Exhibit 10.27
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EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT, dated as of November 6, 2000 (this "Agreement"), by
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and between Sola International, Inc., a Delaware corporation (the "Company"),
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and Xxxxxx Xxxxxxx Xxxxxx (the "Executive").
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WHEREAS, the Executive possesses skills and experience that are of value to
the Company; and
WHEREAS, the Company has determined that it is in its best interest to secure
the continued services and employment of the Executive on behalf of the Company
in accordance with the terms of this Agreement and the Executive is willing to
render such services on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1. Employment Term. Subject to the terms and provisions of this Agreement,
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the Company hereby agrees to employ the Executive, and the Executive hereby
agrees to be employed exclusively by the Company, for the period commencing on
the date hereof and ending on the third anniversary of the date hereof (the
"Initial Term"), unless terminated sooner or extended as hereinafter provided
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(the "Employment Term"). Unless the Company or the Executive shall have given
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the other party written notice not less than 60 days prior to the expiration of
the Initial Term that the Initial Term shall not be extended, the Initial Term
shall automatically be extended for successive one-year periods (each one-year
period an "Additional Term") until either party shall have given the other party
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written notice not less than 60 days prior to the expiration of any Additional
Term that such Additional Term shall not be extended. If either party shall
have elected not to extend the Initial Term or any Additional Term, this
Agreement shall terminate upon expiration of such term, unless terminated sooner
as hereinafter provided.
2. Duties. During the Employment Term, the Executive shall serve as
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President and Chief Executive Officer of the Company, and such other position(s)
as may be reasonably designated by the Board of Directors of the Company (the
"Board"), including serving on the Board. During the Employment Term, the
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Executive shall be responsible for the management and control of the day to day
operations of the Company. The Executive shall also perform such other duties,
services and responsibilities as are determined from time to time by the Board
consistent with the duties of a chief executive officer. In performing such
duties, the Executive will report directly to the Board.
The Executive shall devote all of his business time and attention and
ability to the performance of such duties, services and responsibilities, and
will use his best efforts to promote the interests of the Company. The
Executive will not, directly or indirectly, render services of a business,
commercial or professional nature to any other person or organization, whether
for compensation or otherwise, without the prior consent of the Board.
3. Compensation. In full consideration of the performance by the
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Executive of the Executive's obligations during the Employment Term (including
any services by the Executive as an officer, director, employee or member of any
committee
of any subsidiary or affiliate of the Company, or otherwise on behalf of
Company), the Executive shall be compensated as follows:
(a) The Executive shall receive a base salary (the "Base Salary") at
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an annual rate of $400,000 per year during the Employment Term, payable in
accordance with the normal payroll practices of the Company then in effect. The
Executive will be eligible to receive annual increases in the Base Salary as
determined in the sole discretion of the Board.
(b) The Executive shall be eligible for a bonus pursuant to the terms
and conditions of the Company's "Management Incentive Plan" or successor
thereto.
The Executive shall be solely responsible for taxes imposed on the Executive
by reason of any compensation and benefits provided under this Agreement and all
such compensation and benefits shall be subject to applicable withholding taxes.
4. Benefits. In addition to the payments and awards described in Section 3
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of this Agreement, during the Employment Term, the Executive shall be entitled
to participate in any and all employee benefit plans the Company regularly
provides its other executives or employees including, but not limited to,
health, dental, vision, pension or other retirement plans. In addition the
Executive shall be entitled to the other benefits specified on the attached
Schedule.
5. Termination. The Executive's employment with the Company and the
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Employment Term shall terminate upon the expiration of the Initial Term or any
Additional Term or upon the earlier occurrence of any of the following events
(the date of termination, the "Termination Date"):
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(a) The death or disability of the Executive.
(b) The termination of employment by the Company for Cause. As used
herein, "Cause" shall mean Executive's: (i) willful misconduct, neglect of
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duties, or any act or omission any or all of which materially adversely affect
the Company's business after receipt from the Company of a detailed statement of
the cause for termination, or (ii) conviction of, or plea of guilty or nolo
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contendere to, a felony.
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(c) The termination of employment by the Company other than for Cause.
(d) Resignation by the Executive for Good Reason. As used herein,
"Good Reason" shall mean (i) regular assignment by the Company to the Executive
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of duties and responsibilities that materially diminish his position as
President and CEO of the Company; or (ii) reduction of the Executive's Base
Salary or a material reduction in his employee benefits (other than incentive
compensation) that is not part of, or is disproportionate to a general reduction
by the Company of executive compensation.
