Document:

bws8k052912ex10_1.htm

  

  

  

SEVERANCE AGREEMENT

 

    This SEVERANCE AGREEMENT (the “Agreement”) is effective as of June 11, 2012 (“Effective Date”) by and between Russell C. Hammer (“Employee”) and Brown Shoe Company, Inc., a New York corporation (“Brown Shoe” and, together with its subsidiaries, the “Company”).

 

    WHEREAS, Brown Shoe is engaged, directly and indirectly through its subsidiaries, in the sourcing and retail and wholesale sale of footwear in the United States and throughout the world;

 

    WHEREAS, Employee is employed by Brown Shoe or a wholly-owned subsidiary of Brown Shoe in an executive capacity, possesses intimate knowledge of the business and affairs of the Company, and has acquired, and will continue to acquire, certain confidential, proprietary and trade secret information and data with respect to the Company;

 

    WHEREAS, Brown Shoe desires to insure, insofar as possible, that the Company will continue to have the benefit of Employee’s services and to protect the confidential information and goodwill of the Company; and

 

    WHEREAS, the Company recognizes that circumstances may arise in which a change in the control of Brown Shoe occurs, through acquisition or otherwise, thereby causing uncertainty of employment without regard to Employee’s competence or past contributions which uncertainty may result in the loss of valuable services of Employee to the detriment of the Company and Brown Shoe’s shareholders, and the Company and Employee wish to provide reasonable security to Employee against changes in Employee’s relationship with Brown Shoe in the event of any such change in control; and

 

    WHEREAS, both the Company and Employee are desirous that a proposal for any change of control or acquisition will be considered by Employee objectively and with reference only to the business interests of the Company and Brown Shoe’s shareholders; and

 

    WHEREAS, Employee will be in a better position to consider the best interests of the Company if Employee is afforded reasonable security, as provided in this Agreement, against altered conditions of employment which could result from any such change in control or acquisition.

 

    NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto mutually covenant and agree as follows:

 

Section 1. Definitions

 

    1.1 “Board” means the Board of Directors of Brown Shoe.

 

    1.2 “Business Unit” means any direct or indirect subsidiary, operating division or business unit of Brown Shoe.

 

    1.3 “Cause” means (i) engaging by Employee in willful misconduct which is materially injurious to the Company; (ii) conviction of Employee of a felony; (iii) engaging by Employee in fraud, material dishonesty or gross misconduct in connection with the business of the Company; (iv) engaging by Employee in any act of moral turpitude reasonably likely to materially and adversely affect the Company or its business; (v) engaging by Employee in the illegal use of a controlled
substance or using prescription medications unlawfully; or (vi) abuse by Employee of alcohol.

 

    1.4 “Change of Control” means the occurrence of any of the following events after the Effective Date:

 

       (a) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (x) the then outstanding shares of common stock of Brown Shoe (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then outstanding voting securities of Brown Shoe entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that for purposes of this paragraph (a) the following acquisitions shall not constitute a Change of Control:  (i) any acquisition directly from the Company, (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 corporation controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction which complies with the exception set forth in paragraph (c) below; or

 

       (b) Individuals who, as of the Effective Date of this Agreement, 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 Effective Date whose election, or nomination for election by the Company’s shareholders, 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

 

       (c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation (a “Business Combination”), in each case, unless, following such Business Combination, all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 65% of, respectively, 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 the corporation resulting from such Business Combination (including, without limitation, a corporation which 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) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or

 

       (d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

 

    1.5 “Code” means the Internal Revenue Code of 1986, as amended.

 

    1.6 “Competitor” means any Person which (a) in its prior fiscal year had annual gross sales volume or revenues of more than $20,000,000 attributable to the sale of footwear or (b) is reasonably expected to have such level of footwear sales or revenues in either the current fiscal year or the next following fiscal year.

 

    1.7 “Confidential Information” shall have the meaning set forth in Section 9.

 

    1.8 “Customer” means any wholesale customer of Brown Shoe and/or any Business Unit which either purchased from Brown Shoe and/or any Business Unit during the one (1) year immediately preceding the Termination Date, or is reasonably expected by Brown Shoe and/or any Business Unit to purchase from Brown Shoe and/or any Business Unit in the one (1) year period immediately following the Termination Date, more than $1,000,000 in footwear.

 

    1.9 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

    1.10 “Good Reason,” when used with reference to a voluntary termination by Employee of Employee’s employment with the Company, means (i) a reduction in Employee’s base salary as in effect on the date hereof, or as the same may be increased from time to time; (ii) a reduction in Employee’s status, position, responsibilities or duties; (iii) the required relocation of Employee’s principal place of business, without Employee’s consent, to a location
which is more than fifty (50) miles from Employee’s principal place of business on the Effective Date, or from such location to which Employee may transfer with Employee’s consent after the Effective Date; (iv) a material increase in the amount of time Employee is required to travel on behalf of the Company; (v) the failure of any successor of Brown Shoe to assume this Agreement, or (vi) a material breach of this Agreement by the Company.

 

    1.11 “Person” means 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”)).

 

    1.12 “Termination Date” means the effective date as provided in this Agreement of the termination of Employee’s employment with the Company.  Employee will have a termination of employment only if he has a separation from service determined based on all of the facts and circumstances and in accordance with the rules and regulations issued by the Treasury Department under Code Section 409A.

 

Section 2. Term

 

    2.1 Subject to Section 2.2, the term of this Agreement (the “Term”) shall be a period commencing on the Effective Date and ending March 31, 2013.

 

    2.2 The Term shall be automatically extended for successive one (1) year periods unless either party to this Agreement provides the other party with notice of termination at least ninety (90) days prior to the expiration of the original one-year period or any one-year period thereafter.

 

Section 3. Termination of Employment

 

    3.1 The Company may terminate Employee’s employment at any time for Cause, effective upon written notice to Employee specifying in reasonable detail the particulars of Employee’s conduct deemed by the Company and/or such subsidiary to justify such termination for Cause.

 

    3.2 The Company may terminate Employee’s employment without Cause at any time, effective upon written notice to Employee of termination specifying that such termination is without Cause.

 

    3.3 Employee may terminate Employee’s employment with the Company at any time, with or without Good Reason.

 

Section 4. Separation Benefits

 

    4.1 If Employee’s employment is terminated by the Company for any reason other than for Cause, death or disability and Section 4.2 does not apply, Employee shall be entitled to the following separation benefits:

 

       (a) The Company shall pay, or cause to be paid, to Employee within 30 days of the Termination Date (i) the full base salary earned by Employee through, but unpaid at, the Termination Date, plus (ii) credit for any vacation earned by Employee but not used at the Termination Date, plus (iii) all other amounts owed by the Company to Employee (other than any bonus payment of any kind) but unpaid as of the Termination
Date.

 

       (b) The Company shall pay, or cause to be paid, to Employee (i) in a lump sum not later than thirty (30) days after the Termination Date an amount equal to 200% of the sum of (A) Employee’s base annual salary at the highest rate in effect at any time during the twelve (12) months immediately preceding the Termination Date, and (B) Employee’s targeted bonus for the current year, and (ii) Employee’s bonus for the year of termination prorated to the Termination Date, paid at the time such bonus would have been paid if Employee had remained employed to the
date of payment and calculated based on achievement of the applicable performance criteria applicable to such bonus payment.

