EXHIBIT 10.34
VANS, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement" herein) is entered into as of
June 1, 2002, by and between VANS, INC., a Delaware corporation (the "Company"),
and XXXX X. XXXXXXXXXX ("Employee").
1. Employment and Duties. The Company hereby employs Employee as
President and Chief Executive Officer of the Company on the terms and subject to
the conditions contained in this Agreement. Employee shall be responsible for
the management and direction of all aspects of the Company's business. Employee
hereby accepts such employment and agrees to perform in good faith and to the
best of Employee's ability all services which may be required of Employee
hereunder. Employee hereby acknowledges and understands the duties and services
that are expected of him hereunder, and he hereby represents that he has the
experience and knowledge to perform such duties and services. Employee shall
report to the Board of Directors of the Company. Employee shall be based at the
Company's corporate offices. Employee understands, however, that Employee may be
required to travel up to 20% of his time within and out of the State of
California, with up to one-third of such travel outside the U.S., to discharge
his duties hereunder.
2. Term of Employment. The term of this Agreement shall commence as of
the date hereof and shall terminate on June 1, 2005. Notwithstanding the
foregoing, the term of this Agreement automatically shall extend for one
additional year on each anniversary date hereof, unless sooner terminated as
provided herein. AS PROVIDED FURTHER IN PARAGRAPH 11.1 BELOW, THIS AGREEMENT
CONSTITUTES AN EMPLOYMENT AT-WILL THAT MAY BE TERMINATED AT ANY TIME BY COMPANY
OR EMPLOYEE, WITH OR WITHOUT CAUSE, NOTWITHSTANDING THE ROLLING THREE - YEAR
TERM OF THIS AGREEMENT. IF EMPLOYEE IS TERMINATED WITHOUT CAUSE DURING THE TERM
HEREOF, OR AFTER A "CHANGE IN MANAGEMENT OR CONTROL," AS DEFINED IN PARAGRAPH
11.5 BELOW, OR TERMINATES THIS AGREEMENT FOR "GOOD REASON," AS DEFINED IN
PARAGRAPH 11.3 BELOW, EMPLOYEE'S SOLE REMEDY SHALL BE THE COMPENSATION SET FORTH
IN PARAGRAPH 11.4 BELOW.
Initial /s/ CEG Initial /s/ GHS
-------------- -----------------
Representative Employee
of the Company
3. Salary Compensation. As salary compensation for Employee's services
hereunder and all the rights granted hereunder by Employee to the Company, the
Company shall pay Employee a gross salary of no less than $600,000.00 per annum.
Employee's salary shall be payable in bi-weekly increments in accordance with
the Company's payroll practices for salaried employees, upon the condition that
Employee fully and faithfully performs Employee's services hereunder in
accordance with the terms and conditions of this Agreement. The Company shall
deduct and withhold from the compensation payable to Employee hereunder any and
all amounts required to be deducted or withheld by the Company under the
provisions of any statute, regulation, ordinance, or order and any and all
amendments hereinafter enacted requiring the withholding or deducting from
compensation payable to employees.
4. Expense Reimbursement. Employee shall be reimbursed by the Company
for all traveling, hotel, entertainment and other expenses that are properly
incurred by Employee, pursuant to the Company's policies on the same, including,
without limitation, Employee's and Employee's family's participation in the
Young Presidents' Organization.
5. Death or Disability of Employee.
5.1 General. In the event of Employee's death or "disability" (as
such term is defined in Paragraph 5.2 hereof) while in the employ of the
Company, this Agreement shall terminate upon the date of death or disability and
the Company shall thereafter be required to make payments and provide benefits
to Employee as provided in Paragraph 11.2 hereof. If Employee shall recover from
such disability prior to the expiration date of the Agreement, this Agreement
and Employee's employment hereunder shall be reinstated for the balance of the
term of this Agreement.
5.2 Definition of Disability. Employee shall be deemed disabled if,
in the sole opinion of the Company, Employee is unable to substantially perform
the services required of Employee hereunder for a period in excess of 120
consecutive work days or 120 work days during any 180 work day period. In such
event, Employee shall be deemed disabled as of such 120th workday.