6. Termination Payments. If the Executive's employment with the
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Company terminates or the Initial Term or any Additional Term expires, the
Company's, its subsidiaries' and its affiliates' sole obligation hereunder,
except as otherwise provided in this Section 6, shall be to pay the Executive
(a) any accrued and unpaid Base Salary as of the Termination Date and (b) an
amount equal to such reasonable and necessary business
expenses incurred by the Executive in connection with the Executive's employment
on behalf of the Company on or prior to the Termination Date but not previously
paid to the Executive (the "Accrued Compensation"). In addition, if the
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Executive's employment with the Company terminates pursuant to either
Section 5(c) or Section 5(d) hereof, or if the Company elects not to extend the
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Initial Term or any Additional Term for any reason other than Cause (each, a
"Severance Event"), the Company's, its subsidiaries' and its affiliates' sole
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obligation hereunder shall be to (a) pay the Accrued Compensation, (b) continue
to pay the Executive the Base Salary (at the rate in effect at the time of
termination of employment) for a period of eighteen months, commencing with the
first of the month following the month in which termination takes place, (c) pay
the Executive 150% of the average Management Incentive Plan compensation (or
successor thereto) paid or payable to him for the three completed fiscal years
immediately prior to the date of such termination (including the year of
termination if the Termination Date occurs on the last day of a fiscal year)
(the "MIP Severance"), (d) continue to provide the Executive with the benefits
described in Section 4 of this Agreement for a period of eighteen months after
the date of such termination and (e) pay up to $25,000 for outplacement
assistance on behalf of the Executive in the form of professional consultation
and administrative assistance during the eighteen months after the date of such
termination, in the latter case, subject to the Company's approval which may not
be unreasonably withheld.
The Company shall have no obligation to the Executive for any payments
or benefits other than the Accrued Compensation if the Executive (i) elects not
to extend the Initial Term or any Additional Term or (ii) terminates his
employment with the Company other than for Good Reason.
7. Executive Covenants.
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(a) Unauthorized Disclosure. The Executive recognizes that the
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services to be performed during the Employment Term by the Company are special,
unique, and extraordinary and that by reason of the Executive's employment with
the Company the Executive has acquired and will acquire confidential information
and trade secrets concerning the Company's operations ("Company Confidential
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Information") and the operations of its affiliates ("Affiliate Confidential
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Information"). Accordingly, it is agreed that:
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(i) The Executive shall not divulge to any entity or person,
other than the Company or its affiliates, or, in the event of an
assignment of this Agreement pursuant to Section 14 hereof, the
assignee and its affiliates, if any, whether during the Employment
Term or after a Severance Event, any Company Confidential Information
concerning the Company's customer lists, research or development
programs or plans, processes, methods or any other of its trade
secrets, except information that is then available to the public in
published literature and became publicly available through no fault of
the Executive.
(ii) The Executive shall not divulge to any person or entity,
including an assignee of this Agreement and its affiliates, but
excepting the Company and its affiliates, whether during the
Employment Term or after a Severance Event, any Affiliate Confidential
Information acquired by the Executive concerning the customer lists,
research or development programs or plans, processes, methods or any
other trade secrets of the Company or any affiliate, except
information which is then available to the public in published
literature and became publicly available through no fault of the
Executive.
(iii) The Executive acknowledges that all information the
disclosure of which is prohibited hereby is of a confidential and
proprietary character and of great value to the Company and its
affiliates. Upon a Severance Event, the Executive shall forthwith
deliver up to the Company all records, memoranda, data and documents
of any description which refer or relate in any way to Company
Confidential Information or Affiliate Confidential Information and
return to the Company any of its equipment and property which may then
be in the Executive's possession or under the Executive's personal
control. Upon the assignment of this Agreement, pursuant to Section
14, the Executive shall forthwith deliver up to the Company all
records, memoranda, data and documents of any description which refer
or relate in any way to Affiliate Confidential Information and return
to the Company any of its equipment and property which may then be in
the Executive's possession or under the Executive's personal control.
(b) Non-competition. By and in consideration of the Company's
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entering into this Agreement and the payments to be made and benefits to be
provided by the Company hereunder, and in further consideration of the
Executive's exposure to the Company Confidential Information and Affiliate
Confidential Information, it is agreed that during the Employment Term, and for
eighteen months following a Severance Event, the Executive will not, directly or
indirectly, as an officer, director, stockholder, partner, associate, owner,
employee, consultant or otherwise, become or be interested in or associated with
any other corporation, firm or business engaged in the same or a similar or
competitive business with the Company or any of its affiliates in any
geographical area in which the Company or any of its affiliates are then engaged
in business, provided that the Executive's ownership, directly or indirectly, of
not more than one percent of the issued and outstanding stock of a corporation
the shares of which are regularly traded on a national securities exchange or in
the over-the-counter market shall not, in any event, be deemed to be a violation
of this Subsection.
