Exhibit 10(x)
DEFERRED COMPENSATION AGREEMENT
This AGREEMENT, made as of the 21st day of April, 1994,
between WOLVERINE WORLD WIDE, INC. (hereinafter called the
"Company"), and Charles F. Morgo (hereinafter called the
"Employee");
W I T N E S S E T H :
WHEREAS, Employee is employed by the Company in a
position of trust and confidence resulting in the acquisition of
peculiar and confidential knowledge of the Company's business
such as trade secrets, operational methods, the names of its
customers and suppliers, and other equally important and
confidential information, which both parties acknowledge to be of
present and future business and financial importance to the
Company and which should be prevented from becoming the
information of or subject to use by competitive interests; and
WHEREAS, the Company is desirous of instituting a
security program to assist in providing Employee with family
benefits in the event of his premature death and a program for
continuing compensation on a deferred basis and as a supplemental
pension for Employee after his retirement as an inducement for
Employee to remain with the Company and devote his highest skill
and energy to the discharge of his employment duties, but neither
party wishes to be committed by this Agreement to an employment
relationship for any fixed interval;
NOW, THEREFORE, the parties hereto, each in
consideration of the promises of the other hereinafter contained,
agree as follows:
1. Confidentiality and Relationship.
(a) Employee agrees to refrain from divulging any
information of a confidential nature including, but not
restricted to, trade secrets, operational methods, the names of
the Company's customers and suppliers and the relations of the
Company with such customers and suppliers, or other confidential
information; and to refrain from using or permitting the use of
such information or confidences by any interests competitive with
the Company, irrespective of whether or not Employee is then
employed by the Company, and to refrain from inducing, and from
causing inducements to be made to, the Company's employees to
terminate employment with the Company or undertake employment
with its competitors. The obligations herein assumed by Employee
shall endure whether or not the remaining promises by either
party hereunder remain to be performed or shall be only partially
performed.
(b) This Agreement does not constitute a contract on the
part of the Company to employ Employee until age 65 or to
continue his employment for any given period of time, either
fixed or contingent. Moreover, Employee does not by this writing
agree to continue in the employment of the Company for any
specified interval of time. The employment relationship,
therefore, shall continue for so long as, but only for so long
as, such employment is mutually satisfactory to both parties.
The Company does not promise that Employee's employment will be
continued for such interval as to enable Employee to obtain all
or any part of the benefits under this Agreement.
2. Payments Upon and During Retirement. If at the
Employee's retirement he shall have faithfully performed all
covenants to be performed by him, including those specified in
the Employment Agreement of even date herewith between the
Company and the Employee ("Employment Agreement"), upon the
retirement of the Employee from the employ of the Company on
January 1, 1997 in accordance with the terms of the Employment
Agreement, the Company shall pay to him from its general assets a
deferred compensation retirement payment at the rate of Fifty
Thousand Dollars ($50,000.00) per annum, in substantially equal
consecutive monthly installments commencing on the date the
Employee attains the age of 60 years (or on such later date as
Employee retires), and on the same day of each month thereafter
for 180 months. If after retirement under this paragraph the
Employee shall die prior to the payment of the last monthly
installment as provided above, the Company shall continue to make
payments of the remaining monthly installments as they become
due, pursuant to the provisions of Paragraph 4 hereof.
3. Death or Disability Before Retirement. If the Employee
shall die or become disabled while in the employ of the Company
prior to his retirement and he shall have faithfully performed
all covenants to be performed by him, including those specified
in the Employment Agreement, the Company shall pay from its
general assets, to the beneficiary identified pursuant to the
provisions of Paragraph 4 hereof, at the rate per annum of Fifty
Thousand Dollars ($50,000.00) in substantially equal consecutive
monthly installments for 180 months, the first installment being
due and payable on the 10th day after death or disability and
subsequent installments being payable on the same day of each
month thereafter. If the conditions for such payments are
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satisfied, the initial payments aggregating Five Thousand Dollars
($5,000) are intended to qualify for exclusion from gross income
of the beneficiaries or the estate of the Employee under Section
101(b) of the Internal Revenue Code, as presently or hereafter
amended, or as the benefits of such section of the Code
(irrespective of subsequent designation) may be substantially
afforded.
