EXHIBIT 10.20
EMPLOYMENT AGREEMENT
THIS AGREEMENT made January 21, 2003, between FOOT LOCKER, INC., a New
York corporation with its principal office at 112 West 34 Street, New York, New
York 10120 (the "Company") and Matthew D. Serra (the "Executive").
WHEREAS, the Executive presently serves as the President and Chief
Executive Officer of the Company, pursuant to the provisions of the Employment
Agreement between the Company and the Executive dated February 12, 2001 , as
amended (the "2001 Agreement"); and
WHEREAS, the Company desires to continue to employ Executive as its
President and Chief Executive Officer, for the period commencing on February 2,
2003 and ending on February 4, 2006 (the "Employment Period"), and Executive is
willing to serve in such capacity during the Employment Period; 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. The Company hereby agrees to employ
Executive, and Executive hereby agrees to serve, as its
President and Chief Executive Officer during the Employment
Period, subject to the terms and conditions set forth herein.
2. Position and Duties. Executive shall continue to serve as the
President and Chief Executive Officer of the Company,
reporting only to the Board of Directors (the "Board").
Executive shall have such responsibilities, duties and
authority as are commensurate with his status as President and
Chief Executive Officer as may from time to time be determined
or directed by the Board. 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; provided, however, that the Executive may serve on
the boards of directors of other for-profit corporations, if
such service does not conflict with his duties hereunder or
his fiduciary duty to the Company. It is further understood
and agreed that nothing herein shall prevent the Executive
from managing his passive personal investments (subject to
applicable Company policies on permissible investments), and
(subject to applicable Company policies) participating in
charitable and civic endeavors, so long as such activities do
not interfere in more than a de minimis manner with the
Executive's performance of his duties hereunder.
3. Place of Performance. 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. 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 such rate per year as may be fixed by the
Compensation Committee of the Board of Directors from time to
time, but in no event at a rate of less than $1,500,000 per
year, to be paid in substantially equal monthly installments,
in accordance with the normal payroll practices of the Company
(the "Base Salary").
(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 100 percent of Executive's then-current Base
Salary. The bonus payable to Executive at target under the
Long-Term Incentive Compensation Plan for any three-year
performance period shall be 90 percent of Executive's Base
Salary at the beginning of such performance period.
(c) During the Employment Period, Executive shall be eligible to
participate in all 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 $10,000 per year; (iv) reimbursement of financial planning
expense of up to $7,500 per year; (v) participation in the
Supplemental Executive Retirement Plan (prorated for any
partial plan year included in the Employment Period); (vi)
eligibility to participate in the Deferred Compensation Plan;
and (vii) annual reimbursement of dues and membership fees of
one private
club of up to $20,000 per year. The Company acknowledges that
upon the commencement of his employment with the Company
Executive was treated as if he had been credited with five
years of service under the provisions of the Foot Locker
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 Foot Locker 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) During the Employment Period, Executive shall be eligible to
receive stock option grants as may be determined from time to
time by the Compensation and Management Resources Committee of
the Board and subject to the provisions of the applicable
stock option and award plan of the Company. To the extent
permissible under the terms of such applicable plan, all stock
options currently held by Executive or that may be granted to
Executive during the Employment Period shall become
immediately exercisable upon a Change in Control (as defined
in Attachment A hereto).
(g) No later than February 28, 2003, Executive shall be granted
240,000 shares of restricted stock (the "Restricted Stock")
under, and pursuant to the provisions of, the 1995 and 1998
Stock Option and Award Plans of the Company and the terms of a
restricted stock agreement essentially in the form of
Attachment B hereto.
(h) 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 the amount of such
reimbursement exceed $15,000.
(i) The Company shall reimburse Executive the costs associated
with an automobile of a type to be reasonably agreed upon by
the Company and Executive, such costs to include monthly lease
payments, garaging, insurance, fuel, and maintenance;
provided, however, that the total amount of such payments
shall not exceed $30,000 per year, and the Company, at its
sole expense, shall provide Executive with the services of a
full-time driver.