 

       (c) The Company shall provide to Employee for a period of eighteen (18) months after the Termination Date medical and/or dental coverage under the Company’s medical and/or dental plans, without any cost to Employee in excess of any employee contribution that would be payable by Employee if Employee remained employed by a member of the Company; provided, however, that if Employee becomes employed with another employer during such eighteen (18)-month period and is eligible to receive medical and/or dental coverage under another employer-provided plan, the medical
and/or dental coverage described herein shall be secondary to those provided under such other plan.  In addition, on the last day of such eighteen (18)-month period, the Company shall pay, or cause to be paid, to Employee an amount in cash equal to the aggregate amount that would be payable by the Company for such medical and/or dental coverage for six (6) months if Employee remained employed by the Company for such period.

 

       (d) The restrictions applicable to each share of non-vested restricted stock of Brown Shoe held by Employee that would have vested within the two (2) year period following the Termination Date had Employee remained employed by the Company shall lapse as of the Termination Date.

 

       (e) Each non-vested option to purchase Brown Shoe stock held by Employee that would have vested within the two (2) year period following the Termination Date had Employee remained employed by the Company shall vest as of the Termination Date.

 

       (f) The Company shall pay the reasonable costs of outplacement services selected by the Company for a reasonable period of time following the Termination Date; provided, however, that no such outplacement services shall be provided after the last day of the second calendar year following the calendar year in which the Termination Date occurs.

 

    4.2 If Employee’s employment is terminated within twenty-four (24) months after a Change of Control (x) by the Company for any reason other than for Cause, death or disability, or (y) by Employee within ninety (90) days after the occurrence of Good Reason, Employee shall be entitled to the following separation benefits in place of, and not in addition to, the benefits set forth in Section 4.1:

 

       (a) The Company shall pay, or cause to be paid, to Employee within 30 days of the Termination Date (i) the full base salary earned by Employee through, but unpaid at, the Termination Date, plus (ii) credit for any vacation earned by Employee but not taken at the Termination Date, plus (iii) all other amounts owed by the Company to Employee (other than any bonus payment of any kind) but unpaid as of the Termination
Date.

 

       (b) The Company shall pay, or cause to be paid, to Employee (i) in a lump sum six (6) months after the Termination Date an amount equal to 300% of the sum of (A) Employee’s base annual salary at the highest rate in effect at any time during the twelve (12) months immediately preceding the Termination Date, and (B) Employee’s targeted bonus for the current year; and (ii) Employee’s targeted bonus payment
for the year of termination prorated to the Termination Date.

 

       (c) The Company shall provide to Employee for a period of eighteen (18) months after the Termination Date medical and/or dental coverage under the Company’s medical and dental plans, without any cost to Employee in excess of any employee contribution that would be payable by Employee if Employee remained employed by the Company; provided, however, that if Employee becomes employed with another employer during such
eighteen (18)-month period and is eligible to receive medical and/or dental coverage under another employer-provided plan, the medical and/or dental coverage described herein shall be secondary to those provided under such other plan.  In addition, on the last day of such eighteen (18)-month period, the Company shall pay, or cause to be paid, to Employee an amount in cash equal to the aggregate amount that would be payable by the Company for  such medical and/or dental coverage for six (6) months if Employee remained employed by the Company for such period.

 

       (d) The restrictions applicable to each share of non-vested restricted stock of Brown Shoe held by Employee shall lapse and be exercisable as of the Termination Date.

 

       (e) Each non-vested option to purchase Brown Shoe stock held by Employee shall vest and be exercisable as of the Termination Date.

 

       (f) For purposes of determining Employee’s benefit under the Company’s Supplemental Employment Retirement Plan, an additional two (2) years of Credited Service shall be credited to Employee’s actual or deemed Credited Service.

 

       (g) The Company shall pay the reasonable costs of outplacement services selected by the Company for a reasonable period of time following the Termination Date; provided, however, that no such outplacement services shall be provided after the last day of the second calendar year following the calendar year in which the Termination Date occurs.

 

    4.3 If Employee’s employment is terminated for any reason other than such reasons specified in Sections 4.1 and 4.2, the Company shall pay, or cause to be paid, to Employee within 30 days of the Termination Date (i) the full base salary earned by Employee through, but unpaid at, the Termination Date, plus (ii) credit for any vacation earned by Employee but not taken at the Termination Date, plus (iii) all other amounts owed by the Company to Employee (other than any bonus payment of
any kind) but unpaid as of the Termination Date.

 

    4.4 The benefits set forth in Sections 4.1(c) and 4.2(c) shall run concurrently with any period of continuation coverage to which Employee is entitled under Section 601 of ERISA.  Upon Employee’s re-employment during the period specified in each such Section, to the extent covered by the new employer’s plan, coverage under the Company’s plan shall lapse, subject to any continuation of coverage rights under Section 601 of ERISA.  Employee’s
participation in and/or coverage under all other employee benefit plans, programs or arrangements sponsored or maintained by the Company shall cease effective as of the Termination Date except as otherwise provided in such employee benefit plan, program or arrangement.

 

Section 5. Mitigation or Reduction of Benefits

 

    Employee shall not be required to mitigate the amount of any payment provided for in Section 4 by seeking other employment or otherwise.  Except as otherwise specifically set forth herein, the amount of any payment or benefits provided in Section 4 shall not be reduced by any compensation or benefits or other amounts paid to or earned by Employee as the result of employment by another employer after the Termination Date or otherwise.

 

Section 6. Employee Expenses After Change in Control

 

    If Employee’s employment is terminated by the Company within twenty-four (24) months after a Change in Control and there is a dispute with respect to this Agreement, then all Employee’s costs and expenses (including reasonable legal and accounting fees) incurred by Employee (a) to defend the validity of this Agreement, (b) to contest any termination for Cause, (c) to contest any determinations by the Company concerning the amounts payable by or on behalf of the Company under this Agreement, or (d) to otherwise obtain or enforce any right or benefit provided to Employee by this Agreement, shall be paid by the
Company.  The Company shall make payment of such reimbursements from time to time, but in no event later than the last day of the calendar year following the calendar year in which such expenses are incurred, provided Employee timely submits reasonable documentation of such expenses.  In the event Employee is not the prevailing party in any such contest, Employee shall pay back any reimbursements made by the Company hereunder within 30 days of final disposition of such contest.

 

Section 7. Release

 

    Notwithstanding anything to the contrary stated in this Agreement, no benefits will be paid pursuant to Section 4 except under Section 4.1(a), 4.2(a) or 4.3 prior to execution by Employee of a release of the Company substantially in the form attached as Exhibit A, with such changes as may be made by the Company in its sole discretion in order to comply with and stay current with applicable laws and regulations.  Unless Employee executes such release and returns it to the Company within 45 days of his Termination Date, all benefits except under Sections 4.1(a), 4.2(a)
or 4.3 shall be forfeited.

