EMPLOYMENT AGREEMENT
THIS
AGREEMENT is made this 4th day of September, 2007 (the
“Effective Date”), by and between COLLECTIVE
BRANDS, INC., a Delaware corporation, (“CBI”) and
DOUGLAS J. TREFF (“Executive”).
WITNESSETH :
WHEREAS,
CBI and its related entities are one of the leading global
footwear, accessories and lifestyle brands companies in the
United States, reaching customers through multiple price
points and selling channels, including retail, wholesale,
licensing and e-commerce, throughout the United States,
Europe, Puerto Rico, and the U.S. Virgin Islands, Guam,
Saipan, Canada, and Central and South America.
WHEREAS,
CBI conducts its business in part through various direct and
indirect subsidiaries, including Payless ShoeSource, Inc., The
Stride Rite Corporation, and Collective Licensing
International, LLC (CBI and its subsidiaries and affiliates
being collectively referred to as
“Collective”).
WHEREAS,
Executive recognizes and acknowledges that Executive's
position with Collective provides him with access to
Collective’s proprietary, trade secret and other
confidential information relating to its
business.
WHEREAS,
Collective has expended a great deal of time, money and effort
to develop and maintain its proprietary, trade secret and
confidential information; this information, if misused or
disclosed, could be very harmful to Collective's business and
its competitive position in the marketplace.
WHEREAS,
Executive recognizes and acknowledges that if Executive's
employment with Collective ceases, Collective needs certain
protections to ensure that Executive does not misuse or
disclose any proprietary, trade secret or confidential
information entrusted to Executive during the course of
employment or take any other action which could result in a
loss of Collective's good will that was generated on
Collective's behalf and at its expense, and, more generally,
to prevent Executive from having an unfair competitive
advantage over Collective.
WHEREAS,
Executive desires to be employed by Collective, to be eligible
for potential compensation increases and to be given access to
proprietary, trade secret and confidential information of
Collective necessary for Executive to perform
Executive’s job, but which Collective would not make
available but for Executive’s signing and agreeing to
abide by the terms of this Agreement.
In
consideration of the mutual promises and agreements herein
contained, and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1.
Term .
This Agreement shall commence on the Effective Date and shall
expire on September 4, 2009 (the “Contract Term”),
unless sooner terminated in accordance with Paragraph 8 hereof.
Beginning on September 5, 2007, the Contract Term will be
automatically extended each day by one day, until either party
delivers to the other written notice of non-renewal.
2.
Duties .
(a)
Executive
shall perform all duties incident to the position of Executive
Vice President, Chief Administrative Officer, as well as any
other duties as may be assigned from time to time by
Collective, and agrees to abide by all the by-laws, policies,
practices, procedures and rules of Collective. Executive
agrees to use Executive’s best efforts, energies and
skill to perform the duties and responsibilities of the
position, and to this end will devote Executive’s full
time and attention exclusively to the business of Collective.
Executive may be assigned or transferred to another management
position, as designated by Collective, which may or may not
provide the same level of responsibility as the initial
assignment. This Agreement shall remain in effect and shall
apply to Executive, without any need for re-execution,
regardless of the Collective subsidiary or business division
for which Executive works or provides services, or the duties
to which Executive may in the future be assigned.
(b)
At
all times during the Contract Term, Executive will maintain
Executive’s residence within reasonable access to the
Corporate Headquarters of Collective or any division to which
Executive may be assigned.
3.
Compensation; Benefits .
(a)
Base Salary .
Collective agrees to pay Executive a base salary during the
Contract Term at the annual rate of $525,000.00, less applicable
taxes and withholding, payable in equal bi-weekly installments,
which annual rate will be subject to an annual review, which may
result in an increase or decrease in salary, during
Collective’s regularly scheduled review time.
(b)
Incentive Plans .
Executive shall be eligible to participate in such annual and
long-term plans, programs or arrangements established from time to
time for senior executives of Collective (the "Incentive Plans"),
in accordance with and subject to all of the terms and provisions
of such Incentive Plans.
(c)
Expenses .
Collective shall reimburse Executive for all items of normal
business expense incurred by Executive as an employee of Collective
in accordance with Collective’s reimbursement policies in
effect from time to time.
(d)
Benefits .
