Exhibit 10.5(d) (con't)
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FOOTSTAR, INC.
Employment Agreement for Stephen R. Wilson
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FOOTSTAR, INC.
Employment Agreement for Stephen R. Wilson.
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1.
Definitions...............................................................1
2. Term of
Employment........................................................2
3. Position, Duties and
Responsibilities.....................................2
4. Base
Salary...............................................................2
5. Annual Incentive
Awards...................................................2
6. Long-Term Stock Incentive
Programs........................................3
7. Employee Benefit
Programs.................................................3
8.
Disability................................................................4
9. Reimbursement of Business and
Other Expenses; Perquisites.................5
10. Termination of
Employment.................................................5
11. Confidentiality; Cooperation with
Regard to Litigation....................14
12.
Non-competition...........................................................15
13. Non-solicitation of
Employees.............................................16
14.
Remedies..................................................................16
15. Resolution of
Disputes....................................................16
16.
Indemnification...........................................................17
17. Excise Tax
Gross-Up.......................................................18
18. Effect of Agreement on Other
Benefits.....................................19
19. Assignability; Binding
Nature.............................................19
20.
Representation............................................................20
21. Entire
Agreement..........................................................20
22. Amendment or
Waiver.......................................................20
23.
Severability............................................................
20
24.
Survivorship............................................................
20
25.
Beneficiaries/References................................................
20
26. Governing
Law/Jurisdiction..............................................
21
27.
Notices.................................................................
21
28.
Headings................................................................
21
29.
Counterparts............................................................
22
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EMPLOYMENT AGREEMENT
AGREEMENT, made and entered into as of the 7th day of May, 2001
by
and between Footstar, Inc., a Delaware
corporation (together with its successors
and assigns permitted under this Agreement,
the "Company"), and Stephen R.
Wilson. (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to employ the Executive pursuant to
an
agreement embodying the terms of such
employment (this "Agreement") and the
Executive desires to enter into this
Agreement and to accept such employment,
subject to the terms and provisions of this
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants
contained herein and for other good and
valuable consideration, the receipt of
which is mutually acknowledged, the Company
and the Executive (individually a
"Party" and together the "Parties") agree
as follows:
1. DEFINITIONS.
(a) "Approved Early Retirement" shall have the meaning set
forth in Section 10(f) below.
(b) "Base Salary" shall have the meaning set forth in
Section 4 below.
(c) "Board" shall mean the Board of Directors of the
Company.
(d) "Cause" shall have the meaning set forth in Section
10(b) below.
(e) "Change in Control" shall have the meaning set forth in
Section 10(c) below.
(f) "Confidential Information" shall have the meaning set
forth in Section 11 below.
(g) "Constructive Termination Without Cause" shall have the
meaning set forth in Section 10(c)
below.
(h) "Effective Date" shall have the meaning set forth in
Section 2 below.
(i) "1996 ICP" shall have the meaning set forth in Section
5 below.
(j) "Normal Retirement" shall have the meaning set forth in
Section 10(f) below.
(k) "Original Term of Employment" shall have the meaning
set forth in Section 2 below.
(l) "Renewal Term" shall have the meaning set forth in
Section 2 below.
(m) "Restriction Period" shall have the meaning set forth
in Section 12 below.
(n) "SERP" shall have the meaning set forth in Section 7
below.
(o) "Severance Period" shall have the meaning set forth in
Section 10(c)(ii) below, except as provided
otherwise in Section 10(e) below.
(p)
"Subsidiary" shall have the meaning set forth in
Section 11 below.
(q) "Term of Employment" shall have the meaning set forth
in Section 2 below.
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(r) "Termination Without Cause" shall have the meaning set
forth in Section 10(c) below.
2. TERM OF EMPLOYMENT.
(a) The term of the Executive's employment under this
Agreement shall commence on May 7, 2001
(the "Effective Date") and end on the
third anniversary of such date (the
"Original Term of Employment"). The Original
Term of Employment shall be automatically
renewed for successive one-year terms
(the "Renewal Terms") unless at least 180
days prior to the expiration of the
Original Term of Employment or any Renewal
Term, either Party notifies the other
Party in writing that he or it is electing
to terminate this Agreement at the
expiration of the then current Term of
Employment. "Term of Employment" shall
mean the Original Term of Employment and
all Renewal Terms.