 

Section 8. Covenant Not to Compete

 

    8.1 During Employee’s employment with Brown Shoe and/or any Business Unit and for a period of two (2) years after the Termination (collectively, the “Restricted Period”), Employee will not, directly or indirectly, on Employee’s own behalf or on behalf of any other Person (whether as owner, partner, consultant, employee or otherwise):

 

       (a) provide any executive, managerial, supervisory, and/or consulting services with respect to the footwear industry and/or the footwear business in the United States for any Competitor;

 

       (b) hold any executive, managerial and/or supervisory position with any Competitor in the United States;

 

       (c) assist any Competitor in competing against Brown Shoe and/or any Business Unit for which Employee performs or performed substantial work and/or has or had access to Confidential Information (each a “Relevant Business Unit”) (i) in the United States and/or (ii) in any other country in which Brown Shoe and/or any Relevant Business Unit is doing business in the one year immediately preceding the Termination
Date (each a “Foreign Country”) if Employee had access to Confidential Information regarding the Company’s business in such Foreign Country;

 

       (d) engage in any research, development and/or planning activities or efforts for a Competitor, whether as an employee, consultant, independent contractor or otherwise, to assist the Competitor in competing (i) in the footwear industry in the United States or (ii) in any Foreign Country if Employee had access to Confidential Information regarding the Company’s business in such Foreign Country;

 

       (e) cause or attempt to cause any Customer to divert, terminate, limit, modify or fail to enter into any existing or potential relationship with Brown Shoe and/or any Relevant Business Unit;

 

       (f) assist any Competitor in connection with any plan, effort, activity or undertaking to cause or attempt to cause any Customer to divert, terminate, limit, modify or fail to enter into any existing or potential relationship with Brown Shoe and/or any Relevant Business Unit;

 

       (g) cause or attempt to cause any footwear supplier or manufacturer of Brown Shoe and/or any Relevant Business Unit to divert, terminate, limit, modify or fail to enter into any existing or potential relationship with Brown Shoe and/or any Relevant Business Unit;

 

       (h) assist any Competitor in connection with any plan, effort, activity or undertaking to cause or attempt to cause any footwear supplier or manufacturer of Brown Shoe and/or any Relevant Business Unit to divert, terminate, limit, modify or fail to enter into any existing or potential relationship with Brown Shoe and/or any Relevant Business Unit; and/or

 

       (i) solicit, entice, employ or seek to employ, in the footwear industry, any executive, managerial and/or supervisory employee of, or any consultant or advisor to, Brown Shoe and/or any Relevant Business Unit.

 

    8.2 Employee recognizes and agrees that the restraints contained in Section 8.1 are reasonable and should be fully enforceable in view of, among other things, the high level positions Employee has had with Brown Shoe and/or any Relevant Business Unit(s), the national and international nature of both the Company’s collective business and competition in the footwear industry, and the legitimate interests of the Company in protecting its confidential, proprietary and trade secret
information (“Confidential Information”) and their respective customer goodwill and relationships.  Employee specifically hereby acknowledges and confirms that Employee is willing and intends to, and will, abide fully by the terms of Section 8.1.  Employee further agrees that the Company would not have adequate protection if Employee were permitted to work for its competitors in violation of the terms of this Agreement since the Company would, among other things, be unable to verify whether (i) its Confidential Information was being disclosed and/or misused, and/or (ii) Employee was involved in diverting or helping to divert the Company’s customers and/or customer goodwill.

 

    8.3 Employee agrees to disclose, during the Restricted Period, the terms of this Section 8 to any potential future employer.

 

Section 9. Confidential Information.

 

    9.1 Employee acknowledges and agrees that during Employee’s employment, Employee has been and/or will be provided and have access to certain Confidential Information of the Company.  Employee agrees to keep secret and confidential, and not to use or disclose to any third-parties, except as directly required for Employee to perform Employee's employment responsibilities for the Company, any of the Company’s Confidential Information.

 

    9.2 Confidential Information includes all confidential and/or trade secret information of the Company (regardless of the form or medium in which it may exist or be stored or preserved) and includes, but is not limited to, all such information containing or reflecting any:

 

       (a) lists or other identification of customers or prospective customers of Brown Shoe and/or any Relevant Business Unit (and/or key individuals employed or engaged by such parties);

 

       (b) lists or other identification of sources or prospective sources of Brown Shoe’s and/or any Relevant Business Unit’s products or components thereof (and/or key individuals employed or engaged by such parties);

 

       (c) compilations, information, designs, drawings, files, formulae, lists, machines, maps, methods, models, notes or other writings, plans, records, regulatory compliance procedures, reports, specialized or technical data, schematics, source code, object code, documentation, and software relating to the development, manufacture, fabrication, assembly, marketing and/or sale of Brown Shoe’s and/or any Relevant Business
Unit’s products;

 

       (d) financial, distribution, sales and marketing information, data, plans, and/or strategies of Brown Shoe and/or any Relevant Business Unit;

 

       (e) equipment, materials, procedures, processes, and techniques used in, or related to, the development, manufacture, assembly, fabrication or other production and quality control of the Brown Shoe’s and/or any Relevant Business Unit’s products and services;

 

       (f) Brown Shoe’s and/or any Relevant Business Unit’s relations and/or dealings with its customers, prospective customers, suppliers and prospective suppliers and the nature and type of products or services rendered to such customers (or proposed to be rendered to prospective customers);

 

       (g) Brown Shoe’s and/or any Relevant Business Unit’s relations with its employees (including, without limitation, salaries, job classifications and skill levels); and

 

       (h) any other information designated by Brown Shoe and/or any Relevant Business Unit to be confidential, secret and/or proprietary (including without limitation, information provided by customers or suppliers of Brown Shoe and/or any Relevant Business Unit).

 

    Notwithstanding the foregoing, the term “Confidential Information” shall not consist of any data or other information which has been made publicly available or otherwise placed in the public domain other than by Employee in violation of this Agreement.

 

    9.3 Employee will not, directly or indirectly, copy, reproduce or otherwise duplicate, record, abstract, summarize or otherwise use for Employee or use for, or disclose to, any party other than Brown Shoe, or any subsidiary or affiliate of Brown Shoe, any Confidential Information, without Brown Shoe’s prior written permission or except as required for the proper performance of Employee’s duties on behalf of the Company.

 

    9.4 Employee understands that Confidential Information may or may not be labeled as “confidential” and will treat all information as confidential unless otherwise informed by Brown Shoe.

 

    9.5 At the termination of Employee’s employment with the Company or at any other time Brown Shoe or any subsidiary or affiliate thereof may request, Employee shall promptly deliver to Brown Shoe all documents and other materials, whether in physical or electronic form (including all copies thereof), containing any Confidential Information.