Collective has adopted certain welfare benefit plans (including,
but not limited to, medical, prescription drug, dental, disability,
and life insurance) and has established certain perquisites which
may, from time to time, confer rights and benefits on Executive in
accordance with their terms. Collective may also, in the future,
adopt additional welfare benefit plans, establish additional
perquisites, or amend, modify or terminate any of the aforesaid
welfare benefit plans and arrangements, all in accordance with
their terms and in accordance with applicable law. Unless
effectively waived, Executive shall be entitled to whatever rights
and benefits which may be conferred on Executive, from time to time
in accordance with the terms of such plans and
arrangements.
(e)
Stock .
Executive will be eligible for future grants of restricted stock,
stock-settled stock appreciation rights, stock options, or
performance units, if any, as may be granted under the terms of the
Collective Brands, Inc. 2006 Stock Incentive Plan, in accordance
with the criteria established from time to time by the Compensation
Committee of the Collective Brands, Inc. Board of
Directors.
(f)
Automobile Allowance .
Executive shall be eligible for an automobile allowance as
determined by Collective from time to time, paid monthly upon
written request. The portion of the allowance that is substantiated
as business-related will not be considered taxable.
4.
Noncompete .
(a)
At
all times during the Contract Term, and for a period of two
(2) years immediately following Executive’s last day of
employment with Collective, Executive will not directly or
indirectly:
(i)
own,
manage, operate, finance, join, control, or participate in the
ownership, management, operation, financing, or control of, or
be a partner in, be employed by, or act as an advisor,
consultant, agent, officer, director, or independent
contractor for, or otherwise have an interest in, a Competing
Business; or
(ii)
solicit,
induce, hire, or attempt to aid or assist any person or entity
other than Collective in soliciting for employment, offering
employment to, or hiring, any employee of Collective or any
person who, at any time during the 12 months prior to the
solicitation, was employed by Collective.
Nothing
in this Paragraph 4(a) shall prevent Executive, however, from
performing Executive’s duties and responsibilities for
Collective. In addition, ownership of an investment of less
than the greater of $25,000 or 1% of any class of equity or
debt security of a Competing Business shall not constitute
ownership or participation in ownership in violation of
Paragraph 4(a)(i).
(b)
The
term "Competing Business" shall include, but not be limited
to:
(i)
any
retail business or licensee with gross sales or revenue in the
prior fiscal year of more than $25 million (or which is a
subsidiary, affiliate or joint venture partner of a business
with gross sales or revenue in the prior fiscal year of more
than $25 million) which sells footwear or accessories in whole
or in part competitive to that sold by Collective
(“Competitive Footwear”) (including, without
limitation, Wal-Mart Stores, Inc.; Sears Holdings Corporation;
Target Corporation; Foot Star, Inc.; DSW, Inc.; Aldo Shoes,
Inc.; Ross Stores, Inc.; T.J. Maxx; Off-Broadway Shoes;
Burlington Coat Factory Warehouse Corporation; Gennesco Inc.;
Brown Shoe Company, Inc.; Shoe Carnival, Inc.; Kohl’s
Corporation; Liz Claiborne, Inc.; Big 5 Sporting Goods
Corporation; J.C. Penney Company; Shoe Zone, Limited; Bata,
Limited; Shoes.com; Zappos.com), within 10 miles of any
Collective store or the store of any wholesale customer or
licensee of Collective in the United States, or anywhere in
any foreign country in which Collective has retail stores,
wholesale customers, or licensees;
(ii)
any
franchising or wholesaling business with gross sales or
revenues in the prior fiscal year of more than $25 million (or
which is a subsidiary, affiliate or joint venture partner of a
business with gross sales or revenues in the prior fiscal year
of more than $25 million) which sells Competitive Footwear at
wholesale to franchisees, retailers or other footwear
distributors located within 10 miles of any Collective store
or the store of any wholesale customer or licensee of
Collective in the United States, or anywhere in any foreign
country in which Collective has retail stores or wholesale
customers;
(iii)
any
footwear manufacturing business with gross sales or revenue in the
prior fiscal year of more than $25 million (or which is a
subsidiary, affiliate or joint venture partner of a business with
gross sales or revenue in the prior fiscal year of more than $25
million) which sells Competitive Footwear to retailers, wholesale
customers, licensees, or other footwear distributors located within
10 miles of any Collective store or the store of any wholesale
customer or licensee of Collective in the United States, or
anywhere in any foreign country in which Collective has retail
stores, wholesale customers, or licensees (including, without
limitation, Nine West Shoes; Dexter Shoe Company; Liz Claiborne,
Inc.; Wolverine Worldwide, Inc.; Timberland Company; Nike, Inc.;
Reebok International, Ltd.; K-Swiss, Inc.; adidas-Salomon AG;
Asics; FILA; New Balance; Puma) or
(iv)
any
business, located in the United States or any other country in
which Collective operates, with gross sales or revenue in the prior
fiscal year of more than $25 million engaged in the sale, licensing
or sublicensing of footwear, apparel, sporting goods and
accessories to other companies for manufacture and sale to the
skateboarding, snowboarding, mountain biking, BMX biking, casual
streetwear and youth lifestyle markets (including, without
limitation, Adio; Anarchy; Circa; DC Shoes; Dragon; DVS; Element;
Etnies; Globe; Lakai; Oakley; Osiris; Vans; Volcom; or World
Industries); or
(v)
any
business which provides buying office services to any store or
group of stores or businesses referred to in Paragraph
4(b).
