EXHIBIT 10.12
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT is made this 14th day of May 1998 by and
between THE DERBY CYCLE CORPORATION, a corporation organized and existing under
the laws of the State of Delaware, with its registered office in the State of
Delaware at Corporation Trust Center, c/o CT Corporation, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, XX 00000 (the "Company") and XXXXXXX X. XXXXXX, XX. a United States
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citizen residing at 00000 X.X. 000xx Xxxxxx, Xxxx, Xxxxxxxxxx 00000, in the
United States of America (the "Executive").
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WHEREAS, the Company, Derby International Corporation SA ("DIC"),
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Derby Finance S.a.r.l. ("DFS"), DC Cycle, L.L.C. ("LLC") and Perseus Cycle,
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L.L.C. ("Perseus") have entered into a Recapitalization Agreement, dated March
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11, 1998, contemplating the recapitalization of the Company (the
"Recapitalization") upon satisfaction of certain conditions;
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WHEREAS, it is a condition to consummation of the Recapitalization
that Executive enter into an employment agreement with the Company to be
effective upon consummation of the Recapitalization;
WHEREAS, the Company and the Executive have agreed to execute this
Employment Agreement (this "Agreement") to set forth the rights and duties of
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the Executive in respect of his employment with the Company following
consummation of the Recapitalization;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants set forth in this Agreement, the parties hereto agree as follows:
1. EFFECTIVENESS
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Executive and the Company agree that the terms and conditions of
employment set forth below herein shall become effective immediately upon the
consummation of the Recapitalization (the "Effective Date"). At the Effective
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Date, Executive acknowledges and agrees that his existing Amended & Restated
Employment Agreement dated August 29, 1997 with DIC shall terminate.
2. SERVICES OF EMPLOYEE
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The Company hereby agrees to employ the Executive during the
Employment Period, as defined in paragraph 4 below, to perform the duties
specified in Appendix A attached to this Agreement and made a part hereof, and
the Executive hereby agrees to accept such employment by the Company, all on and
subject to the terms and conditions contained in this Agreement.
3. HOURS AND PLACES OF EMPLOYMENT
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The Executive's services will be rendered primarily in the United
States of America. The Executive may be required to travel on the Company's
business to such places outside the United States of America as the chief
executive or any duly authorized director or officer of the Company shall
designate from time to time. The Executive shall devote such time and attention
to the performance of his duties under this Agreement, both within and outside
normal working hours, as shall reasonably be required by the Company. The
Executive shall not, without the consent of the Company, enter into any other
paid employment or agreement to provide services during the Employment Period.
The Executive shall not be required to change his principal residence without
his prior consent.
4. EMPLOYMENT PERIOD
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The term of the Executive's employment under this Agreement (the
"Employment Period") shall begin on the Effective Date of this Agreement and
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shall continue under this Agreement until the 65th birthday of the Executive on
October 3, 2002; provided, however, that the Employment Period may be terminated
by notice from either party to the other given at any time and received not less
than eighteen (18) months before the date of termination. The Employment Period
may also be terminated as follows:
(a) by the Company for any reason, the Employment Period shall
terminate immediately upon receipt by the Executive of notice in writing from
the Company of termination of the Employment Period, provided that, if the
Employment Period is terminated under this Section 4(a), the Executive shall be
entitled to his base salary (based upon the Executive's base salary set forth in
Appendix B, Section (a)) for the period through the earlier of (i) eighteen
months after such termination or (ii) October 3, 2002;
(b) in the event the Executive dies during the Employment Period, the
Employment Period shall terminate on the date of death, but the Executive's
remuneration shall continue until the end of the month in which his death
occurs;
(c) in the event the Executive, by reason of physical or mental
disability (excluding infrequent and temporary absences due to ordinary
transitory illnesses), shall be unable for more than one hundred and eighty
(180) days in the aggregate during any consecutive twelve (12) month period to
perform the services required of him under this Agreement, the Employment Period
shall terminate at the end of the month following the month in which the Company
shall have given notice to the Executive of its intention to terminate the
Employment Period because of such disability; or
(d) in the event the Executive shall become bankrupt or compound with
his creditors, or if the Executive shall be guilty of any serious or persistent
default or misconduct in connection with or affecting the business of the
Company, or of serious negligence in performing his duties hereunder, or if the
Executive shall be in breach of any law or any rule or regulation of any
regulatory authority which shall disqualify him from performing his duties under
this Agreement,
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the Employment Period shall terminate immediately upon receipt by the Executive
of notice in writing from the Company of termination of the Employment Period.
