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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into as of October
1, 1996, by and between Pacific Sunwear of California, Inc., a California
corporation (the "Company"), and Xxxx X. Xxxxxx ("Executive").
The Company desires to employ Executive, and Executive desires to be an
employee of the Company, pursuant to the terms and conditions set forth herein.
In consideration of the foregoing and the promises and covenants set forth
below, the parties agree as follows:
1. Employment. The Company hereby employs Executive as President and Chief
Executive Officer, and Executive agrees to be employed in such positions during
the term of this Agreement. Executive shall devote his full time and efforts to
perform his duties faithfully and diligently and, to the best of his ability, to
advance the interests of the Company.
2. Compensation. The Company shall pay Executive a base salary of $375,000
per year, with such increases as may be approved by the Company's Board of
Directors, payable in accordance with the Company's practices in effect from
time to time. Notwithstanding the foregoing, the minimum annual adjustment to
the base salary of Executive, commencing October 1, 1997, shall be equal to the
greater of (i) the percentage by which the Consumer Price Index for the last
month of the then current year of the term of this Agreement shall have
increased as compared to the Consumer Price Index of the same month of the
immediately preceding year and (ii) 5% of Executive's then annual base salary.
"Consumer Price Index" refers to the Consumer Price Index -- Los Angeles
Metropolitan Area -- All items compiled by the U.S. Department of Labor, Bureau
of Labor Statistics, based on 1967 as 100.
In addition, Executive shall receive a monthly car lease allowance of $800
per month, reimbursement for all other automobile expenses, family medical
insurance, four weeks vacation per year and other benefits that are comparable
to the benefits offered to other executive officers of the Company in general.
The Company also shall provide Executive with a $1,000,000 term life insurance
policy wherein Executive or a person designated by Executive is the beneficiary,
subject to Executive completing and passing any required physical examinations.
The Company also shall reimburse Executive for all out-of-pocket expenses
reasonably incurred and paid by him in the performance of his duties pursuant to
this Agreement. Such reimbursement shall be in accordance with the Company's
policies, and Executive shall furnish to the Company the documentation required
to support the deductibility of such expenses for federal income tax purposes.
All payments made under this Agreement are subject to all deductions required by
law.
Executive also shall be entitled to participate in an annual bonus program
wherein Executive shall receive a bonus equal to a percentage of his base
salary, not to exceed 75% of his base salary, based upon the achievement of
financial performance criteria to be established by the Company in consultation
with Executive. The bonus payment, if any, shall be made reasonably promptly
after audited financial statements are available to the Company for the purpose
of determining the satisfaction of the financial performance criteria.
3. Term.
(a) The term of this Agreement (the "Term") shall commence on the date
hereof and shall terminate on October 18, 1997; provided, however, if the
Company does not give Executive written notice at least 60 days prior to
the end of the Term of the Company's intention to not have the Term
extended for a one year period, then the Term shall automatically be
extended for one year and shall be automatically extended each year
thereafter unless the Company gives Executive written notice at least 60
days prior to the end of the Term (any such notice being a "60 Day Notice")
of the Company's intention not to extend the Term.
(b) The Term may be terminated at any time upon the occurrence of any
of the following events:
(i) The death or permanent disability of Executive;
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(ii) Executive's voluntary resignation;
(iii) Executive's discharge for cause; or
(iv) Upon the 30th day following written notice of termination
other than for cause (the "Termination Without Cause Notice") from the
Company to Executive.
(c) Executive shall be considered permanently disabled if Executive is
absent from employment or unable to render services hereunder on a
full-time basis by reason of physical or mental illness or disability for
six months or more in the aggregate in any consecutive twelve month period
during the Term.
(d) As used in Paragraph 3(b)(ii), "voluntary resignation" means
Executive has resigned for any reason other than at the express written
request, whether or not for cause, of the Board.
(e) As used in Paragraph 3(b)(iii), "cause" shall mean only that (i)
Executive has refused to perform or discharge his material obligations or
duties hereunder for 30 days after notice from the Board of such refusal,
or (ii) Executive has engaged in illegal or other wrongful conduct
substantially detrimental to the business or reputation of the Company.
