Exhibit 10.2
CHANGE OF CONTROL AGREEMENT
     This AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT (this “Agreement”),
is entered into as of the 19 day of December, 2008 (the “Agreement Date”), by
and between COLLECTIVE BRANDS, INC., a Delaware corporation (the “Company”), and
MATTHEW E. RUBEL (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. Further, notwithstanding
anything in this Agreement to the contrary, if a Potential Change of Control
occurs and if the Executive’s employment with the Company is terminated as
provided in Section 5(e), then “Effective Date” means the date immediately prior
to the date of such termination of employment.
     (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 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

2

--------------------------------------------------------------------------------

 

     (4) Approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company.
     (e) “Potential Change of Control” means:
     (1) At least two directors of a particular class of directors, as of the
date hereof, are replaced for any reason by directors who are not members of the
Incumbent Board at the time of such replacement; 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
     (2) The Board adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change of Control has occurred.
     Section 2. Term of Agreement and Covered Employment. (a) Term of Agreement.
This Agreement shall be in effect from the Agreement Date and shall terminate on
the third anniversary thereof; provided, however, that, commencing on the date
one year after the Agreement 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.
     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
provided Executive’s one-way commute from the Executive’s principal residence is
increased by no more than thirty-five (35) miles.

3

--------------------------------------------------------------------------------

 

     (2) 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 Effective 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 (other than the Collective Brands, Inc. Supplementary
Retirement Plan and any successor plan (the “SRP”)), 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

4

--------------------------------------------------------------------------------

 

peer executives of the Company and the affiliated companies (excluding, for all
purposes, the SRP).”
     (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
automobile, airplane 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

5

--------------------------------------------------------------------------------

 

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 thirtieth (30th) day after receipt of such notice by
the Executive (the “Disability Effective Date”), provided that, within the
thirty (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:
     (A) 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 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
     (B) 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 and a thirty (30) day period to cure
the condition constituting Cause), 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. If the Board does
not give a Notice of Termination for Cause within ninety (90) days after any
member of the Board (other than the Executive and any other member of the Board
involved in the event constituting Cause) has actual knowledge that an event
constituting Cause has occurred, the Board cannot assert that event as a basis
to terminate the Executive’s employment for Cause.
     (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:

6

--------------------------------------------------------------------------------

 

     (A) 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;
     (B) any other action or inaction that constitutes a material breach of the
terms of the Agreement;
     (C) the Company’s requiring the Executive to be based at any office or
location different than the office the Executive was employed immediately
preceding the Effective Date if such relocation increases Executive’s one-way
commute from the Executive’s principal residence by more than thirty-five
(35) miles;
     (D) any purported termination by the Company of the Executive’s employment
otherwise than as expressly permitted by this Agreement;
     (E) any failure by the Company to comply with and satisfy Section 10(c); or
     (F) any failure of the Executive to be a member of the Board of Directors
of the Company, or of any successor to the Company, or the ultimate parent of
the Company or any such successor (as applicable), other than by reason of your
voluntary resignation, Cause, death or Disability.
     Anything in this Agreement to the contrary notwithstanding a termination by
the Executive for any reason during the thirty (30)-day period immediately
following the first anniversary of a Change of Control shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
     (d) Notice of Good Reason. Prior to complying with Sections 4(e) and 11(b),
(1) the Executive must provide written notification of the Executive’s intention
to resign within ninety (90) days after the Executive knows or has reason to
know of the occurrence of any such event in Sections 4(c)(A)-(F) constituting
Good Reason, (2) the Company shall have thirty (30) days from the receipt of
such notice to effect a cure of the condition constituting Good Reason under
Section 4(c) and (3) if the Company is unable to cure the condition constituting
Good Reason within the thirty (30)-day period then the Executive must terminate
his employment within two years from the date such event constituting Good
Reason occurred, otherwise the event will no longer constitute Good Reason. For
the avoidance of doubt, Good Reason will not include any isolated, insubstantial
and inadvertent action not taken in bad faith by the Company and that is cured
promptly upon receiving notice from the Executive.
     (e) Notice of Termination. Any termination by the Company for Cause, or by
the Executive for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 11(b). “Notice of
Termination” means a written notice that (1) indicates the specific termination
provision in this Agreement relied upon, (2) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated, and (3) if the Date of Termination (as defined herein) is other than
the date of receipt of such notice, specifies the Date of Termination (which
Date of Termination shall be not more than