5. REMUNERATION OF EMPLOYEE
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The full and complete remuneration of the Executive for his services
under this Agreement shall be as set forth in Appendix B attached to this
Agreement and made a part hereof.
6. EXPENSES
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The Executive is authorized to incur reasonable expenses in the
performance of his duties under this Agreement, on a basis consistent with the
policies of the Company and its Subsidiaries (as defined below) from time to
time, including expenses for business entertainment, travel and subsistence.
The Executive shall submit all claims for reimbursement of such expenses
directly to the Company or the Subsidiary for which such expenses were incurred,
the Chief Executive Officer of the Company shall review such expenses on a
monthly basis, and, upon the approval of the Chief Executive Officer of the
Company of such expenses, the Company shall ensure that such expenses are
reimbursed to the Executive within a reasonable time after submission by the
Executive of an itemized account of such expenses, together with such vouchers
or receipts for individual expense items as the Company or such Subsidiary may
reasonably require.
7. PENSION AND LIFE ASSURANCE PLANS
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The Company shall make provision for the Executive's inclusion in the
Company's 401K Savings Plan and such medical and dental benefit plans as the
Company shall make available to senior employees located in the United States
from time to time.
8. VACATION
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The Executive shall be entitled to four (4) weeks' vacation in each
calendar year during the Employment Period (in addition to the usual public
holidays in the United States), provided that such vacation shall be taken at
such time or times as the chief executive of the Company approves in advance.
9. REPORTS AND WRITTEN MATERIALS
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The Executive shall promptly communicate and disclose to the Company
all information, data and materials obtained by him in the course of his
employment under this Agreement. All information, data, reports,
recommendations, advice, records, documents and other materials prepared or
obtained by the Executive or coming into his possession in the course of his
employment under this Agreement shall, as between the Company and the Executive,
be the sole and exclusive property of the Company and, at the end of the
Employment Period, or at the request of the Company during the Employment
Period, the Executive shall promptly deliver all such materials to the Company
or to such other person as the Company may direct. The Executive shall prepare
and submit to the Company such regular periodic reports as the Company may
request with respect
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to the activities undertaken by him or conducted under his direction in the
course of his employment under this Agreement. As between the Company and the
Executive, such reports and the information contained therein shall be and
remain the sole property of the Company.
10. CONFIDENTIAL INFORMATION
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Except as otherwise specifically agreed between the parties, the
Executive shall not, at any time during the Employment Period or thereafter,
communicate or disclose to any unauthorized person or use for his own account or
business any information, data, reports, recommendations, advice, records,
documents or other material referred to in paragraph 9 of this Agreement above,
or any other information concerning the business or affairs of the Company or
any of its Subsidiaries or associated companies. The obligations contained in
this paragraph 10 shall not apply in the event and to the extent that the
information, data, reports, recommendations, advice, records, documents or other
materials referred to in this paragraph 10 become generally known to or
available for use by the public, other than by an act or omission of the
Executive in violation of the terms of this Agreement.
11. REVIEW OF THIS AGREEMENT
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On July 1, 1999 and July 1 of each calendar year thereafter during the
Employment Period, the parties shall review all of the provisions of this
Agreement to determine if any mutually agreed amendments or additions should be
made to the terms and conditions contained herein.
12. NON-COMPETITION
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During the Employment Period and for a period of twelve (12) months
thereafter, the Executive shall not, except with the prior consent of the Board
of Directors of the Company, be directly or indirectly engaged, concerned or
interested in any activities which involve the manufacture, importing,
distribution or marketing of bicycle parts or accessories at any place where the
Company or its Subsidiaries are engaged in those activities at that time;
provided, however, that the Executive may remain or become a holder for the
purpose of investment only of any shares or other investments in any
partnership, company or corporation the business of which is competitive with
the business of the Company, its Subsidiaries or associated companies at such
time, so long as the Executive owns (together with his wife, siblings and
children) not more than five percent (5%) of the issued shares (or securities
convertible into shares) of such partnership, company or corporation.