(b) Notwithstanding anything in this Agreement to the
contrary, at least one year prior to the
expiration of the Original Term of
Employment, the Parties shall meet to
discuss this Agreement and may agree in
writing to modify any of the terms of this
Agreement.
3. POSITION, DUTIES AND RESPONSIBILITIES.
(a) GENERALLY. Executive shall serve as a senior executive
of the Company. Executive shall have and
perform such duties, responsibilities,
and authorities as shall be specified by
the Company from time to time and as
are customary for a senior executive of a
publicly held corporation of the size,
type, and nature of the Company as they may
exist from time to time and as are
consistent with such position and status.
Executive shall devote substantially
all of his business time and attention
(except for periods of vacation or
absence due to illness), and his best
efforts, abilities, experience, and talent
to his position and the businesses of the
Company.
(b) OTHER ACTIVITIES. Anything herein to the contrary
notwithstanding, nothing in this Agreement
shall preclude the Executive from (i)
engaging in charitable activities and
community affairs and (ii) managing his
personal investments and affairs, provided
that such activities do not
materially interfere with the proper
performance of his duties and
responsibilities under this Agreement.
Unless approved in writing by the Board
or Chief Executive Officer of the Company,
the Executive may not serve on the
board of directors of any corporation or
the board of any association and/or
charitable organization.
4. BASE SALARY.
The Executive shall be paid an annualized salary, payable
in accordance with the regular payroll
practices (including pay periods) for
other senior - level executives of the
Company, of not less than $410,000
subject to annual review thereafter for
increase at the discretion of the
Compensation Committee of the Board ("Base
Salary").
5. ANNUAL INCENTIVE AWARDS.
The Executive shall participate in the Company's 1996
Incentive Compensation Plan (the "1996
ICP") with a target annual incentive
award opportunity of no less than 45% of
Base Salary or in a successor plan to
the 1996 ICP that provides the Executive
with an equivalent opportunity. Payment
of annual incentive awards shall be made at
the same time that other
senior-level executives receive their
incentive awards.
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6. LONG-TERM STOCK INCENTIVE PROGRAMS.
(a) GENERAL. The Executive shall be eligible to participate
in and to receive stock incentive awards
under the 1996 ICP and any successor
plan. Executive shall receive a number of
restricted shares of Footstar deferred
stock subject to the terms and conditions
set forth in the attached Exhibit A.
Executive shall also receive an initial
stock option grant of Non Qualified and
Incentive Stock Options shares at an
exercise price equal to the fair market
value of Footstar stock on the Effective
Date. Such stock options shall be
subject to all the terms and conditions set
forth in the attached Exhibit B1 and
B2.
(b) CAREER EQUITY PROGRAM. The Executive shall be eligible
to participate in the Company's Career
Equity Program which is currently based
on a three year rolling performance cycle
with a target long term incentive
award opportunity of no less than 30% of
Base Salary or in a successor plan or
program that provides the Executive with an
equivalent opportunity. Executive
shall be eligible for pro-rata awards for
the performance cycles beginning with
the cycle ending with fiscal year 2001
based on meeting the performance goals
for such cycles.
7. EMPLOYEE BENEFIT PROGRAMS.
(a) GENERAL BENEFITS. During the Term of Employment, the
Executive shall be entitled to participate
in such employee pension and welfare
benefit plans and programs of the Company
as are made available to the Company's
senior-level executives or to its employees
generally, as such plans or programs
may be in effect from time to time,
including, without limitation, health,
medical, dental, long-term disability,
travel accident, life insurance and
relocation plans.
(b) SERP. The Executive shall be entitled to participate in
the Company's supplemental retirement plan
("SERP") providing for, among other
things, a lifetime annuity benefit for the
Executive equal to 2% of his average
high three of last 10 years salary plus
annual bonus at target (before any
deferrals) for each year (full and partial)
of service with the Company subject
to all the terms and conditions set forth
in the plan, a copy of which is
attached hereto as Exhibit C.
