Exhibit 10
05/31/99
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT, made as of the 1st day of June, 1999, between Xxxxxxx
X. Xxxxxxx, an individual resident of Wisconsin ("Xxxxxxx"), and LaCrosse
Footwear, Inc., a Wisconsin corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the Company desires to continue to retain the services of
Xxxxxxx as President and Chief Executive Officer;
WHEREAS, Xxxxxxx desires to continue to be employed by the Company on
the terms and conditions hereinafter set forth in this Agreement;
WHEREAS, the Company desires to provide Xxxxxxx with supplemental
retirement benefits sufficient to provide him with a retirement income of
sixty-five percent (65%) of his base salary, assuming retirement at age 65
(after taking into account qualified plan and Social Security benefits);
WHEREAS, the Company could provide such supplemental retirement
benefits to Xxxxxxx directly, or indirectly through an insurance policy or other
funding mechanism;
WHEREAS, Xxxxxxx, who already has a substantial portion of his net
worth in the Company's common stock (including stock options) and is otherwise
financially dependent on the future success of the Company, prefers to have such
supplemental retirement benefits funded indirectly through an insurance policy
in order to diversify his credit risk; and
WHEREAS, the Company is willing to accede to Xxxxxxx'x request on the
understanding that the parties have made certain assumptions about the future
that are incorporated in such insurance policy, and that Xxxxxxx will look
solely to such insurance policy to provide such supplemental retirement
benefits.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and the mutual benefits to be derived from this Agreement, the parties
hereto, intending to be legally bound, hereby agree as follows:
1. Positions and Duties. Subject to the terms and conditions of this
Agreement, from the effective date of this Agreement until January 31, 2005, the
Company shall employ Xxxxxxx as its President and Chief Executive Officer. In
such position, Xxxxxxx shall perform such duties of a managerial nature as shall
be assigned to him from time to time by the Board of Directors of the Company.
Xxxxxxx will devote his best efforts to his employment with the Company and
shall devote substantially all of his business time and attention to the
performance of his duties under this Agreement.
2. Term of Employment. Except if terminated earlier as provided below,
the Company's employment of Xxxxxxx under this Agreement shall continue until
January 31, 2005; provided, however, that the term of employment under this
Agreement shall be automatically renewed for successive one-year periods unless,
at least one hundred eighty (180) days prior to January 31, 2005, or the end of
the then current term of this Agreement, either party shall give written notice
to the other party of such party's intent not to renew the term of employment
under this Agreement as of the end of the then current term. The Company's
employment of Xxxxxxx under this Agreement shall terminate prior to the end of
the term hereof only under the following circumstances:
(a) Death. Xxxxxxx'x death;
(b) Disability. If, as a result of Xxxxxxx'x illness, physical or
mental disability or other incapacity resulting in Xxxxxxx'x inability to
perform his duties under this Agreement for any period of six (6)
consecutive months, and within thirty (30) days after written notice of
termination is given by the Company (which may occur before or after the
end of such 6-month period), he shall not have returned to the performance
of his duties hereunder on a full-time basis, the Company may terminate
Xxxxxxx'x employment hereunder;
(c) Termination for Good Cause. The Company may, upon written notice,
terminate Xxxxxxx'x employment for Good Cause. "Good Cause" for purposes of
this Paragraph (2)(c) shall mean Xxxxxxx'x conviction of a felony,
conviction of a crime involving moral turpitude or such other serious
personal misconduct by Xxxxxxx of such a nature as would render his
continued employment detrimental to the best interests of the Company;
(d) Consolidation, Merger or Comparable Transaction. In the event that
the Company consolidates with or merges with and into any other entity or
enters into a comparable capital transaction pursuant to which the Company
is not the continuing or surviving corporation or if the Company is the
continuing or surviving corporation and the beneficial owners of the
Company have substantially changed, Xxxxxxx'x employment may, by written
notice of termination, be terminated by the Company upon the later of (i)
the consummation of such consolidation, merger or comparable transaction or
(ii) January 31, 2005;
(e) Voluntary Termination by Xxxxxxx. Xxxxxxx'x employment shall
terminate sixty (60) days after written notice of termination is delivered
by Xxxxxxx to the Company or such earlier time as the Company may specify
in writing upon receipt of Xxxxxxx'x notice of termination;
(f) Voluntary Termination by the Company. The Company may terminate
Xxxxxxx'x employment for any reason after January 31, 2005; or
(g) Retirement. Xxxxxxx may terminate employment by retirement upon
attaining age 55 in accordance with the then existing retirement policy of
the Company or by mutual agreement with the Company. The Company may
require Xxxxxxx to
-2-
retire upon attaining age 65; such a decision shall not be treated as a
voluntary termination by the Company for purposes of Paragraph 2(f) above.
