1
EXHIBIT 10.2
AMENDING AGREEMENT
THIS AMENDING AGREEMENT made February 9, 2000, between VENATOR GROUP,
INC., a New York corporation having its principal office at 233 Broadway, New
York, New York 10279 (the "Company") and Matthew D. Serra, residing at 8 Glenby
Lane, Brookville, New York 11545 (the "Executive").
WHEREAS, the Company and the Executive are parties to an Employment
Agreement dated September 8, 1998, a copy of which is annexed hereto as
Attachment A (the "Employment Agreement"); and
WHEREAS, the Company and the Executive are parties to a Restricted
Stock Award Agreement dated September 21, 1998, a copy of which is annexed
hereto as Attachment B (the "1998 Restricted Stock Agreement") and a Restricted
Stock Award Agreement dated November 10, 1999, a copy of which is annexed hereto
as Attachment C (the "1999 Restricted Stock Agreement");
WHEREAS, the Company desires Executive to serve as its Chief Operating
Officer and Executive is willing to serve in such capacity; and
WHEREAS, in connection with this change in the title and
responsibilities of the Executive, the Company and Executive desire to amend the
Employment Agreement, the 1998 Restricted Stock Agreement, and the 1999
Restricted Stock Agreement, as hereinafter provided;
NOW, THEREFORE, in consideration of these premises and of the mutual
covenants and agreements herein contained, the Company and the Executive hereby
agree as follows:
1. Amendment of Employment Agreement. The Employment Agreement is
hereby amended, effective the date hereof, as follows:
2
(a) Section 1 of the Employment Agreement is amended to read in its entirety
as follows:
"Employment and Term. The Company hereby agrees to employ Executive, and
Executive hereby agrees to serve, as its Chief Operating Officer, subject to
the terms and conditions set forth herein, for a period commencing February
9, 2000 (the "Renewal Date") and ending February 2, 2002 (the "Employment
Period"), unless otherwise provided herein."
(b) Section 2 of the Employment Agreement is amended to read in its entirety
as follows:
"Executive shall serve as the Chief Operating Officer of the Company and
shall report directly to the Chief Executive Officer of the Company.
Executive shall have such responsibilities, duties, and authority as are
appropriate to such position, and as may be assigned to him from time to
time by the Chief Executive Officer of the Company. Executive shall devote
substantially all of his working time and efforts to the business and
affairs of the Company and its respective subsidiaries and affiliates."
(c) The first sentence of Section 3 of the Employment Agreement is amended
to read in its entirety as follows:
"In connection with his employment by the Company, Executive shall be based
at the principal executive offices of the Company in the New York
metropolitan area, or such other place in the United States to which the
Company may hereafter relocate its principal executive offices, it being
understood by the parties that the Company is in the process of relocating
its principal executive offices and that, until such relocation is
completed, Executive shall remain based in the executive offices of the Foot
Locker Worldwide division of the Company."
(d) Section 4(a) of the Employment Agreement is amended to read in its
entirety as follows:
"During the period from the Renewal Date to January 31, 2001, the Company
shall pay Executive a base salary at the rate of $850,000 per year, and
during the period from February 1, 2001 to February 2, 2002, the Company
shall pay Executive a base salary at the rate of $900,000 per year, to be
paid in substantially equal monthly installments in accordance with the
normal payroll practices of the Company (the "Base Salary")."
(e) The third sentence of Section 4(b) of the Employment Agreement is
amended to read in its entirety as follows:
"During each year of the Employment Period, the annual bonus payable to
Executive at target shall be 75 percent of Executive's then-current Base
Salary."
2
3
(f) The third, fourth, and fifth sentences of Section 4(f) of the Employment
Agreement ("Executive will not be eligible . . .shall be deemed to have been
October 1, 1998") are deleted and the following is added in their place:
"Effective on the Renewal Date, Executive shall be granted stock options
under, and pursuant to the provisions of, the 1995 Stock Option and Award
Plan or the 1998 Plan (the applicable plan being hereinafter referred to as
the "Option Plan") to purchase 250,000 shares of Common Stock of the Company
at fair market value on the date of grant, as defined in the Option Plan.
Such stock option shall vest on February 1, 2002, and shall be subject to
the provisions of the Option Plan and the Stock Option Award Certificate.
Executive shall not be eligible to receive additional stock option grants
during the Employment Period."
(g) The following is added to Section 4(g) of the Employment Agreement:
"Within 30 days of the Renewal Date, Executive shall be granted 100,000
shares of restricted stock under, and pursuant to the provisions of, the
Option Plan and the terms of a Restricted Stock Agreement essentially in the
form of Attachment D hereto."
(h) Section 4(j), reading as follows, is added to the Employment Agreement:
(j) In the event the Company does not offer to renew the employment of the
Executive beyond February 2, 2002, for reasons other than Cause, upon
essentially the same terms and conditions provided for herein (other than
the compensation provided for in Sections 4(f), 4(g), 4(h), 4(i), and 4(j),
and the provisions of Section 9), then the Company shall pay Executive,
within 30 days of the date on which his employment with the Company
terminates, the amount of $900,000."
(i) Clauses (A) and (B) in clause (i) of the definition of "Competition"
contained in the fourth sentence of Section 8(b) of the Employment Agreement
are amended to read as follows:
". . . (A) a business in competition with the retail, catalog, or on-line
sale of athletic footwear, athletic apparel, and sporting goods conducted by
the Company or any of its subsidiaries or affiliates (the "Athletic
Business") or (B) a business that in the prior fiscal year supplied product
to the Company or any of its subsidiaries or affiliates for the Athletic
Business having a value of $20 million or more at cost to the Company or any
of its subsidiaries or affiliates; . . ."
2. Amendment of Restricted Stock Agreements.
(a) Section 3.3 of the 1998 Restricted Stock Agreement is hereby amended,
effective on the date hereof, to read in its entirety as follows:
"Vesting. The Restricted Stock shall become vested and shall cease to be
Restricted Stock (but still subject to the other terms of the Plan and this
Agreement) as follows if the Executive has been continuously employed by the
Company or its subsidiaries within the meaning of Section 424 of the
Internal Revenue Code of 1986, as amended (the "Control Group") until such
date:
3
4
On the first anniversary of the Commencement Date 12,000 shares
On the second anniversary of the Commencement Date 12,000 shares
On the third anniversary of the Commencement Date 12,000 shares
On February 1, 2002 24,000 shares
"There shall be no proportional or partial vesting in the period prior to
each vesting date and all vesting shall occur only on the appropriate
vesting date, provided that, if the Executive if terminated without cause
or terminated for Good Reason, both as provided in Executive's Employment
Agreement with the Company dated September 8, 1998, as amended, the
unvested portion of the Executive's Restricted Stock will become vested as
of the last date of his employment.
"When any Restricted Stock becomes vested, the Company shall promptly issue
and deliver to the Executive a new stock certificate registered in the
name of the Executive for such shares without the legend set forth in
Section 4 hereof and deliver to the Executive any related other RS
Property.
"In addition, all shares of Restricted Stock shall become immediately
vested and cease to be Restricted Stock upon any Change in Control as
defined in Appendix A hereto."
(b) The 1999 Restricted Stock Agreement is hereby amended, effective on
the date hereof, as follows:
(i) Section 3.3(a) of the 1999 Restricted Stock Agreement is amended to
read in its entirety as follows:
"The Restricted Stock shall become 100 percent vested and cease to be
Restricted Stock (but still subject to the terms of the Plan and this
Agreement) on February 1, 2002 if the Executive has been continuously
employed by the Company or its subsidiaries within the meaning of
Section 424 of the Internal Revenue Code of 1986, as amended (the
"Control Group") until such date. There shall be no proportional or
partial vesting in the period prior to the vesting date and all vesting
shall occur on the vesting date."
(ii) The first paragraph of Section 3.3(b) of the 1999 Restricted Stock
Agreement is deleted.
4
5
3. Confirmation of Prior Agreements. Except as amended hereby, in all
other respects the terms and provisions of the Employment Agreement, the 1998
Restricted Stock Agreement, and the 1999 Restricted Stock Agreement are hereby
ratified and confirmed.
4. Miscellaneous. This Amending Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
heirs, and permitted assigns. This Amending Agreement, along with the Employment
Agreement, the 1998 Restricted Stock Agreement, and the 1999 Restricted Stock
Agreement, as amended hereby, represent the entire understanding of the parties
hereto with regard to the subject matter hereof, and the terms and provisions of
this agreement may not be modified or amended except in a writing signed by both
parties. This Amending Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New York applicable to contracts
between residents of such state to be performed therein. Any controversy or
claim arising out of or relating to this Amending Agreement or the breach
thereof shall be settled in accordance with the provisions of Section 11 of the
Employment Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amending Agreement as of the day and year first above written.
