EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the ____ of _____ 200_,
by and between PAYLESS SHOESOURCE, INC., a Delaware corporation, ("Payless") and
________ ("Executive").
In consideration of mutual promises and agreements set forth in this
Employment Agreement, Payless and Executive agree as follows:
1. (a) Payless agrees to employ Executive, and Executive
agrees to render personal services to Payless, for the period
commencing on the date of this Employment Agreement through May 31,
200__ (the "Contract Term") as Senior Vice President of Payless
ShoeSource, Inc. and/or to perform such other executive duties as may
from time to time be required of Executive by Payless. Upon the
anniversary date of this Agreement, the Contract Term shall
automatically be extended by one (1) year unless, within thirty (30)
days of said anniversary date, or any anniversary date thereafter,
Payless shall deliver to Executive, or Executive shall deliver to
Payless, written notice that the Contract Term shall not be extended.
(b) Payless agrees to pay Executive basic compensation
for such services during the Contract Term at the annual rate of
$__________, payable in equal bi-weekly installments, and in accordance
with Paragraph 5, which annual rate will be subject to an annual review
during Payless' regularly scheduled review time.
(c) If Executive is eligible to participate in one of Payless'
bonus plans (the "Incentive Plan"), then Executive shall be entitled to
such awards, if any, which may be payable under the Incentive Plan,
determined in accordance with and subject to all of the terms and
provisions of the Incentive Plan. If the Executive participates in the
Payless ShoeSource, Inc. Executive Incentive Compensation Plan (the
"EICP") for the long-term performance periods ending in fiscal years
2003 or 2004, the Executive hereby consents to the long-term award, if
any, being calculated using the following formula: long-term
performance period ending in 2003, (1/3 of the bonus under the EICP +
2/3 bonus under the Incentive Compensation Plan (the "ICP")); and for
the long-term performance period ending in 2004, 100 percent of the
bonus will be determined under the ICP. Such awards are subject to the
terms and provisions of the EICP and ICP respectively.
(d) Payless shall reimburse Executive for all items of normal
expense incurred by Executive as an employee of Payless in accordance
with Payless' reimbursement policies in effect from time to time.
(e) Payless has adopted certain employee benefit plans and has
established certain arrangements concerning executive perquisites which
may, from time to time, confer rights and benefits on the Executive in
accordance with their terms, and Payless may, in the future, adopt
additional employee benefit plans and establish additional arrangements
concerning executive perquisites, and may in the future amend, modify
or terminate any of the aforesaid employee benefit plans and
arrangements, all in accordance with their terms and in accordance with
applicable law. Executive shall be entitled to whatever rights and
benefits may be conferred on Executive, from time to time in accordance
with the terms of such plans and arrangements, as they may be amended
from time to time, independent of this Agreement.
(f) Executive will be eligible for future grants of restricted
stock and stock options as may be made under the terms of the Stock
Incentive Plan in accordance with the levels established by the
Compensation Committee of the Board of Directors.
(g) All references to payment dates or vesting dates in this
Paragraph 1 or in such plans and arrangements, shall require that
Executive be employed by Payless on such date to receive such payment
or be vested in such benefit.
2. (a) At all times during the Contract Term, Executive will:
(i) faithfully and diligently perform Executive's duties
in conformity with the directions of Payless and serve Payless
to the best of Executive's ability; and
(ii) devote Executive's undivided time and attention to
the business of Payless, subject to reasonable vacations in
accordance with Payless' vacation policy as it applies from
time to time, to such extent as may be reasonably necessary
for the proper performance of the personal services to be
rendered by Executive under this Agreement; and
(iii) maintain Executive's residence within reasonable
access to the business activities of Payless for the Contract
Term.
(b) At all times during the Contract Term, Executive will not:
(i) engage in any activity which conflicts or interferes
with or adversely affects Executive's performance of
Executive's duties hereunder, or
(ii) accept any other employment, whether as an Executive
or as a consultant or in any other capacity, and whether or
not compensated therefor, or
(iii) violate the terms of any of the policies described
in Payless' Policy of Business Conduct distributed from time
to time to Executive.