In no event shall the termination of Xxxxxxx'x employment affect the rights and
obligations of the parties set forth in this Agreement, except as expressly set
forth herein. Under certain circumstances the Company's obligations to pay
certain insurance premiums and to make certain deferred compensation accruals
shall survive the term of Xxxxxxx'x employment with the Company.
3. Compensation. During the term of this Agreement, Xxxxxxx shall be
entitled to the following compensation for services rendered to the Company:
(a) Xxxxxxx shall be entitled to receive a minimum annual base salary
of $238,000, effective June 1, 1999. Thereafter, any increase in minimum
annual base salary shall be determined at least annually by the Company's
Board of Directors with consideration given to the average increase in base
salaries made available to the Company's executive management group
generally; provided, however, that in no event shall Xxxxxxx'x annual base
salary be reduced without his prior consent.
(b) For each Company fiscal year during the term of this Agreement,
Xxxxxxx shall be entitled to participate in any incentive bonus or
compensation plan made available by the Company to its executives
generally. With respect to any such incentive bonus or compensation plan,
in the event Xxxxxxx is not employed by the Company for a full Company
fiscal year, he shall be entitled to receive a pro rata incentive bonus or
compensation payment equal to (i) the number of full calendar months during
which he was employed by the Company during such fiscal year, divided by
twelve (12), multiplied by (ii) the incentive bonus or compensation that he
would have been entitled to receive had he been employed by the Company for
the full fiscal year; provided, however, that Xxxxxxx shall not be entitled
to any incentive bonus or compensation payment if his termination of
employment with the Company was for Good Cause as provided in Paragraph
2(c) hereof.
(c) Xxxxxxx'x base salary shall be paid ratably during each 12-month
period under this Agreement on a monthly basis. The bonus provided in
Paragraph 3(b) shall be paid in a single payment no later than thirty (30)
days after the independent certified public accountants regularly employed
by the Company have made available to the Company the financial statements
for the appropriate fiscal year. All payments under this Agreement shall be
subject to withholding or deduction by reason of the Federal Insurance
Contribution Act, Federal income tax, state income tax and similar laws and
regulations.
4. Fringe Benefits. During the term of this Agreement:
(a) Xxxxxxx shall be entitled to four (4) weeks paid vacation for each
year during the term of this Agreement. Xxxxxxx shall also be entitled to
participate at the Company's expense, in any retirement plan, pension plan,
employee stock purchase plan, employee stock option plan, life insurance
plan, health insurance plan or fringe or
-3-
other benefit which the Company from time to time makes available generally
to its executive employees; provided, however, that (i) the supplemental
retirement benefits provided under subparagraph (d) shall be taken into
account by the Company in determining Xxxxxxx'x eligibility or extent of
participation in any future retirement plan, pension plan or comparable
benefit plan and (ii) any vacation not taken as of the end of any year
during the term of this Agreement shall be forfeited. Xxxxxxx shall be
compensated by the Company for all reasonable business expenses incurred by
him on behalf of the Company upon presentation of appropriate
documentation.
(b) As long as life insurance on Xxxxxxx'x life is available at
regular rates, the Company shall purchase and maintain a term life
insurance policy on Xxxxxxx'x life in the face amount of $500,000 which
shall be payable to a beneficiary designated by Xxxxxxx. Xxxxxxx agrees to
submit to any requested physical examination and to cooperate fully in
connection with the purchase and retention of such life insurance policy.