4. Death After Retirement or Cessation of Employment. If
the Employee shall die after becoming eligible for a benefit
under Paragraph 2, and after retirement or other cessation of
employment, but prior to receiving the last monthly installment
as provided under Paragraph 2 hereof, the remaining monthly
installments payable under Paragraph 2 hereof shall be paid as
they become due to the person or persons whom the Employee shall
have last designated in a writing filed with the Treasurer of the
Company and in form accepted by such Treasurer. The Employee's
Last Will shall not be sufficient to designate a beneficiary
hereunder. The Employee shall have the right to change or amend
such designations from time to time by a writing similarly filed
and in form accepted by such Treasurer. If the Employee shall
fail to make such designations prior to the time a monthly
installment shall become so payable, such installment and all
remaining monthly installments shall be paid, as they become due,
to the duly appointed executor, administrator, or other personal
representative of the estate of the Employee.
5. Limitations on Death Payments. Notwithstanding
anything herein to the contrary, if within 1 year of the date
Employee first entered into a Deferred Compensation Agreement
with the Company, the Employee should die by suicide, whether
while sane or insane, no payments shall be thereafter made by the
Company. In addition, should the Company in its discretion
determine to carry insurance on the Employee's life to fund in
whole or in part its obligations hereunder, and if the Employee
dies or becomes totally disabled within 2 years of the date
Employee first entered into a Deferred Compensation Agreement
with the Company, under circumstances resulting in a successful
disclaimer of liability by the insurance company due to
statements made, or omissions by, the Employee at the time of
obtaining such insurance, then no payments will be due hereunder
from the Company and its obligations hereunder shall cease.
6. Accelerated Vesting after Change in Control.
(a) Subject to the limitations of Paragraph 6(c) hereof,
but notwithstanding any other provision of this Agreement,
including, without limitation, the age and service vesting
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requirements of Paragraph 2 hereof, the Employee's right to the
deferred compensation retirement payment described in Paragraph 2
(without any reduction for early payment) shall become 100
percent vested upon the termination of the Employee's employment
under the circumstances described in Paragraph 7 hereof within
the 5 years immediately following the occurrence of any Change in
Control (as defined in Paragraph 6(b) hereof). Upon any such
qualifying termination of employment, the Company shall pay to
the Employee, within 30 days of such termination, the sum of (i)
the present value of the benefit to which the Employee would be
entitled under Paragraph 2 hereof if the Employee retired at age
65 (without any reduction described therein for early payment);
plus (ii) an amount equal to 25 percent of such present value.
Payment shall be made, to the extent possible, by distribution of
any insurance policy or policies purchased by the Company in
connection with this Agreement, valued for distribution purposes
at their cash surrender value. Any remaining balance of the
distribution sum shall be paid in cash.
(b) For purposes of this Agreement, a "Change in Control"
shall mean a Change in Control of the Company of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"); provided that,
without limitation, such a Change in Control shall be deemed to
have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes
the beneficial owner (as defined in Rule 13(d)-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing 25 percent or more of the combined voting
power of the Company's then-outstanding securities; or (ii)
during any period of 2 consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the
Company (the "Board") cease for any reason to constitute at least
a majority thereof unless the election, or the nomination for
election by the Company's shareholders, of each new director was
approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the
period.