(c) DEFERRAL OF COMPENSATION. The Executive shall be
entitled to participate in any deferral
arrangements or programs implemented
from time to time by the Company, including
the Company's STEP Program, a
description of which is attached hereto as
Exhibit D, permitting Executive to
elect to defer receipt, pursuant to written
deferral election terms and forms
(the "Deferral Election Forms"), of all or
a specified portion of (i) his annual
Base Salary and annual incentive
compensation under Sections 4 and 5, (ii) long
term incentive compensation under Section 6
and (iii) shares acquired upon
exercise of options to purchase Company
common stock that are acquired in an
exercise in which Executive pays the
exercise price by the surrender of
previously acquired shares, to the extent
of the net additional shares otherwise
issuable to Executive in such exercise;
PROVIDED, HOWEVER, that such deferrals
shall not reduce Executives total cash
compensation in any calendar year below
the sum of (i) the FICA maximum taxable
wage base plus (ii) the amount needed,
on an after-tax basis, to enable Executive
to pay the 1.45% medicare tax imposed
on his wages in excess of such FICA maximum
taxable wage base. In addition, the
Committee may require mandatory deferral of
amounts payable as annual incentive
compensation under Section 5 or long term
incentive compensation under Section
6, which deferrals will not be inconsistent
with employee's written deferral
election referred to in this Section
7(c).
In accordance with such duly executed Deferral Election
Forms or the terms of any such mandatory
deferral, the Company shall credit to
one or more bookkeeping accounts maintained
for Executive on the respective
payment date or dates, amounts equal to the
compensation subject to deferral,
such credits to be denominated in cash if
the compensation would have been paid
in cash but for the deferral or in shares
if the compensation would have been
paid in shares but for the deferral.
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Except as otherwise provided under Section 10, in the event
of Executive s termination of employment
with the Company or as otherwise
determined by the Committee in the event of
hardship on the part of Executive,
upon such date(s) or event(s) set forth in
the Deferral Election Forms
(including forms filed after deferral but
before settlement in which Executive
may elect to further defer settlement) or
under the terms of any mandatory
deferral, the Company shall promptly pay to
Executive cash equal to the value of
the assets then credited to Executive s
deferral accounts, less applicable
withholding taxes, and such distribution
shall be deemed to fully settle such
accounts. The Company and Executive agree
that compensation deferred pursuant to
this Section 7(c) shall be fully vested and
nonforfeitable; HOWEVER, Executive
acknowledges that his rights to the
deferred compensation provided for in this
Section 7(c) shall be no greater than those
of a general unsecured creditor of
the Company, and that such rights may not
be pledged, collateralized,
encumbered, hypothecated, or liable for or
subject to any lien, obligation, or
liability of Executive, or be assignable or
transferable by Executive, otherwise
than by will or the laws of descent and
distribution, provided that Executive
may designate one or more beneficiaries to
receive any payment of such amounts
in the event of his death.
8. DISABILITY.
(a) During the Term of Employment, as well as during the
Severance Period (to the extent Executive
does not receive equivalent disability
coverage and benefits under the plan or
program of a subsequent employer during
such period), the Executive shall be
entitled to disability coverage as
described in this Section 8(a). In the
event the Executive becomes disabled, as
that term is defined under the Company's
Long-Term Disability Plan, the
Executive shall be entitled to receive
pursuant to the Company's Long-Term
Disability Plan or otherwise, and in place
of his Base Salary and any other
employee benefits other than for disabled
employees, an amount equal to 60% of
his Base Salary, at the annual rate in
effect at the commencement date of his
Company long-term disability benefit
("Commencement Date") for a period
beginning on the Commencement Date and
ending with the earlier to occur of (A)
the Executive s attainment of age 65 or (B)
the Executive s commencement of
benefits under the SERP upon his election
to receive such benefits. If (i) the
Executive ceases to be disabled (as
determined in accordance with the terms of
the Long-Term Disability Plan) during the
Term of Employment, (ii) his position
or another senior executive position is
then vacant and (iii) the Company
requests in writing that he resume such
position, he may elect to resume such
position by written notice to the Company
within 15 days after the Company
delivers its request. If he resumes such
position, he shall thereafter be
entitled to his Base Salary at the annual
rate in effect at the Commencement
Date and, for the year he resumes his
position, a pro rata annual incentive
award and to participate in any other
employee benefit programs outlined in
Section 6 and 7 of this Agreement that are
then in effect. If he ceases to be
disabled and does not resume his position
in accordance with the preceding
sentence, he shall be treated as if he
voluntarily terminated his employment
pursuant to Section 10(e) as of the date
the Executive ceases to be disabled. If
the Executive is not offered his position
or another senior executive position
after he ceases to be disabled during the
Term of Employment, he shall be
treated as if his employment was terminated
without Cause pursuant to Section
10(c) as of the date the Executive ceases
to be disabled.
