EXHIBIT 10(a)
XXXXXXXX, INC.
FIRST AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT OF
XXXXXXX X. XXXXXX
This First Amended and Restated Executive Employment
Agreement ("Agreement") is effective as of February 22, 1999, and
amends and restates the Executive Employment Agreement made and
entered into by and between XXXXXXXX, INC. (the "Company") and
XXXXXXX X. XXXXXX ("Xxxxxx") dated October 10, 1996.
1. Employment. The Company hereby employs Xxxxxx, and
Xxxxxx hereby accepts employment upon the terms and conditions
hereinafter set forth.
2. Term. Xxxxxx shall be employed by the Company at-will,
and will serve at the pleasure of the Company's board of
directors, subject to the severance compensation described in
Section 15.
3. Compensation. For all services rendered by Xxxxxx
under this Agreement, the Company shall pay Xxxxxx as follows:
(a) Starting Bonus: A starting bonus, in lieu of
relocation expenses, equal to Seventy-Five Thousand Dollars
($75,000), to be paid on or before October 31,1996;
(b) Annual Base Salary: An annual base salary no less
than Three Hundred Twenty-Five Thousand ($325,000) Dollars,
payable in bi-weekly installments, such compensation to be
reviewed annually in the sole discretion of the Board's
Compensation Committee on the basis of Xxxxxx'x performance and
the Company's financial success and progress.
(c) Annual Bonus: An annual bonus to be paid on January 15
following the 1997 fiscal year end based on the Company's
earnings per share and Xxxxxx'x then current annual base salary
as of such fiscal year end, as follows:
Earnings % of Annual
Per Share Base Salary
$0.46 15%
$0.48 35%
$0.50 50%
$0.52 65%
$0.54 85%
Such bonus shall be included in the calculation of the respective
earnings per share. The Company and Xxxxxx agree to engage in
good faith negotiations to determine the terms of an annual bonus
for fiscal years after 1997.
(d) Initial Stock Options: Initial options to purchase Three
Hundred Thousand (300,000) shares of the Company's Common Stock
at an exercise price of $6.00 per share, exercisable by Xxxxxx
until January 1, 2006, subject to the following vesting dates
(such options to be subject to the terms and conditions of the
Company's Incentive Stock Option Plan attached hereto):
No. of Shares Vesting Date
50,000 June 15,1997
50,000 January 1,1998
100,000 January 1,1999
100,000 January 1, 2000
(e) Clothing Allowance: Xxxxxxxx clothing as
reasonably necessary for the personal use of Xxxxxx and his
immediate family.
4. Duties. Xxxxxx is engaged as Chief Executive Officer
and President. As long as Xxxxxx is the Chief Executive Officer
of the Company, the board shall nominate Xxxxxx for reelection to
the Company's board at the time of each expiration of his term of
office as a board member. If Xxxxxx ceases to be the Chief
Executive Officer of the Company at any time, he will resign from
the board of directors unless a majority of the members of the
board other than Xxxxxx vote to retain him on the board. As
Chief Executive Officer and President, Xxxxxx shall have complete
responsibility for the management of the operations of the
Company, and shall have full authority and responsibility,
subject to the general direction and control of the board of
directors, for formulating policies and administering the Company
in all respects. His power shall include authority to hire and
fire personnel of the Company and to retain consultants when he
deems necessary to implement the Company's policies. The precise
services of Xxxxxx may be extended or reduced from time to time
at the direction of the board of directors, provided any such
expanded services are services normally associated with the
position held by Xxxxxx.
5. Extent of Services. Xxxxxx agrees to devote his best
efforts to the business of the Company and shall not allow any
other business interests to adversely affect his obligations and
responsibilities under this Agreement. Nothing in this Agreement
shall be construed as preventing Xxxxxx from: (a) investing his
assets in any form or manner, or (b) serving as a Chairman,
officer, director, advisor, or consultant to another company or
companies; provided, however, that such services are not in
connection with a business which is in direct competition with
the Company.