(c) In the event that any payment or benefit received
or to be received by Employee in connection with the termination
of his employment (whether payable pursuant to the terms of this
Agreement or any other plan, arrangement, or agreement with the
Company or any corporation ("Affiliate") affiliated with the
Company within the meaning of Section 1504 of the Internal
Revenue Code of 1986, as amended from time to time (the "Code")
(collectively with the payments under this Paragraph 6, "Total
Payments") would not be deductible (in whole or in part) by the
Company or an Affiliate as a result of Section 280G of the Code
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(after taking into account any reduction of any portion of the
Total Payments pursuant to the terms of the appropriate governing
instrument), the payments to be made under this Paragraph 6 shall
be reduced until no portion of the Total Payments is not
deductible as a result of Section 280G of the Code, or the
payments under this Paragraph 6 are reduced to zero. For
purposes of this limitation, (i) no portion of the Total Payments
the receipt or enjoyment of which Employee shall have effectively
waived in writing prior to the date of payment of the payments to
be made under this Paragraph 6 shall be taken into account; (ii)
no portion of the Total Payments shall be taken into account
which in the opinion of tax counsel selected by the Company's
independent auditors and acceptable to Employee does not
constitute a "parachute payment" within the meaning of Section
280G(b)(2) of the Code; (iii) the payments to be made under this
Paragraph 6 shall be reduced only to the extent necessary so that
the Total Payments (other than those referred to in clause (ii))
in their entirety constitute reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4) of the
Code, in the opinion of the tax counsel referred to in clause
(ii); and (iv) the value of any noncash benefit or any deferred
cash payment included in the total Payments shall be determined
by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
7. Qualification for Accelerated Vesting. If a Change in
Control of the Company shall have occurred, the Employee shall be
entitled to the accelerated vesting and benefits provided in
Paragraph 6 hereof upon the subsequent termination of the
Employee's employment within the 5 years immediately following
such Change in Control, unless such termination is (a) because of
the Employee's death or Retirement; (b) by the Company for Cause
or Disability; or (c) by the Employee other than for Good Reason
(as such capitalized terms are defined in this Paragraph 6).
(a) Disability; Retirement.
(i) The Employee's employment shall be deemed to have been
terminated by the Company due to Disability if, as a result of
the Employee's incapacity due to physical or mental illness, the
Employee shall have been absent from the Employee's duties with
the Company on a full-time basis for 6 consecutive months, and
within 30 days after written notice of termination in given, the
Employee shall not have returned to the full-time performance of
the Employee's duties.
(ii) Termination by the Company or the Employee of the
Employee's employment based on "Retirement" shall mean
termination in accordance with any retirement arrangement
established with the Employee's consent with respect to the
Employee.
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(b) Cause. For the purposes of this Agreement, the Company
shall have "Cause" to terminate the Employee's employment
hereunder upon (i) the willful and continued failure by the
Employee to substantially perform the Employee's duties with the
Company (other than any such failure resulting from the
Employee's incapacity due to physical or mental illness, or any
such actual or anticipated failure resulting from the Employee's
termination for Good Reason), after a demand for substantial
performance is delivered to the Employee by the Board which
specifically identifies the manner in which the Board believes
that the Employee has not substantially performed the Employee's
duties; or (ii) the willful engaging by the Employee in gross
misconduct materially and demonstrably injurious to the Company.
For purposes of this paragraph, no act, or failure to act, on the
Employee's part shall be considered "willful" unless done, or
omitted to be done, by the Employee not in good faith and without
reasonable belief that the Employee's action or omission was in
the best interest of the Company. Notwithstanding the foregoing,
the Employee shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to the
Employee 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 the
purpose (after reasonable notice to the Employee and an
opportunity for the Employee, together with the Employee's
counsel, to be heard before the Board), finding that, in the
good-faith opinion of the Board, the Employee was guilty of
conduct set forth above in clause (i) or (ii) of the first
sentence of this paragraph and specifying the particulars thereof
in detail.