(b) The Executive shall be entitled to a pro rata annual
incentive award for the year in which the
Commencement Date occurs based on 45 %
of Base Salary paid to him during such year
prior to the Commencement Date,
payable in a lump sum promptly after the
Commencement Date. The Executive shall
not be entitled to any annual incentive
award with respect to the period
following the Commencement Date unless he
resumes his position in accordance
with Subsection (a) above. If the Executive
recommences his position in
accordance with Section 8(a), he shall be
entitled to a pro rata annual
incentive award for the year he resumes his
position and shall thereafter be
entitled to annual incentive awards in
accordance with Section 5 hereof.
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(c) During the period the Executive is receiving disability
benefits pursuant to Section 8(a) above, he
shall continue to be treated as an
employee for purposes of all employee
benefits and entitlements in which he was
participating on the Commencement Date,
including without limitation, the
benefits and entitlements referred to in
Sections 6 and 7 above, except that the
Executive shall not be entitled to receive
any annual salary increases or any
new stock incentive awards following the
Commencement Date.
9. REIMBURSEMENT OF BUSINESS AND OTHER EXPENSES; PERQUISITES.
The Executive is authorized to incur reasonable expenses in
carrying out his duties and
responsibilities under this Agreement, and the
Company shall promptly reimburse him for
all business expenses incurred in
connection therewith, subject to
documentation in accordance with the Company's
policy. During the Term of Employment, the
Company shall, reimburse the
Executive, for personal financial and tax
planning not to exceed $4,500 per
annum.
10. TERMINATION OF EMPLOYMENT.
(a) TERMINATION DUE TO DEATH. In the event the Executive s
employment with the Company is terminated
due to his death, his estate or his
beneficiaries, as the case may be, shall be
entitled to and their sole remedies
under this Agreement shall be:
(i) Base Salary through the date of death, which
shall be paid in a single lump sum not
later than 15 days following the
Executive s death;
(ii) pro rata annual incentive award for the year
in which the Executive s death occurs
assuming that the Executive would have
received an award equal to 45% of Base
Salary for such year, which shall be
payable in a lump sum promptly (but in no
event later than 15 days) after his
death;
(iii) lapse of all restrictions on any restricted
stock award (including any
performance-based restricted stock) outstanding at
the time of his death;
(iv) Company common stock, issued without
restrictions, equal to any outstanding
award of contingent shares as of the date
of death, including any matching grant
under the Company's "STEP" program or
deferred restricted stock award;
(v) immediate vesting of all outstanding stock
options and the right to exercise such
stock options for a period of one year
following death (or such longer period as
may be provided in stock options
granted to other similarly situated
executive officers of the Company) or for
the remainder of the exercise period, if
less;
(vi) immediate vesting of all outstanding awards
under the "Career Equity" program and a pro
rata payment of such awards based on
target performance, payable in a cash lump
sum promptly (but in no event later
than 15 days) after his death;
(vii) the balance of any incentive awards earned
as of year end of the prior year (but not
yet paid), which shall be paid in a
single lump sum not later than 15 days
following the Executive s death;
(viii) in the event that the Executive s death
occurs before he has met the age and
service requirements of the SERP, the
Company will provide his spouse with a 50%
survivor annuity as if he had met
such age and service requirements at the
time of his death, payable in
accordance with the terms of the SERP but
subject to such other adjustments as
may be provided in the SERP;
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(ix) settlement of all deferred compensation
arrangements in accordance with the
Executive's duly executed Deferral Election
Forms or the terms of any mandatory
deferral; and
(x) other or additional benefits then due or
earned in accordance with applicable plans
and programs of the Company.