3. (a) At all times during the Contract Term and for a period of
one (1) year from actual termination of employment or, if there is more
than one (1) year remaining in the Contract Term at the time of
termination of employment, for the remainder of the Contract Term,
Executive will not:
2
(i) directly or indirectly, own, manage, operate, finance,
join, control, or participate in the ownership, management, operation,
financing or control of, or be employed by or connected in any manner
with any Competing Business(as defined below), or
(ii) solicit for employment, hire or offer employment to, or
disclose information to or otherwise aid or assist any other person or
entity other than Payless or any subsidiary of Payless in soliciting
for employment, hiring or offering employment to, any employee of
Payless or any subsidiary of Payless, or
(iii) take any action which is intended to harm Payless or
its reputation, which Payless reasonably concludes could harm Payless
or its reputation or which Payless reasonably concludes could lead to
unwanted or unfavorable publicity to Payless.
Ownership of an investment of less than the greater of $25,000 or 1% of
any class of equity or debt security of a Competing Business shall not
constitute ownership or participation in ownership in violation of Paragraph
3(a).
(b) The term "Competing Business" shall include, but not be limited to,
(i) any retail business with gross sales or revenue in the
prior fiscal year of more than $25 million (or which is a subsidiary,
affiliate or joint venture partner of a business with gross sales or
revenue in the prior fiscal year of more than $25 million) which sells
footwear at retail to consumers at price points competitive, or likely
to be competitive with Payless (e.g., including, without limitation,
Wal-Mart Stores, Inc., K-Mart Corporation, Target Corporation., Aldo
Group, Genesco Inc., Foot Locker, Inc., Brown Shoe Company, Inc., Shoe
Carnival, Inc., Jones Apparel Group, Inc., Kohl's Corporation, Liz
Claiborne Inc., Big Five Sporting Goods Corporation, Shoe Zone, Bata,
J.C. Penney Company, Inc. and Sears, Roebuck and Co.) within 20 miles
of any Payless store or the store of any wholesale customer of Payless
in the United States, or anywhere in any foreign country in which
Payless has retail stores, franchisees or wholesale customers;
(ii) any franchising or wholesaling business with gross sales
or revenue in the prior fiscal year of more than $25 million (or which
is a subsidiary, affiliate or joint venture partner of a business with
gross sales or revenue in the prior fiscal year of more than $25
million) which sells footwear at wholesale to franchisees, retailers or
other footwear distributors located within 20 miles of any Payless
store or the store of any wholesale customer of Payless in the United
States, or anywhere in any foreign country in which Payless has retail
stores, franchisees or wholesale customers:
(iii) any footwear manufacturing business with gross sales or
revenue in the prior fiscal year of more than $25 million (or which is
a subsidiary, affiliate or joint venture partner of a business with
gross sales or revenue in the prior fiscal year of more than $25
million) which sells footwear to retailers or other footwear
distributors located within 20 miles of any Payless store or the store
of any wholesale customer of Payless in the United States, or
3
anywhere in any foreign country in which Payless has retail stores,
franchisees, or wholesale customers; (e.g., including, without
limitation, Jones Apparel Group, Inc., Dexter, Stride Rite Corporation,
Wolverine Worldwide, Inc., The Timberland Company, Nike Inc., Reebok
International Ltd., K-Swiss, Keds and Adidas-Salomon); or
(iv) any business which provides buying office services to any
store or group of stores or businesses referred to in Paragraph 3.(b)
(i), 3. (b) (ii) or 3. (b) (iii).