7

--------------------------------------------------------------------------------

 

thirty (30) days after the giving of such notice). The failure by the Executive
or the Company to set forth in the Notice of Termination any fact or
circumstance that contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive’s or the Company’s respective rights
hereunder.
     (f) Date of Termination. “Date of Termination” means (1) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive for Good
Reason, the date of receipt of the Notice of Termination or any later date
specified in the Notice of Termination, as the case may be, (2) if the
Executive’s employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination, and (3) if the Executive’s
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
     Section 5. Obligations of the Company upon Termination. (a) Good Reason;
Other Than for Cause, Death or Disability. If, during the Change of Control
Period, the Company terminates the Executive’s employment other than for Cause
or Disability or the Executive terminates employment for Good Reason:
     (A) the Company shall pay to the Executive, in a lump sum in cash within
thirty (30) days after the Date of Termination (provided, however, that no
amount shall be paid pursuant to this paragraph (A) after March 15 of the year
following the first anniversary of a Change of Control), the aggregate of the
following amounts:
     the sum of (i) the Executive’s Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (ii) the product of (x) the
higher of (I) the Recent Annual Bonus and (II) the Annual Bonus paid or payable,
including any bonus or portion thereof that has been earned but deferred (and
annualized for any fiscal year consisting of less than 12 full months or during
which the Executive was employed for less than 12 full months), for the most
recently completed fiscal year during the Change of Control Period, if any (such
higher amount, the “Highest Annual Bonus”) and (y) a fraction, the numerator of
which is the number of days in the current fiscal year through the Date of
Termination and the denominator of which is 365, and (iii) any compensation
previously deferred by the Executive (together with any accrued interest or
earnings thereon) and any accrued vacation pay, in each case, to the extent not
theretofore paid (the sum of the amounts described in subclauses (i), (ii) and
(iii), the “Accrued Obligations”); and
     the amount equal to the product of (i) three and (ii) the sum of (x) the
Executive’s Annual Base Salary and (y) the Highest Annual Bonus; and
     in lieu of the receipt of shares of common stock of the Company (“Common
Stock”) issuable upon the exercise of outstanding options (other than stock
options qualifying as incentive stock options (“ISOs”) under Section 422A of the
Internal Revenue Code of 1986, as amended (the “Code”) which ISOs were granted
on or prior to April 29, 1996) (“Options”), stock appreciation rights (“SARs”)
and performance units (“Units”), if any (the Options, SARs and Units

8

--------------------------------------------------------------------------------

 

shall be referred to herein collectively as the “Awards”), granted to the
Executive under the Company’s 1996 Stock Incentive Plan or any successor or
substitute plans thereto, or otherwise not under any such plan, an amount equal
to the product of (i) the excess of (x) in the case of an ISO granted after
April 29, 1996, the closing price of Common Stock as reported on the New York
Stock Exchange on the Date of Termination or the last full trading day
immediately prior to the Date of Termination (or, if not listed on such
exchange, on a nationally recognized exchange or quotation system on which
trading value in the Common Stock is highest) (the “Closing Price”) and, in the
case of all other Awards, the higher of the Closing Price and the highest per
share price for Common Stock actually paid in connection with any Change of
Control, over (y) the per share exercise price (if any) of each Award, and
(2) the number of shares of Common Stock covered by each such Award, whether or
not such Award is exercisable on the Date of Termination; and
     (B) for three (3) years after the Executive’s Date of Termination, or such
longer period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue benefits to the Executive and/or
the Executive’s family at least equal to those that would have been provided to
them in accordance with the plans, programs, practices and policies described in
Section 3(b)(4) if the Executive’s employment had not been terminated 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 and their families, provided, however, that, if the Executive becomes
reemployed with another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility. If the Executive
has attained age fifty (50) on the Date of Termination and if, with five
additional years of age and service beyond the Executive’s age and years of
service as of the Date of Termination, the Executive would have been entitled to
receive any other benefits under the Company’s post-retirement programs as in
effect immediately prior to the Effective Date, then the Executive shall be
entitled to such benefits as if the Executive had attained those five additional
years of age and been employed by the Company for those five additional years of
service, as of the Date of Termination, and such benefits shall commence
immediately and be determined and provided under the terms of such plans as in
effect immediately prior to the Effective Date, without regard to any amendments
subsequent to the Effective Date that adversely affect the rights of
participants thereunder; and
     (C) Notwithstanding any provision in any equity or equity-based grant
agreement or any other agreement or plan covering the Executive, all of the
non-competition restrictions imposed on the Executive under such equity or
equity-based grant agreement shall cease to apply for all purposes of such
equity or equity-based grant agreement, including but not limited to all
options, stock appreciation rights, and performance units granted to the
Executive at any time; and
     (D) the Company shall, at its sole expense as incurred, and subject to a
maximum limit equal to three (3) times the Executive’s monthly compensation,