6. Restrictive Covenant. During the term of this Agreement, Employee
shall (i) devote substantially all of his full time and energy to the
performance of his duties described herein; (ii) not directly or indirectly
provide services to or through any company or firm except the Company unless
otherwise instructed by the Company; (iii) not directly or indirectly own,
manage, operate, join, control, contribute to, or participate in the ownership,
management, operation or control of or be employed by or connected in any manner
with any enterprise which is engaged in any business competitive with or similar
to that of the Company; and (iv) not render any services of any kind or
character for Employee's own account of for any other person, firm or
corporation without first obtaining the Company's consent in writing; provided,
however, Employee shall have the right to perform such incidental services as
are necessary in connection
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with Employee's (a) private passive investments where he is not obligated or
required to, and shall not in fact, devote any managerial efforts, as long as
such investments are not in companies which are in competition in any way with
the Company; or (b) charitable or community activities, or in trade or
professional organizations, provided that such incidental services do not
interfere with the performance of Employee's services hereunder. Notwithstanding
anything to the contrary contained herein, Employee shall be permitted to serve
on the Board of Directors of Fitness Holdings, Inc. during the term of this
Agreement.
7. Non-Solicitation. Employee shall not, during the full term of this
Agreement and for a period of one (1) year thereafter, for himself or on behalf
of any other person, partnership, corporation or entity, directly or indirectly,
or by action in concert with others, solicit, induce, suggest or encourage any
person known to him to be an employee of the Company or any affiliate of the
Company to terminate his or her employment or other contractual relationship
with the Company or any of its affiliates.
8. Trade Secrets and Related Matters
8.1 Definitions. For purpose of this Section 8:
(a) "Records" means material and confidential files, accounts,
records, log books, documents, drawings, sketches, designs, diagrams, models,
plans, blueprints, specifications, manuals, books, forms, notes, reports,
memoranda, studies, surveys, software, flow charts, data, computer programs,
listing of source code, calculations, recordings, catalogues, compilations of
information, correspondence, confidential data of customers and all copies,
abstracts or summaries of the foregoing in any storage medium, as well as
instruments, tools, storage devices, disks, equipment and all other physical
items related to the business of the Company (other than merely personal items
of a general professional nature), whether prepared by Employee or not.
(b) "Trade Secrets" means confidential business or technical
information or trade secrets of the Company which Employee acquires while
employed by the Company, whether or not conceived of, developed or prepared by
Employee or at his direction and includes:
(i) Any information or compilation of information concerning
the Company's financial position, financing, purchasing, accounting, marketing,
merchandising, sales, salaries, pricing, investments, costs, profits, plans for
future development, employees, prospective employees, research, development,
formulae, patterns, inventions, plans, specifications, devices, products,
procedures, processes, operations, techniques, software, computer programs or
data;
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(ii) Any information or compilation of information concerning
the identity, plans, requirements, preferences, practices and methods of doing
business on specific customers, suppliers, prospective customers and prospective
suppliers of the Company;
(iii) Any other information or "know how" which is related to
any product, process, service, business or research of the Company; and
(iv) Any information which the Company acquires from another
party and treats as its proprietary information or designates as "Confidential,"
whether or not owned or developed by the Company.
Notwithstanding the foregoing, "Trade Secrets" do not include any of the
following:
(i) Information which is publicly known or which is generally
employed by the trade, whether on or after the date that Employee first acquires
the information;
(ii) General information or knowledge which Employee would
have learned in the course of similar work elsewhere in the trade; or
(iii) Information which Employee can prove was known by
Employee before the commencement of Employee's engagement by the Company;
8.2 Acknowledgments. Employee acknowledges that:
(a) Employee's relationship with the Company will be a
confidential relationship in which Employee will have access to and may create
Trade Secrets.
(b) The Company uses the Trade Secrets in its business to obtain
a competitive advantage over its competitors who do not know or use that
information.
(c) The protection of the Trade Secrets against unauthorized
disclosure or use is of critical importance in maintaining the competitive
position of the Company.
8.3 Protection of Trade Secrets. Employee shall not at any time,
without the prior written consent of the Company, which may be withheld by it in
its sole and absolute discretion, use any Trade Secret in any way except in
connection with duties to the Company.
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8.4 Records.
(a) Ownership. All Records are and shall remain the exclusive
property of the Company.
(b) Return of Records. Upon the Company's written request, at the
termination of this Agreement, Employee shall promptly return to the Company all
Records in Employee's possession or over which Employee has control.
8.5 Prohibited Use of Trade Secrets. During the term of this
Agreement and for 12 months following termination of this Agreement, Employee
shall not undertake any employment or consulting relationship (the "New
Activity") if the loyal and complete fulfillment of his duties in the New
Activity would inherently call upon Employee to reveal any material Trade Secret
which would likely have a material adverse effect on the Company.