 

Section 10. Injunctive Relief

 

    In the event of a breach or threatened breach of any of Employee’s duties or obligations under the terms and provisions of Section 8, Section 9, Section 11.2 or Section 11.9, the Company shall be entitled, in addition to any other legal or equitable remedies it may have in connection therewith (including any right to damages that it may suffer), to temporary, preliminary and permanent injunctive relief restraining such breach or threatened breach.  Employee hereby expressly acknowledges that the harm that might result to the Company’s business as a result of noncompliance by Employee with any of the provisions of
Section 8, Section 9, Section 11.2 or Section 11.9 would be largely irreparable.  Employee specifically agrees that if there is a question as to the enforceability of any of the provisions of Section 8, Section 9, Section 11.2 or Section 11.9, Employee will not engage in any conduct inconsistent with or contrary to such Sections until after the question has been resolved by a final judgment of a court of competent jurisdiction.  Employee undertakes and agrees that if Employee breaches or threatens to breach the Agreement, Employee shall be liable for any attorneys’ fees and costs incurred by the Company in enforcing its rights hereunder.

 

Section 11. Miscellaneous

 

    11.1 Notice.  All notices hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered personally or by courier, or (b) when received by facsimile (including electronic mail), receipt confirmed, or (c) on the third business day following the mailing thereof by registered or certified mail, postage prepaid, or (d) on the first business day following the mailing thereof by overnight delivery
service, in each case addressed as set forth below:

 

If to the Company:

 

Brown Shoe Company, Inc.

8300 Maryland Avenue

St. Louis, Missouri  63166-0029

Attention:  General Counsel

 

If to Employee:

 

Russell C. Hammer

4478 Wellington Drive

Long Grove, IL 60047

 

Any party may change the address to which notices are to be addressed by giving the other party written notice in the manner herein set forth.

 

    11.2 Successors; Binding Agreement.

 

       (a) Brown Shoe shall require any successor to all or substantially all of the business and/or assets of the Company (whether such succession is direct or indirect, by purchase, merger, consolidation or otherwise), prior to or upon such succession, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would have been required to perform it if no such succession
had taken place.  To the extent such transaction constitutes a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company under Code Section 409A and the rules and regulations thereunder, failure of Brown Shoe to obtain such agreement upon or prior to the effectiveness of any such succession shall be a material breach of this Agreement and shall entitle Employee to benefits from the Company in the same amounts and on the same terms as Employee would be entitled hereunder if Employee’s employment was terminated without Cause within twenty-four (24) months after a Change of Control.  For purposes of the preceding sentence, the date on which any such succession becomes effective shall be deemed the Termination Date.

 

       (b) Brown Shoe shall also have the right, but not the obligation, to assign this Agreement, without Employee’s consent, to any successor to all or substantially all of the business and/or assets of a Business Unit for which Employee performs substantially all of Employee’s duties (whether such succession is direct or indirect, by purchase, merger, consolidation or otherwise).  In the event, and only
in the event, Brown Shoe elects to assign this Agreement to such successor of a Business Unit, a Change of Control will be deemed to have occurred and Brown Shoe shall require such successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would have been required to perform it if no such succession had taken place.  No Change of Control shall be deemed to have occurred if Brown Shoe does not elect to assign this Agreement to such successor of a Business Unit.

 

       (c) This Agreement is personal to Employee and Employee may not assign or delegate any part of Employee’s rights or duties hereunder to any other person, except that this Agreement shall inure to the benefit of and be enforceable by Employee’s legal representatives, executors, administrators, heirs and beneficiaries.

 

    11.3 Judicial Modification.  If and to the extent that any Section, term and/or provision of this Agreement is determined by a court of competent jurisdiction to be unenforceable under applicable law, then such Section(s), term(s) and/or provision(s) shall not be void but instead shall be modified and, to the maximum extent permissible under applicable law, enforced.

 

    11.4 Headings.  The headings in this Agreement are inserted for convenience of reference only and shall not in any way affect the meaning or interpretation of this Agreement.

 

    11.5 Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

    11.6 Waiver.  Neither any course of dealing nor any failure or neglect of either party hereto in any instance to exercise any right, power or privilege hereunder or under law shall constitute a waiver of such right, power or privilege or of any other right, power or privilege or of the same right, power or privilege in any other instance.  Without limiting the generality of the foregoing, Employee’s
continued employment without objection shall not constitute Employee’s consent to, or a waiver of Employee’s rights with respect to, any circumstances constituting Good Reason.  All waivers by either party hereto must be contained in a written instrument signed by the party to be charged therewith, and, in the case of the Company, by its duly authorized officer.

 

    11.7 Entire Agreement.  This instrument constitutes the entire agreement of the parties in this matter and shall supersede any other agreement between the parties, oral or written, concerning the same subject matter.

 

    11.8 Amendment.  Subject to Section 11.3, no modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless in writing specifically referring hereto, and signed by the parties hereto.

 

    11.9 Governing Law.  In light of Company’s and Employee’s substantial contacts with the State of Missouri, the facts that the Company is headquartered in Missouri and Employee resides in and/or reports to Company management in Missouri, the parties’ interests in ensuring that disputes regarding the interpretation, validity and enforceability of this Agreement are resolved on a uniform basis, and Brown
Shoe’s execution of, and the making of, this Agreement in Missouri, the parties agree that:  (i) any litigation involving any noncompliance with or breach of the Agreement, or regarding the interpretation, validity and/or enforceability of the Agreement, shall be filed and conducted exclusively in the state courts in St. Louis County, Missouri, or the U.S. District Court for the Eastern District of Missouri; and (ii) this Agreement shall be interpreted in accordance with and governed by the laws of the State of Missouri, without regard for any conflict of law principles.  Employee agrees that Employee under no circumstances will, either alone or in conjunction with anyone else, file or pursue any such litigation other than in such state or federal courts in Missouri, and Employee hereby consents and agrees that any such litigation filed in any other court(s)
shall be dismissed and that Employee may be enjoined from filing and/or pursuing any such action.

 

    11.10 Third Party Beneficiaries.  Employee agrees that Brown Shoe’s subsidiaries are third party beneficiaries of this Agreement and hereby consents to the enforcement by any subsidiary of Brown Shoe of the provisions contained herein, including without limitation, the provisions of Section 8 and Section 99.

 

    11.11  409A Interpretation.  With respect to those amounts payable hereunder which are subject to Code Section 409A, this Agreement shall be interpreted in a manner so as to be consistent with such provision and the rules and regulations promulgated thereunder.  The Company may modify the Agreement to the extent necessary to prevent a benefit or payment from being subject to a tax due to noncompliance with Code Section 409A.  Notwithstanding anything herein to the contrary, in the event that Executive is determined to be a specified employee
within the meaning of Code Section 409A, for purposes of any payment on termination of employment hereunder, payment(s) shall be made or begin, as applicable, on the first payroll date which is more than six months following the date of separation from service, to the extent required to avoid any adverse tax consequences under Code Section 409A.

 

    IN WITNESS WHEREOF, Employee and Brown Shoe have executed this Agreement as of the day and year first above written.

 

	
Brown Shoe Company, Inc.