VENATOR GROUP, INC.
By: /s/ Dennis M. Lee
---------------------------
Dennis M. Lee
Sr. Vice President
/s/ Matthew D. Serra
------------------------------
Matthew D. Serra
5
6
ATTACHMENT A
EMPLOYMENT AGREEMENT
THIS AGREEMENT made September 8, 1998, between VENATOR GROUP, INC., a
New York corporation with its principal office at 233 Broadway, New York, New
York 10279 (the "Company") and Matthew D. Serra, residing at 8 Glenby Lane,
Brookville, New York 11545 (the "Executive").
WHEREAS, the Company desires to employ Executive as the President and
Chief Executive Officer of its Foot Locker Worldwide division and Executive is
willing to serve in such capacity; and
WHEREAS, the Company and Executive desire to set forth the terms and
conditions of such employment;
NOW, THEREFORE, in consideration of these premises and of the mutual
covenants and agreements herein contained, the Company and Executive hereby
agree as follows:
1. Employment and Term. (a) The Company hereby agrees to employ
Executive, and Executive hereby agrees to serve, as the President
and Chief Executive Officer of its Foot Locker Worldwide division,
subject to the terms and conditions set forth herein, for a period
commencing October 1, 1998 (the "Commencement Date") and ending on
September 30, 2001 (the "Employment Period"), unless otherwise
provided herein.
(b) The Company will notify Executive no later than September
30, 2000 whether it is prepared to extend the Employment
Period, and, if so, on what terms and conditions.
6
7
2. Position and Duties. Executive shall serve as President and Chief
Executive Officer of the Foot Locker Worldwide division and shall
report directly to the Chairman of the Board and Chief Executive
Officer of the Company. Executive shall have such responsibilities,
duties and authority as are appropriate to such position, and as
may be assigned to him from time to time by the Chairman of the
Board and Chief Executive Officer of the Company. Executive shall
devote substantially all of his working time and efforts to the
business and affairs of the Company and its respective subsidiaries
and affiliates.
3. Place of Performance. In connection with his employment by the
Company, Executive shall be based at the principal executive
offices of the Foot Locker Worldwide division of the Company in the
New York metropolitan area, or such other place in the United
States to which the Company may hereafter relocate its principal
executive offices. In the event of such relocation outside of the
New York metropolitan area, the Company will pay the reasonable
costs of the relocation of the principal residence of Executive,
and provide such other relocation assistance as the Company then
provides to its comparably situated senior executive employees.
4. Compensation. As full compensation for the services of Executive
hereunder, and subject to all of the provisions hereof:
(a) During the Employment Period, the Company shall pay Executive a
base salary at the rate of $800,000 per year, to be paid in
substantially equal monthly installments, in accordance with the
normal payroll practices of the Company (the "Base Salary").
Executive's rate of Base Salary shall be reviewed annually during
the Employment Period (with the first such review occurring no
earlier than in connection with salary increases effective May 1,
2000) in accordance with the Company's normal salary review
practices for its senior executives, and in no
7
8
event shall the Base Salary be less than $800,000 per year.
(b) During the Employment Period, Executive shall be entitled to
participate in all bonus, incentive, and equity plans that are
maintained by the Company from time to time during the Employment
Period for its comparably situated senior executive employees in
accordance with the terms of such plans at the time of
participation. The Company may, during the Employment Period, amend
or terminate any such plan, to the extent permitted by the
respective plan, if such termination or amendment occurs pursuant
to a program applicable to all comparably situated executives of
the Company and does not result in a proportionally greater
reduction in the rights or benefits of Executive as compared with
any other comparably situated executives of the Company. During
each year of the Employment Period, the annual bonus payable to
Executive at target shall be 50 percent of Executive's then-current
Base Salary; provided, however, that (i) for the first full fiscal
year of the Company included in the Employment Period, the bonus
payable to Executive under the annual bonus plan shall not be less
than $400,000, and (ii) for the last fiscal year included in the
Employment Period, the annual bonus shall be prorated if the
Employment Period is not extended. Notwithstanding the foregoing to
the contrary, if Executive is legally prohibited from accepting
employment with the Company until after January 31, 1999,
Executive's annual bonus for the period beginning with the
Commencement Date through and including the last day of the fiscal
year during which he commences employment shall be $33,300 times
the number of months between the Commencement Date and the last day
of such fiscal year, and the annual bonus for the balance of the
Employment Period shall be in accordance with the above formula,
prorated for any partial fiscal year. Executive shall participate,
on a pro rata basis, in any performance periods in the Company's
Long Term Incentive Compensation Plan that are open on the
Commencement Date.
(c) During the Employment Period, Executive shall be eligible to
participate in all
8
9
pension, welfare, and fringe benefit plans, as well as perquisites,
maintained by the Company from time to time for its comparably
situated senior executive employees in accordance with their
respective terms as in effect from time to time. These shall
include (i) Company-paid life insurance in the amount of
Executive's annual Base Salary, (ii) long-term disability insurance
coverage of $25,000 per month; (iii) annual out-of-pocket medical
expense reimbursement of up to $5,000 per year; (iv) reimbursement
of financial planning expense of up to $5,000 per year; (v)
participation in the Supplemental Executive Retirement Plan
(prorated for any partial plan year included in the Employment
Period); and (vi) eligibility to participate in the Deferred
Compensation Plan. Executive shall, upon the commencement of his
employment with the Company, be treated as if he has been credited
with five years of service credit under the provisions of the
Venator Group Retirement Plan, and Executive acknowledges that any
increased amount of pension payable to him as a result of such
credit may be payable from the Venator Group Excess Cash Balance
Plan or a similar non-qualified plan of the Company.
(d) During the Employment Period, Executive shall be entitled to
receive reimbursement for all reasonable and customary expenses
incurred by him in performing services hereunder, including all
travel and living expenses while away from home on business at the
request of the Company, provided such expenses are incurred and
accounted for in accordance with the Company's applicable policies
and procedures.
(e) Executive shall be entitled to 20 vacation days in each calendar
year. Unused vacation shall be forfeited.
(f) On the Commencement Date, Executive will be granted stock options
under, and pursuant to the provisions of, the 1998 Stock Option and
Award Plan (the "1998 Plan") to purchase 250,000 shares of Common
Stock of the Company at fair market value on the date of grant, as
defined in the 1998 Plan. Subject to the
9
10
provisions of the 1998 Plan and the Stock Option Award Certificate
and except as otherwise provided herein, such stock option shall
vest in three equal annual installments on the first, second, and
third anniversaries of the date of grant. Executive will not be
eligible to receive additional stock option grants during the
Employment Period. In the event the Company does not offer to renew
the employment of Executive for at least a two year period beyond
September 30, 2001, for reasons other than Cause, upon essentially
the same terms and conditions as provided for herein (other than
with respect to the compensation provided for in Sections 4(f),
4(g), 4(h), and 4(i), and the provisions of Section 9) then any
unvested portion of such stock options shall vest on September 30,
2001. Subject to the approval of the Compensation Committee of the
Company's Board of Directors and to the extent permissible under
the terms of the 1998 Plan, in the event Executive is prohibited in
any legal proceeding from commencing his employment with the
Company on or before October 1, 1998, then, for the purposes of
determining the vesting schedule for options that are exercisable
after the Commencement Date, the date of grant of the options shall
be deemed to have been October 1, 1998. Subject to the approval of
the Compensation Committee of the Company's Board of Directors and
to the extent permissible under the terms of the 1998 Plan, all
options shall become immediately exercisable upon any Change in
Control.
(g) On the Commencement Date, Executive will be granted 60,000 shares
of restricted stock under, and pursuant to the provisions of, the
1998 Plan and the terms of a Restricted Stock Agreement essentially
in the form of Attachment A hereto.
(h) As a bonus in connection with the execution of this agreement, the
Company shall pay Executive, subject to withholding, $1,000,000
plus the amount, if any, specified in Section 9(b) hereof. Such
amount shall be paid within five business days after the
Commencement Date.
10
11
(i) The Company shall reimburse Executive for the monthly lease cost of
the vehicle presently leased by Executive, through the termination
date of such lease or the end of the Employment Period, whichever
first occurs, in an amount not to exceed $975 per month.