(c) The Company and Xxxxxxx shall establish a "split dollar" life
insurance policy (the "Split Dollar Policy"), which shall be owned by
Xxxxxxx and with respect to which Xxxxxxx shall enjoy all of the attributes
of ownership, subject only to the Company's right to be reimbursed, without
interest or any increase or decrease, for the dollar amount of premiums it
expends. Subject to the terms and conditions of this Agreement, the Company
shall make premium payments to such Split Dollar Policy in accordance with
the attached Exhibit A. The Company shall retain the right to be reimbursed
for the dollar amount of the aggregate premiums paid with respect to the
Split Dollar Policy upon the later of (i) the sixteenth (16th) anniversary
date of the effective date of the Split Dollar Policy or (ii) the
termination of Xxxxxxx'x employment with the Company in accordance with the
then current retirement policy of the Company. The Company and Xxxxxxx
shall cooperate in good faith to ensure that their relative rights are
properly recorded on the books of the insurance company that issues the
Split Dollar Policy. The Company shall make the required premium payments
to the Split Dollar Policy until the earlier of (i) January 1, 2015, or
(ii) the termination of Xxxxxxx'x employment with the Company as a result
of death (Paragraph 2(a)), disability (Paragraph 2(b)), termination for
Good Cause (Paragraph 2(c)), a consolidation, merger or comparable
transaction after January 31, 2005, involving the Company (Paragraph 2(d)),
Xxxxxxx'x voluntary termination (Paragraph 2(e)) or Xxxxxxx'x retirement in
accordance with the then existing retirement policy of the Company
(Paragraph 2(g)) (except for retirement on or after age 55 under
circumstances where the Company has not allowed Xxxxxxx to continue as the
Chief Executive Officer); provided, however, that in the event that the
Company does not allow Xxxxxxx to continue as the Chief -------- -------
Executive Officer of the Company at any time after January 31, 2005, the
Company shall continue to make such premium payments to the Split Dollar
Policy (but in no event shall any such premium payment be required after
January 1, 2015).
(d) The Company shall establish an unfunded deferred compensation
account (the "Deferred Compensation Account") for Xxxxxxx effective as of
the date
-4-
hereof. Xxxxxxx and/or his personal representative(s) or estate shall not
have any right to receive any amount from such Deferred Compensation
Account until the later of (i) January 31, 2015, or (ii) the termination of
Xxxxxxx'x employment with the Company in accordance with the then current
retirement policy of the Company. The Deferred Compensation Account shall
be established solely for measurement purposes, and Xxxxxxx and/or his
personal representative(s) or estate shall have no right to receive any
amount from such Deferred Compensation Account except in strict compliance
with the provisions of this Agreement. Subject to the terms and conditions
of this Agreement, the Company shall credit amounts to such Deferred
Compensation Account in accordance with the attached Exhibit B. The
Deferred Compensation Account shall not be increased or decreased to
reflect the time value of money or foregone interest or other income, but
shall represent solely the actual dollar amount of the amounts credited to
such account. The Company shall make the required credits to the Deferred
Compensation Account until the earlier of (i) January 1, 2015, or (ii) the
termination of Xxxxxxx'x employment with the Company as a result of death
(Paragraph 2(a)), disability (Paragraph 2(b)), termination for Good Cause
(Paragraph 2(c)), a consolidation, merger or comparable transaction after
January 31, 2005, involving the Company (Paragraph 2(d)), Xxxxxxx'x
voluntary termination (Paragraph 2(e)) or Xxxxxxx'x retirement in
accordance with the then existing retirement policy of the Company
(Paragraph 2(g)) (except for retirement on or after age 55 under
circumstances where the Company has not allowed Xxxxxxx to continue as the
Chief Executive Officer); provided, however, that (i) in the event that the
Company does not allow Xxxxxxx to continue as the Chief Executive Officer
of the Company at any time after January 31, 2005, the Company shall
continue to make such credits to the Deferred Compensation Account (but in
no event shall any such credit be required after January 1, 2015) and (ii)