9

--------------------------------------------------------------------------------

 

provide the Executive with outplacement services the scope and provider of which
shall be selected by the Executive in the Executive’s sole discretion; and
     (E) to the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or benefits required to
be paid or provided or that the Executive is eligible to receive under any plan,
program, policy or practice or contract or agreement of the Company and the
affiliated companies (such other amounts and benefits, the “Other Benefits”).
     (b) Death. If the Executive’s employment is terminated by reason of the
Executive’s death during the Change of Control Period, this Agreement shall
terminate without further obligations to the Executive’s legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of the Other Benefits. The Accrued Obligations shall
be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum
in cash within thirty (30) days of the Date of Termination. With respect to the
provision of the Other Benefits, the term “Other Benefits” as utilized in this
Section 5(b) shall include, without limitation, and the Executive’s estate
and/or beneficiaries shall be entitled to receive, benefits at least equal to
the most favorable benefits provided by the Company and the affiliated companies
to the estates and beneficiaries of peer executives of the Company and the
affiliated companies under such plans, programs, practices and policies relating
to death benefits, if any, as in effect with respect to other peer executives
and their beneficiaries at any time during the 120-day period immediately
preceding the Effective Date (excluding any death benefits payable under the
SRP) or, if more favorable to the Executive’s estate and/or the Executive’s
beneficiaries, as in effect on the date of the Executive’s death with respect to
other peer executives of the Company and the affiliated companies and their
beneficiaries (excluding any death benefits payable under the SRP).
     (c) Disability. If the Executive’s employment is terminated by reason of
the Executive’s Disability during the Change of Control Period, this Agreement
shall terminate without further obligations to the Executive, other than for
payment of Accrued Obligations and the timely payment or provision of the Other
Benefits. The Accrued Obligations shall be paid to the Executive in a lump sum
in cash within thirty (30) days of the Date of Termination. With respect to the
provision of the Other Benefits, the term “Other Benefits” as utilized in this
Section 5(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and the
affiliated companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if
any, as in effect generally with respect to other peer executives and their
families at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive’s
family, as in effect at any time thereafter generally with respect to other peer
executives of the Company and the affiliated companies and their families.
     (d) Cause; Other Than for Good Reason. If the Executive’s employment is
terminated for Cause during the Change of Control Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (1) the Executive’s Annual Base Salary through the Date
of Termination, (2) the amount of any compensation previously deferred by the
Executive, and (3) the Other Benefits, in each case, to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the Change of
Control Period, excluding a termination for Good Reason, this Agreement shall
terminate without further obligations to the Executive, other than for the
Accrued Obligations and the timely payment or provision of the Other Benefits.
In such case, all the Accrued Obligations