5. Termination.
(a) The Employment Period shall terminate upon the earliest of the
following:
(i) the death of Executive;
(ii) if, as a result of the incapacity of Executive due to
physical or mental illness, Executive shall have been
absent from his duties hereunder on a full time basis
for 180 days, and within 30 days after written notice
of termination is given (which may occur before or
after the end of such 180 day period) he shall not
have returned to the performance of his duties
hereunder on a full time basis; or
(iii) if the Company terminates the employment of Executive
hereunder for Cause. For purposes of this agreement,
the Company shall have "Cause" to terminate the
employment of Executive hereunder upon (A) his
willful and continued failure to substantially
perform his duties hereunder (other than any such
failure resulting from his incapacity due to physical
or mental illness) (B) his willful engagement in
misconduct that is materially injurious to the
Company, monetarily or otherwise or (C) his failure
to commence the performance of his duties hereunder
on the Commencement Date.
(b) If the Company shall terminate the employment of Executive
pursuant to the provisions of paragraph (a) above, it shall
have no further liability or obligation hereunder except (i)
to pay promptly to Executive his then-current Base Salary
11
12
through the effective date of such termination, and (ii)
Executive shall receive benefits, if any, and have the rights
afforded by the Company, under its then-existing policies, to
employees whose employment is terminated for death,
disability, or cause, as the case may be, or under the
specific terms of any welfare, fringe benefit, or incentive
plan.
(c) If the employment of Executive is terminated for any other
reason during the Employment Period, or if the Company
breaches any material provision of this agreement, which
breach is not corrected within 30 days following written
notice to the Company, the Company shall make the following
payments to Executive: Until the earliest of (i) the end of
the Employment Period (ii) his death, or (iii) his breach of
the provisions of Section 8 hereof, (A) the Company shall make
payments to Executive, no less frequently than monthly,
calculated at his then-applicable annual rate of Base Salary;
(B) the Company shall pay to Executive (at the same time as
other annual bonuses are paid), with respect to the fiscal
year in which such termination occurs, the annual bonus that
Executive would otherwise have earned under the annual bonus
plan applicable to Executive if such termination had not
occurred, prorated as of the date of the termination of
Executive's employment; (C) with respect to the performance
period under the Long-Term Incentive Compensation Plan that
ends on the last day of the fiscal year in which the
employment of Executive is terminated, the Company shall pay
to Executive the payment under the Long-Term Incentive
Compensation Plan that Executive would otherwise have earned
with respect to such performance period if such termination
had not occurred, prorated as of the date of the termination
of Executive's employment, payment of such amount to be made
at the same time and in the same manner as other awards are
paid for such period; and (D) the Company shall provide
Executive for a period of one year following such termination
of employment, at no cost to Executive, with out-placement at
a level commensurate with that provided by the Company to
other comparably situated executives. Executive
12
13
shall not be required to mitigate the amount of any payment
provided for in the preceding sentence by seeking other
employment, nor shall any amounts to be received by Executive
hereunder be reduced by any other compensation earned.
(d) Notwithstanding anything herein to the contrary, in the event
that within one year following a "Change in Control" of the
Company, (including one which occurs prior to Executive's
Commencement Date, if such Commencement Date occurs after
October 1, 1998) or if such Change in Control occurs prior to
Executive's Commencement Date, within one year after
Executive's Commencement Date, whichever period runs later (i)
the employment of Executive is terminated for any reason not
specified in paragraph (a) hereof or (ii) Executive terminates
his employment with the Company for "Good Reason", the amount
payable to Executive under paragraph (c) (A) through (D) above
shall be not less than 1.5 times the sum of his Base Salary
and annual bonus at target, such amount to be paid in a lump
sum within 10 days following such termination of the
employment of Executive, and all of the restricted stock
granted to Executive pursuant to Section 4(g) and all of the
stock options granted to Executive pursuant to Section 4(f)
shall immediately become fully vested. For purposes of this
paragraph, (i) "Change in Control" shall have the meaning
specified in Attachment B hereto and (ii) "Good Reason" shall
mean (A) any material demotion of Executive or any material
reduction in Executive's authority or responsibility, except
in each case in connection with the termination of Executive's
employment for Cause or disability or as a result of
Executive's death, or temporarily as a result of Executive's
illness or other absence; (B) any reduction in Executive's
rate of Base Salary as payable from time to time; (C) a
reduction in Executive's annual bonus classification level
other than in connection with a redesign of the applicable
bonus plan that affects all employees at Executive's bonus
level; (D) a failure of the Company to continue in effect the
benefits applicable to, or the Company's reduction of the
benefits applicable to, Executive under any benefit plan or
arrangement
13
14
(including without limitation, any pension, life insurance,
health or disability plan) in which Executive participates as
of the date of the Change in Control without implementation of
a substitute plan(s) providing materially similar benefits in
the aggregate to those discontinued or reduced, except for a
discontinuance of, or reduction under, any such plan or
arrangement that is legally required or generally applies to
all executives of the Company of a similar level, provided
that in either such event the Company provides similar
benefits (or the economic effect thereof) to Executive in any
manner determined by the Company; or (E) failure of any
successor to the Company to assume in writing the obligations
hereunder, or (F) a breach of any other material provision of
this Employment Agreement, which breach is not corrected
within 30 days following written notice to the Company.
6. Gross-up. (a) In the event that Executive shall become
entitled to the payments and/or benefits provided by Section 5
or any other amounts (whether pursuant to the terms of this
Employment Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in
a change of ownership covered by Code Section 280G(b)(2) or
any person affiliated with the Company or such person) as a
result of a Change in Control as defined in Attachment B
(collectively the "Company Payments"), and such Company
Payments will be subject to the tax (the "Excise Tax") imposed
by Section 4999 of the Code (and any similar tax that may
hereafter be imposed), subject to paragraph (f) below, the
Company shall pay to Executive at the time specified in
paragraph (d) below an additional amount (the "Gross-up
Payment") such that the net amount retained by Executive,
after deduction of any Excise Tax on the Company Payments and
any federal, state and local income tax and Excise Tax upon
the Gross-up Payment provided for by this paragraph (a), but
before deduction for any federal, state or local income tax on
the Company Payments, shall be equal to the Company Payments.
14
15
(b) For purposes of determining whether any of the Company
Payments and Gross-up Payments (collectively the "Total
Payments") will be subject to the Excise Tax and the amount of
such Excise Tax, (a) the Total Payments shall be treated as
"parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "parachute payments" in excess of the
"base amount" (as defined under Code Section 280G(b)(3) of the
Code) shall be treated as subject to the Excise Tax, unless
and except to the extent that, in the opinion of the Company's
independent certified public accountants appointed prior to
any change in ownership (as defined under Code Section
280G(b)(2)) or tax counsel selected by such accountants (the
"Accountants") such Total Payments (in whole or in part)
either do not constitute "parachute payments," represent
reasonable compensation for services actually rendered within
the meaning of Section 280G(b)(2) of the Code in excess of the
"base amount" or are otherwise not subject to the Excise Tax,
and (b) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Accountants in
accordance with the principles of Section 280 of the Code.
(c) For purposes of determining the amount of the Gross-up
Payment, Executive shall be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation in the
calendar year in which the Gross-up Payment is to be made and
state and local income taxes at the highest marginal rate of
taxation in the state and locality of Executive's residence
for the calendar year in which the Company Payment is to be
made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local
taxes if paid in such year. In the event that the Excise tax
is subsequently determined by the Accountants to be less than
the amount taken into account hereunder at the time the
Gross-up payment is made, Executive shall repay to the
Company, at the time that the amount of such reduction in
Excise Tax is finally determined, the portion of the prior
Gross-up Payment attributable to such reduction (plus the
portion of the Gross-up Payment
15
16
attributable to the Excise tax and federal and state and local
income tax imposed on the portion of the Gross-up Payment
being repaid by Executive if such repayment results in a
reduction in Excise Tax or a federal and state and local
income tax deduction), plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the
Code. Notwithstanding the foregoing, in the event any portion
of the Gross-up Payment to be refunded to the Company has been
paid to any federal, state or local tax authority, repayment
thereof (and related amounts) shall not be required until
actual refund or credit of such portion has been made to
Executive, and interest payable to the Company shall not be
required until actual refund or credit of such portion has
been made to Executive, and interest payable to the Company
shall not exceed the interest received or credited to
Executive by such tax authority for the period it held such
portion. Executive and the Company shall mutually agree upon
the course of action to be pursued (and the method of
allocating the expense thereof) if Executive's claim for
refund or credit is denied.