in the event Xxxxxxx dies prior to retiring from the Company, or retires in
contemplation of death or voluntarily terminates employment with the
Company (in either case prior to attaining age 65) in contemplation of
death, any amounts then due him pursuant to such Deferred Compensation
Account shall be forfeited and no further payments shall be due or owing to
Xxxxxxx or his estate pursuant to the provisions of such Deferred
Compensation Account. The Company shall pay Xxxxxxx and/or his personal
representative(s) or estate the value of the Deferred Compensation Account
in ten (10) substantially equal installments commencing upon the earliest
of his retirement in accordance with the current retirement plan of the
Company, death, permanent disability or January 31, 2015. Xxxxxxx
acknowledges that, in partial consideration for the establishment and
funding of the Deferred Compensation Account, he forfeits, waives and
releases any right he has to receive any amount under the Company's
Deferred Compensation Plan for Key Employees. Xxxxxxx and/or his personal
representative(s) or estate have the status of a general unsecured creditor
of the Company and this Agreement constitutes a mere promise by the Company
to make the payments set forth above in the future. Xxxxxxx and the Company
intend that these arrangements be unfunded for tax purposes and for
purposes of Title I of ERISA. Nothing in this Agreement shall give Xxxxxxx,
or any other person, any right, title, interest, or claim in or to any
specific assets, fund, reserve, account, or property of any kind whatsoever
owned by the Company or in which it may have any right, title, or interest
now or in the future.
-5-
(e) The Company shall guarantee a bank loan (or any replacement bank
loan) arranged by Xxxxxxx for his personal benefit with a maximum principal
balance of One Hundred Fifty Thousand Dollars ($150,000); provided,
however, that such maximum principal balance shall be reduced by
Twenty-five Thousand Dollars ($25,000) each February 15th commencing
February 15, 2000, until such bank loan (or any replacement bank loan)
shall mature, and related guarantee shall expire, on February 15, 2005. The
parties understand and agree that this bank loan shall be used to repay
promptly in full the outstanding principal balance and interest on the
Promissory Note, dated October 9, 1998, executed and delivered by Xxxxxxx
to the Company.
(f) During each calendar year during the term of this Agreement, the
Company shall pay or reimburse Xxxxxxx for up to Two Thousand Five Hundred
Dollars ($2,500) for personal financial, tax, accounting and/or estate
planning services upon request and presentation of appropriate invoices or
other documentation.
5. Termination Payments. In addition to any benefits due under the
Company's Retirement Plan ("Retirement Plan"), Xxxxxxx shall be entitled to
receive the following payments upon termination of his employment hereunder:
(a) In the event of the termination of Xxxxxxx'x employment pursuant
to Paragraph 2(b) hereof, the Company shall continue to pay the base salary
due Xxxxxxx under Paragraph 3 hereof for a period of twelve (12) months
from and after the date of such termination; provided, however, that any
disability insurance payments received by Xxxxxxx shall be offset against
the amounts otherwise required to be paid by the Company hereunder.
(b) In the event of termination of Xxxxxxx'x employment pursuant to
Paragraph 2(c) hereof, the Company shall pay to Xxxxxxx only such amounts
due him as of the date of such termination.
(c) In the event of termination of Xxxxxxx'x employment pursuant to
Paragraph 2(d) hereof under circumstances where Xxxxxxx does not continue
to be employed by the Company or such continuing or successor corporation,
the Company shall continue to pay the base salary and incentive
compensation due Xxxxxxx under Paragraph 3 hereof for a period of twelve
(12) months from and after the date of such termination.
(d) In the event of termination of Xxxxxxx'x employment pursuant to
Paragraph 2(f) hereof, the Company shall continue to pay the base salary
due Xxxxxxx under Paragraph 3 hereof for a period of six (6) months from
and after the date of such termination.
(e) In the event that Xxxxxxx violates the provisions of Paragraph 6
hereof after the termination of his employment with the Company, the
payments and benefits provided under this Agreement shall be automatically
forfeited.