 

	  	
Employee

 

	
By:

	
/s/ Doug Koch

	  	
/s/ Russell C. Hammer

	
Name:

	
Doug Koch

	  	
Russell C. Hammer

	
Title:

	
Senior Vice President and Chief Talent & Strategy Officer

	  	  
	
Date:

	
5-24-12

	  	
Date:

	
5-24-12ex101may2012.htm

 

 

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is effective as of May 23, 2012 by and between CHYRON CORPORATION, a New York corporation (the “Company”), having its principal offices at 5 Hub Drive, Melville, New York 11747, and MICHAEL WELLESLEY-WESLEY (“MWW”) having an address at 420 East 54th Street, Apartment 29C, New York, New York 10022.

 

WITNESSETH:

 

WHEREAS, the Company and MWW are parties to that certain Amended and Restated Employment Agreement, dated September 1, 2010 (the “Prior Agreement”), which sets forth the terms and conditions of MWW’s employment with the Company as the Company’s Chief Executive Officer (“CEO”) and President;

 

WHEREAS, the Prior Agreement expires by its terms on December 31, 2012;

 

WHEREAS, the Company desires to continue to employ MWW as its CEO and President, and MWW desires to continue to hold such positions, subject to and upon the terms and conditions contained herein;

 

WHEREAS the parties desire to enter into this Agreement, which shall supersede and replace the Prior Agreement in its entirety; and

 

WHEREAS, MWW and the Company will enter into a Change-in-Control Agreement simultaneously herewith (the “CIC Agreement”), which, together with the Agreement, shall reflect the employment arrangement between the Company and MWW.

 

NOW, THEREFORE, in consideration of the mutual premises and agreements contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

 

 

  

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1. Nature of Employment:  Term of Employment.

 

(a) The Company hereby agrees to continue to employ MWW and MWW agrees to continue to serve the Company as its CEO and President, upon the terms and conditions contained herein, for a term commencing effective as of May 23, 2012 (the “Commencement Date”) and continuing until and including December 31, 2013, unless terminated earlier pursuant to Section 9 (the “Employment Term”).

 

(b) (i)           The parties agree to begin good faith negotiations of an extension of the Agreement not later than 120 days before the end of the Employment Term.

 

(ii)           In the event that the Company desires not to renew this Agreement or offers to renew the Agreement on terms less favorable to MWW than those contained herein or for a period of less than one year, then MWW shall be entitled to (w) continued payment of his Base Salary (the “Transitional Payment”) for an additional period of six (6) months (i.e., through June 30, 2014) (such period, the “Transition Period”), (x) continued participation in the Company’s health benefits during the Transition Period, (y) payment of any accrued but unpaid Incentive Bonus, if any, payable at the time it would have been paid had the Company renewed the Employment Term, and (z) the benefits set forth in Section 9(h); provided that, during the Transition Period, MWW makes himself available as is reasonably requested by the Company to consult with the Company and assist the Company in an orderly transition to a new CEO and President.

 

(iii)           In the event that the Company offers to extend this Agreement for a period of not less than one year, on terms and conditions that are no less favorable than contained in this Agreement, and MWW declines to accept such extension, then there shall be no severance payments benefits or Transitional Payment due MWW at the end of Employment Term.

 

 

  

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2. Duties and Powers as Employee.

 

(a) During the Employment Term, MWW shall be employed by the Company as CEO and President, which position is, and shall remain at all times during the Employment Term, the senior executive officer position of the Company.  MWW shall devote substantially his full working time to his duties as CEO and President.  In performance of his duties, MWW shall report directly to and be subject to the direction of the Board of Directors of the Company or any Committee thereof.  As CEO and President, MWW shall have all the responsibilities, duties and authority as are generally associated with the position of CEO and President of a public company, including full executive power over, and responsibility for, managing, directing and supervising all aspects of the business of the Company worldwide.  The CEO and President shall also be responsible for developing the business plan and objectives of the Company and managing the execution of such plan.

 

(b) As CEO and President, MWW shall travel in accordance with the reasonable needs of the business, which shall require him to conduct business for the Company primarily in Melville, New York and such other locations as he deems reasonably necessary.  Business Class accommodations shall be permissible for any travel of three (3) hours or longer.

 

(c) It shall not be a violation of this Agreement for MWW to (A) serve on any civic or charitable boards or committees consistent with the Company’s conflicts of interest policies and corporate governance guidelines in effect from time to time, (B) serve as a Director on any other for-profit corporation, provided that the Compensation Committee of the Board of Directors approves such appointment or election prior to MWW accepting such Directorship, (C) deliver lectures and fulfill speaking engagements, or (D) manage his personal investments, so long as such activities do not materially interfere with the performance of MWW’s responsibilities as an executive officer of the Company.  It is expressly understood and agreed 

 

 

 

  

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that to the extent that any such activities have been conducted by MWW and disclosed to the Company in writing prior to the Commencement Date, the continued conduct of such activities subsequent to the Commencement Date shall not thereafter be deemed to interfere with the performance of MWW’s responsibilities to the Company; provided, however, that the failure to disclose any such existing activities shall not create a presumption that such activities are in violation of this Agreement; and provided further, notwithstanding anything to the contrary in any written non-competition or similar provision between MWW and the Company, no activity so disclosed in writing by MWW shall be violative thereof.

 

3. Compensation.

 

(a) During the Employment Term, as compensation for his services hereunder, the Company shall pay MWW a base salary (the “Base Salary”) at the annual rate of $482,850.  The Base Salary shall be payable in equal installments bi-weekly, less required withholdings.

 

(b) In addition to the Base Salary, and subject to the sole discretion of the Compensation Committee of the Board of Directors, MWW may receive, as incentive compensation, an annual bonus (the “Incentive Bonus”) during the Employment Term.  The Company shall pay the Incentive Bonus, if any, to MWW only after the issuance of the results of the annual audit of its books and records by its independent auditor, except that MWW can accelerate the payment of such Incentive Bonus at anytime up to the amount of $40,000, in order to balance the payment of personal income taxes owed the United States and Great Britain by MWW, on the condition that the Compensation Committee resolves that it has been earned and does not constitute a loan, which would violate the provisions of the Sarbanes-Oxley Act, and provided further that the Compensation Committee determines at the time that MWW requests the acceleration of the Incentive Bonus that the Incentive Bonus will be $40,000 or greater.  

 

 

  

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Notwithstanding the foregoing, the Incentive Bonus shall be payable on a date on or before March 15 of the year following the year to which the Incentive Bonus relates.  Except as otherwise provided for in this Agreement, MWW must be employed by the Company on December 31 of the year to which the Incentive Bonus relates in order to be entitled to payment of the Incentive Bonus.

 

4. Expenses; Vacation; Insurance; Other Benefits.

 

(a) MWW shall be entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in the performance of his duties hereunder, upon submission and approval of written statements and bills in accordance with the then regular policies and procedures of the Company for submission of expenses.  During the Employment Term, the Company shall also pay MWW an additional $18,000 a year (without need for written submission and approval of bills or statements) to defray regular commutation costs.  This amount will be payable in equal installments bi-weekly and is subject to withholding and other appropriate payroll taxes.  This amount may be used for, among other things, the cost of an automobile lease and all related costs; no other payments will be made for regular commutation costs.