6. Working Facilities. Xxxxxx shall be furnished with a
private office, administrative assistant, and such other
facilities and services suitable to Xxxxxx'x position and
adequate for the performance of the duties required by this
Agreement.
7. Employee Benefits. Except as otherwise provided
herein, Xxxxxx shall be entitled to receive all of the rights,
benefits, and privileges of a principal executive under any
retirement, pension, profit-sharing, insurance, health and
hospital, and other employee benefit plans which may be now in
effect or hereafter adopted.
8. Life Insurance. The Company shall maintain during the
term of this Agreement life insurance in the amount of One
Million Dollars ($1,000,000), the beneficiary of which may be
named by Xxxxxx.
9. Automobile Allowance. The Company shall pay Xxxxxx an
automobile expense allowance of Seven Hundred Dollars ($700) per
month.
10. Vacation. Xxxxxx shall be entitled to annual vacations
in a manner commensurate with Xxxxxx'x status as a principal
executive.
11. Disability. In the event Xxxxxx shall become disabled
during the term of this Agreement for a continuous period up to
ninety days, Xxxxxx'x salary shall continue at the same rate as
on the date of such disability. To provide for disability which
continues beyond ninety days, the Company agrees to obtain and
maintain disability insurance for the period covering the term of
this Agreement which will provide Xxxxxx with disability benefits
after a waiting period of ninety days in an amount no less than
60% of his then current salary. The Company shall also pay
Xxxxxx a pro rata share of Annual Bonus in the year which Xxxxxx
was disabled. All stock options granted to Xxxxxx as of the date
of disability, whether granted pursuant to this Agreement or
otherwise, shall continue to vest as if Xxxxxx had not been
disabled. The Company shall have no other obligations with
respect to compensation to Xxxxxx during his disability. For the
purpose of this Agreement, disability shall mean mental or
physical illness or condition rendering Xxxxxx incapable of
performing his normal duties with the Company.
12. Proprietary Interests of Company. Xxxxxx agrees that
he will not, during or after the term of his employment, disclose
confidential and proprietary information of the Company which are
valuable, special, and unique assets of the Company's business
(Trade Secrets).
In the event of a breach or threatened breach by Xxxxxx of
the provisions of this section, the Company shall be entitled to
an injunction restraining Xxxxxx from such breach. Nothing
herein shall be construed as prohibiting the Company from
pursuing any other remedies available to the Company for such
breach or threatened breach, including the recovery of any
severance compensation described herein, damages, costs, and
attorney fees.
13. Noncompete. Xxxxxx agrees that during the term of this
Agreement Xxxxxx will not, directly or indirectly, own, manage,
operate, control, be employed by, participate in, or be connected
in any manner with the ownership, management, operation, or
control of any business which manufactures or sells golf-inspired
sportswear which is substantially the same as that of the Company
and which is distributed in the same channels of distribution as
the then current channels of distribution of the Company,
provided, however, that if Xxxxxx'x employment is terminated for
reasons which provide for severance compensation, the noncompete
term shall be extended to the period for which he receives such
severance compensation.
In the event of Xxxxxx'x actual or threatened breach of the
provisions of this paragraph, the Company shall be entitled to an
injunction restraining Xxxxxx therefrom. Nothing shall be
construed as prohibiting the Company from pursuing any other
available remedies for such breach or threatened breach,
including the recovery of any severance compensation described
herein damages, costs, and attorney fees.
14. Expenses. Xxxxxx is authorized to incur reasonable
expenses for promoting and conducting the business of the
Company, including expenses for entertainment, travel and similar
items. The Company will reimburse Xxxxxx for all such expenses
upon the presentation by Xxxxxx, from time to time, of an
itemized account of such expenditures.
15. Termination of Employment.
(a) Death. All stock options owned by Xxxxxx, whether
granted pursuant to this Agreement or otherwise and regardless of
their scheduled vesting dates, will vest immediately upon
termination of Xxxxxx'x employment as a result of his death, and
will be exercisable for a period of one year following the date
of death, provided that no option may be exercised beyond its
original expiration date.