(c) Background of non-compete restriction:
(i) Payless is one of the leading retail companies in North
America, with self-service shoe stores throughout the United States and
its territories, Canada and Central America; and
(ii) In connection with its business, Payless has expended a
great deal of time, money and effort to develop and maintain its
confidential, proprietary and trade secret information; this
information, if misused or disclosed, could be very harmful to Payless'
business and its competitive position in the marketplace; and
(iii) Executive desires to be employed by Payless, to be
eligible for opportunities for advancement within Payless, to be
eligible for potential compensation increases and to be given access to
confidential and proprietary information of Payless necessary for
Executive to perform Executive's job, but which Payless would not make
available to Executive but for Executive's signing and agreeing to
abide by the terms of this Agreement as a condition of Executive's
employment by Payless; and
(iv) Executive recognizes and acknowledges that Executive's
position with Payless provides Executive with access to Payless'
confidential and proprietary trade secret information and other
confidential business information; and
(v) Payless compensates its associates to, among other things,
develop and preserve goodwill and relationships on Payless' behalf and
to develop and preserve business information for Payless' exclusive
ownership and use; and
(vi) long-term customer and supplier relationships often can
be difficult to develop and require a significant investment of time,
effort and expense; and
(vii) Executive recognizes and acknowledges that if
Executive's employment with Payless were to cease, Payless needs
certain protections in order to ensure that Executive does not
appropriate and use any confidential information entrusted to Executive
during the course of Executive's employment by Payless or take any
other action which could result in a loss of Payless' goodwill that was
generated on Payless' behalf and at its expense, and, more generally,
to prevent Executive from having an unfair competitive advantage over
Payless.
4
(d) Reasonableness of non-compete restriction. Executive
acknowledges and agrees that the restrictions in Paragraph 3(a) are
reasonable and enforceable in view of the background for the
non-compete restriction set forth in Paragraph 3(c) and in view of,
among other things,
(i) the markets in which Payless and its subsidiaries
operate their business; and
(ii) the confidential information to which Executive has
access; and
(iii) Executive's training and background, which are such
that neither Payless nor Executive believe that the restraint
will pose an undue hardship on Executive; and
(iv) the fact that a Competing Business could benefit
greatly if it were to obtain Payless' confidential
information; and
(v) the fact that Payless would not have adequate
protection if Executive were permitted to work for any
Competing Business since Payless would be unable to verify
whether its confidential information was being disclosed or
misused; and
(vi) the limited duration of, the limited scope of, and
the limited activities prohibited by, the restrictions in
Paragraph 3(a); and
(vii) Payless' legitimate interests in protecting its
confidential information, goodwill and relationships.
(e) If Executive violates Executive's obligations under
Paragraph 3(a), then Payless shall be entitled to all legal and
equitable rights and remedies under this Agreement, including all of
its rights and remedies referred to in Paragraph 8 of this Agreement.
Further, the time during which Executive violated the obligations shall
not count toward satisfying the time during which any injunctive
restriction shall apply. For example, if Executive were to join a
competitor at the end of the Contract Term in violation of the
restrictions in Paragraph 3(a) and work for such competitor for one (1)
month before a court enjoined such violation, then the two (2) year
time period of the restriction would begin when such injunction were
issued; the one (1) month during which Executive violated such
restriction would not count toward the time that the restriction
applies.
4. If Executive becomes Disabled and remains continuously
so Disabled for a period of 180 days, then Payless' obligations under
this Employment Agreement, at Payless' option, may be terminated by
notice in writing to that effect given during the continuance of such
Disability, such termination to take effect the later of (a) the last
day of the month during which such notice is given or (b) the last day
of such 180 day period. If Executive has made a previous election to
participate in the Payless ShoeSource, Inc. Long-Term Disability Plan
(subject to the terms and provisions of that plan), then the terms of
that plan shall apply. "Disability" or "Disabled" shall mean the
inability of Executive to perform the essential duties of Executive's
job under this Agreement.
5
5. (a) If Executive's employment terminates during the Contract
Term by reason of Executive's death or Disability, by Executive's
voluntary termination of employment or by Payless for Cause,
(i) Executive's basic compensation and employee
benefits shall cease on the date of such termination, except
as otherwise provided herein or in any applicable employee
benefit plan or program; and
(ii) Executive (or Executive's legal
representative(s)) shall be entitled to such portion of any
incentive compensation as shall be payable under the terms of
the Incentive Plan.
(b) In addition, if Executive's employment is terminated by
reason of death, then Executive's obligations under Paragraphs 1 and 2
shall cease on the effective date of such termination.