(c) Non-solicitation. The Executive agrees not to solicit any person
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employed by the Company or its affiliates. As used herein, "solicit" or
"soliciting" means any direct or indirect approach or appeals to such an
employee to leave the Company. Indirect solicitation includes but is not
limited to, acting through a third party or parties or characterizing job
advertisements or opportunities in such a fashion so as to entice any employee.
The Executive agrees that, if approached by a Company employee, the Executive
will:
(i) Inform the employee of the Executive's obligations set forth
in this subparagraph;
(ii) Refer the employee to the relevant Company Human Resources
personnel; and
(iii) Request that the employee confirm in writing to the
Company that he has approached the Executive and confirm that request
in a memorandum to such Human Resources organization.
(d) Remedies. The Company shall be entitled, in addition to any other
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right or remedy that it may have at law or in equity with respect to a breach of
this Agreement by the Executive (including the right to terminate payments
pursuant to Section 6 hereof), to an injunction, without the posting of a bond
or other security, enjoining or restraining the
Executive from any violation or threatened violation of this Section 7 and
Sections 8 and 9 hereof and the Executive hereby consents to the issuance of
such an injunction.
8. Proprietary Rights. The Executive agrees that any invention made
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by the Executive during the Employment Term shall belong to the Company if (a)
it was made in the normal course of the duties of the Executive or in the course
of duties falling outside the Executive's normal duties but specifically
assigned to the Executive, and the circumstances in either case were such that
an invention might reasonably be expected to result from the carrying out of
such duties, or (b) the invention was made in the course of the duties of the
Executive and, at the time of making the invention, because of the nature of the
Executive's duties and the particular responsibilities arising from the nature
of the Executive's duties, the Executive had a special obligation to further the
interests of the Company. In addition, if (a) the Executive during the
Employment Term shall make any improvement or develop any know-how,
copyrightable work or design, (b) such improvement, know-how, copyrightable work
or design is relevant to the business of the Company or any of its subsidiaries,
and (c) such improvement, know-how, copyrightable work or design arose directly
out of any work carried out during the Employment Term, or out of Confidential
Company Information or Confidential Affiliate Information to which the Executive
had access while in the employ of the Company, then such improvement, know-how,
copyrightable work or design shall belong to the Company, whether or not it was
disclosed to the Company during the Employment Term by the Company.
In the event that the Executive makes any invention or develops any
improvement, know-how, copyrightable design or work which belongs to the
Company, the Executive shall fully, freely and immediately communicate the same
to the Company and the Executive shall, if and as desired by the Company execute
all documents and do all acts and things at the Company's cost which may be
necessary or desirable to obtain letters patent or other adequate protection in
any part of the world for such invention, improvement, know-how, copyrightable
work or design and to vest the same in the Company for the Company's benefit.
The Executive hereby irrevocably appoints the Company as the Executive's
attorney in the Executive's name and on the Executive's behalf to execute all
such deeds and documents and to do all such acts and things as may be necessary
to give effect to this Subsection in the event that the Executive fails to
comply within seven days with the written directions given by the Company
pursuant to this Subsection.
The Executive has been notified and understands that the provisions of the
two immediately preceding paragraphs of this Section 8 do not apply to any
invention that qualifies fully under the provisions of Section 2870 of the
California Labor Code, which states as follows:
(a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in
an invention to his or her employer shall not apply to an invention
that the employee developed entirely on his or her own time without
using the employer's equipment, supplies, facilities, or trade secret
information except for those inventions that either:
(i) Relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or
demonstrably anticipated research or development of the employer,
or
(ii) Result from any work performed by the employee for the
employer.
(b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from
being required to be assigned under subdivision (a), the provision is
against the public policy of this state and is unenforceable.
9. Non-Disparagement. In the event of a Severance Event both the Executive
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and the Company agree that neither of them will disparage the other in any
manner.
10. Moral Rights Waiver. As used herein, "Moral Rights" shall mean
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any right to claim authorship of a work, any right to object to any distortion,
or other modification of a work, and any similar right, existing under the law
of any country in the world, or under any treaty. Executive hereby irrevocably
transfers and assigns to the Company any and all Moral Rights that Executive may
have in any services or materials. Executive also hereby forever waives and
agrees never to assert against the Company, its successors or assigns any and
all Moral Rights Executive may have in any services or materials, even after
termination of this Agreement.