 

(b) MWW shall be entitled to twenty (20) days paid vacation time per annum or such other period as is in accordance with the regular procedures of the Company governing senior executive officers as determined from time to time by the Company’s Board of Directors.

 

(c) During the Employment Term, MWW shall be entitled to participate in all employee benefit plans and programs of the Company now or hereafter made available to all senior executives of the Company as a group, to the extent eligible, (including, without limitation, each retirement plan, supplemental and excess retirement plans, deferral savings plans, annual and long-term incentive compensation plans, stock option and purchase plans, 

 

 

 

  

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group life insurance, accident and death insurance, medical and dental insurance, sick leave, disability plans and fringe benefit plans) on a basis which is no less favorable than is made available to any other senior executive of the Company, except as otherwise provided herein.

 

(d) For each calendar year during the Employment Term, the Company shall pay for United States income tax advice and preparation of United States income tax forms for MWW up to $5,000 per year.

 

(e) MWW shall continue to be covered by the Company’s directors’ and officers’ liability insurance policy, and errors and omissions coverage, if any, to the extent such coverage is generally provided by the Company to its directors and officers and to the fullest extent permitted by such insurance policies.  Nothing herein is or shall be deemed to be a representation by the Company that it provides, or a promise by the Company to obtain, maintain or continue any liability insurance coverage whatsoever for its executives.  In addition, the Company confirms that the Indemnification Agreement, dated November 19, 1996, between the Company and MWW remains in full force and effect.

 

5. Representations and Warranties of Employee.

 

(a) MWW represents and warrants to the Company that (i) MWW is under no contractual or other obligation which is inconsistent with the execution of this Agreement, the performance of his duties hereunder, or the other rights of the Company hereunder, and (ii) MWW is under no physical or mental disability that would prevent him, with reasonable accommodation, from performing his duties under this Agreement.

 

6. Non-Competition.

 

(a) MWW agrees that he will not:  (i) during the period he is employed by the Company, engage in, or otherwise directly or indirectly be employed by, or act as a consultant to, or be a director, officer, employee, owner, member or partner of, any other business or 

 

 

  

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organization that is or shall then be competing with the Business of the Company (as defined below), and (ii) for the applicable periods of time as described in Section 6(b) below, directly or indirectly, compete with or be engaged in the Business of the Company, or be employed by, or act as consultant to, or be a director, officer, employee, owner, member or partner of, any business or organization which, at the time of such cessation, competes with or is engaged in the Business as the Company, except that in each case the provisions of this Section 6 will not be deemed breached merely because MWW:  (A) owns not more than five percent (5%) of the outstanding common stock of a corporation, if, at the time of its acquisition by MWW, such stock is listed on a national securities exchange, is reported on NASDAQ, or is regularly traded in the over-the-counter market by a member of a national securities exchange; or (B) MWW is a passive investor in any fund in which he has no investment discretion.  This prohibition shall apply to the entire world in recognition of the fact that the Company operates on a multi-national basis.  “Business of the Company” shall mean (w) the design, manufacture, sale, re-sale, distribution or maintenance of character generators (software or hardware or a combination thereof) that are used by the broadcast and cable industries, (x) online graphics creation and work flow solutions or any other product or solution similar to those products or solutions marketed or distributed by the Axis Graphics division, (y) products or solutions similar to ChyTV, and (z) any other products or solutions acquired or developed by the Company while MWW is employed by the Company.  Notwithstanding the foregoing, this restrictive covenant shall not be applicable if MWW is terminated without Cause or he resigns for Good Reason.

 

(b) In addition to the applicable period referred to in Section 6(a)(i) above, the covenant not to compete shall be applicable for the following periods:

 

 

 

  

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(i) In the event the Agreement is not renewed pursuant to Section 1(b)(iii), then the applicable period shall be to and including June 30, 2014.

 

(ii) In the event that the Agreement is not renewed pursuant to Section 1(b)(ii) and MWW is entitled to the Transitional Payment, then the applicable period shall be to and including December 31, 2014.

 

(iii) In the event that MWW ceases to be employed by the Company due to termination for Cause (as defined in Section 9(a)) or due to MWW’s voluntary resignation (which is not for Good Reason (as defined in Section 9(i)), then the applicable period shall be one year from the date of cessation of employment with the Company.

 

(c) It is the intent of the parties to this Agreement that the provisions of this Section 6 shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought.  If any particular provisions or portions of this Section 6 shall be adjudicated to be invalid or unenforceable, such provisions or portion thereof shall be deemed amended to the minimum extent necessary to render such provision or portion valid and enforceable, such amendment to apply only with respect to the operation of such provisions or portions in the particular jurisdiction in which such adjudication is made.

 

(d) The parties acknowledge that damages and remedies at law for any breach of this Section 6 will be inadequate and that the Company shall be entitled to specific performance and other equitable remedies (including injunction) and such other relief as a court or tribunal may deem appropriate in addition to any other remedies the Company may have.  MWW also waives the posting of any bond in connection with the issuance of any injunctive relief.

 

 

 

  

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7. Patents; Copyrights.

 

Any interest in patents, patent applications, inventions, copyrights, developments, and processes (“Such Inventions”) which MWW now or hereafter during the period he is employed by the Company may own or develop relating to the fields in which the Company may then be engaged shall belong to the Company; and forthwith upon request of the Company, MWW shall execute all such assignments and other documents and take all such other action as the Company may reasonably request in order to vest in the Company all his right, title, and interest in and to Such Inventions, free and clear of all liens, charges and encumbrances.  The Company will reimburse MWW for any reasonable fees and expenses (including fees and expenses of counsel) incurred by MWW in connection with executing such assignments and documents and taking any such action at the request of the Company.

 

8. Confidential Information.

 

All confidential information which MWW may now possess or may obtain during the Employment Term relating to the business of the Company shall not be published, disclosed, or made accessible by him to any other person, firm, corporation or entity during the Employment Term or anytime thereafter without the prior written consent of the Company; provided that the foregoing shall not apply to information which is not unique to the Company or which is generally known to the industry or the public, other than as a result of MWW’s breach of this covenant, and shall not preclude MWW from disclosing any such information to the extent such disclosure (i) is required by law, or (ii) would, in the reasonable judgment of MWW, be in the best interest of the Company or is reasonably necessary in order to defend MWW or to enforce MWW’s rights under this Agreement in connection with any action or proceeding to which the Company or its affiliates is a party.  MWW shall return all tangible evidence of such confidential information to the Company prior to or at the termination of his employment.

 

 

  

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9. Termination.

 

(a) Notwithstanding anything herein contained, if MWW is terminated for Cause (as defined below) during the Employment Term, then the Company shall have the right to give notice of termination of MWW’s services hereunder as of a date to be specified in such notice, and this Agreement shall terminate on the date so specified.  Termination for Cause shall mean MWW:  (1) is convicted of a felony crime; (ii) willfully commits any act or willfully omits to take any action in bad faith and to the material detriment of the Company; (iii) commits an act of active and deliberate fraud against the Company; or (iv) materially breaches any term of this Agreement and fails to correct such breach within ten (10) days after written notice of the commission thereof.  In the event that this Agreement is terminated for Cause, then MWW shall be entitled to receive only his Base Salary at the rate provided in Section 3 to the date on which termination shall take effect and any Incentive Bonus accrued, but not yet paid, any commutation payment accrued, but not yet paid, and any unreimbursed expenses (the “Accrued Obligations”).  Thereafter, the Company shall have no further obligation to MWW under this Agreement.