(c) In addition, if Executive's employment is terminated by
reason of Disability, by Executive voluntarily or by Payless for Cause,
then Executive's obligations under Paragraphs 1 and 2 shall cease on
the effective date of such termination and Executive's obligations
under Paragraphs 3 and 6 remain in full force and effect, and Payless
shall be entitled to all legal and equitable rights and remedies under
this Agreement, including all of its rights and remedies referred to in
Paragraph 8 of this Agreement.
(d) If Executive's employment is terminated by Payless without
Cause, then
(i) Executive's employment (and status as an
employee) shall cease immediately; and
(ii) Executive shall be entitled, subject to the
provisions of Paragraph 5(d)(v), to continue to receive for
the remainder of the Contract Term the higher of Executive's
basic compensation specifically stated in Paragraph 1(b) as of
the date of this Agreement, or Executive's basic compensation
at the time Executive employment terminates; and
(iii) Executive shall be entitled to such portion of
any incentive compensation as shall be payable under the terms
of the Incentive Plan; and
(iv) Except as expressly provided in this Paragraph
5(d), Executive's post-termination obligations under this
Agreement, including, without limitation, the provisions of
Paragraphs 3 and 6, shall continue to apply following such
termination; and
(v) Executive shall use Executive's best efforts to
find other employment which does not violate the provisions of
Paragraph 3 hereof. If Executive accepts such other
employment, Executive shall promptly notify Payless of such
employment and of the compensation received, to be received or
receivable from Executive's subsequent employer attributable
to
6
the remainder of the Contract Term, and all basic compensation
otherwise payable under Paragraph 5(d) for the remainder of
the Contract Term shall be reduced to the extent of
Executive's similar compensation received, to be received or
receivable from such other employer or other business.
(e) "Cause" means
(i) an intentional act of fraud, embezzlement, theft
or any other material violation of law in connection with
Executive's duties or in the course of Executive's employment
with Payless; or
(ii) intentional damage to assets of Payless; or
(iii) intentional disclosure of confidential
information of Payless contrary to the policy of Payless; or
(iv) breach of Executive's obligations under this
Agreement; or
(v) intentional engagement in any competitive
activity which would constitute a breach of Executive's duty
of loyalty or of Executive's obligations under this Agreement;
or
(vi) intentional breach of any policy of Payless; or
(vii) the willful and continued failure by Executive
to substantially perform Executive's duties with Payless
(other than any such failure resulting from Executive's
incapacity due to physical or mental illness); or
(viii) the willful engaging by Executive in conduct
which is demonstrably and materially injurious to Payless,
monetarily or otherwise.
For purposes of this Paragraph 5(e), an act, or a failure to
act, shall not be deemed "willful" or "intentional" unless it is done,
or omitted to be done, by Executive in bad faith or without reasonable
belief that Executive's action or omission was in the best interest of
Payless. Failure to meet performance standards or objectives, by
itself, will not constitute "Cause".
(f) Executive agrees that, in addition to any other remedies,
Payless shall be permitted, as part of the computation of any final
amount or amounts due to Executive as wages, compensation, bonus,
deferred compensation or otherwise, and before any such amount shall be
due and owing, to reduce any amount which Payless may otherwise owe to
Executive by any unpaid amount which Executive owes to Payless.
6. (a) Executive will not, at any time, directly or indirectly,
use or disclose any of Payless' Confidential Information except as
authorized and within the scope of Executive's employment with Payless.
7
(b) At Payless' request and/or termination of Executive's
employment with Payless, Executive will return to Payless all
documents, records, notebooks, computer diskettes and tapes and
anything else containing Payless' Confidential Information, including
all copies thereof, as well as any other Payless property, in
Executive's possession, custody or control. Executive will also delete
from Executive's own computer or other electronic storage medium any of
Payless' proprietary or Confidential Information. Not later than 20
days after Executive's employment is terminated, Executive will certify
in writing to Payless that Executive has complied with these
obligations.
(c) During Executive's employment with Payless and thereafter,
Executive will
(i) notify and provide Payless immediately with the
details of any unauthorized possession, use or knowledge of any of
Payless' Confidential Information,
(ii) assist in preventing any reoccurrence of this
possession, use or knowledge, and
(iii) cooperate with Payless in any litigation or
other action to protect or retrieve Payless' Confidential information.