11. Release. In consideration of the payments and covenants under
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this Agreement, the Executive hereby releases the Company, its employees,
officers, directors, subsidiaries, affiliates, successors and assigns and the
Company, its subsidiaries, affiliates, successors and assigns hereby release the
Executive from any and all claims for relief or causes of action relating to any
matters of any kind arising out of his employment (or its termination) with the
Company arising prior to the date hereof.
The Executive expressly waives all rights and remedies under Section 1542
of the Civil Code of the State of California which provides as follows:
A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor.
The Executive understands that if the facts with respect to which this
Agreement is executed are found hereafter to be different from the facts which
he now believes to be true, the Executive expressly accepts and assumes the risk
of such possible differences in facts and agrees that this Agreement shall be
and remain effective notwithstanding such differences in facts.
12. Notices. All notices, consents, waivers or demands of any kind
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which either party to this Agreement may be required or may desire to serve on
the other party in connection with this Agreement shall be in writing and may be
delivered by personal service or sent by telegraph or cable or sent by
registered or certified mail, return receipt requested with postage thereon
fully prepaid. All such communications shall be addressed as follows:
The Company: Sola International, Inc.
Xxxxx 000
0000 Xxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxx
The Executive: Xxxxxx Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxx Xxxxx Xx, Xxxxxxxxxx 00000
If sent by telegraph or cable, a confirmed copy of such telegraphic or
cable notice shall be promptly sent by mail (in the manner provided above) to
the addressees. Service of any such communication made only by mail shall be
deemed complete on the date of actual delivery as shown by the addressee's
registry or certification receipt or at the expiration of the third (3rd)
business day after the date of mailing which ever is later in time. Either
party hereto may from time to time, by notice in writing served upon the other
as aforesaid, designate a different mailing address or a different person to
which such notices or demands are thereafter to be addressed or delivered.
Nothing contained in this Agreement shall excuse either party from giving oral
notice to the other when prompt notification is appropriate, but any oral notice
given shall not satisfy the requirement of written notice as provided in this
paragraph.
13. Governing Law. This Agreement shall be governed and construed
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and enforced in accordance with the laws of the State of California (regardless
of that jurisdiction or any other jurisdictions' choice of law principles).
14. Assignment. This Agreement may be assigned by the Company to any
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affiliate of the Company or to any non-affiliate of the Company that shall
succeed to the business and assets of the Company. In the event of such
assignment, the Company shall cause such affiliate or non-affiliate as the case
may be, to assume the obligations of the Company hereunder by written agreement
addressed to the Executive concurrently with any assignment with the same effect
as if such assignee were the Company hereunder. This Agreement is personal to
the Executive and the Executive may not assign any rights or delegate any
responsibilities hereunder without the prior approval of the Company.
15. Entire Agreement. This Agreement is the entire Agreement between
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the Company and the Executive with respect to the subject matter hereof and
cancels and supersedes any and all other agreements regarding the subject matter
hereof between the parties. This Agreement may not be altered, modified,
changed, or discharged except in writing signed by both of the parties.
16. Severability. If any one or more of the provisions (or any part
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thereof) of this Agreement, or any application thereof to the circumstances,
shall be held to be invalid, illegal or unenforceable in any respect the
remaining provisions (or any part thereof) shall not in any way be affected or
impaired thereby.
17. Arbitration. Except as otherwise provided in Section 7(d) hereof, with
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respect to any controversy arising out of or relating to this Agreement, or the
subject matter thereof, such controversy shall be settled by final and binding
arbitration in Palo Alto, California in accordance with the then
existing rules ("the Rules") of the American Arbitration Association
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("AAA") and judgment upon the award rendered by the arbitrators may be entered
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in any court having jurisdiction thereof; provided, however, that the law
applicable to any controversy shall be the law of California, regardless of its
or any jurisdiction's choice of law
principle. Arbitration shall be the sole and exclusive remedy for the resolution
of the disputes described above. In any such arbitration, the award or decision
shall be rendered by a majority of the members of a board of arbitration
consisting of three members, one of whom shall be appointed by each party and
the third of whom shall be the chairman of the panel and be appointed by mutual
agreement of said two party appointed arbitrators. In the event of the failure
of said two arbitrators to agree, within five working days after the
commencement of the arbitration, upon appointment of the third arbitrator, the
third arbitrator shall be appointed by the AAA in accordance with the Rules. In
the event that either party shall fail to appoint an arbitrator within five days
after the commencement of the arbitration proceeding, such arbitrator and the
third arbitrator shall be appointed by the AAA in accordance with the Rules. The
arbitrators are empowered but, not limited, in making an award in favor of the
Executive to require any act or acts which they believe necessary to effectuate
the intent of this Agreement. The Company agrees that any costs of any
arbitration borne by the Executive, including the Executive's reasonable
attorneys' fees and expenses and the costs, fees and expenses of the Executive's
appointed arbitrator, shall be borne by the Company to the extent attributable
to issues on which the Executive prevails on the merits.
