Exhibit 10.1


 


CHANGE OF CONTROL AGREEMENT


 


This
Change of Control Agreement (the “Agreement”) is made as of this 1st
day of August, 2005 by and between Rick Paterno (the “Executive”) and The
Rockport Company, LLC (the “Company”), a wholly owned subsidiary of Reebok
International Ltd. (“Reebok”).


 


WHEREAS, Reebok
has determined that it is in the best interests of Reebok and its shareholders
to agree to provide benefits to Executive under circumstances described below;
and


 


WHEREAS,
Reebok recognizes that the possibility of a change of control of the Company
followed by a termination of the Executive’s employment is unsettling to the
Executive and wishes to make arrangements at this time to help assure his
continuing dedication to the duties to the Company and Reebok, notwithstanding
any possible change of control of the Company; and


 


WHEREAS,
Reebok believes it important to enable the Executive as President and Chief
Executive Officer of the Company, without being distracted by the uncertainties
of his own employment situation, to perform his regular duties,


 


NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, the parties hereto agree as follows:


 


1.                                       If,
within two years following a Change of Control, Executive’s employment with the
Company is terminated either (i) by the Company other than for “Cause” (as
defined in paragraph 3 below), or (ii) by Executive for “Good Reason” (as
defined in paragraph 3 below), then:


 


a.                                       The
Company will continue to pay Executive’s then-current annual base salary (or,
if his base salary has been reduced at anytime after the Change of Control, his
base salary in effect prior to the reduction) for up to two (2) years.  Such pay continuation shall not extend beyond
the date that Executive obtains new employment (as that term is defined in
Reebok’s Severance Policy).  Executive
shall utilize reasonable efforts to mitigate damages and obtain comparable new
employment.  If Executive obtains new
employment prior to the expiration of the two-year period, Executive shall
receive a lump sum payment equal to one-half of the remaining weeks in the two
year pay continuation period.


 


b.                                      The
Company will pay to Executive within 30 days of such termination of employment
a lump sum cash payment equal to 200% of: the higher of his target bonus for
the then-current year, or his bonus for the most recent calendar year ended
before the Change of Control.


 


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c.                                       The
Company will pay to Executive, in a single lump-sum cash payment, an amount
equal to the difference, if any, between (i) the total distribution that
he receives following his termination under all Company retirement plans, and (ii) the
total distribution that he would have received under such plans had he accumulated
three additional years of service for vesting prior to termination (as defined
in relevant plan documents).  The payment
will be made at the same time that he receives his distribution from those
plans.


 


d.                                      To
the extent permitted under the terms of the applicable plans, following such
termination, Executive and his dependents, if any, will continue to participate
fully, with no contribution required by Executive to the cost thereof, in all
accident, life and health plans maintained or sponsored by the Company
immediately prior to the Change of Control, or receive substantially equivalent
coverage from the Company for up to an additional two (2) years following
such termination.  Such coverage shall
cease upon obtaining new employment with comparable coverage.  In the alternative or if the applicable plans
do not permit coverage, the Company may elect to pay Executive the equivalent
cash value of such coverage.


 


e.                                       The
Company will promptly reimburse Executive for all reasonable legal fees and
expenses incurred by him to enforce the provisions of this Agreement (provided
such efforts result in Executive’s recovery of any sum from the Company,
whether through court award or settlement).


 


To the
extent any payment hereunder shall be required to be delayed until six months
following separation from service to comply with the “specified employee” rules of
Section 409A of the Internal Revenue Code, it shall be so delayed (but not
more than is required to comply with such rules).  In this regard, any payments that otherwise
would have been made during such 6-month period shall be paid to the Executive
in a lump sum on the first date on which they may be paid, together with
interest credited at the short-term applicable federal rate, compounded daily.


 


2.                                       For purposes of this Agreement a “Change of
Control” shall be deemed to have occurred if, at any time: (a) the Company
sells or otherwise disposes of all or substantially all of its business or
assets (other than as a result of sales of inventory in the ordinary course of
business), or (b) Reebok or any of its affiliates (as defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended) shall cease to control
(as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended) the Company.


 


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3.                                       Definitions


 


a.                                       “Cause”
for purposes of this Agreement only means conviction of the Executive for a
felony or a crime involving moral turpitude.


 


b.                                      “Good
Reason” means any one or more of the following:


 


(i)                                     Executive
ceases to hold the positions, with the titles, that he held immediately prior
to the Change of Control or Executive’s responsibilities or authority are
downgraded following the Change of Control.


 


(ii)                                  Reduction
of Executive’s base salary.


 


(iii)                               Failure to pay to him a
bonus at least equal to his target bonus for the year in which the Change of
Control occurs.


 


(iv)                              Material
reduction in the health, disability or life insurance benefits that the Company
was providing Executive immediately prior to the Change of Control.


 


(v)                                 Relocation
of Executive’s principal place of business more than 45 miles from its location
immediately prior to the Change of Control.


 


4.                                       If
the Company is at any time before or after a Change of Control merged or
consolidated into or with any other corporation or other entity (whether or not
the Company is the surviving entity), or if substantially all of the assets
thereof are transferred to another corporation or other entity, the provisions
of this Agreement will be binding upon and inure to the benefit of the
corporation or other entity resulting from such merger or consolidation or the
acquirer of such assets, and this paragraph will apply in the event of any
subsequent merger or consolidation or transfer of assets.