10

--------------------------------------------------------------------------------

 

shall be paid to the Executive in a lump sum in cash within thirty (30) days of
the Date of Termination.
     (e) Obligations of the Company and the Executive upon a Potential Change of
Control. If, prior to the Change of Control Period, a Potential Change of
Control occurs, the Executive hereby agrees to remain in the employ of the
Company, on the same basis and terms and conditions as the Executive is employed
by the Company immediately prior to the Potential Change of Control, for the
twelve (12)-month period following such Potential Change of Control. If the
Executive’s employment is terminated by the Company other than for Cause, death
or Disability, or the Executive terminates his employment for Good Reason,
during the twelve (12)-month period following the occurrence of a Potential
Change of Control, without regard to whether a Change of Control has actually
occurred or is likely to occur, the Executive’s employment shall be deemed to
have been terminated by the Company in anticipation of a Change of Control, and
the Executive shall be entitled to receive the payments and benefits provided in
Section 5(a) hereof, except that no amount shall be paid pursuant to clause
(ii) of the first paragraph of Section 5(a)(A) of this Agreement (relating to a
fractional payment of the Highest Annual Bonus) and the amount specified in
Appendix A shall be paid at the same time as the other amounts specified in
Section 5(a)(A) are paid.
     Section 6. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive’s continuing or future participation in any plan,
program, policy or practice provided by the Company or the affiliated companies
and for which the Executive may qualify, nor, subject to Section 11(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or the affiliated companies.
Amounts that are vested benefits or that the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or the affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement, except as explicitly modified by
this Agreement.
     Section 7. Full Settlement. 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 that the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses that the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus, in each case, interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.
     Section 8. Certain Additional Payments by the Company.
     (a) Anything in this Agreement to the contrary notwithstanding and except
as set forth below, in the event it shall be determined that any payment or
distribution by the Company or the affiliated companies to or for the benefit of
the Executive (whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise but

11

--------------------------------------------------------------------------------

 

determined without regard to any additional payments required under this
Section 8) (the “Payment”) would be subject to the excise tax imposed by
Section 4999 of the Code, or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, collectively, the “Excise Tax”), then the Executive
shall be entitled to receive an additional payment (the “Gross-Up Payment”) in
an amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments. Notwithstanding the foregoing provisions of this Section 8(a), if
it shall be determined that the Executive is entitled to the Gross-Up Payment,
but that the Payments do not exceed 110% of the greatest amount that could be
paid to the Executive such that the receipt of the Payments would not give rise
to any Excise Tax (the “Reduced Amount”), then no Gross-Up Payment shall be made
to the Executive and the Payments, in the aggregate, shall be reduced to the
Reduced Amount. The reduction of amounts payable hereunder, if applicable, shall
be determined in a manner which has the least economic cost to the Executive
and, to the extent the economic cost is equivalent, then all the Payments in the
aggregate will be reduced in the inversed order of when all the Payments in the
aggregate, would have been made to the Executive until the reduction specified
is achieved.
     (b) Subject to the provisions of Section 8(c), all determinations required
to be made under this Section 8, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by Deloitte & Touche
LLP or such other certified public accounting firm as may be designated by the
Executive (the “Accounting Firm”) that shall provide detailed supporting
calculations both to the Company and the Executive within fifteen (15) business
days of the receipt of notice from the Executive that there has been a Payment
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change of Control, is not able to make the determinations
required hereunder for any reason, or the Company determines that the Accounting
Firm is precluded from performing such services under applicable independence
standards or otherwise, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by
the Company to the Executive within five days of the receipt of the Accounting
Firm’s determination. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder or as a result of a permitted or required
redetermination of the Excise Tax, it is possible that Gross-Up Payments that
will not have been made by the Company should have been made (the
“Underpayment”) or that Gross-Up Payments that were initially made by the
Company exceeded the amount necessary to reimburse the Executive as contemplated
in the first sentence of Section 8(a) or were not due pursuant to the
application of the last sentence of Section 8(a) (“Overpayment”). In the event
the Company exhausts its remedies pursuant to Section 8(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive. The Accounting Firm shall determine the amount of any Overpayment
that has been made and whether any permitted redetermination of the Excise Tax
would result in an Overpayment and such Overpayment shall be promptly paid to
the Company by the Executive to the extent he is entitled to a refund on account
of such

12

--------------------------------------------------------------------------------

 