(d) "Confidential Information" means any non-public
information pertaining to Payless' business. Confidential Information
includes information disclosed by Payless to Executive, and information
developed or learned by Executive during the course of or as a result
of Executive's employment with Payless, which Executive also agrees is
Payless' property. Executive further agrees that any item of
intellectual or artistic property generated or prepared by Executive,
for Executive or with others, in connection with Executive's employment
by Payless is Payless' sole property and shall remain so unless Payless
otherwise specifically agrees in writing. Confidential Information
includes, without limitation, information and documents concerning
Payless' processes; suppliers (including Payless' terms, conditions and
other business arrangements with suppliers); supplier and customer
lists; advertising, marketing plans and strategies; profit margins;
seasonal plans, goals, objectives and projections, compilations,
analyses and projections regarding Payless' divisions, businesses,
product segments, product lines, suppliers, sales and expenses; files;
trade secrets and patent applications (prior to their being public);
salary, staffing and employment information (including information
about performance of other executives); and "know-how," techniques or
any technical information not of a published nature relating, for
example, to how Payless conducts its business.
(e) Executive agrees that Executive will not disclose to
Payless or use, or induce Payless to use, any proprietary information,
trade secret or confidential business information of any other person
or entity, including any previous employer of Executive. Executive also
represents that Executive has returned property, proprietary
information, trade secret and confidential business information
belonging to any prior employer.
8
7. (a) If any court of competent jurisdiction determines that,
but for the provisions of this Paragraph 7, any provision of this
Agreement is illegal, void as against public policy or otherwise
unenforceable because it is deemed to be overbroad, then such provision
shall automatically be amended to the extent (but only to the extent)
necessary to make it sufficiently narrow in scope, time and geographic
area that it is not illegal, void as against public policy or
overbroad. All other remaining terms and provisions shall remain in
full force and effect.
(b) If Executive raises any question regarding the
enforceability of any aspect of this Agreement, including, without
limitation, Paragraphs 3 or 6, Executive specifically agrees that
Executive will abide fully by such provisions unless and until a court
of competent jurisdiction has rendered a final judgment that such
provisions are not fully enforceable. Following any such final
judgment, Executive and Payless will abide fully by such judgment.
8. (a) Payless and Executive shall each be entitled to pursue all
legal and equitable rights and remedies to secure performance of the
obligations and duties of the other under this Agreement, and
enforcement of one or more of such rights and remedies shall in no way
preclude Payless or Executive from pursuing any and all other rights
and remedies available to each of them.
(b) Executive acknowledges and agrees that the individualized
services and capabilities that Executive will render and provide to
Payless during the Contract Term are of a personal, special, unique,
unusual, extraordinary and intellectual character.
(c) Executive acknowledges and agrees that the restrictions in
this Agreement on Executive are reasonable in order to protect Payless'
expectations and rights under this Agreement and to provide Payless
with the protections that Payless needs to, among other things,
safeguard its confidential information. Executive agrees that any
breach of this Agreement by Executive will cause immediate irreparable
injury to Payless, for which an award of damages alone may be
inadequate. Therefore, Payless shall be entitled, in addition to any
other right or remedy it may have, to an injunction without the posting
of any bond or other security, enjoining or restraining Executive from
any violation or threatened violation of this Agreement. In the event
that Payless is successful in any suit or proceeding relating to the
enforcement of this Agreement, Executive agrees to pay the reasonable
attorneys fees and costs as calculated by the Court.
(d) If Executive's employment is terminated by Executive
voluntarily or by Payless for Cause, Executive shall be liable for all
attorneys' fees and costs incurred by Payless in seeking to enforce its
rights under this Agreement.