 

(b) In the event that MWW shall be physically or mentally incapacitated or disabled or otherwise unable fully to discharge his duties hereunder for a period of one-hundred and twenty (120) consecutive days during the Employment Term, then this Agreement shall terminate upon an additional thirty (30) days’ written notice to MWW (unless MWW is able to resume his duties during such notice period), and no further compensation shall be payable to MWW, except:  (i) as may otherwise be provided under any disability insurance policy and, (ii) the Accrued Obligations.

 

(c) In the event that MWW shall die during the Employment Term, then this Agreement shall terminate on the date of MWW’s death, and no further compensation shall be 

 

 

  

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payable to MWW, except as may otherwise be provided under any insurance policy or similar instrument and the Accrued Obligations.

 

(d) If, during the Employment Term, MWW’s employment is terminated (x) by the Company other than pursuant to subparagraphs 9(a), 9(b) or 9(c) hereof, or (y) by MWW upon written notice by MWW for resignation with Good Reason (as defined in Section 9(i)), then MWW shall be entitled to receive from the Company:  (i) continued payment of his Base Salary pursuant to the Company’s payroll schedule for the longer of (x) the remainder of the Employment Term following the date of termination and (y) six (6) months; (ii) any unvested equity-based award (the “Equity Award”) issued to MWW pursuant to the Company’s 1999 Incentive Compensation Plan, 2008 Long-Term Incentive Plan, as amended (the “2008 LTIP”) or other such incentive compensation plan adopted by the Company (collectively, the “Plan”), shall immediately vest, except to the extent that the Equity Award vests upon the Company’s achievement of performance goals, then in such case the Equity Award will vest as provided for in the Equity Award agreement notwithstanding that MWW is no longer employed by the Company on such date, and the period to exercise the Equity Award shall be the remaining term of each respective Equity Award agreement regardless of any shorter periods provided for by the Plan as a result of the termination; (iii) an amount, grossed up for federal state and local taxes, in lieu of participation in the Company’s life, long-term disability and health insurance plans for the remainder of the Employment Term from the date of termination (the “Severance Benefits”), as set forth in Section 9(j); and (iv) the Accrued Obligations.  All amounts payable in accordance with this subsection, except for the Severance Benefits, shall be made in accordance with Company policy as if MWW had not been terminated.  The Severance Benefits shall be paid in a lump sum within twenty (20) business days from the date of termination, provided, however, that 

 

 

 

  

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if such period begins in one taxable year of MWW and ends in another, MWW shall not be able to select the taxable year in which such Severance Benefits will be paid.  The Company shall give written notice of termination to MWW which shall state the date the termination is to be effective.  All payments made pursuant to this Section 9(d) shall not be subject to mitigation or any right of set-off.  Notwithstanding the foregoing, if MWW is entitled to any of the payments or benefits set forth in Section 1 of the CIC Agreement, MWW shall not be entitled to receive the payments or benefits set forth in this Section 9(d).

 

(e) If any of the payments or benefits to be provided to MWW pursuant to Section 9(d) of this Agreement constitute “nonqualified deferred compensation” subject to 409A of the U.S. Tax Code (“the Code”) payable in connection with a separation of service under Section 409A(2)(a)(i) of the Code, the following interpretations apply to Section 9(d):  (i) Any termination of MWW’s employment triggering payment of benefits under Section 9(d) must constitute a “separation from service” under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) before distribution of such benefits can commence.  To the extent that the termination of MWW’s employment does not constitute a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. § 1.409A-1(h) (as the result of further services that are reasonably anticipated to be provided by MWW to the Company at the time MWW’s employment terminates under Section 9(d), any benefits payable under Section 9(d) that constitute non-qualified deferred compensation under Section 409A of the Code shall be delayed until after the date of a subsequent event constituting a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h).  For purposes of clarification, this Section 9(e) shall not cause any forfeiture of benefits on MWW’s part, but shall only act as a delay until such time as a “separation from service” occurs; (ii) If MWW is a “specified 

 

 

  

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employee” (as that term is used in Section 409A of the Code and regulations and other guidance issued thereunder) on the date his separation from service becomes effective, any benefits payable under Section 9(d) that constitute non-qualified deferred compensation under Section 409A of the Code shall be delayed until the earlier of (A) business day following the six-month anniversary of the date his separation from service becomes effective, and (B) the date of his death, but only to the extent necessary to avoid such penalties under Section 409A of the Code.  On the earlier of (A) the business day following the six-month anniversary of the date his separation from service becomes effective, and (B) MWW’s death, the Company shall pay MWW in a lump sum the aggregate value of the non-qualified deferred compensation that the Company otherwise would have paid MWW prior to that date under Section 9(d) of this Agreement; (iii) It is intended that each installment of the payments and benefits provided under Section 9(d) of this Agreement shall be treated as a separate “payment” for purposes of Section 409A of the Code; (iv) Neither the Company nor MWW shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A of the Code; and (v) MWW’s termination of employment other than by the Company without Cause or by MWW for Good Reason shall be deemed circumstances of forfeiture pursuant to which MWW is not entitled to the compensation provided under Section 9(d) as a result of a separation from service.  The Company may, however, in its sole discretion, waive the forfeiture provisions and pay MWW the compensation provided under Section 9(d) on any separation from service.

 

(f) Notwithstanding anything to the contrary in this Agreement, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A of the Code pursuant to Treas. Reg. § 1.409A-1(b)(9)(v)(A) or (C) (relating to certain reimbursements and in-

 

 

 

  

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kind benefits) shall be paid or provided to MWW only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar year following the calendar year in which MWW’s separation of service occurs; and provided further that such expenses are reimbursed no later than the last day of the third calendar year following the calendar year in which MWW’s separation from service occurs.  To the extent any indemnification payment, expense reimbursement, or the provision of any in-kind benefit is determined to be subject to Section 409A (and not exempt pursuant to the prior sentence or otherwise), the amount of any such indemnification payment or expense eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the indemnification payment, provision of in-kind benefits or expenses eligible for reimbursement in any other calendar year (except for any life-time or other aggregate limitation applicable to medical expenses), and in no event shall any indemnification payment or expenses be reimbursed after the last day of the calendar year following the calendar year in which MWW incurred such indemnification payment or expenses, and in no event shall any right to indemnification payment or reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

 

(g) If the Company does not extend this Agreement for a period of at least one year on terms and conditions that are no less favorable than contained in this Agreement, then all the vested options held by MWW shall have an exercise period equal to the remaining term of each respective Equity Award agreement underlying such option regardless of any shorter periods provided for by the Plan or in the Equity Award agreement as a result of the termination.