-6-
6. Covenant Not to Compete and Non-Disclosure.
------------------------------------------
(a) During the term of this Agreement and for a period of two (2)
years following the termination of his employment with the Company, Xxxxxxx
covenants and agrees that neither he nor any of his affiliates (including
any corporation or entity in which he is an officer, director or partner,
or in which he owns beneficially five percent (5%) or more of any class of
equity securities) shall within the United States or Canada, whether
directly or indirectly, with or without compensation, enter into, engage in
or be employed by or act as a consultant to any corporation or other
commercial enterprise which competes with the Company, or solicit or do any
business with any existing customers of the Company.
(b) Xxxxxxx agrees to disclose promptly to the Company and does assign
and agree to assign to the Company, free from any obligation to him, all
his right, title and interest in and to any and all ideas, concepts,
processes, improvements and inventions made, conceived, written, acquired,
disclosed or developed by him, solely or in concert with others, during the
term of his employment by the Company, which relate to the business,
activities or facilities of the Company, or resulting from or suggested by
any work he may do for the Company or at its request. Xxxxxxx further
agrees to deliver to the Company any and all drawings, notes, photographs,
copies, outlines, specifications, memoranda and data relating to such
ideas, concepts, processes, improvements and inventions, to cooperate fully
during his employment and thereafter in the securing of copyright,
trademark or patent protection or other similar rights in the United States
and foreign countries, and to give evidence and testimony and to execute
and deliver to the Company all documents requested by it in connection
therewith.
(c) Except as expressly set forth below, Xxxxxxx agrees, whether
during his employment pursuant to this Agreement or thereafter, except as
authorized or directed by the Company in writing, not to disclose to
others, use for his benefit, copy or make notes of any confidential
knowledge or trade secrets or any other knowledge or information of or
relating to the business, activities or facilities of the Company or any of
its affiliates which may come to his knowledge during his employment
pursuant to this agreement or thereafter. Xxxxxxx shall not be bound to
this obligation of confidentiality and nondisclosure if:
(i) the knowledge or information shall become part of the public
domain by publication or otherwise through no fault of Xxxxxxx;
(ii) the knowledge or information is known to the recipient prior
to the receipt of the disclosure from Xxxxxxx; or
(iii) the knowledge or information is disclosed to the recipient
by a third party who is in lawful possession of the knowledge or
information and has the lawful right to make disclosure thereof.
-7-
(d) Upon termination of employment pursuant to this Agreement for any
reason whatsoever, Xxxxxxx will deliver to the Company all records, notes,
data, memoranda, photographs, models and equipment of any nature which are
in his possession or control and which are the property of the Company or
which relate to his employment or to the business, activities or facilities
of the Company or any of its affiliates.
(e) The parties understand and agree that the remedies at law for
breach of the covenants in this Paragraph 6 would be inadequate and that
the Company shall be entitled to injunctive or such other equitable relief
as a court may deem appropriate for any breach of these covenants. If any
of these covenants shall at any time be adjudged invalid to any extent by
any court of competent jurisdiction, such covenant shall be deemed modified
to the extent necessary to render it enforceable.
7. Entire Agreement. This instrument embodies the entire agreement
between the parties hereto with respect to Xxxxxxx'x employment with the
Company, and there have been and are no agreements, representations or
warranties between the parties other than those set forth or provided for
herein.
8. No Assignment. This Agreement shall not be assigned by Xxxxxxx
without the prior written consent of the Company and any attempted assignment
without such prior written consent shall be null and void and without legal
effect. Xxxxxxx'x rights to benefit payments hereunder are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment or garnishment by creditors of Xxxxxxx and/or his
personal representative(s), estate or beneficiaries.
9. Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if delivered by hand or if
mailed, by certified or registered mail, with postage prepaid:
(a) If to Xxxxxxx, to Xxxxxxx X. Xxxxxxx, c/o LaCrosse Footwear, Inc.,
0000 Xx. Xxxxxx Xxxxxx, P.0. Box 1328, La Crosse, Wisconsin 54601, or to
such other person or place as Xxxxxxx may specify in a prior written notice
to the Company;
(b) If to the Company, to LaCrosse Footwear, Inc., 0000 Xx. Xxxxxx
Xxxxxx, P.0. Xxx 0000, Xx Xxxxxx, Xxxxxxxxx 00000, Attention: Chairman of
the Board, or to such other person or place as the Company may specify in
prior written notice to Xxxxxxx.
10. Amendment; Modification. This Agreement shall not be amended,
modified or supplemented other than in a writing signed by both parties hereto.
11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
-8-
12. Headings. The headings in the sections of this Agreement are
inserted for convenience only and shall not constitute a part of this Agreement.
13. Severability. The parties agree that if any provision of this
Agreement shall under any circumstances be deemed invalid or inoperative, the
Agreement shall be construed with the invalid or inoperative provision deleted,
and the rights and obligations of the parties shall be construed and enforced
accordingly.
14. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal law of the State of Wisconsin.
15. Remedies. Each party to this Agreement shall have available all
rights and remedies (including claims for damages and equitable relief) for any
breach or violation of this Agreement by the other party, and any provision in
this Agreement specifically allowing a particular remedy shall not be construed
or interpreted to limit the rights and remedies available to such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
/s/ Xxxxxxx X. Xxxxxxx (SEAL)
-------------------------------------
Xxxxxxx X. Xxxxxxx ("Xxxxxxx")
LACROSSE FOOTWEAR, INC.
("Company")
By:/s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Attest: /s/ Xxxx X. Xxxx
-----------------------------
Attachment: Exhibit A
Exhibit B
-9-
Exhibit A
---------
--------------------------------------------------------------------
Date Amount
---- ------
--------------------------------------------------------------------
August 19, 1999 $73,786
--------------------------------------------------------------------
August 19, 2000 $73,786
--------------------------------------------------------------------
August 19, 2001 $73,786
--------------------------------------------------------------------
August 19, 2002 $73,786
--------------------------------------------------------------------
August 19, 2003 $73,786
--------------------------------------------------------------------
August 19, 2004 $30,786
--------------------------------------------------------------------
August 19, 2005 $30,786
--------------------------------------------------------------------
August 19, 2006 $30,786
--------------------------------------------------------------------
August 19, 2007 $30,786
--------------------------------------------------------------------
August 19, 2008 $30,786
--------------------------------------------------------------------
August 19, 2009 $30,786
--------------------------------------------------------------------
August 19, 2010 $30,786
--------------------------------------------------------------------
August 19, 2011 $30,786
--------------------------------------------------------------------
August 19, 2012 $30,786
--------------------------------------------------------------------
August 19, 2013 $30,786
--------------------------------------------------------------------
August 19, 2014 $30,786
--------------------------------------------------------------------
Exhibit B
---------
--------------------------------------------------------------------
Date Amount
---- ------
--------------------------------------------------------------------
August 19, 1999 $73,786
--------------------------------------------------------------------
August 19, 2000 $73,786
--------------------------------------------------------------------
August 19, 2001 $73,786
--------------------------------------------------------------------
August 19, 2002 $73,786
--------------------------------------------------------------------
August 19, 2003 $73,786
--------------------------------------------------------------------
August 19, 2004 $30,786
--------------------------------------------------------------------
August 19, 2005 $30,786
--------------------------------------------------------------------
August 19, 2006 $30,786
--------------------------------------------------------------------
August 19, 2007 $30,786
--------------------------------------------------------------------
August 19, 2008 $30,786
--------------------------------------------------------------------
August 19, 2009 $30,786
--------------------------------------------------------------------
August 19, 2010 $30,786
--------------------------------------------------------------------
August 19, 2011 $30,786
--------------------------------------------------------------------
August 19, 2012 $30,786
--------------------------------------------------------------------
August 19, 2013 $30,786
--------------------------------------------------------------------
August 19, 2014 $30,786
--------------------------------------------------------------------