In the event that the Excise Tax is later determined by the
Accountants or the Internal Revenue Service to exceed the
amount taken into account hereunder at the time the Gross-up
Payment is made (including by reason of any payment the
existence or amount of which cannot be determined at the time
of the Gross-up Payment), the Company shall make an additional
Gross-up Payment in respect of such excess (plus any interest
or penalties payable with respect to such excess) at the time
that the amount of such excess is finally determined.
(d) The Gross-up Payment or portion thereof provided for in
paragraph (c) above shall be paid not later than the thirtieth
day following an event occurring which subjects Executive to
the Excise Tax; provided, however, that if the amount of such
Gross-up Payment or portion thereof cannot be finally
determined on or before such day, the Company shall pay to
Executive on such day an estimate,
16
17
as determined in good faith by the Accountants, of the minimum
amount of such payments and shall pay the remainder of such
payments (together with interest at the rate provided in Code
Section 1274(b)(2)(B) of the Code), subject to further
payments pursuant to paragraph (c) hereof, as soon as the
amount thereof can reasonably be determined, but in no event
later than the ninetieth day after the occurrence of the event
subjecting Executive to the Excise Tax. In the event that the
amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall
constitute a loan by the Company to Executive, payable on the
fifth day after demand by the Company (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code).
(e) The Company shall be responsible for all charges of the
Accountants.
7. Indemnification and Legal Fees. The Company shall defend,
indemnify, and hold Executive harmless of or from any and all
claims asserted against Executive arising out of his entering
into this agreement or the performance of his duties
hereunder, in accordance with the indemnification provisions
of the Certificate of Incorporation and By-laws of the Company
applicable to its officers, as if Executive were an officer of
the Company. Executive shall promptly notify the Company of
any claim giving rise to indemnification and shall cooperate
fully with the Company in the defense of the claim. The
Company shall have the right to retain counsel of its choice
to defend the claim and to enter into any good faith
settlement or compromise of the claim. The Company shall
reimburse Executive for reasonable legal costs and expenses
incurred by him if it is necessary for Executive to retain
separate counsel. The Company shall reimburse Executive the
reasonable legal fees (based on hourly rates and
disbursements) incurred by him in connection with negotiating
and preparing this employment agreement, provided that in no
event shall such reimbursement exceed $15,000.
17
18
8. Confidential Information and Non-Competition.
(a) Executive agrees that during the Employment Period and thereafter
he shall not disclose, at any time, to any person, or use for his
own account, nonpublic information of any kind concerning the
Company or any of its subsidiaries or affiliates, including, but
not limited to, nonpublic information concerning finances,
financial plans, accounting methods, strategic plans, operations,
personnel, organizational structure, methods of distribution,
suppliers, customers, client relationships, marketing strategies,
store lists, real estate strategies, or the like ("Confidential
Information"). During such period, Executive shall not, without the
prior written consent of the Company, unless compelled pursuant to
the order of a court or other body having jurisdiction over such
matter and unless required by lawful process or subpoena,
communicate or divulge any Confidential Information to anyone other
than the Company and those designated by the Company. Executive
agrees that during the Employment Period he will not breach his
obligations to comply with the provisions of the Code of Corporate
Conduct of the Company, as in effect on the date hereof and as may
be amended from time to time.
(b) Executive recognizes that Confidential Information has been
developed by the Company and its affiliates at substantial cost and
constitute valuable and unique property of the Company. Executive
acknowledges that the foregoing makes it reasonably necessary for
the protection of the Company's interests that Executive not
compete with the Company or its affiliates during the Employment
Period and for a reasonable and limited period thereafter.
Therefore, Executive agrees that during the term of this agreement
and for a period of two years thereafter, Executive shall not
engage in Competition. As used herein, "Competition" shall mean (i)
participating, directly or indirectly, as an individual proprietor,
stockholder, officer, employee, director, joint venturer, investor,
lender, consultant,
18
19
or in any capacity whatsoever (within the United States of America,
or in any country where the Company or any of its subsidiaries or
affiliates does business) in (A) a business in competition with any
business conducted by the Company or any of its subsidiaries or
affiliates for which Executive worked at any time, or (B) a
business that supplies merchandise for sale at retail by the
Company having a value of $20 million or more at cost annually to
the Company or any of its subsidiaries or affiliates; provided,
however, that (X) such participation shall not include the mere
ownership of not more than 1 percent of the total outstanding stock
of a publicly traded company and (Y) a department store or general
or merchandise store shall not be a business in competition with
any business conducted by the Company; or (ii) the intentional
recruiting, soliciting or inducing of any employee or employees of
the Company or any of its subsidiaries or affiliates to terminate
their employment with, or otherwise cease their relationship with,
the Company or any of its subsidiaries or affiliates where such
employee or employees do in fact so terminate their employment.
(c) Executive agrees (i) that his services are special and
extraordinary, (ii) that a violation of his commitment not to
disclose Confidential Information or otherwise to engage in acts of
Competition would immediately and irreparably harm the Company, and
(iii) that such harm would be incapable of adequate remediation by
money damages. Accordingly, Executive agrees that this paragraph 8
may be enforced by injunction, and that he will interpose no
objection or defense to such enforcement. Enforcement by injunction
shall not bar the Company from any other legal or equitable
remedies to which it may be entitled for such violation. If any
restriction set forth with regard to Competition is found by any
court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of
activities or in too broad a geographic area, it is the intention
of the parties that the court should interpret and enforce such
restriction to its fullest lawful extent.
19
20
9. Other Agreements. (a) Executive represents to the Company that (i)
he has fully disclosed to the Company all prior employment
agreements or understandings to which he is a party; (ii) he will
satisfy all financial obligations under all prior employment
agreements or understandings to which he is a party or by which he
is bound; and (iii) he will not disclose to the Company or use for
its benefit any trade secrets or proprietary information of any
prior employer. Executive has advised that he desires and intends
to terminate his current employment prior to October 1, 1998.
(b) In the event Executive is legally prohibited from accepting
employment with the Company on October 1, 1998, then (i) Executive
shall so notify the Company and the Commencement Date, as specified
in Section 1(a), shall be the fifth business day following the date
Executive is no longer so legally prohibited; (ii) the Company
shall pay Executive, as an additional bonus in connection with the
execution of this agreement, $100,000 multiplied by the number of
full months between October 1, 1998 and the Commencement Date, less
any amount Executive receives from his prior employer as
compensation related to such months (including salary, the prorated
portion of any annual or long-term bonus payment, and any severance
payment); and (iii) this agreement shall be automatically, and
without further action by either party, amended to provide that the
position for which Executive is being employed is President and
Chief Executive Officer of the Foot Locker Worldwide division of
the Company, or such other comparable position as the Company may
specify.
10. Assignment. This agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors,
heirs, and permitted assigns. This agreement is personal to
Executive and neither this agreement or any rights hereunder may be
assigned by him. No rights or obligations of the Company under this
agreement may be assigned or transferred by the Company except that
such rights or obligations may be assigned or transferred pursuant
to a merger or
20
21
consolidation in which the Company is not the continuing entity, or
pursuant to a sale of all or substantially all of the assets of the
Company, provided that the assignee or transferee is the successor
to all or substantially all of the assets of the Company and such
assignee or transferee assumes the liabilities, obligations and
duties of the Company, as contained in this agreement, either
contractually or as a matter of law.
11. Arbitration. Any controversy or claim arising out of or relating to
this agreement, or the breach thereof, shall be settled by
arbitration in the City of New York, in accordance with the rules
of the American Arbitration Association (the "AAA"); provided,
however, that this Section shall not apply to Section 8 herein. The
decision of the arbitrator(s) shall be final and binding on the
parties hereto and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction
thereof. The costs assessed by the AAA for arbitration shall be
borne equally by both parties.
12. Notice. Any notice to either party hereunder shall be in writing,
and shall be deemed to be sufficiently given to or served on such
party, for all purposes, if the same shall be personally delivered
to such party, or sent to such party by registered mail, postage
prepaid, in the case of Executive, at the address first given
above, and in the case of the Company, to the General Counsel,
Venator Group, Inc., 233 Broadway, New York, New York 10279. Either
party hereto may change the address to which notices are to be sent
to such party hereunder by written notice of such new address given
to the other party hereto. Notices shall be deemed given when
received if delivered personally or three (3) days after mailing if
mailed as aforesaid.
13. Applicable Law. This agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York
applicable to contracts between residents of such state to be
performed therein.