9. Ownership of Material and Ideas. Employee agrees that all
material, ideas, and inventions pertaining to the business of the Company or of
any client of the Company, including but not limited to, all patents and
copyrights thereon and renewals and extensions thereof, trademarks and trade
names, belong solely to the Company. Employee hereby assigns any rights he may
have to any such property to the Company, and agrees to execute and deliver any
documents which evidence such assignment.
10. Employee Plans, etc. Employee shall be entitled to
participate, at least to the same extent as the other officers of the Company,
in any bonus compensation plan, stock purchase or stock option plan, group life
insurance plan, group medical insurance plan and other compensation or employee
benefit plans (collectively, "Plans") which are available to the other officers
of the Company during the term hereof and for which Employee shall qualify,
including specifically the Company's annual bonus plan for executive officers
pursuant to which Employee shall have the opportunity to earn an annual bonus
equal to one hundred percent (100%) of his salary compensation, subject to the
terms and conditions of the plan. The Company also shall maintain during the
term of this Agreement, a $5.0 million split dollar life insurance policy for
the benefit of Employee, and shall be responsible for the payment of all
premiums thereunder. Employee agrees and acknowledges that he has no vested
interest in the continuance of any Plan, and that no Plan in existence on the
date of the Agreement has acted as a material inducement to Employee in entering
into this Agreement.
11. Termination.
11.1 "At Will" Employment. This Agreement, and Employee's
employment, is at will, and the Company may, with or without notice, terminate
this Agreement and all of the Company's obligations hereunder with or without
"Cause."
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Employee may also terminate this Agreement at any time, for any reason, upon the
giving of thirty (30) days' written notice to the Company; provided, however,
the Company may waive all or any portion of such notice period in its sole and
absolute discretion. Termination by the Company for "Cause" means termination
due to (i) Employee's conviction of a felony (which, through the lapse of time
or otherwise is not subject to appeal); (ii) Employee's material refusal without
proper cause to perform adequately his obligations under this Agreement or
follow the instructions of his supervisor(s), after reasonable written notice
and an opportunity to cure within thirty (30) days of Employee's receipt of such
notice; (iii) Employee's knowing material breach of his fiduciary duty of
loyalty as an executive officer of the Company; (iv) Employee's material failure
to adhere to the code of conduct and rules set forth in the Company's Employee
Handbook, as amended or in existence from time to time, after reasonable written
notice and an opportunity to cure within thirty (30) days of Employee's receipt
of such notice; (v) the death or disability of Employee; or (vi) the voluntary
termination by Employee of his employment, except for "Good Reason" (as defined
in Paragraph 11.3 hereof).
11.2 Termination for Cause. Upon termination for Cause, the
Company shall only be required to pay Employee (i) accrued salary compensation
due to Employee as compensation for services rendered hereunder and not
previously paid; (ii) accrued vacation pay; and (iii) any appropriate business
expenses incurred by Employee in connection with his duties hereunder and
approved pursuant to Section 4 hereof, all through the date of termination.
Employee shall not be entitled to any severance compensation; unvested bonus
compensation, or any other compensation, benefits or reimbursement of any kind.
Notwithstanding the foregoing, in the event the Cause for termination of this
Agreement is the death or disability of Employee, the Company shall pay
Employee's salary and other benefits hereunder for a period of two (2) years
from the date of death or disability. Employee or Employee's estate shall have
the option, in his or its sole discretion, to receive such payments in one lump
sum.
11.3 Termination for "Good Reason." Employee may terminate this
Agreement for "Good Reason" (as hereinafter defined) upon thirty (30) days
written notice to the Company. The term "Good Reason" means: (i) Employee is not
appointed or is removed from the position of President and Chief Executive
Officer without Cause during the term of this Agreement; (ii) without Employee's
written consent, any material change to the duties defined in Section 1 hereof;
(iii) without Employee's written consent, a change in office location which
necessitates extending Employee's daily commute to more than two hours, or
relocation of his residence; (iv) a "Change in Management or Control" has
occurred (as defined in Section 11.5); or (v) Vans has materially breached this
Agreement and failed to cure such breach within thirty (30) days of its receipt
of written notice thereof. Unless Employee terminates this Agreement within one
year of learning from any source that the Company has acted so as to provide
Good Reason for Employee to terminate this Agreement (or three years if the Good
Reason is a Change in Management or Control), and gives thirty (30) days'
written notice of such termination, Employee's right to receive severance
compensation
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for terminating this Agreement for Good Reason pursuant to the terms of
Paragraph 11.4 shall be forever lost.