(f) If this Agreement is terminated pursuant to Paragraphs 3(b)(i),
3(b)(ii) or 3(b)(iii), this Agreement shall terminate immediately or at
such later date as shall be designated by the Board and all of Executive's
rights hereunder shall terminate effective upon such termination, except
for payment of amounts earned by or owed to Executive prior to Executive's
termination hereunder, including, without limitation, a Pro Rata Portion of
the Bonus (as defined below).
Except as provided above and as otherwise specified in any notice of
termination, Executive shall not continue after termination to be an
employee of the Company for any purpose and all rights Executive might
thereafter have as an employee pursuant to any plan shall cease except as
expressly provided to the contrary in writing under any such plan.
(g) If the Company should terminate this Agreement pursuant to
Paragraph 3(b)(iv) by giving a Termination Without Cause Notice or shall at
any time give a 60 Day Notice:
(i) Executive shall cease to be Chief Executive Officer and
President of the Company, and to hold such other office or position
Executive then holds in the Company or any subsidiary or affiliate
thereof, effective upon the date specified in the Termination Without
Cause Notice or the 60 Day Notice, as the case may be (the "Effective
Date"), and if requested by a majority of the members of the Board,
shall resign from the Board and from any of the Boards of Directors of
the Company's subsidiaries or affiliated companies of which Executive
may be a member.
(ii) The Company shall be obligated and shall continue to pay
Executive a salary at Executive's then annual salary (without regard to
any bonus) for a period of one year following the Effective Date. Such
payments shall be made in installments payable as provided in Section 2
hereof. The Company also shall pay Executive in a single payment within
60 days of the end of the Company's fiscal year a Pro Rata Portion of
the Bonus (as defined below). "Pro Rata Portion of the Bonus" means an
amount equal to any bonus to which Executive would have been entitled
had Executive remained an employee for the balance of the fiscal year in
which his employment terminated multiplied by a fraction, the numerator
of which is the number of days from February 1 to the date of
Executive's termination, and the denominator of which is 365.
(h) Executive must give the Company written notice of at least 60 days
prior to Executive's voluntary resignation.
4. Return of Documents and Property. Upon the termination of Executive's
employment by the Company, or at any time upon the request of the Company,
Executive (or his heir or personal representative) shall deliver to the Company
(a) all documents and materials containing trade secrets and other confidential
information relating to the Company's business and affairs, and (b) all other
documents, materials and other
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property belonging to the Company or its affiliated companies that are in the
possession or under the control of Executive.
5. Assignment. Executive's rights and obligations under this Agreement
shall not be assignable by Executive. The Company's rights and obligations under
this Agreement shall not be assignable by the Company except as incident to the
transfer, by merger, liquidation, or otherwise, of all or substantially all of
the business of the Company.
6. Notices. Any notice required or permitted under this Agreement shall be
given in writing and shall be deemed to have been effectively made or given if
personally delivered, or if telegraphed, telexed, cabled, or mailed to the other
party at its address set forth below in this Section 6, or at such other address
as such party may designate by written notice to the other party hereto. Any
effective notice hereunder shall be deemed given on the date personally
delivered or on the date telegraphed, telexed, cabled or deposited in the United
States mail (sent by certified mail, return receipt requested) mailed, as the
case may be at the following address:
(i) If to the Company:
Pacific Sunwear of California, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Secretary
(ii) If to the Executive:
Xx. Xxxx X. Xxxxxx
c/o Pacific Sunwear of California, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
7. Miscellaneous. This Agreement constitutes the entire agreement of the
parties hereto relating to the subject matter hereof, and there are no written
or oral terms or representations made by either party other than those contained
herein. This Agreement supersedes all prior agreements between the parties
concerning the subject matter hereof, including that certain Severance Agreement
dated February 6, 1996, between the Company and Executive which is hereby deemed
terminated as of the date of this Agreement. This Agreement may only be amended
in writing signed by both parties. No waiver by any party of any breach of this
Agreement shall be deemed to be a waiver by any party of any preceding or
succeeding breach. The validity, interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of California without
regard to conflicts of laws principles. The headings contained herein are for
reference purposes only and shall not in any away affect the meaning or
interpretation of this Agreement. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, all such
counterparts together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PACIFIC SUNWEAR OF CALIFORNIA, INC.
By:
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XXXX X. XXXXXX
Chief Financial Officer,
Vice President of Finance
and Secretary
"Executive"
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XXXX X. XXXXXX
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