21
22
14. Miscellaneous.
(a) This agreement represents the entire understanding of the
parties hereto, supersedes any prior understandings or
agreements between the parties, and the terms and provisions
of this agreement may not be modified or amended except in a
writing signed by both parties.
(b) No waiver by either party of any breach by the other party of
any condition or provision contained in this agreement to be
fulfilled or performed by such other party shall be deemed a
waiver of a similar or dissimilar condition or provision at
the same or any prior or subsequent time. Except to the extent
otherwise specifically provided herein, any waiver must be in
writing and signed by you or an authorized officer of the
Company, as the case may be.
22
23
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Employment Agreement as of the day and year first above written.
VENATOR GROUP, INC.
By: /s/ Roger N. Farah
-----------------------------
/s/ Matthew D. Serra
-----------------------------
Matthew D. Serra
23
24
Attachment B
Change in Control
A Change in Control shall mean any of the following: (i) (A) the making
of a tender or exchange offer by any person or entity or group of associated
persons or entities (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934) (a "Person") (other than the Company or its
Affiliates) for shares of common stock pursuant to which purchases are made of
securities representing at least twenty percent (20%) of the total combined
voting power of the Company's then issued and outstanding voting securities; (B)
the merger or consolidation of the Company with, or the sale or disposition of
all or substantially all of the assets of the Company to, any Person other than
(a) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving or parent entity) fifty percent (50%) or more of the combined voting
power of the voting securities of the Company or such surviving or parent entity
outstanding immediately after such merger or consolidation; or (b) a merger or
capitalization effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the beneficial owner,
directly or indirectly (as determined under Rule 13d-3 promulgated under the
Securities Exchange Act of 1934), of securities representing more than the
amounts set forth in (C) below; (C) the acquisition of direct or indirect
beneficial ownership (as determined under Rule 13d-3 promulgated under the
Securities Exchange Act of 1934), in the aggregate, of securities of the Company
representing twenty percent (20%) or more of the total combined voting power of
the Company's then issued and outstanding voting securities by any Person acting
in concert as of the date of this Agreement; provided, however, that the Board
may at any time and from time to time and in the sole discretion of the Board,
as the case may be, increase the voting security ownership percentage threshold
of this item (C) to an amount not exceeding forty percent (40%); or (D) the
approval by the shareholders of the Company of any plan or proposal for the
complete liquidation or dissolution of the Company or for the sale of all or
substantially all of the assets of the Company; or (ii) during any period of not
more than two (2) consecutive years,
24
25
individuals who at the beginning of such period constitute the Board, any new
director (other than a director designated by a person who has entered into
agreement with the Company to effect a transaction described in clause (i))
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof.
25
26
ATTACHMENT B
RESTRICTED STOCK AWARD AGREEMENT
UNDER THE VENATOR GROUP
1998 STOCK OPTION AND AWARD PLAN
This Restricted Stock Award Agreement (the "Agreement") made under the
Venator Group 1998 Stock Option and Award Plan (the "Plan") on this 21st day of
September 1998 by and between Venator Group, Inc., a New York corporation with
its principal office located at 233 Broadway, New York, New York 10279 (the
"Company") and Matthew D. Serra, residing at 8 Glenby Lane, Brookville, New York
11545 (the "Executive").
Effective September 21, 1998, the Compensation Committee of the Board
of Directors of the Company has granted the Executive an award of 60,000 shares
of Restricted Stock under the Plan, subject to the terms of the Plan and the
restrictions set forth in this Agreement.
1. Grant of Shares
The Company is transferring to the Executive 60,000 shares of validly
issued Common Stock of the Company, par value $.01 per share. Such shares are
fully paid and nonassessable and upon transfer shall be validly issued and
outstanding. The shares are subject to certain restrictions pursuant to Section
3 hereof, which restrictions shall expire at various times with regard to
portions of the Restricted Stock.
2. Restrictions on Transfer
The Employee shall not sell, transfer, pledge, hypothecate, assign or
otherwise dispose of the Restricted Stock, except as set forth in this
Agreement. Any attempted sale, transfer, pledge, hypothecation, assignment or
other disposition of the shares in violation of this Agreement shall be void and
of no effect and the Company shall have the right to disregard the same on its
books and records and to issue "stop transfer" instructions to its transfer
agent.
3. Restricted Stock
3.1 Deposit of Certificates.
The Executive will deposit with and deliver to the Company the stock
certificates representing the Restricted Stock, each duly endorsed in blank or
accompanied by stock powers duly executed in blank. In the event the Executive
receives a stock dividend on the Restricted Stock or the Restricted Stock is
split or the Executive receives any other shares, securities, monies, or
property representing a dividend on the Restricted Stock (other than regular
cash dividends on and after the date of this Agreement) or representing a
26
27
distribution or return of capital upon or in respect of the Restricted Stock or
any part thereof, or resulting from a split-up, reclassification or other like
changes of the Restricted Stock, or otherwise received in exchange therefor, and
any warrants, rights or options issued to the Executive in respect of the
Restricted Stock (collectively the "RS Property"), the Executive will also
immediately deposit with and deliver to the Company any of such RS Property,
including any certificates representing shares duly endorsed in blank or
accompanied by stock powers duly executed in blank, and such RS Property shall
be subject to the same restrictions, including that of this Section 3.1, as the
Restricted Stock with regard to which they are issued and shall herein be
encompassed within the term "Restricted Stock."
3.2 Rights with Regard to the Restricted Stock.
The Restricted Stock has been transferred from either the Company's
treasury or newly issued stock and, therefore, upon delivery to the Executive
will constitute issued and outstanding shares of Common Stock for all corporate
purposes. From and after the date of transfer, the Executive will have the right
to vote the Restricted Stock, to receive and retain all regular cash dividends
payable to record holders of Common Stock on and after the transfer of the
Restricted Stock (although such dividends shall be treated, to the extent
required by law, as additional compensation for tax purposes if paid on
Restricted Stock), and to exercise all other rights, powers and privileges of a
holder of Common Stock with respect to the Restricted Stock, with the exceptions
that (i) the Executive will not be entitled to delivery of the stock certificate
or certificates representing the Restricted Stock until the restriction period
shall have expired and unless all other vesting requirements with respect
thereto shall have been fulfilled, (ii) the Company will retain custody of the
stock certificate or certificates representing the Restricted Stock and the
other RS Property during the restriction period, (iii) no RS Property shall bear
interest or be segregated in separate accounts during the restriction period and
(iv) the Executive may not sell, assign, transfer, pledge, exchange, encumber or
dispose of the Restricted Stock during the restriction period.
3.3 Vesting.
If the Executive commences his employment with the Company on or prior
to October 1, 1998, the Restricted Stock shall become vested and cease to be
Restricted Stock (but still subject to the other terms of the Plan and this
Agreement) as follows if the Executive has been continuously employed by the
Company or its subsidiaries within the meaning of Section 424 of the Internal
Revenue Code of 1986, as amended (the "Control Group") until such date:
On the first anniversary of Commencement Date 12,000 shares
On the second anniversary of Commencement Date 12,000 shares
On the third anniversary of Commencement Date 12,000 shares
On the fourth anniversary of Commencement Date 12,000 shares
On the fifth anniversary of Commencement Date 12,000 shares
27
28
There shall be no proportionate or partial vesting in the periods prior
to each vesting date and all vesting shall occur only on the appropriate vesting
date, provided that, if the Executive is terminated without cause or terminated
for Good Reason, both as provided in the Executive's employment agreement with
the Company dated September 8, 1998 (the "Employment Agreement"), or if at the
end of the three year period covered by the Employment Agreement, the Company
does not offer to extend the Employment Agreement for at least a two year period
immediately following September 30, 2001 under the same terms and conditions
then existing (other than with respect to the compensation provided for in
Sections 4(b), 4(g), and 4(k) and 4(i)), for reasons other than Cause (as
defined in the Employment Agreement), the unvested portion of the Executive's
Restricted Stock will become vested as of the last date of his employment.
Subject to the approval of the Compensation Committee of the Company's
Board of Directors and the provisions of the Plan, if the Executive is
prohibited in any legal proceeding from commencing his employment with the
Company on or before October 1, 1998, then for purposes of the vesting schedule
referred to in the preceding paragraph, Executive shall be deemed to have been
continuously employed by the Company from October 1, 1998 to Executive's actual
Commencement Date (as defined in the Employment Agreement). When any Restricted
Stock becomes vested, the Company shall promptly issue and deliver to the
Executive a new stock certificate registered in the name of the Executive for
such shares without the legend set forth in Section 4 hereof and deliver to the
Executive any related other RS Property.