11.4 Severance Compensation. In the event (i) Employee terminates
this Agreement for Good Reason in accordance with Paragraph 11.3 hereof; or (ii)
Employee is terminated without Cause, the Company shall be obligated to pay
severance compensation to Employee in an amount equal to his salary compensation
(at the rate payable at the time of such termination) for the remaining term of
the Agreement. In the event Employee is terminated without Cause, or terminates
this Agreement for Good Reason, within three (3) years of a "Change in
Management or Control" (as such term is defined in Paragraph 11.5 hereof), the
Company shall be obligated to pay severance compensation to Employee in an
amount equal to 2.99 times the sum of (a) Employee's then current salary
compensation, plus (b) the highest amount of bonus earned by Employee in any
fiscal year during the three fiscal years prior to the Change in Management or
Control, or in any fiscal year in the three-year period immediately prior to the
date of this Agreement, and such severance compensation shall be "grossed up"
for all federal and state taxes payable thereon. Employee shall have the option,
in his sole discretion, to receive such severance compensation in one lump sum.
Additionally, Employee shall be entitled to exercise the vested portion of any
of his Company stock options for a period of eighteen (18) months after the date
of termination. In addition to the foregoing severance compensation, the Company
shall pay the reasonable cost of outplacement services for Employee and also pay
Employee (i) all compensation for services rendered hereunder and not previously
paid; (ii) accrued vacation pay; and (iii) any appropriate business expenses
incurred by Employee in connection with his duties hereunder and approved
pursuant to Section 4 hereof, all through the date of termination.
11.5 Definition of "Change in Management or Control." The term
"Change in Management or Control" means the occurrence, in a single transaction
or in a series of related transactions, of (i) a merger, consolidation or
similar transaction involving (directly or indirectly) the Company and,
immediately after the consummation of such merger, consolidation or similar
transaction, the stockholders of the Company immediately prior thereto do not
own, directly or indirectly, outstanding voting securities representing more
than fifty percent (50%) of the combined outstanding voting power of the
surviving entity in such merger, consolidation or similar transaction or more
than fifty percent (50%) of the combined outstanding voting power of the parent
of the surviving entity in such merger, consolidation or similar transaction;
(ii) a sale, lease, license or other disposition of all or substantially all of
the consolidated assets of the Company and its subsidiaries, other than a sale,
lease, license or other disposition of all or substantially all of the
consolidated assets of the Company and its subsidiaries to an entity, of more
than fifty percent (50%) of the combined voting power of the voting securities
of which are owned by stockholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior to such sale,
lease, license or other disposition; or (iii) the acquisition by any Person
(other than any employee benefit plan, or related trust, sponsored or maintained
by the Company) as
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Beneficial Owner (as "Person" and "Beneficial Owner" are defined in the
Securities Exchange Act of 1934, as amended, or the rules and regulations
thereunder), directly or indirectly, of securities of the Company representing
20 percent (20%) or more of the total voting power represented by the Company's
then outstanding voting securities.
11.6 Exclusive Remedy. The payments referred to in this Section
11 shall be exclusive and shall be the only remedy available to Employee for
termination of his employment with the Company, regardless of the circumstances,
reasons or motivation for any such termination. If Employee gives notice of
termination of this Agreement, or if it becomes known that this Agreement will
otherwise terminate in accordance with its provisions, the Company may, in its
sole discretion, relieve Employee of his duties under this Agreement or assign
Employee other duties and responsibilities to be performed until the termination
becomes effective.
12. Key Man Life Insurance. During the term of this Agreement, the
Company may at any time effect insurance on Employee's life and/or health in
such amounts and in such form as the Company may in its sole discretion decide.
Employee shall not have any interest in such insurance, but shall, if the
Company requests, submit to such medical examinations, supply such information
and execute such documents as may be required in connection with, or so as to
enable the Company to effect, such insurance. The insurance obtained hereunder
shall be in addition to, and not in lieu of, any insurance the Company is
obligated to provide Employee pursuant to Section 10.
13. Vacation. Employee shall have the right during each one year period
of the term of this Agreement to take an aggregate of four weeks of vacation,
with pay, at such times as are mutually convenient to Employee and to the
Company.