Overpayment (together with interest at the rate provided in Section 1274(d)(2)
of the Code from the date of such entitlement). It is the intent of this
provision that the Gross-Up Payment reflect the Excise Tax liability, if any,
actually incurred by the Executive in the opinion of the Accounting Firm.
     (c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty
(30)-day period following the date on which the Executive gives such notice to
the Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that the Company desires to
contest such claim, the Executive shall:
     (A) give the Company any information reasonably requested by the Company
relating to such claim,
     (B) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
     (C) cooperate with the Company in good faith in order effectively to
contest such claim, and
     (D) permit the Company to participate in any proceedings relating to such
claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 8(c), the Company shall control all proceedings taken in connection
with such contest, and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim and may, at its sole
option, either direct the Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that, if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and provided, further, that any extension of the
statute of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company’s control of
the contest shall be limited to issues with respect to which the Gross-Up
Payment would be payable hereunder, and the Executive shall be entitled

13

--------------------------------------------------------------------------------

 

to settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
     (d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 8(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company’s
complying with the requirements of Section 8(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
     Section 9. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or the affiliated
companies, and their respective businesses, which information, knowledge or data
shall have been obtained by the Executive during the Executive’s employment by
the Company or the affiliated companies and which information, knowledge or data
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive’s employment with the Company, the Executive shall
not, without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those persons designated
by the Company. In no event shall an asserted violation of the provisions of
this Section 9 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
     Section 10. Successors. (a) This Agreement is personal to the Executive,
and, without the prior written consent of the Company, shall not be assignable
by the Executive other than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive’s legal representatives.
     (b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
     (c) 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 assume expressly 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. “Company” means
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid that assumes and agrees to perform this Agreement by
operation of law or otherwise.
     Section 11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, 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. This
Agreement may not be amended or modified other than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.

14

--------------------------------------------------------------------------------

 

     (b) 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 as follows:
if to the Executive:
to the address then on file with the Company’s payroll department
if to the Company:
Collective Brands, Inc.
[3231 SE Sixth Avenue
Topeka, Kansas 66607]
Attention: General Counsel
or 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.
     (c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
     (d) The Company may withhold from any amounts payable under this Agreement
such United States federal, state or local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
     (e) The Executive’s or the Company’s failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 4(c), shall not be deemed to be a waiver of such provision
or right or any other provision or right of this Agreement.
     (f) From and after the Effective Date or the date that a Potential Change
of Control occurs, and except as expressly set forth herein, this Agreement
shall supersede any other agreement between the parties with respect to the
subject matter hereof, including the Amended and Restated Employment Agreement,
dated as of December • , 2008 (the “Employment Agreement”); provided, however,
in no event shall this Agreement supersede or replace the Indemnification
Agreement between the Executive and the Company, dated as of July 18, 2005, as
from time to time amended prior to the Effective Date; and provided further
that, to the extent not inconsistent with any provision hereof, the following
provisions of the Employment Agreement shall remain in effect during the Change
of Control Period: Section 7 (relating to proprietary information), Section 8
(relating to certain covenants), Section 12(d) (relating to certain remedies
that the Company and the Executive shall have) and Section 13(b)(2) (relating to
Section 409A, with any references in that provision to other sections of the
Employment Agreement also being deemed references to similar provisions of this
Agreement, as appropriate, so as to give maximum effect to such provision.

15

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand
and, pursuant to the authorization from the Board, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.

            EXECUTIVE
      /s/ Matthew E. Rubel       Name of Executive: Mathew E. Rubel             
COLLECTIVE BRANDS, INC.
      By:   /s/ Betty J. Click       Name:  Betty J. Click      Title:    Senior
Vice President – Human Resources     

16

--------------------------------------------------------------------------------

 

APPENDIX A
CHART OF ADDITIONAL SEVERANCE PAYMENT UNDER SECTION 5(E)

          Fiscal Quarter in which     Date of Termination   Payment under
Section Occurs   6(b)(2)(B) $*
First Fiscal Quarter
  $ 1,000,000  
Second Fiscal Quarter
  $ 1,425,000  
Third Fiscal Quarter
  $ 1,850,000  
Fourth Fiscal Quarter
  $ 2,275,000  

 

*   The amounts set forth in this column shall be increased automatically by the
percentage increase, if any, in the Executive’s Salary from January 1, 2009.

17