In addition, all shares of Restricted Stock shall become immediately
vested and cease to be Restricted Stock upon any Change in Control as defined in
Appendix A hereto.
3.4 Forfeiture.
In the event of the Executive's death, disability, or resignation, the
Executive shall forfeit to the Company, without compensation, all unvested
shares of Restricted Stock; provided that, in the event of death or disability
of the Executive, the Compensation Committee of the Board of Directors of the
Company may, in its sole discretion, but shall not be obligated to, fully vest
and not forfeit all or any portion of the Executive's Restricted Stock.
3.5 Adjustments.
In the event of any stock dividend, split up, split-off, spin-off,
distribution, recapitalization, combination or exchange of shares, merger,
consolidation, reorganization or liquidation or the like, the Restricted Stock
shall, where appropriate in the sole discretion of the Compensation Committee of
the Board of Directors of the Company, receive the same distributions as other
shares of Common Stock or on some other basis as determined by the Compensation
Committee of the Board of Directors. In any such event, the Compensation
Committee of the Board of Directors may, in its sole discretion,
28
29
determine to award additional Restricted Stock in lieu of the distribution or
adjustment being made with respect to other shares of Common Stock. In any such
event, the determination made by the Compensation Committee of the Board of
Directors shall be conclusive. The Compensation Committee of the Board of
Directors may, in its sole discretion, at any time fully vest and not forfeit
all or any portion of the Executive's Restricted Stock.
3.6 Withholding.
The Employee agrees that, subject to subsection 3.7 below,
(a) No later than the date on which any Restricted Stock shall have
become vested, the Executive will pay to the Company, or make
arrangements satisfactory to the Company regarding payment of, any
federal, state or local taxes of any kind required by law to be
withheld with respect to any Restricted Stock which shall have become
so vested;
29
30
(b) The Company shall, to the extent permitted by law, have the right
to deduct from any payment of any kind otherwise due to the Executive
any federal, state or local taxes of any kind required by law to be
withheld with respect to any Restricted Stock which shall have become
so vested; and
(c) In the event the Executive does not satisfy (a) above on a timely
basis, the Company may, but shall not be required to, pay such required
withholding and treat such amount as a demand loan to the Employee at
the maximum rate permitted by law, with such loan, at the Company's
sole discretion and provided the Company so notifies the Employee
within thirty (30) days of the making of the loan, secured by the
shares of Common Stock and any failure by the Executive to pay the loan
upon demand shall entitle the Company to all of the rights at law of a
creditor secured by the shares of Common Stock. The Company may hold as
security any certificates representing any shares of Common Stock and,
upon demand of the Company, the Executive shall deliver to the Company
any certificates in his possession representing shares of Common Stock
together with a stock power duly endorsed in blank.
3.7 Section 83(b).
If the Executive properly elects (as required by Section 83(b) of the
Internal Revenue Code of 1986, as amended) within thirty (30) days after the
issuance of the Restricted Stock to include in gross income for federal income
tax purposes in the year of issuance the fair market value of such Restricted
Stock, the Executive shall pay to the Company or make arrangements satisfactory
to the Company to pay to the Company upon such election, any federal, state or
local taxes required to be withheld with respect to such Restricted Stock. If
the Executive shall fail to make such payment, the Company shall, to the extent
permitted by law, have the right to deduct from any payment of any kind
otherwise due to the Executive any federal, state or local taxes of any kind
required by law to be withheld with respect to such Restricted Stock, as well as
the rights set forth in Section 3.6(c) hereof. The Executive acknowledges that
it is his sole responsibility, and not the Company's, to file timely the
election under Section 83(b) of the Internal Revenue Code of 1986, as amended,
and any corresponding provisions of state tax laws if he elects to utilize such
election.
3.8 Special Incentive Compensation.
The Executive agrees that the award of the Restricted Stock hereunder
is special incentive compensation and that it, any dividends paid thereon (even
if treated as compensation for tax purposes) and any other RS Property will not
be taken into account as "salary" or "compensation" or "bonus" in determining
the amount of any payment under any pension, retirement or profit-sharing plan
of the Company or any life insurance, disability or other benefit plan of the
Company.
30
31
3.9 Delivery Delay.
The delivery of any certificate representing Restricted Stock or other
RS Property may be postponed by the Company for such period as may be required
for it to comply with any applicable federal or state securities law, or any
national securities exchange listing requirements and the Company is not
obligated to issue or deliver any securities if, in the opinion of counsel for
the Company, the issuance of such shares shall constitute a violation by the
Executive or the Company of any provisions of any law or of any regulations of
any governmental authority or any national securities exchange.
4. Legend.
All certificates representing shares of Restricted Stock shall have
endorsed thereon a legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, substantially in the following form:
"The anticipation, alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge of the shares of stock represented hereby are subject to
the terms and conditions (including forfeiture) of the Venator Group (the
"Company") 1998 Stock Option and Award Plan and an Agreement entered into
between the registered owner and the Company dated as of September 21, 1998.
Copies of such Plan and Agreement are on file at the principal office of the
Company."
5. Not an Employment Agreement.
The issuance of the shares of Restricted Stock hereunder does not
constitute an agreement by the Company to continue to employ the Executive
during the entire, or any portion of the, term of this Agreement, including but
not limited to any period during which the Restricted Stock is outstanding.
6. Power of Attorney.
The Company, its successors and assigns, is hereby appointed the
attorney-in-fact, with full power of substitution, of the Executive for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instruments which such attorney-in-fact may deem necessary or
advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest. The Company, as
attorney-in-fact for the Executive, may, in the name and stead of the Executive,
make and execute all conveyances, assignments and transfers of the Restricted
Stock, shares and property provided for herein, and the Executive hereby
ratifies and confirms all that the Company, as said attorney-in-fact, shall do
by virtue hereof. Nevertheless, the Executive shall, if so requested by the
Company, execute and deliver to the Company all such instruments as may, in the
judgment of the Company, be advisable for the purpose.
31
32
7. Miscellaneous.
7.1 This Agreement shall inure to the benefit of and be binding upon all parties
hereto and their respective heirs, legal representatives, successors and
assigns.
7.2 This Agreement constitutes the entire agreement between the parties and
cannot be changed or terminated orally. No modification or waiver of any of the
provisions hereof shall be effective unless in writing and signed by the party
against whom it is sought to be enforced.
7.3 This Agreement may be executed in one or more counterparts, all of which
taken together shall constitute one contract.
7.4 The failure of any party hereto at any time to require performance by
another party of any provision of this Agreement shall not affect the right of
such party to require performance of that provision, and any waiver by any party
of any breach of any provision of this Agreement shall not be construed as a
waiver of any continuing or succeeding breach of such provision, a waiver of the
provision itself, or a waiver of any right under this Agreement.
7.5 The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall in no way restrict or modify any of the
terms or provisions hereof.
7.6 All notices, consents, requests, approvals, instructions and other
communications provided for herein shall be in writing and validly given or made
when delivered, or on the second succeeding business day after being mailed by
registered or certified mail, whichever is earlier, to the persons entitled or
required to receive the same, at the addresses set forth at the heading of this
Agreement or to such other address as either party may designate by like notice.
Notices to the Company shall be addressed to the Chairman of the Compensation
Committee with a copy similarly sent to the General Counsel.
7.7 This Agreement shall be governed and construed and the legal relationships
of the parties determined in accordance with the internal laws of the State of
New York.
7.8 To indicate your acceptance of the terms of this Restricted Stock Award
Agreement, you must sign and deliver or mail not later than November 20, 1998 a
copy of this Agreement to the General Counsel of the Company at the address
provided in the heading of this Agreement.
32
33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
VENATOR GROUP, INC.
By:/s/ Roger N. Farah
------------------
/s/ Matthew D. Serra
--------------------
Matthew D. Serra
33
34
ACKNOWLEDGMENT
STATE OF NEW YORK )
) s.s.:
COUNTY OF NEW YORK )
On this 13th day of October, 1998 before me personally appeared
Matthew Serra, to me known to be the person described in and who executed the
foregoing agreement, and acknowledged that he executed the same as his free act
and deed.
