Severance Agreement - Converse Inc. and Jim Stroesser
February 13, 2003
Dear Jim:
Converse Inc. ("Converse") considers the stability of its executive
management team to be essential to the best interests of Converse. In order to
induce you to remain in the employ of Converse, this severance agreement (the
"Agreement") describes the severance compensation which Converse agrees will be
provided to you in the event your employment with Converse is terminated under
certain of the circumstances described below.
1. At-will Employment.
Notwithstanding any provisions of this Agreement, any offer letter,
Confidentiality Agreement, Stock Option Agreement or other document that you
sign in connection with your employment, your employment at Converse is and
continues to be "at-will" employment and may be terminated at any time with or
without cause or notice.
2. Scope of Agreement.
This Agreement is not intended to supercede the terms of any offer
letter, Confidentiality Agreement, Stock Option Agreement or other document
which you signed in connection with your employment at Converse, except insofar
as such document deals with severance pay (e.g., in the event the terms of any
offer letter conflict with the terms of this Agreement the terms of this
Agreement shall control).
3. Severance Payment if Termination Occurs for Disability, due to
Death, Without Cause or for Good Reason following a Change of Control. If your
employment with Converse is terminated (i) by Converse due to "Disability" (as
defined below); (ii) due to death; (iii) by Converse without "Cause" (as defined
below); or (iv) by you for "Good Reason" (as defined below) within twelve (12)
months following a "Change of Control" (as defined below), then Converse shall,
subject to your executing and not revoking a severance agreement and release of
claims prepared by and acceptable to Converse, do the following:
(a) Continue your "Base Salary" (as defined below) for a period of
one (1) year, less applicable withholding and payable in
accordance with Converse's normal payroll practices. For
purposes of this Agreement, the term "Base Salary" means the
highest annual base salary you received while employed by
Converse, excluding bonuses, commissions and other similar
amounts.
(b) In the event (i) a bonus is paid, in the first three months of
the calendar year following the calendar year in which you
were terminated, to Converse employees for services performed
in the calendar year in which you were terminated (the "Bonus
Year"), (ii) you would have been eligible to receive a
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bonus payment (as reasonably determined by Converse) for such
Bonus Year, and (iii) your employment was terminated after
March 31st of the applicable Bonus Year, then Converse shall
pay you a pro-rated amount of the bonus payment you would have
received had you remained employed with Converse through the
end of the Bonus Year (as reasonably determined by Converse
based on the product of (x) the amount of such bonus payment
(as reasonably determined by Converse), multiplied by (y) a
fraction of which the numerator is the number of whole months
you were employed in the Bonus Year and the denominator is
twelve).
(c) Converse shall continue your group medical and/or dental
coverage for a period of one year following your termination
date.
4. Payment if Termination Occurs for Cause or Voluntarily by you
Without Good Reason. If your employment is terminated (i) by Converse for Cause,
or (ii) by you (except for your termination for Good Reason within twelve (12)
months following a Change in Control), Converse shall pay you your base salary
through the date of termination plus year-to-date accrued vacation. Converse
shall have no further obligations to you under this Agreement.
5. Definitions of Certain Terms.
(a) Cause. "Cause" shall mean your conviction of or plea of guilty
to, a felony.
(b) Disability. "Disability" shall mean your inability to perform
substantially your regular duties with Converse on a full-time basis for more
than 120 consecutive days as a result of incapacity due to physical or mental
illness as determined by an independent physician reasonably and good faith
selected by Converse.
(c) Change in Control. A "Change in Control" shall mean the
occurrence of any of the following events:
(1) The acquisition by any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the "1934 Act") and excluding
Converse) of "beneficial ownership" (as such term is
defined in Rule 13d-3 promulgated under the 1934 Act),
directly or indirectly, of securities of Converse
representing forty percent (40%) or more of the total
voting power represented by Converse's then outstanding
voting securities; or
(2) The completion of: (i) any merger or consolidation of
Converse with any other entity, other than a merger or
consolidation which would result in the voting
securities of Converse outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities
of the surviving entity or its parent) at least
fifty-one percent (51%) of the total voting power
represented by the voting securities of Converse or such
surviving entity or its parent outstanding immediately
after such merger or consolidation; or (ii) any sale,
lease, exchange, or other transfer (in one transaction
or a series of
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related transactions) of all, or substantially all of
the assets of Converse; excluding any sale, lease,
exchange, or other - transfer of assets as part of a
plan or proposal for the liquidation or dissolution of
Converse.
