directors of
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the Person (or, where appropriate, for the election of persons
performing similar functions).
2. AGREEMENT PERIOD
----------------
The Company hereby agrees to provide the Employee with the protections
and benefits enumerated in Section 3 of this Agreement for the period commencing
on the Effective Date and ending on the third anniversary of the Effective Date.
3. OBLIGATIONS OF THE COMPANY UPON TERMINATION
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(a) Notice of Termination. Any termination after the Effective Date
by the Company or by the Employee shall be communicated by
Notice of Termination, within ten (10) business days after the
later of the date of employment termination or the date of
Change of Control, to the other party hereto given in accordance
with Section 13(c) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice
which (i) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Employee's employment, and (ii) if the termination date is other
than the date of receipt of such notice, specifies the
termination date.
(b) Termination by the Company for Cause; Termination by the
Employee for Other Than Good Reason. If during the Agreement
Period, the Employee's employment is terminated by the Company
for Cause, by the Employee other than for Good Reason, or by
reason of death or disability, this Agreement shall terminate
without further obligations to the Employee.
(c) Termination by the Company other than for Cause; Termination by
the Employee for Good Reason. If, during the Agreement Period,
the Company shall terminate the Employee's employment other than
for Cause, or the employment of the Employee shall be terminated
by the Employee for Good Reason, the Employee shall be entitled
to the following payments and benefits:
(i) The Company shall pay to the Employee in a lump sum in
cash within thirty (30) days after the Date of Termination
the aggregate of ______times the amount of the Employee's
base salary in effect on the Date of Termination
_______times the average amount of the Employee's annual
bonus payments made in the ______years prior to the Date
of Termination, plus a payment equal to a pro rata portion
(based on the whole number of months worked in the fiscal
year by the Employee prior to the Date of Termination and,
if applicable performance targets have not been met on the
Date of Termination, based on a reasonable estimate of the
amount of
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bonus to be earned for the full year) of the Employee's
annual bonus for the year of termination.
(ii) For ______years after the Date of Termination, the Company
shall continue providing medical, dental, life and
disability insurance benefits to the Employee in an amount
equivalent to that which would have been provided to the
Employee had the Employee's employment not been
terminated. The Employee shall not be obligated to pay
higher fees for such benefits than he or she was paying,
at the Date of Termination. In the event it is not
possible to provide this continued coverage, the Company
shall provide the Employee with a cash payment in the
amount necessary for the Employee to purchase equivalent
insurance for _____years after the Date of Termination.
(iii) Within ten (10) business days after the later of the date
of employment termination or the date of Change of
Control, the Company shall provide, at no cost to the
Employee, individual outside assistance for the Employee
in finding other employment. Such obligation may be
fulfilled by the Company through the retention of an
outplacement service for use by the Employee.
4. NON-REDUCTION OF TERMINATION BENEFITS
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In the event the Company's independent auditors (the "Accounting Firm")
shall determine that any payment or distribution by the Company to or for the
benefit of the Employee made pursuant to Section 3 of this Agreement would be
nondeductible by the Company for Federal income tax purposes because of Section
280G of the Internal Revenue Code of 1986 ("Code"), as amended, then the Company
shall nonetheless pay to Employee all payments and distributions under Section
3. If the Accounting Firm makes such a determination, the Company shall promptly
provide the Employee with notice to that effect with a copy of the detailed
calculation thereof. The Employee shall pay all taxes on all such payments and
distributions under Section 3 that are imposed on Employee, including the excise
tax under Section 280G of the Code.
5. FUNDING OF GRANTOR TRUST
------------------------
The Board of Directors of the Company shall have the option to
establish a so-called "Rabbi Trust" upon the occurrence, or in anticipation, of
a Change of Control to secure for the Employee the benefits provided pursuant to
Section 3 of this Agreement. If the Board of Directors elects to do so, the
Company shall, immediately upon the occurrence of a Change of Control, make an
irrevocable contribution to the Rabbi Trust in an amount that is sufficient to
pay the Employee the benefits to which such Employee would be entitled pursuant
to the terms of this Agreement as of the date on which the Change of Control
occurred.
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6. NON-EXCLUSIVITY OF RIGHTS
-------------------------
Nothing in this Agreement shall prevent or limit the Employee's
continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its affiliated companies and
for which the Employee may qualify, nor shall anything herein limit or otherwise
affect such rights that the Employee may have under any stock option or other
agreements with the Company. Amounts which are vested benefits or which the
Employee is otherwise entitled to receive under any plan or program of the
Company at or subsequent to the Date of Termination shall be payable in
accordance with such plan or program.
7. NO SETOFF; COOPERATION
----------------------
The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Employee or others.
8. CONFIDENTIAL INFORMATION
------------------------
Employee specifically agrees that he will not at any time, whether
during his employment or for a period of two (2) years after such employment
ends for any reason, disclose or communicate to any third party or use for any
purpose (other than during his employment by the Company for proper business
purposes) any secret, proprietary or confidential information, or trade secret,
relating to the business of Company, or any subsidiary or affiliate of Company,
including business methods and techniques, research data, marketing and sales
information, customer lists, know-how, and any other information, process or
technique or information, customer lists, know-how, and any other information,
process or technique or information concerning the business of Company, or any
subsidiary or affiliate of Company, their manner and method of operation, their
plans or other data not disclosed to the general public or known within the
industry, regardless of whether such information or trade secret was acquired
prior to or after execution of this Agreement.