/s/ Kathryn M. Kress
-----------------------------------
Notary Public
KATHRYN M. KRESS
Notary Public, State of New York
No. 43-4742328
Qualified in Richmond County
Certificate Filed in New York County
Commission Expires Feb. 28, 2000
34
35
APPENDIX A
CHANGE IN CONTROL
A Change in Control shall mean any of the following: (i) (A) the making
of a tender or exchange offer by any person or entity or group of associated
persons or entities (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934) (a "Person") (other than the Company or its
Affiliates) for shares of Common Stock pursuant to which purchases are made of
securities representing at least twenty percent (20%) of the total combined
voting power of the Company's then issued and outstanding voting securities; (B)
the merger or consolidation of the Company with, or the sale or disposition of
all or substantially all of the assets of the Company to, any Person other than
(a) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving or parent entity) fifty percent (50%) or more of the combined voting
power of the voting securities of the Company or such surviving or parent entity
outstanding immediately after such merger or consolidation; or (b) a merger or
capitalization effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the beneficial owner,
directly or indirectly (as determined under Rule 13d-3 promulgated under the
Securities Exchange Act of 1934), of securities representing more than the
amounts set forth in (C) below; (C) the acquisition of direct or indirect
beneficial ownership (as determined under Rule 13d-3 promulgated under the
Securities Exchange Act of 1934), in the aggregate, of securities of the Company
representing twenty percent (20%) or more of the total combined voting power of
the Company's then issued and outstanding voting securities by any Person acting
in concert as of the date of this Agreement; provided, however, that the Board
of Directors of the Company (referred to herein as the "Board") may at any time
and from time to time and in the sole discretion of the Board, as the case may
be, increase the voting security ownership percentage threshold of this item (C)
to an amount not exceeding forty percent (40%); or (D) the approval by the
shareholders of the Company of any plan or proposal for the complete liquidation
or dissolution of the Company or for the sale of all or substantially all of the
assets of the Company; or (ii) during any period of not more than two (2)
consecutive years, individuals who at the beginning of such period constitute
the Board, and any new director (other than a director designated by a person
who has entered into agreement with the Company to effect a transaction
described in clause (i)) whose election by the Board or nomination for election
by the Company's shareholders was approved by a vote of at least two-thirds (")
of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof.
35
36
ATTACHMENT C
RESTRICTED STOCK AWARD AGREEMENT
UNDER THE VENATOR GROUP
1995 STOCK OPTION AND AWARD PLAN
This Restricted Stock Award Agreement (the "Agreement") made under the
Venator Group 1995 Stock Option and Award Plan (the "Plan") as of the 9th day of
February 2000 by and between Venator Group, Inc., a New York corporation with
its principal office located at 233 Broadway, New York, New York 10279 (the
"Company") and Matthew D. Serra, residing at 8 Glenby Lane, Brookville, New York
11545 (the "Executive").
Effective February 9, 2000, the Compensation Committee of the Board of
Directors of the Company has granted the Executive an award of 100,000 shares of
Restricted Stock under the Plan, subject to the terms of the Plan and the
restrictions set forth in this Agreement.
1. Grant of Shares
The Company is transferring to the Executive 100,000 shares of validly
issued Common Stock of the Company, par value $.01 per share. Such shares are
fully paid and nonassessable and upon transfer shall be validly issued and
outstanding. The shares are subject to certain restrictions pursuant to Section
3 hereof, which restrictions shall expire as provided in Section 3.3 hereof.
2. Restrictions on Transfer
The Executive shall not sell, transfer, pledge, hypothecate, assign or
otherwise dispose of the Restricted Stock, except as set forth in this
Agreement. Any attempted sale, transfer, pledge, hypothecation, assignment or
other disposition of the shares in violation of this Agreement shall be void and
of no effect and the Company shall have the right to disregard the same on its
books and records and to issue "stop transfer" instructions to its transfer
agent.
3. Restricted Stock
3.1 Deposit of Certificates.
The Executive will deposit with and deliver to the Company the stock
certificates representing the Restricted Stock, each duly endorsed in blank or
accompanied by stock powers duly executed in blank. In the event the Executive
receives a stock dividend on the
36
37
Restricted Stock or the Restricted Stock is split or the Executive receives any
other shares, securities, monies, or property representing a dividend on the
Restricted Stock (other than regular cash dividends on and after the date of
this Agreement) or representing a distribution or return of capital upon or in
respect of the Restricted Stock or any part thereof, or resulting from a
split-up, reclassification or other like changes of the Restricted Stock, or
otherwise received in exchange therefor, and any warrants, rights or options
issued to the Executive in respect of the Restricted Stock (collectively the "RS
Property"), the Executive will also immediately deposit with and deliver to the
Company any of such RS Property, including any certificates representing shares
duly endorsed in blank or accompanied by stock powers duly executed in blank,
and such RS Property shall be subject to the same restrictions, including that
of this Section 3.1, as the Restricted Stock with regard to which they are
issued and shall herein be encompassed within the term "Restricted Stock."
3.2 Rights with Regard to the Restricted Stock.
The Restricted Stock has been transferred from either the Company's
treasury or newly issued stock and, therefore, upon delivery to the Executive
will constitute issued and outstanding shares of Common Stock for all corporate
purposes. From and after the date of transfer, the Executive will have the right
to vote the Restricted Stock, to receive and retain all regular cash dividends
payable to record holders of Common Stock on and after the transfer of the
Restricted Stock (although such dividends shall be treated, to the extent
required by law, as additional compensation for tax purposes if paid on
Restricted Stock), and to exercise all other rights, powers and privileges of a
holder of Common Stock with respect to the Restricted Stock, with the exceptions
that (i) the Executive will not be entitled to delivery of the stock certificate
or certificates representing the Restricted Stock until the restriction period
shall have expired and unless all other vesting requirements with respect
thereto shall have been fulfilled, (ii) the Company will retain custody of the
stock certificate or certificates representing the Restricted Stock and the
other RS Property during the restriction period, (iii) no RS Property shall bear
interest or be segregated in separate accounts during the restriction period and
(iv) the Executive may not sell, assign, transfer, pledge, exchange, encumber or
dispose of the Restricted Stock during the restriction period.
3.3 Vesting.
The Restricted Stock shall become vested and cease to be Restricted
Stock (but still subject to the other terms of the Plan and this Agreement) on
February 1, 2002 if the Executive has been continuously employed by the Company
or its subsidiaries within the meaning of Section 424 of the Internal Revenue
Code of 1986, as amended (the "Control Group") until such date.
Other than as may be provided for under Section 3.4 hereof, there shall
be no proportionate or partial vesting prior to the vesting date and all vesting
shall occur only on the appropriate vesting date.
37
38
When any Restricted Stock becomes vested, the Company shall promptly
issue and deliver to the Executive a new stock certificate registered in the
name of the Executive for such shares without the legend set forth in Section 4
hereof and deliver to the Executive any related other RS Property.
In addition, all shares of Restricted Stock shall become immediately
vested and cease to be Restricted Stock upon any Change in Control as defined in
Appendix A hereto.
3.4 Forfeiture.
In the event of the Executive's death, disability, or resignation, the
Executive shall forfeit to the Company, without compensation, all unvested
shares of Restricted Stock; provided that (i) in the event of death or
disability of the Executive or (ii) in the event that the Executive ceases to be
employed by the Company or any subsidiary or affiliate of the Company as a
result of the closing, sale, spin-off or other divestiture of any operation of
the Company, the Compensation Committee of the Board of Directors of the Company
may, in its sole discretion, but shall not be obligated to, fully vest and not
forfeit all or any portion of the Executive's Restricted Stock.
3.5 Adjustments.
In the event of any stock dividend, split up, split-off, spin-off,
distribution, recapitalization, combination or exchange of shares, merger,
consolidation, reorganization or liquidation or the like, the Restricted Stock
shall, where appropriate in the sole discretion of the Compensation Committee of
the Board of Directors of the Company, receive the same distributions as other
shares of Common Stock or on some other basis as determined by the Compensation
Committee of the Board of Directors. In any such event, the Compensation
Committee of the Board of Directors may, in its sole discretion, determine to
award additional Restricted Stock in lieu of the distribution or adjustment
being made with respect to other shares of Common Stock. In any such event, the
determination made by the Compensation Committee of the Board of Directors shall
be conclusive. The Compensation Committee of the Board of Directors may, in its
sole discretion, at any time fully vest and not forfeit all or any portion of
the Executive's Restricted Stock.
