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EXHIBIT 10.6 CHANGE OF CONTROL AGREEMENT
This
CHANGE OF CONTROL AGREEMENT (this "Agreement"), is made and entered
into effective as of the 30th day of December , 2008
(the "Agreement Effective Date"), by and between Collective Brands,
Inc., a Delaware corporation (the "Company"), and Douglas G.
Boessen (the "Executive").
WHEREAS,
the Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its
stockholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined herein).
The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive’s full attention
and dedication to the current Company and in the event of any
threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change
of Control that ensure that the compensation and benefits
expectations of the Executive will be satisfied and that are
competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
Section 1. Certain Definitions . (a) "Effective
Date" means the first date on which a Change of Control occurs.
Notwithstanding anything in this Agreement to the contrary, if a
Change of Control occurs and if the Executive’s employment
with the Company is terminated without Cause or for Good Reason
within one year prior to the date on which the Change of Control
occurs, then "Effective Date" means the date immediately prior to
the date of such termination of employment unless such termination
did not occur at the request of a third party that has taken steps
reasonably calculated to effect a Change of Control.
(b)
"Change of Control Period" means the period commencing on the
Effective Date and ending on the third anniversary thereof.
(c)
"affiliated company" means any company controlled by, controlling
or under common control with the Company.
(d)
"Change of Control" means:
(1) The
acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either
(A) the then-outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (B) the combined
voting power of the then-outstanding
voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting
Securities"); provided , however , that, for purposes
of this Section 1(d), none of the following shall constitute a
Change of Control: (i) any acquisition directly from the
Company of 30% or less of Outstanding Company Common Stock or
Outstanding Company Voting Securities provided that at least a
majority of the members of the board of directors of the Company
following such acquisition were members of the Incumbent Board at
the time of the Board’s approval of such acquisition,
(ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any affiliated company or
(iv) any acquisition by the Company which, by reducing the
number of shares of Outstanding Company Common Stock or Outstanding
Company Voting Securities, increases the proportionate number of
shares of Outstanding Company Common Stock or Outstanding Company
Voting Securities beneficially owned by any Person to 20% or more
of the Outstanding Company Common Stock or Outstanding Company
Voting Securities; provided, however, that, if such Person
shall thereafter become the beneficial owner of any additional
shares of Outstanding Company Common Stock or Outstanding Company
Voting Securities and beneficially owns 20% or more of either the
Outstanding Company Common Stock or the Outstanding Company Voting
Securities, then such additional acquisition shall constitute a
Change of Control; or
(2) Individuals
who, as of the date hereof, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of
the Board; provided , however , that any individual
becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(3) Consummation
of a reorganization, merger, consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless,
immediately following such Business Combination, (A) more than
50%, respectively, of the then-outstanding shares of common stock
and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors,
as the case may be, of (x) the corporation resulting from such
Business Combination, or (y) a corporation that, as a result
of such transaction, owns the Company or all or substantially all
of the Company’s assets either directly or through one or
more subsidiaries, is represented by the Outstanding Company Common
Stock and the Outstanding Company Voting Securities (or, if
applicable, is represented by shares into which Outstanding Company
Common Stock or Outstanding Company Voting Securities were
converted pursuant to such Business Combination) in substantially
the same proportions as their ownership immediately prior to such
Business Combination of the Outstanding Company Common Stock and
the Outstanding Company
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Voting Securities, as the case may be, (B) no Person
(excluding any corporation resulting from such Business Combination
or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the
corporation resulting from such Business Combination or the
combined voting power of the then-outstanding voting securities of
such corporation, except to the extent that such ownership existed
prior to the Business Combination, and (C) at least a majority
of the members of the board of directors of the corporation
resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial
agreement or of the action of the Board providing for such Business
Combination; or
(4) Approval
by the stockholders of the Company of a complete liquidation or
dissolution of the Company.
Section 2. Term of Agreement and Covered
Employment . (a) Term of Agreement . This
Agreement shall be in effect from the Agreement Effective Date and
shall terminate on December 30, 2011; provided ,
however , that, commencing on the date one year after the
Agreement Effective Date, and on each annual anniversary of such
date (such date and each annual anniversary thereof, the "Renewal
Date"), unless previously terminated, this Agreement shall be
automatically extended so as to terminate three years from such
Renewal Date, unless, at least 60 days prior to the Renewal
Date, the Company shall give notice to the Executive that the
Change of Control Period shall not be so extended (a "Nonrenewal
Notice"). Notwithstanding the delivery of any such Nonrenewal
Notice, this Agreement shall continue in effect for the Change of
Control Period if a Change of Control occurs during the term of
this Agreement. Notwithstanding anything in this Section to the
contrary, this Agreement shall terminate if (i) the Executive
or the Company terminates the Executive’s employment prior to
a Change of Control (except as provided in Section 1(a)), or
(ii) the Executive’s employment terminates in accordance
with Sections 1(a), 4 or 5 and the Company has fulfilled all
of its obligations to the Executive under this Agreement.
(b)
Covered Employment . The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company, subject to the terms
and conditions of this Agreement, for the Change of Control
Period.
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Section 3. Terms of Employment . (a)
Position and Duties . (1) During the Change of
Control Period, (A) the Executive’s position (including
status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period
immediately preceding the Effective Date and (B) the
Executive’s services shall be performed at the office where
the Executive was employed immediately preceding the Effective Date
or at any other location less than 35 miles from such office.
(1) During
the Change of Control Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal
business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to
the Executive hereunder, to use the Executive’s reasonable
best efforts to perform faithfully and efficiently such
responsibilities. During the Change of Control Period, it shall not
be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements
or teach at educational institutions and (C) manage personal
investments, so long as such activities do not significantly
interfere with the performance of the Executive’s
responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that, to the
extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and
scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the
Executive’s responsibilities to the Company.