9. Payless Work Product. The Executive agrees to disclose fully
to Payless, and hereby assigns and transfers to Payless, and agrees to
execute any additional documentation Payless may reasonably request to
evidence the assignment and transfer, immediately upon the conception,
development, making or acquisition thereof, the right, title, and
interest in and to any and all inventions, discoveries, improvements,
innovations, and/or designs (the "Work Product") conceived, discovered,
developed, acquired or secured by the Executive, solely or jointly with
9
others or otherwise, together with all associated U.S. and foreign
intellectual property rights (i.e., patents, copyrights, trademarks or
trade secrets) either:
(a) during the period of Executive's employment, if such Work
Product is related directly or indirectly, to the business of, or to
the research or development work of Payless;
(b) with the use of the time, materials, or facilities of
Payless; or
(c) within one (1) year after termination of such employment
if conceived as a result of and is attributable to work done during
such employment and relates to Work Product within the scope of the
business of Payless, together with rights to all intellectual property
rights which may be granted thereon.
Upon discovery, development or acquisition or any such Work
Product, Executive shall notify Payless and shall execute and deliver
to Payless, without further compensation, such documents prepared by
Payless as may be reasonable or necessary to prepare or prosecute
applications for such Work Product and to assign and transfer to
Payless Executive's right, title and interest in and to such Work
Product and intellectual property rights thereof. Executive
acknowledges that Executive has carefully read and considered the
provisions of this paragraph and, having done so, agrees that the
restrictions set forth herein are fair and reasonable and are
reasonably required for the protection of the interests of Payless, its
officers, directors, and other executives.
10. The entire understanding and agreement between the parties has
been incorporated into this Agreement, and this Agreement supersedes
all other agreements and understandings between the Executive and
Payless and its parents and subsidiaries, with respect to the
employment of Executive by Payless and its parents and subsidiaries.
This Agreement shall inure to the benefit of, and shall be binding
upon, Payless, its successors and assigns and upon Executive and
Executive's heirs, successors and assigns; provided, however, that,
since this is an agreement for the rendering of personal services,
Executive cannot assign any of Executive's obligations under this
Agreement to anyone else. This Agreement may be executed in
counterparts, in which case each of the two (2) counterparts shall be
deemed to be an original and the final counterpart shall be deemed to
have been executed in Topeka, Kansas.
11. Executive agrees that this Agreement may be assigned by
Payless to a subsidiary of Payless; such assignment, however, shall not
relieve Payless of any of its obligations hereunder except to the
extent that such obligations are actually discharged by such
subsidiary.
12. This Agreement has been executed by Payless at Payless'
corporate headquarters and principal executive offices in Topeka,
Kansas. Any questions or other matter arising under this Agreement,
whether of validity, interpretation, performance or otherwise, shall be
governed by and construed in accordance with the laws of the State of
Kansas applicable to agreements made and to be performed in such state
without regard to such state's conflicts of law provision. All actions
and proceedings arising out of or relating directly or indirectly to
this Agreement shall be
10
filed and litigated exclusively in any state court or federal court
located in the City of Topeka, Kansas or in Shawnee County, Kansas. The
parties hereto expressly consent to the jurisdiction of any such court
and to venue therein and consent to service of process if made upon
Payless' registered agent or if made at Executive's last known address
on the records of Payless.
BY SIGNING THIS AGREEMENT, EXECUTIVE HEREBY CERTIFIES THAT EXECUTIVE
(A) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND STUDY BEFORE
SIGNING IT; (B) HAS READ THIS AGREEMENT CAREFULLY BEFORE SIGNING IT;
(C) HAS HAD SUFFICIENT OPPORTUNITY TO REVIEW THE AGREEMENT WITH ANY
ADVISOR WHICH EXECUTIVE MAY DESIRE TO CONSULT, INCLUDING LEGAL COUNSEL;
(D) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING IT TO ASK ANY
QUESTIONS EXECUTIVE HAS ABOUT THIS AGREEMENT AND HAS RECEIVED
SATISFACTORY ANSWERS TO ALL SUCH QUESTIONS; AND (E) UNDERSTANDS
EXECUTIVE'S RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT.
IN WITNESS WHEREOF, this Agreement has been executed by Executive, and
then by Payless in Topeka, Kansas, effective as of the date first above
written.
___________________________________________
Name
Date:______________________________________
PAYLESS SHOESOURCE, INC.
By:________________________________________
Name: Steven J. Douglass
Title: Chairman and Chief Executive Officer
11