(b) TERMINATION BY THE COMPANY FOR CAUSE.
(i) "Cause" shall mean:
(A) the Executive s willful and material
breach of Sections 11, 12 or 13 of this
Agreement;
(B) the Executive is convicted of a
felony involving moral turpitude; or
(C) the Executive engages in conduct
that constitutes willful gross neglect or
willful gross misconduct in carrying
out his duties under this Agreement,
resulting, in either case, in material harm
to the financial condition or reputation of
the Company.
For purposes of this Agreement, an act or
failure to act on Executive s part
shall be considered "willful" if it was
done or omitted to be done by him not in
good faith, and shall not include any act
or failure to act resulting from any
incapacity of Executive.
(ii) A termination for Cause shall not take
effect unless the provisions of this
paragraph (ii) are complied with. The
Executive shall be given written notice by
the Company of its intention to
terminate him for Cause, such notice (A) to
state in detail the particular act
or acts or failure or failures to act that
constitute the grounds on which the
proposed termination for Cause is based and
(B) to be given within 90 days of
the Company's learning of such act or acts
or failure or failures to act. The
Executive shall have 10 days after the date
that such written notice has been
given to him in which to cure such conduct,
to the extent such cure is possible.
If he fails to cure such conduct, the
Executive shall then be entitled to a
hearing before the Compensation Committee
of the Board at which the Executive is
entitled to appear. Such hearing shall be
held within 15 days of such notice to
the Executive, provided he requests such
hearing within 10 days of the written
notice from the Company of the intention to
terminate him for Cause. If, within
five days following such hearing, the
Executive is furnished written notice by
the Board confirming that, in its judgment,
grounds for Cause on the basis of
the original notice exist, he shall
thereupon be terminated for Cause. Such
hearing shall not limit any other review as
set forth in this Agreement on a DE
NOVO basis. Such hearing shall be limited
to the grounds set forth in the
termination notice.
(iii) In the event the Company terminates the
Executive s employment for Cause, he shall
be entitled to and his sole remedies
under this Agreement shall be:
(A) Base Salary through the date of the
termination of his employment for Cause,
which shall be paid in a single lump
sum not later than 15 days following the
Executive s termination of employment;
(B) any incentive awards earned as of year end of
the prior year (but not yet paid), which
shall be paid in a single lump sum not
later than 15 days following the Executive
s termination of employment;
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(C) settlement of all deferred compensation
arrangements in accordance with the
Executive s duly executed Deferral Election
Form or the terms of any mandatory
deferral; and
(D) other or additional benefits, to the extent
then due or earned in accordance with
applicable plans or programs of the
Company, including but not limited to stock
or stock option programs, the Career
Equity Program or the SERP.
(c) TERMINATION WITHOUT CAUSE OR CONSTRUCTIVE TERMINATION
WITHOUT CAUSE PRIOR TO CHANGE IN CONTROL.