(c) Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of any of the following within
the 5-year period immediately after a Change in Control without
the Employee's express written consent:
(i) the assignment to the Employee of any duties
inconsistent with the Employee's status as a senior executive
officer of the Company or a substantial alteration in the nature
or status of the Employee's responsibilities from those in effect
immediately prior to a Change in Control of the Company;
(ii) a reduction by the Company in the Employee's annual
base salary as in effect on the date hereof or as the same may be
increased from time to time; or the failure by the Company to
increase such base salary during the calendar year in which a
Change in Control has occurred and each calendar year thereafter
by an amount which at least equals, on a percentage basis, the
mean average percentage increase in base salary for all officers
of the Company during the 2 full calendar years immediately
preceding a Change in Control of the Company (the "Annual Salary
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Adjustment"), except for across-the-board salary reductions,
freezes, or reduced increases similarly affecting all executives
of any person in control of the Company;
(iii) a failure by the Company to continue the Company's
Executive Incentive Bonus Plan as the same may be modified from
time to time but substantially in the form presently in effect
(the "Plan"), or a failure by the Company to continue the
Employee as a participant in the Plan on at least the present
basis or to pay the Employee any annual installment of a previous
award under the Plan or any Deferred Distribution (as defined in
the Plan) awarded under the Plan;
(iv) the relocation of the Company's principal executive
offices to a location outside Rockford, Michigan, or the
Company's requiring the Employee to be based anywhere other than
the Employee's current location without the Employee's consent
except for required travel on the Company's business to an extent
substantially consistent with the Employee's present business
travel obligations, or, in the event the Employee consents to any
such relocation of the Company's principal executive offices, the
failure by the Company to pay (or reimburse the Employee for) all
reasonable moving expenses incurred by the Employee relating to a
change of the Employee's principal residence in connection with
such relocation and to indemnify the Employee against any loss
(defined as the difference between the actual sale price of such
residence and the higher of (A) the Employee's aggregate
investment in such residence or (B) the fair market value of such
residence as determined by a real estate appraiser designated by
the Employee and reasonably satisfactory to the Company) realized
in the sale of the Employee's principal residence in connection
with any such change of residence;
(v) the failure by the Company to continue to provide the
Employee with benefits substantially similar to those enjoyed by
the Employee under any benefit or compensation plan (including
but not limited to the Company's 1988 Stock Option Plan and
Deferred Compensation Plan), pension, life insurance, medical,
health, and accident or disability plan in which the Employee is
participating at the time of a Change in Control of the Company,
the taking of any action by the Company which would adversely
affect the Employee's participation in or materially reduce the
Employee's benefits under any of such plans or deprive the
Employee of any material fringe benefit enjoyed by the Employee
at the time of the Change in Control of the Company, or the
failure by the Company to provide the Employee with the number of
paid vacation days to which the Employee is then entitled on the
basis of years of service with the Company in accordance with the
Company's normal vacation policy in effect on the date hereof; or
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(vi) any purported termination of the Employee's employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of subparagraph (d) below (and, if
applicable, subparagraph (b) above); and for the purposes of this
Agreement, no such purported termination shall be effective. The
Employee's right to terminate the Employee's employment pursuant
to this subparagraph (c) shall not be affected by the Employee's
incapacity due to physical or mental illness.
(d) Notice of Termination. Any purported termination by
the Company or by the Employee pursuant to subparagraph (c) above
shall be communicated by written Notice of Termination to the
other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee's
employment under the provision so indicated.
(e) Date of Termination. "Date of Termination" shall mean
(i) if this Agreement is terminated for Disability, 30 days after
Notice of Termination is given (provided that the Employee shall
not have returned to the performance of the Employee's duties on
a full-time basis during such 30-day period); and (ii) if the
Employee's employment is terminated pursuant to subparagraph (b)
or (c) above, or for any other reason, the date specified in the
Notice of Termination (which in the case of a termination
pursuant to subparagraph (b) above shall not be more than 30
days, and in the case of a termination pursuant to subparagraph
(c) above shall not be more than 60 days, from the date such
Notice of Termination is given); provided that if within 30 days
after any Notice of Termination is given the party receiving such
Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall
be the date on which the dispute is finally determined, either by
mutual written agreement of the parties, by a binding arbitration
award, or by a final judgment, order, or decree of a court of
competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected); and, provided
further, that the Date of Termination shall be extended by a
notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such
dispute with reasonable diligence.
8. Nonassignability. Except as permitted by this
Agreement, no rights of any kind under this Agreement shall be
transferable or assignable by the Employee, any designated
beneficiary, or any other person, or be subject to alienation,
encumbrance, garnishment, attachment, execution, or levy of any
kind, voluntary or involuntary.