3.6 Withholding.
The Employee agrees that, subject to subsection 3.7 below,
(a) No later than the date on which any Restricted Stock shall have
become vested, the Executive will pay to the Company, or make arrangements
satisfactory to the Company regarding payment of, any federal, state or local
taxes of any kind required by law to be withheld with respect to any Restricted
Stock which shall have become so vested;
38
39
(b) The Company shall, to the extent permitted by law, have the right
to deduct from any payment of any kind otherwise due to the Executive any
federal, state or local taxes of any kind required by law to be withheld with
respect to any Restricted Stock which shall have become so vested; and
(c) In the event the Executive does not satisfy (a) above on a timely
basis, the Company may, but shall not be required to, pay such required
withholding and treat such amount as a demand loan to the Employee at the
maximum rate permitted by law, with such loan, at the Company's sole discretion
and provided the Company so notifies the Employee within thirty (30) days of the
making of the loan, secured by the shares of Common Stock and any failure by the
Executive to pay the loan upon demand shall entitle the Company to all of the
rights at law of a creditor secured by the shares of Common Stock. The Company
may hold as security any certificates representing any shares of Common Stock
and, upon demand of the Company, the Executive shall deliver to the Company any
certificates in his possession representing shares of Common Stock together with
a stock power duly endorsed in blank.
3.7 Section 83(b).
If the Executive properly elects (as required by Section 83(b) of the
Internal Revenue Code of 1986, as amended) within thirty (30) days after the
issuance of the Restricted Stock to include in gross income for federal income
tax purposes in the year of issuance the fair market value of such Restricted
Stock, the Executive shall pay to the Company or make arrangements satisfactory
to the Company to pay to the Company upon such election, any federal, state or
local taxes required to be withheld with respect to such Restricted Stock. If
the Executive shall fail to make such payment, the Company shall, to the extent
permitted by law, have the right to deduct from any payment of any kind
otherwise due to the Executive any federal, state or local taxes of any kind
required by law to be withheld with respect to such Restricted Stock, as well as
the rights set forth in Section 3.6(c) hereof. The Executive acknowledges that
it is his sole responsibility, and not the Company's, to file timely the
election under Section 83(b) of the Internal Revenue Code of 1986, as amended,
and any corresponding provisions of state tax laws if he elects to utilize such
election.
3.8 Special Incentive Compensation.
The Executive agrees that the award of the Restricted Stock hereunder
is special incentive compensation and that it, any dividends paid thereon (even
if treated as compensation for tax purposes) and any other RS Property will not
be taken into account as "salary" or "compensation" or "bonus" in determining
the amount of any payment under any pension, retirement or profit-sharing plan
of the Company or any life insurance, disability or other benefit plan of the
Company.
39
40
3.9 Delivery Delay.
The delivery of any certificate representing Restricted Stock or other
RS Property may be postponed by the Company for such period as may be required
for it to comply with any applicable federal or state securities law, or any
national securities exchange listing requirements and the Company is not
obligated to issue or deliver any securities if, in the opinion of counsel for
the Company, the issuance of such shares shall constitute a violation by the
Executive or the Company of any provisions of any law or of any regulations of
any governmental authority or any national securities exchange.
4. Legend.
All certificates representing shares of Restricted Stock shall have
endorsed thereon a legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, substantially in the following form:
"The anticipation, alienation, attachment, sale, transfer, assignment,
pledge, encumbrance or charge of the shares of stock represented hereby are
subject to the terms and conditions (including forfeiture) of the Venator Group
(the "Company") 1995 Stock Option and Award Plan and an Agreement entered into
between the registered owner and the Company dated as of February 9, 2000.
Copies of such Plan and Agreement are on file at the principal office of the
Company."
5. Not an Employment Agreement.
The issuance of the shares of Restricted Stock hereunder does not
constitute an agreement by the Company to continue to employ the Executive
during the entire, or any portion of the, term of this Agreement, including but
not limited to any period during which the Restricted Stock is outstanding.
6. Power of Attorney.
The Company, its successors and assigns, is hereby appointed the
attorney-in-fact, with full power of substitution, of the Executive for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instruments which such attorney-in-fact may deem necessary or
advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest. The Company, as
attorney-in-fact for the Executive, may, in the name and stead of the Executive,
make and execute all conveyances, assignments and transfers of the Restricted
Stock, shares and property provided for herein, and the Executive hereby
ratifies and confirms all that the Company, as said attorney-in-fact, shall do
by virtue hereof. Nevertheless, the Executive shall, if so requested by the
Company, execute and deliver to the Company all such instruments as may, in the
judgment of the Company, be advisable for the purpose.
40
41
7. Miscellaneous.
7.1 This Agreement shall inure to the benefit of and be binding upon all parties
hereto and their respective heirs, legal representatives, successors and
assigns.
7.2 This Agreement constitutes the entire agreement between the parties and
cannot be changed or terminated orally. No modification or waiver of any of the
provisions hereof shall be effective unless in writing and signed by the party
against whom it is sought to be enforced.
7.3 This Agreement may be executed in one or more counterparts, all of which
taken together shall constitute one contract.
7.4 The failure of any party hereto at any time to require performance by
another party of any provision of this Agreement shall not affect the right of
such party to require performance of that provision, and any waiver by any party
of any breach of any provision of this Agreement shall not be construed as a
waiver of any continuing or succeeding breach of such provision, a waiver of the
provision itself, or a waiver of any right under this Agreement.
7.5 The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall in no way restrict or modify any of the
terms or provisions hereof.
7.6 All notices, consents, requests, approvals, instructions and other
communications provided for herein shall be in writing and validly given or made
when delivered, or on the second succeeding business day after being mailed by
registered or certified mail, whichever is earlier, to the persons entitled or
required to receive the same, at the addresses set forth at the heading of this
Agreement or to such other address as either party may designate by like notice.
Notices to the Company shall be addressed to the Chairman of the Compensation
Committee with a copy similarly sent to the General Counsel.
7.7 This Agreement shall be governed and construed and the legal relationships
of the parties determined in accordance with the internal laws of the State of
New York.
7.8 To indicate your acceptance of the terms of this Restricted Stock Award
Agreement, you must sign and deliver or mail not later than March 9, 2000 a copy
of this Agreement to the General Counsel of the Company at the address provided
in the heading of this Agreement.
41
42
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
VENATOR GROUP, INC.
By:/s/ Dennis M. Lee
---------------------
Senior Vice President
/s/ Matthew D. Serra
---------------------
Matthew D. Serra
42
43
ACKNOWLEDGMENT
STATE OF NEW YORK )
) s.s.:
COUNTY OF NEW YORK )
On this 12th day of January, 2000 before me personally
appeared Matthew D. Serra, to me known to be the person described in and who
executed the foregoing agreement, and acknowledged that he executed the same as
his free act and deed.
/s/ Shirley Camacho
---------------------
Notary Public
SHIRLEY A. CAMACHO
Notary Public, State of New York
No. 01CA5040447
Qualified in Bronx County
Commission Expires March 12, 2001
43
44
APPENDIX A
CHANGE IN CONTROL
A Change in Control shall mean any of the following: (i) (A) the making
of a tender or exchange offer by any person or entity or group of associated
persons or entities (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934) (a "Person") (other than the Company or its
Affiliates) for shares of Common Stock pursuant to which purchases are made of
securities representing at least twenty percent (20%) of the total combined
voting power of the Company's then issued and outstanding voting securities; (B)
the merger or consolidation of the Company with, or the sale or disposition of
all or substantially all of the assets of the Company to, any Person other than
(a) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving or parent entity) fifty percent (50%) or more of the combined voting
power of the voting securities of the Company or such surviving or parent entity
outstanding immediately after such merger or consolidation; or (b) a merger or
capitalization effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the beneficial owner,
directly or indirectly (as determined under Rule 13d-3 promulgated under the
Securities Exchange Act of 1934), of securities representing more than the
amounts set forth in (C) below; (C) the acquisition of direct or indirect
beneficial ownership (as determined under Rule 13d-3 promulgated under the
Securities Exchange Act of 1934), in the aggregate, of securities of the Company
representing twenty percent (20%) or more of the total combined voting power of
the Company's then issued and outstanding voting securities by any Person acting
in concert as of the date of this Agreement; provided, however, that the Board
of Directors of the Company (referred to herein as the "Board") may at any time
and from time to time and in the sole discretion of the Board, as the case may
be, increase the voting security ownership percentage threshold of this item (C)
to an amount not exceeding forty percent (40%); or (D) the approval by the
shareholders of the Company of any plan or proposal for the complete liquidation
or dissolution of the Company or for the sale of all or substantially all of the
assets of the Company; or (ii) during any period of not more than two (2)
consecutive years, individuals who at the beginning of such period constitute
the Board, and any new director (other than a director designated by a person
who has entered into agreement with the Company to effect a transaction
described in clause (i)) whose election by the Board or nomination for election
by the Company's shareholders was approved by a vote of at least two-thirds (")
of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof
44