In the event the Executive s
employment with the Company is terminated
without Cause (which termination shall
be effective as of the date specified by
the Company in a written notice to the
Executive), other than due to death, or in
the event there is a Constructive
Termination Without Cause (as defined
below), in either case prior to a Change
in Control (as defined below) the Executive
shall be entitled to and his sole
remedies under this Agreement shall be:
(i) Base Salary through the date of termination
of the Executive s employment, which shall
be paid in a single lump sum not
later than 15 days following the Executive
s termination of employment;
(ii) Base Salary, at the annualized rate in
effect on the date of termination of the
Executive s employment (or in the event
a reduction in Base Salary is the basis for
a Constructive Termination Without
Cause, then the Base Salary in effect
immediately prior to such reduction), for
a period of 18 months following such
termination (the "Severance Period");
provided further that the salary
continuation payment under this Section
10(c)(ii) and Section 10(c)(iv) shall be in
lieu of any salary continuation
arrangements under any other severance
program of the Company or any other
agreement between the Executive and the
Company;
(iii) pro rata annual incentive award for the
year in which termination occurs based on
the bonus that would have been
received by the Executive for such year,
payable in a lump sum at the same time
such award is actually paid to other
employees;
(iv) an amount equal to 45% of Base Salary
multiplied by 1.5 payable in equal monthly
installments over the Severance
Period:
(v) Company common stock, issued without
restrictions, equal to the number of
unvested shares of deferred stock relating
to any matching grant under the Company's
"STEP" program multiplied by a
fraction the numerator of which is the
number of completed years of employment
(or any part thereof) with the Company
following the date on which such matching
grant was awarded and the denominator of
which shall be the vesting period;
(vi) Company common stock, issued without
restrictions, equal to the number of
unvested shares of deferred restricted
stock awarded to the Executive multiplied
by a fraction the numerator of which
is the number of completed years of
employment (or any part thereof) with the
Company following the date on which such
award was granted and the denominator
of which shall be the vesting period;
(vii) immediate vesting of all outstanding awards
under the "Career Equity" program relating
to completed performance cycles,
payable in a cash lump sum promptly (but in
no event later than 15 days)
following the Executive's termination of
employment;
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(viii) the right to exercise all outstanding
stock options that are vested as of the
date of termination during the Severance
Period or for the remainder of the exercise
period, if less;
(ix) the balance of any incentive awards earned
as of year end of the prior year (but not
yet paid), which shall be paid in a
single lump sum not later than 15 days
following the Executive s termination of
employment;
(x) settlement of all vested deferred stock or
cash compensation arrangements in
accordance with the Executive s duly executed
Deferral Election Forms or the terms of any
mandatory deferral;
(xi) continued participation in all medical,
health and life insurance plans at the same
benefit level at which he was
participating on the date of the
termination of his employment until the earlier
of:
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(A) the end of the Severance Period; or
(B) the date, or dates, he receives
equivalent coverage and benefits under the
plans and programs of a subsequent
employer (such coverage and benefits to be
determined on a coverage-by-coverage,
or benefit-by-benefit, basis); provided
that (1) if the Executive is precluded
from continuing his participation in any
employee benefit plan or program as
provided in this clause (xi) of this
Section 10(c), he shall receive cash
payments equal on an after-tax basis to the
cost to him of obtaining the
benefits provided under the plan or program
in which he is unable to participate
for the period specified in this clause
(xi) of this Section 10(c), (2) such
cost shall be deemed to be the lowest
reasonable cost that would be incurred by
the Executive in obtaining such benefit
himself on an individual basis, and (3)
payment of such amounts shall be made
quarterly in advance; and
(xii) other or additional benefits then due or
earned in accordance with applicable plans
and programs of the Company.
"Termination Without Cause" shall mean the
Executive s employment is terminated by the
Company for any reason other than
Cause (as defined in Section 10 (b)) or due
to death.
"Constructive Termination Without Cause" shall
mean a termination of the Executive's
employment at his initiative as provided
in this Section 10(c) following the
occurrence, without the Executive s written
consent, of one or more of the following
events (except as a result of a prior
termination):
(A) an assignment of any duties to Executive
which are inconsistent with his status as a
senior executive of the Company;
(B) a decrease in annual Base Salary, target
annual incentive award opportunity below
45% of Base Salary or target long term
incentive award opportunity below 30% of
Base Salary;
(C) any other failure by the Company to perform
any material obligation under, or breach by
the Company of any material
provision of, this Agreement that is not
cured within 30 days; or
(D) any failure to secure the agreement of any
successor corporation or other entity to
the Company to fully assume the Company
s obligations under this Agreement.
In addition, following a Change in Control,
"Constructive Termination Without
Cause" shall also mean a termination of the
Executive s employment at his
initiative as provided in this Section
10(c) following the occurrence, without
the Executive s written consent, of a
relocation of his principal place of
employment outside a 35-mile radius of his
principal place of employment as in
effect immediately prior to such Change in
Control.
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(i) A "Change in Control" shall be deemed to have
occurred upon:
(A) An acquisition by any Person of Beneficial
Ownership of the shares of common stock of
the Company then outstanding (the
"Company Common Stock Outstanding") or the
voting securities of the Company then
outstanding entitled to vote generally in
the election of directors (the
"Company Voting Securities Outstanding"),
if such acquisition of Beneficial
Ownership results in the Person's
Benefic