13. NOTICES
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All notices, demands, consents or other communications under this
Agreement shall be given or made in writing, and shall be delivered personally,
sent by certified or registered airmail with postage prepaid or transmitted by
telefax or courier service, addressed to the other party at the address set out
at the head of this Agreement or at such other address as may be designated by
notice from such other party; provided, however, that any communication sent by
telefax shall be confirmed by mail as prescribed in this paragraph. Any notice,
demand, consent or other
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communication given or made by mail in the manner prescribed in this paragraph
shall be deemed to have been received seven (7) days after the date of mailing.
14. ADDITIONAL ACTION
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Each party to this Agreement shall execute and deliver such other
documents and do such other acts and things as may be necessary or desirable to
carry out the terms, provisions and purposes of this Agreement.
15. AMENDMENTS
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No amendment, interpretation or waiver of any of the provisions of
this Agreement shall be effective unless made in writing and signed by the
parties to this Agreement.
16. ASSIGNMENT BY THE COMPANY; SUBSIDIARIES
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This Agreement shall be binding upon and shall inure to the benefit of
the Company, its successors and assigns and any such successor or assigns shall
be deemed substituted for the Company as a party to this Agreement. The term
"successor" shall mean any person, firm, corporation or business entity which at
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any time, whether by purchase, merger, assignment or otherwise, acquires all or
substantially all of the assets or business of the Company. The term
"Subsidiary" shall mean a corporation (or equivalent legal entity under the law
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of any country) of which the Company owns directly or indirectly more than forty
percent (40%) of the shares the holders of which are ordinarily and generally,
in the absence of contingencies or special arrangements, entitled to vote for
the election of directors (or the equivalent governing body of the corporation).
The Executive may be required to provide services under this Agreement to any
Subsidiary or associated company of the Company, and all such Subsidiaries or
associated companies shall be deemed to be included in the term "Company" for
the purposes of this Agreement, where the context so requires or permits.
17. ASSIGNMENT BY THE EXECUTIVE
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This Agreement shall be binding upon and shall inure to the benefit of
the Executive, his legal representatives and assigns, except that the
Executive's obligations to perform services under this Agreement are personal
and are expressly declared to be non-assignable and non-transferable without the
consent of the Company.
18. ENFORCEMENT
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The failure to enforce or to require the performance at any time of
any of the provisions of this Agreement shall in no way be construed to be a
waiver of such provisions, and shall not affect either the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every provision in accordance with the terms of this Agreement. The
Executive acknowledges and agrees that a breach by him of his obligations under
paragraphs 10 and 11 of this Agreement may cause the Company and any Subsidiary
or associated company to which
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the Executive provides services during the Employment Period irreparable injury
and damage. The Executive, therefore, expressly agrees that, in addition to
whatever other remedies may be available to the Company or such Subsidiaries and
associated companies, the Company or any other company which may be injured by
default in the performance of such obligations shall be entitled to injunctive
and/or other equitable relief to prevent a breach of such obligations and to
secure their enforcement.
19. ENTIRE AGREEMENT
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This Agreement constitutes the entire agreement of the parties up to
the date hereof with respect to the Executive's employment by the Company and
his remuneration therefor.
20. GOVERNING LAW
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This Agreement and the relationships of the parties in connection with
the subject matter of this Agreement shall be governed by and determined in
accordance with the laws of the State of Washington, in the United States of
America.
21. SEVERABILITY
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If any severable provision of this Agreement is held to be invalid or
unenforceable by any judgment of a tribunal of competent jurisdiction, the
remainder of this Agreement shall not be affected by such judgment, and the
Agreement shall be carried out as nearly as possible according to its original
terms and intent.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year set out at the head of this Agreement.
THE DERBY CYCLE CORPORATION
By: ______________________________
Xxxx X. Finden-Crofts
President and CEO
______________________________
XXXXXXX X. XXXXXX, XX.
APPENDIX A
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TO EMPLOYMENT AGREEMENT WITH
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XXXXXXX X. XXXXXX, XX.