 


In the event of any merger, consolidation, or sale of
assets described above, nothing contained in this Agreement will detract from
or otherwise limit Executive’s right to participate or privilege of
participation in any stock option or purchase plan or any bonus, profit
sharing, pension, group insurance, hospitalization, or other incentive or
benefit plan or arrangement which may be or become applicable to executives of
the corporation resulting from such merger or consolidation or the corporation
acquiring such assets of the Company.  In
the event of any merger, consolidation or sale of assets described above,
references to the Company in this Agreement shall unless the context suggests
otherwise be deemed to include the entity resulting from such merger or
consolidation or the acquirer of such assets of the Company.


 


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5.                                       All
payments required to be made by the Company hereunder to Executive or his
dependents, beneficiaries, or estate will be subject to the withholding of such
amounts relating to tax and/or other payroll deductions as may be required by
law.


 


6.                                       In
the event that it is determined that any payment or benefit provided by the
Company to or for the benefit of Executive, either under this Agreement or
otherwise, will be subject to the excise tax imposed by section 4999 of
the Internal Revenue Code or any successor provision (“section 4999”), the
Company will, prior to the date on which any amount of the excise tax must be
paid or withheld, make an additional lump-sum payment (the “gross-up payment”)
to Executive.  The gross-up payment will
be sufficient, after giving effect to all federal, state and other taxes and
charges (including interest and penalties, if any) with respect to the gross-up
payment, to make Executive whole for all taxes (including withholding taxes)
and any associated interest and penalties, imposed under or as a result of section 4999.
Notwithstanding the foregoing, no gross-up payment shall include any amounts in
respect of taxes imposed by Section 409A of the Internal Revenue Code.


 


Determinations
under this section will be made by the Company’s auditors unless Executive
has reasonable objections to the use of that firm, in which case the
determinations will be made by a comparable firm chosen by Executive after
consultation with the Company (the firm making the determinations to be
referred to as the “Firm”).  The
determinations of the Firm will be binding upon the Company and Executive
except as the determinations are established in resolution (including by
settlement) of a controversy with the Internal Revenue Service to have been
incorrect.  All fees and expenses of the
Firm will be paid by the Company.


 


If the IRS asserts a claim that, if successful, would
require the Company to make a gross-up payment or an additional gross-up
payment, the Company and Executive will cooperate fully in resolving the
controversy with the IRS.  The Company
will make or advance such gross-up payments as are necessary to prevent
Executive from having to bear the cost of payments made to the IRS in the
course of, or as a result of, the controversy. 
The Firm will determine the amount of such gross-up payments or advances
and will determine after final resolution of the controversy whether any
advances must be returned by Executive to the Company.  The Company will bear all expenses of the
controversy and will gross Executive up for any additional taxes that may be
imposed upon Executive as a result of its payment of such expenses.


 


7.                                       Nothing
contained in this Agreement shall be construed as a contract of employment
between the Company and the Executive, or as a right of the Executive to
continue in the employ of the Company, or as a limitation of the right of the
Company to discharge the Executive with or without Cause.  The Executive may, subject to the terms and
conditions of this Agreement, have the right to receive upon termination of his
employment the payments and benefits provided in Paragraph 2 of this Agreement
and shall not be deemed to have waived any


 


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rights he may have either
at law or in equity in respect of such discharge.  Payments made by the Company pursuant to this
Agreement shall be in lieu of payments and other benefits, if any, to which
Executive may be entitled under any other severance agreement or severance plan
of the Company.


 


8.                                       No
amendment, change, or modification of this Agreement may be made except in
writing, signed by both parties.  The
provisions of this Agreement shall be binding upon and shall inure to the
benefit of Executive, his executors, administrators, legal representatives and
beneficiaries, and the Company and its successors.  The validity, interpretation, and effect of
this Agreement shall be governed by the laws of The Commonwealth of
Massachusetts.


 


The
invalidity or unenforceability of any provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.


 


No
right or interest to or in any payments or benefits hereunder shall be
assignable by the Executive; provided, however, that this provision shall not
preclude him from designating one or more beneficiaries to receive any amount
that may be payable after his death and shall not preclude the legal
representative of his estate from assigning any right hereunder to the person
or persons entitled thereto under his will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to
his estate.  The term “beneficiaries” as
used in this Agreement shall mean a beneficiary or beneficiaries so designated
to receive any such amount, or if no beneficiary has been so designated, the
legal representative of the Executive’s estate. 
No right, benefit, or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt, or obligation, or to
execution, attachment, levy, or similar process, or assignment by operation of
law.  Any attempt, voluntary or
involuntary, to effect any action specified in the immediately preceding
sentence shall, to the full extent permitted by law, be null, void, and of no
effect.


 


No
right, benefit, or interest hereunder, shall be subject to anticipation,
alienation, sale, assignment, encumbrance, charge, pledge, hypothecation, or
set-off in respect of any claim, debt, or obligation, or to execution,
attachment, levy, or similar process, or assignment by operation of law.  Any attempt, voluntary or involuntary, to
effect any action specified in the immediately preceding sentence shall, to the
full extent permitted by law, be null, void, and of no effect.


 


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IN
WITNESS WHEREOF, Company and Executive have each caused this Agreement to be
duly executed and delivered as of the date set forth above.


 


	
   

  	
  THE ROCKPORT
  COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David Pace

  	
   

  
	
   

  	
  Duly Authorized
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Paul Fireman

  	
   

  
	
   

  	
  Duly Authorized
  Officer

  
	
   

  
	
   

  
	
  Agreed:

  
	
   

  
	
   

  
	
  /s/ Rick Paterno

  	
   

  
	
  Rick Paterno

  
	
  President and
  CEO

  
	
  The Rockport
  Company, LLC

  
					



 


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