(d) Good Reason. "Good Reason" shall mean, provided you have not
engaged in conduct which constitutes Cause for termination, or death and/or you
are not then subject to a Disability: (i) a change in your title, status or
position(s) with Converse which does not represent a promotion from your then
current title, status or position(s) or (ii) a change in your duties or
responsibilities that is inconsistent with such title, status or position(s)
with Converse which does not represent a promotion from your then current title,
status or position(s) or (iii) any removal of you from, or any failure to
reappoint or reelect you to, such position(s), except (A) any deminimis or
inconsequential change in your critical duties or responsibilities related to
such position(s), (B) any change in your title, status, position, duties or
responsibilities(s) solely as a result of Converse being acquired and made part
of a larger entity so long as you shall have the same title and shall continue
to serve in the same position of the subsidiary or business unit containing the
Converse business following a Change in Control or (C) in connection with the
termination of your employment for Cause or Disability or as a result of your
death or voluntarily by you other than for Good Reason; (iv) a reduction of your
base salary by Converse; (v) Converse's requiring you to be based anywhere other
than within seventy-five (75) miles from Cotto De Caza, California except for
required travel on Converse's business to the extent substantially consistent
with the business travel obligations which you normally undertake or would
reasonably be expected to undertake on behalf of Converse; and (vi) the failure
of any successor to Converse to assume expressly and in writing within ten (10)
days following such succession the terms and conditions of this Agreement. In
respect of events described in the previous sentence, you shall give Converse
written notice and explanation of the "Good Reason" event and thirty (30) days
to cure the default, failure or refusal. If such default, failure or refusal is
not cured within such thirty (30) day cure period, you may give written Notice
of Termination by you for Good Reason.
(e) Notice of Termination. A "Notice of Termination" of your
employment shall mean a written notice given of the termination of your
employment which shall indicate the specific termination provision in this
Agreement relied upon, and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of employment under the
provision so indicated.
6. Notices. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally, sent by courier or
mailed by United States certified or registered mail, return receipt requested,
postage prepaid. All notices to Converse shall be directed to the attention of
the Chief Executive Officer of Converse with a copy to the General Counsel of
Converse. All notices to you may be delivered to your last-known address as
maintained by Converse and you are responsible for maintaining the accuracy of
that address.
7. Successors; Binding Agreement.
(a) This Agreement shall inure to the benefit of, and be binding
upon, any corporate or other successor or assignee of Converse which shall
acquire, directly or indirectly, by merger, consolidation or purchase, or
otherwise, all or substantially all of the business or assets of
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Converse. Converse shall require any such successor to expressly to assume and
agree to perform this Agreement in the same manner and to the same extent as
Converse would be required to perform if no such succession had taken place.
(b) This Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die after
termination of employment where any amount would still be payable to you
hereunder if you had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
your estate.
8. Miscellaneous. No provision of this Agreement may be modified,
waived, or discharged unless such modification, waiver, or discharge is agreed
to in a writing signed by you and the Chief Executive Officer or Chief Operating
Officer of Converse that expressly references this letter agreement. No waiver
by either party hereto at any time of any breach by the other party hereto of,
or of compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same, or at any prior or subsequent time. The
validity, interpretation, construction, and performance of this Agreement shall
be governed by laws of the Commonwealth of Massachusetts without giving effect
to the principles of conflict of laws thereof
9. Entire Agreement. This Agreement represent the entire agreement and
understanding between the parties as to the subject matter of herein and
supersede all prior contemporaneous agreements, whether written or oral.
10. Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.
11. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
12. Arbitration. Any dispute or controversy arising out of, relating to,
or in connection with this Agreement, or the interpretation, validity,
construction, performance, breach, or termination thereof, shall be settled by
binding arbitration to be held in Middlesex County, Massachusetts, in accordance
with the National Rules for the Resolution of Employment Disputes then in effect
of the American Arbitration Association (the "Rules"). The arbitrator may grant
injunctions or other relief in such dispute or controversy. The decision of the
arbitrator shall be final, conclusive and binding on the parties to the
arbitration. Judgment may be entered on the arbitrator's decision in any court
having jurisdiction.
The arbitrator(s) shall apply Massachusetts law to the merits of any
dispute or claim, without reference to conflicts of law rules. The arbitration
proceedings shall be governed by federal arbitration law and by the Rules,
without reference to state arbitration law. You hereby consent to the personal
jurisdiction of the state and federal courts located in Massachusetts for any
action or proceeding arising from or relating to this Agreement or relating to
any arbitration in which the parties are participants.
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YOU HAVE READ AND UNDERSTAND THIS SECTION, WHICH DISCUSSES ARBITRATION. YOU
UNDERSTAND THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, CONSTITUTES A
WAIVER OF YOUR RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL
DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP,
INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:
(a) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH
OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND
FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF
EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR
INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND
DEFAMATION.
(b) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR
MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS
ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT
ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, AND THE FAIR LABOR
STANDARDS ACT;
(c) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS
RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.
13. Employment Taxes. All payments made pursuant to this Agreement shall
be subject to withholding of applicable income and employment taxes.
14. Precedence. The offer of a severance to the employee is not intended
to establish and does not establish a practice or policy for the treatment of
any other employees.
15. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together will constitute
one and the same instrument.
o O o
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If you would like to enter into this Agreement, kindly sign and return to
Converse the enclosed copy of this letter, which will then constitute our
agreement on this subject.
Very truly yours,
CONVERSE INC.
By: /s/ Marsden S. Cason
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Name: Marsden S. Cason
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Title: Executive Chairman
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AGREED TO:
/s/ Jim Stroesser
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Jim Stroesser
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