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) or (B) his willful
engagement in misconduct that is materially injurious
to the Company, monetarily or otherwise.
(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
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) (i) If the employment of Executive is terminated by the
Company 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, and Executive
thereupon elects to terminate his employment hereunder, the
Restricted Stock and any of the restricted stock granted
pursuant to the 2001 Agreement (the "2001 Restricted Stock")
not previously vested shall become fully vested as of the date
of the termination of Executive's employment and the Company
shall make the following payments and provide the following
benefits 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 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. (ii) On the earlier to occur of (A)
February 1, 2004 and (B) the date thirty (30) days following
the day on which J. Carter Bacot ceases, for any reason, to
serve as Chairman of the Board of the Company, if Executive
has not been elected Chairman of the Board of the Company (in
addition to continuing as Chief Executive Officer), Executive
may, during the 30-day period commencing on such date, give
written notice to the Company of his election to resign his
position as President and Chief Executive Officer and
terminate this agreement. If Executive gives such notice,
Executive's resignation as President and Chief Executive
Officer shall be effective 30 days following the date on which
such notice is given, this agreement shall terminate 30 days
following the date on which such notice is given, and
Executive shall be entitled to receive the payments, and shall
have such other rights, provided for in Section 5(c)(i)
hereof, except that, with regard to the Restricted Stock and
the 2001 Restricted Stock, the Executive shall become vested
in 120,000 shares of the Restricted Stock and any of the 2001
Restricted Stock not previously vested, and the balance of the
Restricted Stock shall be cancelled.
(d) Notwithstanding anything herein to the contrary, in the event
of a Change in Control, as defined in Attachment A hereto, the
Executive shall have the right to terminate the Employment
Period by written notice given within the 30 day period
following three months after such Change in Control. The
Employment Period shall cease upon the giving of such notice.
In such event, or in the event that the Company shall
terminate the Executive's employment without Cause or the
Executive shall terminate his employment for Good Reason
during the two year period after the Change in Control, 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, any
2001 Restricted Stock not previously vested, and any stock
options granted to Executive on or after February 12, 2001 not
previously vested shall immediately become fully vested. For
purposes of this paragraph, (i) "Change in Control" shall have
the meaning specified in Attachment A 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 (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 (i) the Company, (ii) any person whose actions
result in a change of ownership covered by Section 280G(b)(2)
of the Internal Revenue Code of 1986, as amended (the "Code")
or (iii) any person affiliated with the Company or such
person) as a result of a Change in Control as defined in
Attachment A (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), 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 (of
the Company Payments and the Gross-up Payment) 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.
(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
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 280G 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 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, as determined in good faith
by the Accountants, of the minimum amount of such payments and
the Company shall pay the remainder of such payments or the
Executive shall reimburse the Company for the amount of any
over-payment (together with interest at the rate provided in
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.
(e) The Company shall be responsible for all charges of the
Accountants.
7. Indemnification. The Company agrees that the Executive shall be
entitled to the benefits of the indemnity provisions set forth in the
Certificate of Incorporation and the By-laws from time to time in accordance
with their terms both during his employment and thereafter with regard to his
actions as an officer or director of the Company. In addition, the Company
agrees to continue in effect for the benefit of the Executive during the
Employment Period directors' and officers' liability insurance of the type and
in the amount currently maintained by the Company to the extent such insurance
is available at a premium cost which the Company considers reasonable and,
thereafter, with regard to his prior activities as an officer or director, such
insurance as is maintained for active directors and officers.
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, 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 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;
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.
9. 2001 Agreement. The 2001 Agreement is hereby terminated,
effective as of February 1, 2003, without further obligation
of either party to the other, and shall thereafter be of no
force and effect. Notwithstanding the foregoing, the parties
acknowledge that they are parties to a Restricted Stock
Agreement dated March 4, 2001; Stock Option Agreements dated
September 21, 1998, February 12, 2001, and April 18, 2002; and
an Indemnification Agreement dated February 9, 2000, which
agreements shall remain in full force and effect in accordance
with their terms.