 

(h) Performance Based Cash and Equity Awards

 

 

 

  

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(i) If (A) the Company does not extend this Agreement for an additional one (1) year period on the same or better terms as contained in this Agreement on or prior to the end of the Employment Term, and (B) the Company achieves the Performance Conditions (as that term is defined in the Restricted Stock Unit Agreement between the Company and MWW dated May 26, 2010 (the “RSU Award Agreement”), then (1) the Units (as that term is defined in the RSU Award Agreement) issued to MWW shall vest pursuant to the terms of the RSU Award Agreement, notwithstanding that MWW may not be employed by the Company at such time; and (2) MWW shall be entitled to receive any additional performance based award under the terms of the 2008 LTIP, whether in the form of cash or equity, that is based on the Company’s achievement of the Performance Conditions without the requirement that MWW be employed on the date that such performance based award is granted, provided that the Performance Conditions relates to the period in which MWW was employed by the Company.

 

(ii) If the Company does extend this Agreement for an additional one (1) year period on the same or better terms as contained in this Agreement on or prior to the end of the Employment Term, and MWW declines to accept the extension, then the Units will cease to vest at the end of the Employment Term, and MWW shall not be entitled to receive any further performance based awards under the 2008 LTIP.

 

(i) Resignation with Good Reason means (i) a reduction in MWW’s Base Salary or the cap, if any, on MWW’s incentive pay, or (ii) the assignment to MWW of any duties inconsistent in any material respect with MWW’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities which result in a material diminution in such position, authority, duties or responsibilities.  MWW must provide notice to the 

 

 

  

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Company of the existence of any of the conditions described in clauses (i) or (ii) above within a period of 90 days of the initial existence of such condition and the Company shall have a period of 30 days following receipt of such notice during which it may remedy such condition.  In the event of MWW’s failure to deliver timely notice as set forth herein or in the event of the Company’s timely remedy of any condition described in clauses (i) or (ii) above, MWW shall not be entitled to a resignation with Good Reason.

 

(j) Recognizing that such amount is subject to income and other taxes, the Severance Benefits payment shall include an amount equal to the amount of federal, state, and local income taxes incurred as a result of the Severance Benefits payment or any additional tax gross up payment on such payment.  The Severance Benefits payment shall be equal to the sum of the Health Care Payment, the Life Insurance Payment and the Disability Insurance Payment, all as described in Sections 9(k) through 9(m) below, plus the foregoing tax gross up.

 

(k) The “Health Care Payment” is an amount equal to the monthly premium amount charged by the Company for COBRA continuation coverage under the health care option in which you are enrolled at the time of MWW’s termination times the number of months remaining in the Employment Term at the time of MWW’s termination.  To receive coverage under the Company’s health insurance plans, MWW must elect to receive COBRA coverage and remit the appropriate payment to the Company as per the policy of the Company,

 

(l) The Company’s group term life insurance policy provides $500,000 of coverage, and upon termination, offers MWW the opportunity to convert Whole Life (subject to acceptance by the insurer).  The “Life Insurance Payment” is an amount equal to the number of months remaining in the Employment Term at the time of MWW’s termination times the monthly premium for one of the following, as MWW elects:  (i) a Whole Life conversion policy 

 

 

  

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through the Company’s group life insurer (subject to acceptance by the insurer); (ii) an existing life insurance policy or policies that MWW may currently have in place; or (iii) a new term life insurance policy.  The Company will pay only that pro-rated portion of the premium that represents coverage equal to your coverage under the group life insurance plan as of the date of this Agreement, that is, $500,000.

 

(m) The Company’s long-term disability insurance plan provides coverage of 60% of monthly earnings (but not more than $10,000, which amount may be reduced by deductible sources of income and disability earnings) after a 26 week elimination (waiting) period, and the insurer offers a portable policy after termination.  The “Disability Insurance Payment” is an amount equal to the number of months remaining in the Employment Term at the time of MWW’s termination times the monthly premium for one of the following, as MWW elects:  (i) a portable long-term disability policy through the Company’s insurer (subject to acceptance by the insurer), (ii) an existing long-Win’ disability insurance policy or policies that MWW may currently have in place, or (iii) a new personal long-term disability insurance policy obtained through other than the Company’s insurance policy.  The Company will pay only that pro-rated portion of the premium that represents coverage equal to MWW’ s coverage under the group long-term disability insurance plan as of the date of this Agreement

 

10. Survival.

 

The covenants, agreements, representations and warranties set forth in Sections 5, 6, 7 and 8 of this Agreement shall survive MWW’s termination of employment, irrespective of any investigation made by or on behalf of any party.

 

11. Modification.

 

This Agreement and the CIC Agreement set forth the entire understanding of the parties with respect to the subject matter hereof, supersede all existing agreements between them 

 

 

 

  

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concerning such subject matter and, except for the CIC Agreement, may be modified only by a written instrument duly executed by each party.

 

12. Notices.

 

Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be delivered in person, by telecopy with electronic confirmation of delivery or by delivery to an internationally recognized carrier for overnight delivery to the party to whom it is to be given at the address of such party as set forth in the preamble to this Agreement (or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 12).  In the case of a notice to the Company, a copy of such notice (which copy shall not constitute notice) shall be delivered to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.  Chrysler Center, 666 Third Avenue, New York, New York 10017, Attn:  Daniel L DeWolf, Esq.  In the case of a notice to MWW, a copy of such notice (which copy shall not constitute notice) shall be delivered to Greenberg Traurig LLP, 200 Park Avenue, New York, New York 10166, Attn:  Ronald D. Lefton, Esq.  Any notice or other communication given by overnight delivery shall be deemed given at the time of delivery to the carrier, except for a notice changing a party’s address which shall be deemed given at the time of receipt thereof Any notice given by telecopy shall be deemed given at the time the notice or other communication is delivered with electronic confirmation of delivery.

 

13. Waiver.

 

Any waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision of this Agreement.  The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right 

 

 

 

  

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thereafter to insist upon strict adherence to that term or any other term of this Agreement.  Any waiver must be in writing.

 

14. Binding Effect.

 

MWW’s rights and obligations under this Agreement shall not be transferable by assignment or otherwise, such rights shall not be subject to encumbrance or the claims of MWW’s creditors, and any attempt to do any of the foregoing shall be void.  The provisions of this Agreement shall be binding upon and inure to the benefit of MWW and his heirs and personal representatives, and shall be binding upon and inure to the benefit of the Company and its successors and assigns.

 

15. Headings.

 

The headings in this Agreement are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.

 

16. Counterparts; Governing Law.

 

This Agreement may be executed in any number of counterparts (and by facsimile), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  It shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to the rules governing the conflicts of laws.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above.

 

	  	
CHYRON CORPORATION

	  	
By:

	
/s/ Roger L. Ogden

	  	  	
Name:

	
Roger L. Ogden

	  	  	
Title:

	
Chairman of the Board of Directors

	  	  	  	  
	  	  	
MICHAEL WELLESLEY-WESLEY

	  	  	
/s/ Michael Wellesley-Wesley

19

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00204-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00204-of-00352.parquet"}]]