1
Exhibit 10.8
FORM OF
CHANGE OF CONTROL SEVERANCE
AGREEMENT
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
(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.
(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 Clifford Borland or any
Group of Persons with respect to which
Clifford Borland is the Beneficial Owner of
the majority of the voting equity interests.
(e) "Cause" for termination of the Employee's
employment shall be defined as (i) commission by
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) conduct which is
detrimental to the reputation, goodwill or
business operation of the Company; (iv) Employee's
misfeasance or nonfeasance in the performance of
his duties; [or] (v) 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 [; or
(vi) the Employee's breach of Sections 4, 5, 6, 7,
or 9 of the Employment Agreement between Employee
and Company, or any similar provisions contained
in any subsequent or successor agreement between
Employee and Company].
(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
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
(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 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
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.
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
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 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
(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
(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.
(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.
P.O. Box 1670
Newport, Kentucky 41072
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.
(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.
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:
__________________________________________
Company:
NS GROUP, INC.
By:_______________________________________
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. C.R. Borland, Robichaud 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.
Depenbrock and Golatzki'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:
Clifford R. Borland
Rene J. Robichaud
William W. Beible, Jr.
Thomas J. Depenbrock
Thomas L. Golatzki