(b) Termination Without Cause. Upon termination of
Xxxxxx'x employment without cause (as defined in the attached
Exhibit A), Xxxxxx shall receive severance compensation as
follows:
i. If terminated within the first twelve months
of this Agreement, cash compensation in an amount equal to
one and one-half times his then annual base salary. If
terminated after the first twelve months of this Agreement,
cash compensation in an amount equal to his then annual base
salary. Such compensation shall be paid in a lump sum;
however, Xxxxxx acknowledges that such compensation is an
advance payment of severance intended to compensate him for
the loss of income during the respective periods following
termination;
ii. Any earned but unpaid annual bonus plus a pro
rata share of annual bonus for the fiscal year in which
terminated without cause; and
iii. All stock options owned by Xxxxxx, whether
granted pursuant to this Agreement or otherwise and
regardless of their scheduled vesting dates, will vest
immediately upon termination of Xxxxxx'x employment, and
will be exercisable for a period of two years following the
date of termination, provided that no option may be
exercised beyond its original expiration date.
The Company also agrees to continue to provide Xxxxxx full
employee benefits for the first year following termination of his
employment without cause.
(c) Termination Upon Change of Control. Xxxxxx'x
employment will be deemed to have been terminated as a result of
a change of control of the Company within the meaning of this
section if Xxxxxx'x employment terminates for any reason at the
instigation of the Company or Xxxxxx himself at any time within
90 days before or within 180 days after the change in control.
Upon termination of Xxxxxx'x employment as a result of a change
of control of the Company (as defined herein and in the attached
Exhibit A), Xxxxxx shall receive severance compensation as
follows:
i. Cash compensation in an amount equal to two times
his then annual base salary, to be paid in a lump sum;
however, Xxxxxx acknowledges that such compensation is an
advance payment of severance intended to compensate him for
the loss of income during the two-year period following
termination;
ii. Any earned but unpaid annual bonus plus the annual
bonus which would have been earned at the end of the fiscal
year in which the employment is terminated; and
iii. All stock options owned by Xxxxxx, whether granted
pursuant to this Agreement or otherwise and regardless of
their scheduled vesting dates, will vest immediately upon
termination of Xxxxxx'x employment, and will be exercisable
for a period of five years following the date of
termination, provided that no option may be exercised beyond
its original expiration date.
The Company also agrees to continue to provide Xxxxxx full
employee benefits for the first year following termination of his
employment as a result of a change of control of the Company.
(d) Intentionally omitted.
(e) Resignation in the Event of Change of Circumstances.
In the event of any change in Xxxxxx'x Duties, Compensation, or
Benefits (as defined in the attached Exhibit A), Xxxxxx shall be
entitled to resign and receive severance compensation as provided
for a termination without cause.
(f) Severance Payments. The severance payments provided
herein will be payable regardless of when termination of
employment occurs and will be payable notwithstanding any other
employment Xxxxxx may find.
16. Notices. Any notice required or permitted to be given
under this Agreement shall be sufficient if in writing and
delivered in person or sent by registered or certified mail to
Xxxxxx'x residence in the case of Xxxxxx or to its principal
office in the case of the Company.
17. Arbitration. Any dispute arising out of this Agreement
shall be resolved by binding arbitration at San Diego, California
pursuant to the rules of the American Arbitration Association.
In any such proceeding, the prevailing party shall be entitled to
an award of its reasonable attorneys fees and expenses.
18. Waiver. The waiver of any provision of this Agreement
shall not operate or be construed as a waiver of any other
provision of this Agreement. No waiver shall be valid unless in
writing and executed by the party to be charged therewith.
19. Severability/Modification. In the event that any
clause or provision of this Agreement shall be determined to be
invalid, illegal or unenforceable, such clause or provision may
be severed or modified to the extent necessary, and, as severed
and/or modified, this Agreement shall remain in full force and
effect.