9. NON-SOLICITATION
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Employee shall not, either directly or indirectly, by or for himself,
or as agent of another, or through others as his agent, in any way seek to
induce, bring about, promote, facilitate or encourage the discontinuance of or
in any way solicit for himself or others, those persons or entities who are
employees of the Company, or any subsidiary or affiliate of the Company.
[REMEDIES FOR ANY BREACH OF THIS SECTION 9 WILL BE THOSE SET FORTH IN SECTIONS 7
AND 8 OF THE EMPLOYMENT AGREEMENT BETWEEN EMPLOYEE AND THE COMPANY.]
10. EXCLUSIVE REMEDY
----------------
The Employee's rights to severance benefits pursuant to Section 3
hereof shall apply only in the events specified in this Agreement and shall be
the Employee's sole and exclusive remedy for any termination of the Employee's
employment by the Company other than for Cause or by
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the Employee for Good Reason. The payments, severance benefits and severance
protections provided to the Employee pursuant to this Agreement are provided in
lieu of any severance payments, severance benefits and severance protections
provided in any employment agreement or any other plan or policy of the Company,
except (i) as may be expressly provided in writing under the terms of any plan
or policy of the Company; or (ii) as provided in any Non-Qualified Stock Option
Agreement between the Company and the Employee and any Salary Continuation
Agreement between the Company and the Employee; or (iii) as may be provided in a
written agreement between the Company and the Employee entered into on or after
the date of this Agreement. In no event shall the Employee be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Employee under any of the provisions of this Agreement.
11. STATEMENT OF INTENTION
----------------------
It is the intention of the parties hereto that, prior to the Effective
Date, this Agreement shall not create any rights or obligations in the Employee
or the company, or require any payments by the Company to the Employee.
12. SUCCESSORS
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(a) The Employee. This Agreement is personal to the Employee and
without the prior written consent of the Company shall not be
assignable by the Employee otherwise than by will or the laws
of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Employee's legal
representatives.
(b) The Company. This Agreement shall inure to the benefit of and
be binding upon the Company and its successors. The Company
will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company
to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall include any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
13. MISCELLANEOUS
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(a) Interpretation. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Kentucky, without reference to principles of conflict of laws.
The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
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(b) Legal Fees. In the event of any litigation involving this
Agreement, and if the Employee is successful in such
litigation, the Company will reimburse the Employee for all
legal fees and expenses paid by the Employee in prosecuting or
defending such litigation.
(c) Notices. All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt
requested, postage prepaid, addressed to the Employee at the
Employee's address on the payroll records of the Company and to
the Company as follows:
NS Group, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
And to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(d) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(e) Withholding Taxes. The Company may withhold from any amounts
payable under this Agreement such Federal, state or local taxes
as shall be required to be withheld pursuant to any applicable
law or regulation.
(f) No Waiver. The failure of the Employee or the Company to insist
upon strict compliance with any provision hereof shall not be
deemed to be a waiver of such provision or any other provision
thereof.
(g) Entire Agreement. This Agreement contains the entire
understanding of the Company and the Employee with respect to
the subject matter hereof. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
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(h) Dispute/Resolution Procedures. If any question shall arise in
regard to the interpretation of any provision of this Agreement
or as to the rights and obligations of either of the parties
hereunder, the Employee and a designated representative of the
Company shall meet to negotiate and attempt to resolve such
question in good faith. The Employee and such representative
may, if they so desire, consult outside experts for assistance
in arriving at a resolution. In the event that a resolution is
not achieved within fifteen (15) days after their first
meeting, then either party may submit the question for final
resolution by binding arbitration in accordance with the rules
and procedures of the American Arbitration Association
applicable to commercial transactions, and any judgment thereon
may be entered in any court having jurisdiction thereof. The
arbitration shall be held in Covington, Kentucky. In the event
of any arbitration, the Employee shall select one arbitrator,
the Company shall select one arbitrator and the two arbitrators
so selected shall select a third arbitrator, any two of which
arbitrators together shall make the necessary determinations.
All out-of-pocket costs and expenses of the parties in
connection with such arbitration, including, without
limitation, the fees of the arbitrators and any administration
fees and reasonable attorney's fees and expenses, shall be
borne by the parties in such proportions as the arbitrators
shall decide that such expenses should, in equity, be
apportioned.
(i) This Agreement shall supersede any previous agreement between
Employee and the Company with regard to the change of control
benefits, which is deemed to be terminated.
IN WITNESS WHEREOF, the Employee and the Company have executed this
Agreement as of the day and year first above written.
I HAVE READ THIS CHANGE OF CONTROL SEVERANCE AGREEMENT AND, UNDERSTANDING ALL
ITS TERMS, INCLUDING THAT THIS AGREEMENT CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES, I SIGN IT AS MY FREE ACT AND
DEED.
Employee:
-----------------------------------------
[EMPLOYEE NAME]
Company:
NS GROUP, INC.
By:
-------------------------------------
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SCHEDULE OF DOCUMENTS OMITTED
The following agreements are substantially identical to the Form of Change of
Control Severance Agreement shown here, except for the identity of the employee,
dates of execution and, except that under paragraph 3. (c) (i), Messrs.
▇▇▇▇▇▇▇▇▇ and Beible's payment would be the aggregate of three times the amount
his then current base salary and three times the average amount of his bonus
payments in the prior five years. Messrs. ▇▇▇▇▇▇▇▇▇▇, Golatzki and LaRosa's
payment would be the aggregate of two times the amount of their then current
base salary and two times the average amount of their bonus payments in the
prior five years. These documents are not filed as separate documents in
accordance with Exchange Act rule 12b-31.
Employee:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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