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9. Interpretation by Board of Directors. All questions of
interpretation, construction, or application arising under this
Agreement (except any such questions arising after a Change in
Control, as defined in Paragraph 6(b) hereof) shall be decided by
the Board of Directors of the Company, whose decision shall be
final and conclusive upon all persons.
10. Unsecured Obligation. The undertakings of the Company
hereunder constitute merely the unsecured promise of the Company
to make the payments as provided for herein from its general
assets. Nothing contained in this Agreement shall be construed
to require the Company to hold any property in trust for the
Employee, any designated beneficiary, or any other person, and
neither the Employee nor any designated beneficiary, nor any
other person shall have by reason of this Agreement, any rights,
title, or interest of any kind in or to any property or insurance
which the Company may elect in its exclusive discretion to carry
(or to discontinue from carrying) from time to time.
Notwithstanding the foregoing, if the Company shall, in its sole
discretion, establish a benefit trust which is subject to the
claims of existing and future general creditors of the Company,
payments of the Company's obligations hereunder may be made from
such trust, but the Company shall remain liable to the extent
payments are not so made.
11. Noncompetition. Notwithstanding any other provision of
this Agreement Employee shall not be entitled to and the Company
shall not be obligated for any payments hereunder and his
beneficiary or estate shall not be entitled to any death benefits
hereunder if at any time subsequent to the execution of this
Agreement and prior to the due date of any such installment, the
Employee has acquired 5 percent or more of the voting stock of or
interest in a competing business or has been employed as a
director, officer, employee, consultant, adviser, partner, or
owner of a competing business. A competing business shall be any
business which is substantially similar to the whole or any part
of the business conducted by the Company.
12. Discharge for Misconduct. Prior to any Change in
Control (as defined in Paragraph 6(b) hereof) but notwithstanding
any other provision of this Agreement, the Employee shall not be
entitled to any payments under this Agreement if he shall at any
time be discharged by the Company for dishonesty or commission of
a misdemeanor or felony injurious to the Company, or for any
action inimical and injurious to the interests of the Company.
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13. Amendment. This Agreement may be amended from time to
time by a written document signed by both parties hereto.
14. Termination of Agreement by Company. This Agreement
may be terminated by the Company at any time prior to the
Employee's retirement or death, provided the Company
simultaneously terminates all similar supplemental deferred
compensation agreements with other employees similarly situated.
In the event this Agreement is so terminated, neither the
Employee nor any designated beneficiary or any other person shall
have any rights, interest, or cause of action hereunder unless:
(i) at the date of termination the Employee shall have met the
age and service requirements of Paragraph 2 for eligibility to
receive deferred compensation retirement payments, in which event
the Company's obligations hereunder shall continue in accordance
with the terms hereof to the extent of the Employee's accrued
vested benefit as of the date the Agreement is terminated; or
(ii) at the date of termination the Employee (or his beneficiary)
has already begun receiving benefits under Paragraph 2, 3, or 4,
in which case such benefits will continue based upon Employee's
age and service (where applicable) as of the date the Agreement
is terminated. Any such termination shall be upon at least 90
days' notice to the Employee. Notwithstanding the foregoing,
after the occurrence of any Change in Control (as defined in
Paragraph 6(b) hereof) this Agreement cannot be amended or
terminated by the Company without the written consent of the
Employee.
15. Subsidiary or Related Companies. For purposes of this
Deferred Compensation Agreement, the term "Company" shall include
and encompass any subsidiary or related company (i.e., in which
Wolverine owns or controls 50 percent or more of the outstanding
capital stock or equity interest) of Wolverine World Wide, Inc.
16. Benefit Inures to Heirs, Successors, or Assigns.
Except as above otherwise expressly stated, this Agreement shall
be binding upon the parties hereto, their heirs, executors,
administrators, successors, or assigns.
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IN WITNESS WHEREOF, the parties hereto have hereunto
set their hands and seals on the date hereinabove first
mentioned.
WOLVERINE WORLD WIDE, INC.
By s/ Geoffrey B. Bloom
Its Chief Executive Officer
"Company"
s/ Charles F. Morgo
Charles F. Morgo
"Employee"
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