(b)
Compensation . (1) Base Salary . During
the Change of Control Period, the Executive shall receive an annual
base salary (the "Annual Base Salary"), which Annual Base Salary
shall be paid at a monthly rate at least equal to 12 times the
highest monthly base salary paid or payable, including any base
salary that has been earned but deferred, to the Executive by the
Company and the affiliated companies in respect of the 12-month
period immediately preceding the month in which the Effective Date
occurs. During the Change of Control Period, the Annual Base Salary
shall be reviewed at least annually, beginning no more than
12 months after the last salary increase awarded to the
Executive prior to the Effective Date. Any increase in the Annual
Base Salary shall not serve to limit or reduce any other obligation
to the Executive under this Agreement. The Annual Base Salary shall
not be reduced after any such increase and the term "Annual Base
Salary" shall refer to the Annual Base Salary as so increased.
(2)
Annual Bonus . In addition to the Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during
the Change of Control Period, an annual bonus (the "Annual Bonus")
in cash at least equal to the Executive’s highest bonus under
the Company’s annual and long-term incentive plans, or any
comparable bonus under any predecessor or successor plan, for the
last three full fiscal years prior to the Ef-
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fective Date (annualized, in the event that the Executive was
not employed by the Company for the whole of such fiscal year) (the
"Recent Annual Bonus"). Each such Annual Bonus shall be paid no
later than the end of the third month of the fiscal year next
following the fiscal year for which the Annual Bonus is awarded,
unless the Executive shall elect to defer the receipt of such
Annual Bonus.
(3)
Incentive, Savings and Retirement Plans . During the
Change of Control Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans,
practices, policies, and programs applicable generally to other
peer executives of the Company and the affiliated companies, but in
no event shall such plans, practices, policies and programs provide
the Executive with incentive opportunities (measured with respect
to both regular and special incentive opportunities, to the extent,
if any, that such distinction is applicable), savings opportunities
and retirement benefit opportunities, in each case, less favorable,
in the aggregate, than the most favorable of those provided by the
Company and the affiliated companies for the Executive under such
plans, practices, policies and programs as in effect at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives of the
Company and the affiliated companies.
(4)
Welfare Benefit Plans . During the Change of Control
Period, the Executive and/or the Executive’s family, as the
case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company and the affiliated
companies (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company and
the affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with
benefits that are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect
for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective
Date to other peer executives of the Company and the affiliated
companies.
(5)
Expenses . During the Change of Control Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with
the most favorable policies, practices and procedures of the
Company and the affiliated companies in effect for the Executive at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and the affiliated companies.
(6)
Fringe Benefits . During the Change of Control
Period, the Executive shall be entitled to fringe benefits,
including, without limitation, tax and financial planning services,
payment of club dues, and, if applicable, use of an
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automobile and payment of related expenses, in accordance with
the most favorable plans, practices, programs and policies of the
Company and the affiliated companies in effect for the Executive at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and the affiliated companies.
(7)
Office and Support Staff . During the Change of
Control Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other appointments, and
to exclusive personal secretarial and other assistance, at least
equal to the most favorable of the foregoing provided to the
Executive by the Company and the affiliated companies at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided generally at
any time thereafter with respect to other peer executives of the
Company and the affiliated companies.
(8)
Vacation . During the Change of Control Period, the
Executive shall be entitled to paid vacation in accordance with the
most favorable plans, policies, programs and practices of the
Company and the affiliated companies as in effect for the Executive
at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and the affiliated companies.
Section 4. Termination of Employment . (a)
Death or Disability . The Executive’s
employment shall terminate automatically if the Executive dies
during the Change of Control Period. If the Company determines in
good faith that the Disability (as defined herein) of the Executive
has occurred during the Change of Control Period (pursuant to the
definition of "Disability"), it may give to the Executive written
notice in accordance with Section 11(b) of its intention to
terminate the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive’s
duties. "Disability" means the absence of the Executive from the
Executive’s duties with the Company on a full-time basis for
180 consecutive business days as a result of incapacity due to
mental or physical illness that is determined to be total and
permanent by a physician selected by the Company or its insurers
and acceptable to the Executive or the Executive’s legal
representative.
(b)
Cause . The Company may terminate the
Executive’s employment during the Change of Control Period
for Cause. "Cause" means:
(1) the
willful and continued failure of the Executive to perform
substantially the Executive’s duties with the Company or any
affiliated company (other than any such failure resulting from
incapacity due to physical or mental illness), after a
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written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the
Company that specifically identifies the manner in which the Board
or the Chief Executive Officer of the Company believes that the
Executive has not substantially performed the Executive’s
duties, or
(2) the
willful engaging by the Executive in illegal conduct or gross
misconduct that is materially and demonstrably injurious to the
Company.
For
purposes of this Section 4(b), no act, or failure to act, on
the part of the Executive shall be considered "willful" unless it
is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or
omission was in the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chief
Executive Officer of the Company or a senior officer of the Company
or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
The cessation of employment of the Executive shall not be deemed to
be for Cause unless and until there shall have been delivered to
the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with
counsel for the Executive, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in Section 4(b)(1) or 4(b)(2),
and specifying the particulars thereof in detail.
(c)
Good Reason . The Executive’s employment may be
terminated by the Executive for Good Reason. "Good Reason" means in
the absence of a written consent by the Executive:
(1) the
assignment to the Executive of any duties inconsistent in any
material respect with the Executive’s position (including
status, offices, titles and reporting requirements), authority,
duties or responsibilities as contemplated by Section 3(a) of this
Agreement, or any other action by the Company that results in a
material diminution in such position, authority, duties or
responsibilities;
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