20. Assignment. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and shall be
binding upon the successors and assigns of the Company. Xxxxxx
acknowledges that the services to be rendered under this
Agreement are unique and personal. Accordingly, Xxxxxx may not
assign his rights and obligations under this Agreement.
21. Entire Agreement. This instrument contains the entire
agreement concerning the employment arrangement between the
parties and shall, as of the effective date hereof supersede all
other such agreements between the parties. It may not be amended
except by an agreement in writing signed by both parties.
22. Governing Law and Jurisdiction. This Agreement shall
be interpreted, construed, and enforced under the laws of the
State of California. The courts and authorities of the State of
California shall have sole jurisdiction and venue for purposes of
enforcing the arbitration agreement above.
23. Authorization to Sign. The undersigned represents that
he is properly authorized to legally bind Xxxxxxxx, Inc., to this
Agreement and to sign this Agreement on behalf of Xxxxxxxx, Inc.
IN WITNESS WHEREOF, the parties have executed this Agreement
the date and year indicated below.
Dated: March 4, 1999 "COMPANY"
XXXXXXXX, INC.
By:/s/ Xxxx Xxxxxx
Xxxx Xxxxxx
Vice President
Dated: April 14, 1999 By:/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
STATE OF CALIORNIA )
) SS.
COUNTY OF SAN DIEGO )
Subscribed and sworn to before me this 4th day of March,
1999.
/s/ Xxxxxxx Xxxxxxxxx
Notary Public
exhibit a to
FIRST AMENDED AND RESTATED
executive employment agreement
of Xxxxxxx X. Xxxxxx
DEFINITIONS OF TERMS
For purposes of the severance compensation granted to
Xxxxxx pursuant to the terms of the First Amended and Restated
Executive Employment Agreement between him and Xxxxxxxx, Inc.,
to which this exhibit is attached, the following terms shall
have the meanings indicated:
Termination Without Cause shall be deemed to have occurred
if the executive officer is terminated for any reason other than
the executive officer's fraud, misappropriation of or
intentional material damage to the property or business of the
Company (including its subsidiaries), or conviction of a felony,
provided, however, that termination as a result of a material
breach of the Executive Employment Agreement shall be deemed to
be termination with cause.
Change of Control shall be deemed to have occurred if:
1. Any "person," including a "group" as determined in
accordance with the Section 13(d)(3) of the Securities Exchange
Act of 1934 (the "Exchange Act"), is or becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the
Company's then outstanding securities;
2. As a result of, or in connection with, any tender
offer or exchange offer, merger or other business combination,
sale of assets or contested election, or any combination of the
foregoing transactions (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company
or any successor to the Company;
3. The Company is merged or consolidated with another
corporation and as a result of the merger or consolidation less
than 70% of the outstanding voting securities of the surviving
or resulting corporation shall then be owned in the aggregate by
the former stockholders of the Company, other than
(x) affiliates within the meaning of the Exchange Act or (y) any
party to the merger or consolidation;
4. A tender offer or exchange offer is made and
consummated for the ownership of securities of the Company
representing 20% or more of the combined voting power of the
Company's then outstanding voting securities; or
5. The Company transfers substantially all of its assets
to another corporation which is not a wholly-owned subsidiary of
the Company.
Change in Duties, Compensation or Benefits shall mean any
one or more of the following:
1. A significant change in the nature or scope of the
executive officer's authorities or duties;
2. A reduction in executive officer's Annual Base Salary;
3. A diminution in executive officer's eligibility to
participate in bonus, stock option, incentive award and other
compensation plans which provide opportunities to receive
compensation;
4. A diminution in Employee benefits (including but not
limited to medical, dental, life insurance and long-term
disability plans) and prerequisites applicable to executive
officer; or
5. A change in the location of executive officer's principal
place of employment by the Company (including its subsidiaries)
by more than ten miles from the location where he was
principally employed.