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 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
his principal residence address as shown in the records of the
Company, and in the case of the Company, to the General
Counsel, Foot Locker, Inc., 112 West 34 Street, New York, New
York 10120. 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.
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.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Employment Agreement as of the day and year first above written.
FOOT LOCKER, INC.
By: /s/ Laurie J. Petrucci
----------------------------------------
Laurie J. Petrucci
Sr. Vice President - Human Resources
/s/ Matthew D. Serra
----------------------------------------
Matthew D. Serra
Attachment 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
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, 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.
Attachment B
RESTRICTED STOCK AWARD AGREEMENT
This Restricted Stock Award Agreement (the "Agreement") made as of
February 2, 2003 by and between Foot Locker, Inc. , a New York corporation with
its principal office located at 112 West 34th Street, New York, New York 10120
(the "Company") and Matthew D. Serra (the "Executive").
On November 20, 2002, the Compensation and Management Resources
Committee of the Board of Directors of the Company approved the grant to the
Executive effective February 2, 2003 (the "Date of Grant") of an award of
240,000 shares of Restricted Stock, 140,000 shares granted under the 1995 Stock
Option and Award Plan (the "1995 Plan") and 100,000 shares granted under the
1998 Stock Option and Award Plan (the "1998 Plan"; the 1995 Plan and the 1998
Plan being hereinafter referred to as the "Plans") , subject to the terms of the
Plans and the restrictions set forth in this Agreement.
1. Grant of Shares
The Company is transferring to the Executive 240,000 shares of validly
issued Common Stock of the Company, par value $.01 per share (the "Restricted
Stock"). 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 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 certificate or 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 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 100% vested and cease to be
Restricted Stock (but still subject to the other terms of the Plan and this
Agreement) on February 3, 2006 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 in the periods prior to the appropriate
vesting date and all vesting shall occur only on the appropriate vesting date.
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 the 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 and Management Resources
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; and provided further that (A) in the event
that the employment of the Executive by the Company is terminated in a manner
that gives rise to the payments provided for in Section 5(c)(i) of the
Employment Agreement between Executive and the Company dated January 21, 2003
(the "Employment Agreement"), the Restricted Stock shall become fully vested as
of the date of the termination of his employment, and (B) in the event that
Executive elects to terminate his employment with the Company under the
provisions of Section 5(c)(ii) of the Employment Agreement, 50,000 shares of the
Restricted Stock shall become fully vested as of the date of the termination of
his employment.
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 and Management Resources 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 and Management Resources
Committee of the Board of Directors. In any such event, the Compensation and
Management Resources 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 and
Management Resources Committee of the Board of Directors shall be conclusive.
The Compensation and Management Resources 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; and
(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.
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.
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
Foot Locker (the "Company") [1995/1998] Stock Option and Award Plan and an
Agreement entered into between the registered owner and the Company dated as of
February 2, 2003. 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.
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 This Agreement is subject, in all respects, to the provisions
of the Plan, and to the extent any provision of this Agreement contravenes or is
inconsistent with any provision of the Plan, the provisions of the Plan shall
govern.
7.6 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.
7.7 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, in the case of the Company, the
address set forth at the heading of this Agreement and, in the case of the
Executive, his principal residence address as shown in the records of the
Company, 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
and Management Resources Committee with a copy similarly sent to the General
Counsel.
7.8 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.
7.9 To indicate your acceptance of the terms of this Restricted
Stock Award Agreement, you must sign and deliver or mail not later than 30 days
from the date hereof, a copy of this Agreement to the General Counsel of the
Company at the address provided in the heading of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FOOT LOCKER, INC.
By: ___________________________
Senior Vice President
___________________________
Matthew D. Serra
ACKNOWLEDGMENT
STATE OF _______________________________ )
) s.s.:
COUNTY OF ______________________________ )
On this ___________day of___________2003, 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.
_____________________________
Notary Public
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.