(c)
Background
of non-compete restrictions:
(i)
In connection with its business, Collective has expended a
great deal of time, money and effort to develop and maintain
its proprietary, trade secret and confidential information;
this information, if misused or disclosed, could be very
harmful to Collective's business and its competitive position
in the marketplace;
(ii)
Executive recognizes and acknowledges that Executive’s
position with Collective provides Executive with access to
Collective’s proprietary, trade secret, and confidential
information;
(iii)
Collective compensates its employees to, among other things,
develop and preserve goodwill and relationships on
Collective's behalf and to develop and preserve business
information for Collective’s exclusive ownership and
use;
(iv)
long-term
customer and supplier relationships often can be difficult to
develop and require a significant investment of time, effort
and expense; and
(v)
Executive
recognizes and acknowledges that if Executive’s
employment with Collective were to cease, Collective would
need certain protections in order to ensure that Executive
does not appropriate or use any confidential and proprietary
trade secret information entrusted to Executive during the
course of employment or take any other action which could
result in a loss of Collective’s goodwill that was
generated on Collective’s behalf and at its expense,
and, more generally, to prevent Executive from having an
unfair competitive advantage over Collective.
(d)
Reasonableness
of non-compete restrictions. Executive acknowledges and agrees
that the restrictions in Paragraph 4 are reasonable and that
such restrictions are enforceable in view of the background
for the non-compete restrictions set forth in the Paragraph
4(c), and in view of, among other things, the
following:
(i)
the
markets in which Collective operates its
businesses;
(ii)
the
proprietary, trade secret, and other confidential business
information to which Executive has or will have
access;
(iii)
Executive's
training and background, which are such that neither
Collective nor Executive believes that the restraint will pose
an undue hardship on the Executive or prevent Executive from
finding suitable non-competitive employment during the
specified period of non-competition;
(iv)
a
Competing Business could benefit greatly if it were to obtain
Collective's proprietary, trade secret, and other confidential
business information;
(v)
Collective
would not have adequate protection if Executive is permitted
to work for any Competing Business in violation of this
Agreement since Collective would be unable to verify whether
its proprietary, trade secret, and other confidential business
information was being disclosed or misused;
(vi)
the
limited duration and limited scope of, and the limited
activities prohibited by, the restrictions in Paragraph 4;
and
(vii)
Collective's
legitimate interests in protecting its proprietary, trade
secret, and other confidential business information, goodwill
and relationships.
(e)
If
Executive violates Executive’s obligations under
Paragraph 4, then Collective shall be entitled to all legal
and equitable rights and remedies under this Agreement,
including all of its rights and remedies referred to in
Paragraph 10 of this Agreement. Further, any time in which
Executive is in violation of Executive’s obligations
shall not count toward satisfying the time during which any
injunctive restriction shall apply. For example, if Executive
were to join a competitor in violation of the restrictions in
Paragraph 4(a) and work for such competitor for one month
before a court enjoined such violation, then the two year time
period of the restriction would begin when such injunction
were issued; the one month in which Executive violated the
restriction would not count toward the time that the
restriction applies.
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