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Indiana
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0-20184
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35-1537210
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(State
or Other Jurisdiction of
Incorporation)
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(Commission
File Number)
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(IRS
Employer Identification
No.)
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3308
North Mitthoeffer Road, Indianapolis, Indiana
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46235
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(Address
of Principal Executive Offices)
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(Zip
Code)
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Term
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The
term of each Amended and Restated Employment Agreement has been extended
to October 30, 2010, rather than expiring on October 30, 2009. The term
continues to be subject to automatic renewal for additional 1-year periods
unless the Company or the executive gives notice of non-renewal, but the
notice period has been increased to 180 days from 90
days.
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Base
Salary; Bonus Participation
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Mr.
Lyon’s base salary will increase from $468,000 to $620,000. Mr.
Schneider’s base salary will increase from $406,000 to
$500,000. Both executives assumed their new positions effective
December 1, 2008, and they will be recognized in those positions, for
salary, bonus and other purposes, as of that date. They will
continue to be eligible to participate in the annual and long-term
incentive bonus compensation programs and employee benefit plans available
to other executives.
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Rights
Upon Non-Renewal of Employment Agreement, Coupled with Termination (not
due to “cause”)
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Under
the prior agreements, the executives were not entitled to any income
protection in this event. Under the Amended and Restated Employment
Agreements, the executives will be entitled to the following severance
benefits: (i) base salary for one year; (ii) health insurance for one
year; and (iii) the current year bonus based on days of service during the
year and actual performance for the
year.
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Rights
Upon Termination by the Company for “Cause” or by the executive without
“Good Reason”
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The
executive’s monetary rights and benefits in this event do not change.
However, the Amended and Restated Employment Agreements have made the
following changes or clarifications: (i) the executive will have 35 days
after notice to attempt to cure any cause, instead of 15 days; (ii)
whether cause has occurred will be determined by a majority of the Board
of Directors, instead of by the Company; (iii) embezzlement and theft are
confirmed as constituting conduct that causes demonstrable harm to the
Company, and are thereby a basis for cause; and (iv) any failure to
perform material duties must continue for 30 days (instead of an undefined
period) in order to support a finding of cause.
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Rights
Upon Termination by the Company without “Cause” or by the executive with
“Good Reason” (not during the 30 days before or 2 years after a change in
control)
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A
“good reason” for an executive to terminate employment continues to
include (i) a reduction in base salary or bonus opportunities that does
not affect all executives; (ii) a transfer out of the geographic area; and
(iii) a substantial reduction in authority, duties or responsibilities, or
the imposition of duties and responsibilities inconsistent with the
executive’s position, if these developments occur during the 30 days
before or 2 years after a change in control. The Amended and
Restated Employment Agreements add the occurrence of a material breach by
the Company as another “good reason,” and also add rights for the Company
to receive notice of an executive’s “good reason” to terminate and be
given an opportunity to cure the problem.
The
Amended and Restated Employment Agreements also increase the financial
rights and benefits of the executives in the event of a termination
without cause or a resignation for good reason. Specifically,
instead of an amount equal to 1 times base salary, Mr. Lyon will receive 2
times base salary and Mr. Schneider will receive 1.5 times base
salary. Also, instead of continued health benefits for 1 year,
Mr. Lyon will receive such benefits for 2 years and Mr. Schneider will
receive them for 1.5 years. Finally, the possible bonus payment
in this event has been enhanced to be the greater of (i) prorated
long-term and annual bonus based on actual employment, or (ii) average
annual bonus actually paid to the executive for the 3-year period prior to
the termination of employment.
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Rights
Upon Termination by the Company without “Cause” or by
the executive with “Good Reason” (during the 30 days
before or 2 years after a change in control)
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In
the event of a termination without cause or a resignation with good
reason relating to a change in control, the executive will
continue to receive the same rights and benefits previously disclosed,
including a payment equal to 2.5 times the sum of (i) Base Salary, plus
(ii) target annual bonus for the termination year, plus (iii) the value of
any other bonus the executive could have earned during the termination
year, and also including health coverage for 2 years.
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Definition
of Change in Control
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Under
the prior agreements, a change in control would not be deemed to have
occurred if one of the Founders of the Company (Alan Cohen, David Klapper
or Larry Sablosky) continued to be the CEO for a period of time or the
group of Founders continued to own a majority of the voting
power. This exception to the definition of a change in control
was eliminated.
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Parachute
Taxes
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In
the event the executive will be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, the
executive will continue to be entitled to receive additional payments from
the Company.
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Non-Competition
Provisions
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The
executive will be bound to observe certain non-competition covenants for
12 months following (i) termination without cause prior to a change in
control, or (ii) resignation without good reason following a change in
control. The executive now will also be bound to an extended
restrictive period in the event of a resignation for good reason prior to
a change in control, with Mr. Lyon bound for 24 months and Mr. Schneider
bound for 18 months. After a change in control, the restrictive
period for a termination without cause or a resignation for good reason
has been reduced from 30 months to 24 months. Also, the ability
of the Company to impose a 6-month restrictive period on any employee to
whom the Company pays salary and health coverage severance benefits during
the restricted period has been eliminated. In addition, the
restricted activity during any restrictive period has been redefined to
more accurately reflect the business of the Company and current law. The
executive has to be engaged in a “competitive capacity” in a competitive
business; a competitive business is any business that competes with the
Company’s athletic specialty and/or sporting goods retail industry
business.
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Section
409A
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The
Amended and Restated Employment Agreement includes revisions to insure
compliance with Section 409A of the Internal Revenue Code of 1986, as
amended.
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Exhibit Number
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Description of Exhibit
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Exhibit
10.1
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Amended
and Restated Employment Agreement of Glenn S. Lyon, dated as of December
31, 2008
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Exhibit
10.2
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Amended
and Restated Employment Agreement of Steven J. Schneider, dated as of
December 31, 2008
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The
Finish Line, Inc.
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Date: December
31, 2008
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By:
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/s/
Beau J. Swenson
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Beau
J. Swenson, Vice President and
Controller
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Exhibit Number
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Description of Exhibit
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Location
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Exhibit
10.1
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Amended
and Restated Employment Agreement of Glenn S. Lyon, dated as of December
31, 2008
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Attached
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Exhibit
10.2
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Amended
and Restated Employment Agreement of Steven J. Schneider, dated as of
December 31, 2008
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Attached
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