14. Notices. Any and all notices, demands or other communications
required or desired to be given hereunder by any party shall be in writing and
shall be validly given or made to another party if given by personal delivery,
telex, facsimile, telegram or if deposited in the United States mail, certified
or registered, postage prepaid, return receipt requested. If such notice, demand
or other communication is given by personal delivery, telex, facsimile or
telegram, service shall be conclusively deemed made at the time of such personal
service. If such notice, demand or other communication is given by mail, such
notice shall be conclusively deemed given forty-eight (48) hours after the
deposit thereof in the United States mail addressed to the party to whom such
notice, demand or other communication is to be given as hereinafter set forth:
To the Company: VANS, INC.
00000 Xxxxxxxxx Xxxxxx
Xxxxx Xx Xxxxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
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562/565-8413 - facsimile
To Employee: Xxxx X. Xxxxxxxxxx
(at the address set forth below his signature)
Any party hereto may change his or its address for the purpose of receiving
notices, demands and other communications as herein provided by a written notice
given in the manner aforesaid to the other party or parties hereto.
15. Applicable Law and Severability. This Agreement shall, in all
respects, be governed by the laws of the State of California applicable to
agreements executed and to be wholly performed within the State of California.
Nothing contained herein shall be construed so as to require the commission of
any act contrary to law, and wherever there is any conflict between any
provision contained herein and any present or future statute, law, ordinance or
regulation contrary to which the parties have no legal right to contract, the
latter shall prevail but the provision of this Agreement which is affected shall
be curtailed and limited only to the extent necessary to bring it within the
requirements of the law.
16. Attorneys' Fees. In the event any action is instituted by a party to
enforce any of the terms and provisions contained herein, the prevailing party
in such action shall be entitled to such reasonable attorneys' fees, costs and
expenses as may be fixed by the Court.
17. Modifications or Amendments. No amendment, change or modification of
this Agreement shall be valid unless in writing and signed by all of the parties
hereto. Further, any amendment, change or modification of this Agreement
(including but not limited to the at-will nature of this Agreement as set forth
in Section 2 and Paragraph 11.1 hereof) must be approved in advance by the Board
of Directors of Company and reflected in the minutes of such Board's meetings or
in an action by unanimous written consent.
18. Successors and Assigns. All of the terms and provisions contained
herein shall inure to the benefit of and shall be binding upon the parties
hereto and their respective heirs, personal representatives, successors and
assigns.
19. Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties with respect to the subject matter of
this Agreement, and any and all prior agreements, understandings or
representations are hereby terminated and canceled in their entirety and are of
no further force or effect, including but not limited to that certain Employment
Agreement, dated as of September 1, 1995, as amended.
20. Counterparts. This Agreement may be executed in counterparts.
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21. Arbitration of Employment Disputes. All disputes or controversies
arising out of the employment relationship between Employee and the Company,
including claims by the Company against Employee, and claims by Employee against
the Company, including but not limited to claims for wrongful termination;
violations of Title VII of the Civil Rights Act of 1964, as amended; violations
of the Americans with Disabilities Act of 1990; or claims for violations of any
State law, rule or regulation regarding discrimination, harassment or other
wrongful conduct, shall be decided by a single arbitrator in a final and binding
arbitration administered by either the Judicial Arbitration and Mediation
Service ("JAMS") to be conducted in Los Angeles, California, in accordance with
their rules, guidelines and standards for employment arbitration.
Notwithstanding anything in the rules of the body administering the arbitration,
or applicable law to the contrary, each party to the arbitration shall be
entitled to conduct sufficient discovery to adequately prepare its claims or
defenses for arbitration, including access to essential documents and witnesses,
to be determined by the arbitrator, subject to judicial review as allowed by
law. The arbitrator shall have jurisdiction to decide his/her jurisdiction, any
questions as to the arbitrability of such claims, whether an agreement to
arbitrate exists, or whether an agreement to arbitrate covers the claims in
question. The arbitrator shall have the authority to grant any and all rights,
remedies and relief that would otherwise be available to the parties if the
claims were brought in a court of law including punitive damages and shall have
the authority to award the prevailing party reasonable attorneys' fees. The
arbitrator shall issue a written award and arbitration decision that sets forth
the arbitrator's findings of fact and conclusions of law upon which the award is
based. Judgment upon the award rendered by the arbitrator may be entered in any
court of competent jurisdiction. The cost of arbitration (other than Employee's
attorneys' fees and costs) shall be borne by the Company.
22. Survival of Certain Provisions. Sections 7,8,9, and 21 of this
Agreement shall survive the termination hereof.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
EMPLOYEE: THE COMPANY:
VANS, INC.,
a Delaware corporation
/s/ Xxxx X. Xxxxxxxxxx By: /s/ Xxxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxxxx
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Address Title
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