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The Executive's duties shall be to:
(a) serve as the president of the Company's United States operations
as currently conducted and in such other executive positions of the Company and
its Subsidiaries as shall be agreed between the Executive and the Board of
Directors of the Company;
(b) in cooperation with and under the direction of the chief executive
of the Company, formulate and implement the overall policies and operating
procedures for the Company's United States operations as currently conducted by
Raleigh USA Bicycle Company ("Raleigh USA");
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(c) in cooperation with and under the direction of the chief executive
of the Company, formulate and implement strategic planning and marketing, sales,
manufacturing, distribution and financial policies for Raleigh USA;
(d) in cooperation with and under the direction of the chief executive
of the Company, formulate and implement operating procedures for Raleigh USA,
including operating procedures on marketing, sales, manufacturing, importing,
distribution, financial reporting, internal cost controls, budgeting and
budget/cost analysis, working capital management, banking and capital spending
controls, product pricing and credit management;
(e) ensure that full, timely and accurate financial reports and
budgets are prepared and submitted by Raleigh USA to the Company, and
participate in the presentation of such reports to the Board of Directors of the
Company, with the Executive's comments and recommendations thereon;
(f) take responsibility for the achievements of all financial
objectives and budgets for Raleigh USA;
(g) establish and maintain contacts with senior executives of major
companies in the bicycle industry throughout the world, and with governmental
officials, representatives of trade and professional organizations and members
of the press and other media in order to maintain and promote the name,
reputation and business of Raleigh USA, as well as the brands of bicycles,
bicycle parts and accessories and related products manufactured and sold by that
company;
(h) establish and maintain contacts with banking institutions,
external auditors, legal counsel, tax counsel and government tax officials;
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(i) in cooperation with and under the direction of the chief executive
of the Company, take responsibility for the recruitment, appointment, direction
and dismissal (where appropriate) of senior executive and financial staff of
Raleigh USA;
(j) in cooperation with and under the direction of the chief executive
of the Company, establish standards and procedures for evaluation of the
performance of the senior executive staff of Raleigh USA at all times;
(l) in cooperation with the Board of Directors and the chief executive
of the Company, participate in communications with the shareholders of and
lenders to the Company and its Subsidiaries;
(m) assist the chairman of the Board of Directors and chief executive
of the Company in the identification and development of new products,
appropriate manufacturing technology, additional markets, proposed acquisitions,
dispositions and cooperative business arrangements and improved management
controls and operating procedures of and for companies in the bicycle industry;
and
(n) perform such other duties as may be assigned to the executive by
the Board of Directors and chief executive of the Company from time to time
which are consistent with the status of the Executive as the president of
Raleigh USA.
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APPENDIX B
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TO EMPLOYMENT AGREEMENT WITH
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XXXXXXX X. XXXXXX, XX.
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1. The full and complete remuneration of the Executive for his services
under the Agreement to which this Appendix B is attached shall be as follows:
(a) the Company shall pay to the Executive during the Employment
Period, by transfer to a bank of the Executive's choice, a base salary at the
rate of two hundred and fifty-five thousand United States dollars ($255,000) a
year, payable semi-monthly in arrears in twenty-four (24) equal installments
each year;
(b) for each calendar year during the Employment Period, beginning
with calendar year 1998, the Company shall pay to the Executive a bonus of up to
fifty percent (50%) of his base salary upon the achievement of financial targets
for Raleigh USA for such calender year, with such financial targets to be agreed
between the Executive and the chief executive of the Company;
(c) the Company shall pay during the Employment Period the lease and
insurance costs for an automobile for the Executive's use with a list price of
up to thirty-six thousand United States dollars ($36,000), based on a four year
lease of such vehicle; and
(d) the Company shall reimburse to the Executive for the cost of
professional subscriptions which are relevant to his position and duties with
the Company or Raleigh USA.
2. The Executive shall promptly apply for any social security benefits to
which he may become entitled in respect of ill-health or incapacity, and the
Executive shall forthwith notify the Company of the amount of any payment he
receives. The Company shall be entitled to deduct an amount equivalent to any
such payment from any amount which becomes due to the Executive under this
Agreement.
3. The Company shall be entitled to deduct and retain from any amounts
owed by the Company to the Executive any sum properly paid by the Company on
behalf of or at the request of the Executive, or any other sum due to the
Company by the Executive.
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