18. Excise Tax Limitation.
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(a) Notwithstanding anything contained in this Agreement to the
contrary, to the extent that the payments and benefits provided under this
Agreement and benefits provided to, or for the benefit of, the Executive under
any other Company plan or agreement (such payments or benefits are collectively
referred to as the "Payments") would be subject to the excise tax (the "Excise
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Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as
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amended (the "Code"), the Payments shall be reduced (but not below zero) if and
to the extent necessary so that no Payment to be made or benefit to be provided
to the Executive shall be subject to the Excise Tax (such reduced amount is
hereinafter referred to as the "Limited Payment Amount"). Unless the Executive
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shall have given prior written notice specifying a different order to the
Company to effectuate the foregoing, the Company shall reduce or eliminate the
Payments, by first reducing or eliminating the portion of the Payments which are
not payable in cash and then by reducing or eliminating cash payments, in each
case in reverse order beginning with payments or benefits which are to be paid
the farthest in time from the Determination (as hereinafter defined). Any
notice given by the Executive pursuant to the preceding sentence shall take
precedence over the provisions of any other plan, arrangement or agreement
governing the Executive's rights and entitlements to any benefits or
compensation.
(b) The determination of whether the Payments shall be reduced to the
Limited Payment Amount pursuant to this Agreement and the amount of such Limited
Payment Amount shall be made, at the Company's expense, by an accounting firm
selected by the Executive which is one of the five largest accounting firms in
the United States (the "Accounting Firm"). The Accounting Firm shall provide
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its determination (the "Determination"), together with detailed supporting
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calculations and documentation to the Company and the Executive within ten (10)
days of the date of termination, if applicable, or such other time as requested
by the Company or by the Executive (provided the Executive reasonably believes
that any of the Payments may be subject to the Excise Tax) and if the Accounting
Firm determines that no Excise Tax is payable by the Executive with respect to
the Payments, it shall furnish the Executive and the Company with an opinion
reasonably acceptable to the Executive that no Excise Tax will be imposed with
respect to any such Payments. The Determination shall be binding, final and
conclusive upon the Company and the Executive.
19. Non-Waiver of Rights. The failure to enforce at any time the provisions
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of this Agreement or to require at any time performance by any other party of
any provisions hereof shall in no way be
construed to be a waiver of such provisions or to affect either the validity of
this Agreement or any part hereof, or the right of any party to enforce each and
every provision in accordance with its terms. No waiver by any party hereto of
any breach by any other party hereto of any provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions at the time or at any prior or subsequent time.
20. Headings. The headings contained herein are solely for the purposes of
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reference, are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.
21. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
22. THE EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD THE OPPORTUNITY TO CONSULT
WITH THE ADVISOR OF HIS CHOICE AND THAT HE HAS FREELY AND VOLUNTARILY ENTERED
INTO THIS AGREEMENT.
IN WITNESS WHEREOF, the Company has caused this Employment Agreement to be
executed by authority of its Board of Directors, and the Executive has hereunto
set the Executive's hand, on the day and year first above written.
Sola International, Inc.:
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By: /s/Xxxxxxx X. Xxx
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Name: Xxxxxxx X. Xxx
Title: Vice President, H.R.
Executive:
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/s/ Xxxxxx Xxxxxxx Xxxxxx
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Xxxxxx Xxxxxxx Xxxxxx
Schedule of Continuing Benefits Entitlement Pursuant to Paragraph 4 of the
Attached Agreement between SOLA International Inc. and Xxxxxx X. Xxxxxx.
1. Participation in the SOLA International Inc. Stock Option Plan.
2. Provision of a Company Car under the Company's Executive Automobile Plan
with a lease reimbursement of up to $1,200 per month.
3. Payment of an Expatriate Housing Allowance, subject to the Executive's
continuing residence in California.
4. Reimbursement of repatriation costs (including real estate agents
commissions on the sale of his home) in the event that the Executive
relocates back to the United Kingdom.
5. Provision of Tax Return Preparation and Advice.
6. Participation in Company Retirement Plans.
7. Reimbursement of travel expenses for Family Home Leave while resident in the
United States.
