EMPLOYMENT AGREEMENT
THIS
AGREEMENT is made this 22nd day of July, 2008 (the
“Effective Date”), by and between PAYLESS
SHOESOURCE, INC., a Missouri corporation (“PSS”),
and LUANN VIA (“Executive”).
WITNESSETH :
WHEREAS,
PSS conducts its business in part through various direct and
indirect subsidiaries and affiliates (PSS and its parent,
subsidiaries and affiliates being collectively referred to as
“Payless”).
WHEREAS,
Payless is one of the leading retail companies in the United
States with self service shoe stores throughout the United
States, Puerto Rico and the U.S. Virgin Islands, Guam, Saipan
and Canada.
WHEREAS,
Executive recognizes and acknowledges that Executive's
position with PSS provides Executive with access to
Payless’ proprietary, trade secret and other
confidential information relating to its
business.
WHEREAS,
Payless 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 Payless' business and its
competitive position in the marketplace.
WHEREAS,
Executive recognizes and acknowledges that if Executive's
employment with PSS and all other Payless-related entities
ceases, Payless 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 Payless' good will that was
generated on Payless' behalf and at its expense, and, more
generally, to prevent Executive from having an unfair
competitive advantage over Payless.
WHEREAS,
Executive desires to be employed by PSS, to be eligible for
potential compensation increases, and to be given access to
proprietary, trade secret and confidential information of
Payless necessary for Executive to perform Executive’s
job, but which Payless 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 July 22, 2010 (the “Contract Term”), unless
sooner terminated in accordance with Paragraph 8 hereof. Beginning
on July 23, 2008, 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 President
and Chief Executive Officer of PSS, as well as any other
duties as may be assigned from time to time by PSS, and agrees
to abide by all the by-laws, policies, practices, procedures
and rules of Payless. 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 PSS and/or such other Payless
entities to which Executive may be assigned or transferred.
Executive may be assigned or transferred to another management
position with PSS or Payless, as designated by Payless, so
long as such assignment or transfer does not result in a
material diminution in responsibilities or duties. This
Agreement shall remain in effect and shall apply to Executive,
without any need for re-execution, regardless of the Payless
parent, subsidiary, affiliate 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 PSS or any division, parent,
subsidiary or affiliate to which Executive may be
assigned.
3.
Compensation; Benefits .
(a)
Base Salary .
PSS agrees to pay Executive a base salary during the Contract Term
at the annual rate of $675,000, 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 (where such decrease is i) not
material; or ii) is occurring as part of an overall reduction in
compensation also applied to other senior executives of Payless as
a result of a decrease in business performance by PSS or one of its
business units), during PSS’ 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 PSS (the "Incentive Plans"), in
accordance with and subject to all of the terms and provisions of
such Incentive Plans and such other incentive plans of Payless as
may be appropriate in light of any reassignment or transfer of
Executive under Paragraph 2(a) above.
(c)
Expenses .
PSS shall reimburse Executive for all items of normal business
expense incurred by Executive as an employee of PSS in accordance
with its reimbursement policies in effect from time to
time.
(d)
Benefits .
PSS 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. PSS 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 and such other benefits of
Payless as may be appropriate in light of any reassignment or
transfer of Executive under Paragraph 2(a) above.
(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, or any successor
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 PSS (or such other Payless entity as may be
appropriate) 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 any Payless entity, 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 Payless in soliciting for employment, offering
employment to, or hiring, any employee of any Payless entity
or any person who, at any time during the 12 months prior to
the solicitation, was employed by any Payless
entity.
Nothing
in this Paragraph 4(a) shall prevent Executive, however, from
performing Executive’s duties and responsibilities for
PSS or any other Payless entity. 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). Further, Paragraph 4 shall not
apply in the event of a Change of Control (as defined in
Section 1.8 of the Collective Brands, Inc. Supplementary
Retirement Account Plan, as amended and restated January 1,
2008).
(b)
The
term "Competing Business" shall include, but not be limited
to:
(i)
any
retail business with gross sales or revenue in the prior
fiscal year of more than $25 million (or which is a parent,
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 Payless
(“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; and Zappos.com, within 10 miles of any
Payless store or the store of any wholesale customer of
Payless in the United States, or anywhere in any foreign
country in which Payless has retail stores or wholesale
customers;
(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 Payless store or
the store of any wholesale customer of Payless in the United
States, or anywhere in any foreign country in which Payless
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, or other footwear distributors
located within 10 miles of any Payless store or the store of
any wholesale customer of Payless in the United States, or
anywhere in any foreign country in which Payless has retail
stores or wholesale customers (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.; and adidas-Salomon
AG); or
(iv)
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, Payless (including PSS) 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 Payless' business and its competitive
position in the marketplace;
(ii)
Executive recognizes and acknowledges that Executive’s
position with PSS provides Executive with access to
Payless’ proprietary, trade secret, and confidential
information;
(iii)
Payless compensates its employees to, among other things,
develop and preserve goodwill and relationships on Payless'
behalf and to develop and preserve business information for
Payless’ 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 hereunder were to cease, Payless 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 Payless’ goodwill that was generated on
Payless’ behalf and at its expense, and, more generally,
to prevent Executive from having an unfair competitive
advantage over Payless.
(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 Payless 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 Payless
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
Payless' proprietary, trade secret, and other confidential
business information;
(v)
Payless
would not have adequate protection if Executive is permitted
to work for any Competing Business in violation of this
Agreement since Payless 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)
Payless'
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 Payless (including PSS) 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.
(f)
Executive
agrees to provide a copy of this Agreement (with Paragraph
3(a) redacted, if Executive so desires) to any prospective
employer Executive contacts during or after termination or
resignation of employment. Executive authorizes Payless to
contact Executive’s future employers and other entities
with which Executive has any business relationship to
determine Executive’s compliance with this Agreement or
to communica
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