EXHIBIT 10.11
EMPLOYMENT AGREEMENT
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 XXXX X. FINDEN-CROFTS, a British
subject residing at Willowhayne House, Tamarisk Way, The Willowhayne, East
Preston, Littlehampton, West Sussex XX00 0XX, Xxxxxxx (the "Executive").
WHEREAS, the Company, Derby International Corporation SA ("DIC"),
Derby Finance S.a.r.l. ("DFS"), DC Cycle, L.L.C. ("LLC") and Perseus Cycle,
L.L.C. ("Perseus") have entered into a Recapitalization Agreement, dated March
11, 1998, contemplating the recapitalization of the Company (the
"Recapitalization") upon satisfaction of certain conditions;
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
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
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
Date, Executive acknowledges and agrees that his existing Second Amended &
Restated Employment Agreement dated December 31, 1994 with DIC shall terminate.
2. SERVICES OF EMPLOYEE
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
The Executive's services will be rendered primarily in the United
Kingdom of Great Britain and Northern Ireland, Germany, the Netherlands, the
other countries of continental Europe,
-1-
the Republic of Ireland, South Africa, Canada and the United States of America.
The Executive will be required to travel on the Company's business to such
places as the Board of Directors or any duly authorized director or officer of
the Company shall designate from time to time. Executive shall report to the
Company's Board of Directors, and Executive shall devote his best efforts and
his full business time and attention, both within and outside working hours, to
the business and affairs of the Company and its Subsidiaries and performance of
his duties under this Agreement; provided that, the Executive shall be entitled
to devote up to 20 days per year to oversee his property business and to Exeter
International Corporation S.A., in each case so long as such activity does not
conflict with Executive's duties and obligations to the Company and its
Subsidiaries. Executives duties hereunder will require significant amount of
time working overseas and may necessitate residence in the Channel Islands
and/or North America. The Executive may engage in charitable and personal
business activities which do not conflict with his duties under this Agreement,
but 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 except with the consent of the Company.
4. EMPLOYMENT PERIOD
(a) The term of the Executive's employment under this Agreement (the
"Employment Period") shall begin on the Effective Date of this Agreement and
shall continue for a period of twelve (12) months (with the last day of such
twelve month period being referred to herein as the "Termination Day");
provided, however, that the Employment Period may be terminated as follows:
(i) 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;
(ii) 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
(iii) 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, the Employment Period shall terminate immediately upon receipt
by the Executive of notice in writing from the Company of termination of the
Employment Period.
(b) Should the Employment Period terminate by notice as provided for
in sub-paragraph (a) of this paragraph 4, the Executive shall not be entitled to
receive any payment from
-2-
the Company under the United Kingdom Redundancy Payments Xxx 0000. For the
purposes of this Agreement, the Employment Period shall include and be deemed to
be continuous with the period of employment under the Employment Agreement.
5. REMUNERATION OF EMPLOYEE
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
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,
and 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
The Company shall make provision for the Executive's inclusion in any
pension and/or life insurance plan which the Company or its Subsidiaries may
establish or maintain from time to time for senior executive employees, subject
to any conditions which the Company or the insurance company underwriting such
plan may impose with respect to participation in the plan; provided, however,
that the pension benefits provided shall be no less favourable to the Executive
than those set out in Appendix B to this Agreement.
8. VACATION
The Executive shall be entitled to five (5) weeks' vacation in each
calendar year during the Employment Period (in addition to the usual public
holidays in the United Kingdom), provided that such vacation shall be taken at
such time or times as the Board of Directors of the Company approves in advance.
9. REPORTS AND WRITTEN MATERIALS
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 written 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
-3-
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 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
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. ANNOUNCEMENTS
Neither party to this Agreement shall make any public announcement
relating to the Executive's employment by the Company without the prior consent
of the other party to this Agreement, which shall not be unreasonably withheld.
12. OFFICE FACILITIES
The Company shall make available to the Executive during the
Employment Period full office and secretarial facilities at such places as the
Company and the Executive shall agree.
13. NOTICES
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 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
-4-
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
This Agreement and the relationships of the parties in connection with
the subject matter of this Agreement may, upon the desire of the parties hereto
expressed in writing, be reviewed by the parties from time to time for such
purposes as the parties may choose to consider. Notwithstanding the foregoing,
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
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
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
of any country) of which the Company owns directly or indirectly more than fifty
percent (50%) 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
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
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
paragraph 10 of this Agreement may cause the Company and any Subsidiary or
associated company to which 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
-5-
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
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
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 England.
21. SEVERABILITY
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.
* * *
-6-
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:_____________________________________ _________________________________
Xxxxxxx X. Xxxxxx, Xx. XXXX X. FINDEN-CROFTS
Vice-President
APPENDIX A
TO EMPLOYMENT AGREEMENT
The Executive's duties shall be to:
(a) serve as president and chief executive officer of the Company and
such of its Subsidiaries as shall be agreed between the Executive and the Board
of Directors of the Company;
(b) in cooperation with the chairman and the Board of Directors of the
Company, formulate and implement the overall policies and operating procedures
for the Company and its Subsidiaries;
(c) ensure that full, timely and accurate financial reports and
budgets are prepared and submitted for the Company and each of its Subsidiaries,
and participate in the presentation of such reports to the Board of Directors of
the Company, with the Executive's comments and recommendations thereon;
(d) take responsibility for the achievement of all financial
objectives and budgets for the Company and its Subsidiaries which are mutually
agreed by the Board of Directors of the Company and the Executive;
(e) establish and maintain contacts with senior executives of major
companies in the sporting goods and bicycle industries throughout the world, and
with government 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 the Company and its Subsidiaries;
(f) take responsibility for the recruitment, appointment, direction
and dismissal (where appropriate) of all senior executives of the Company and
its Subsidiaries;
(g) establish standards and procedures for evaluation of the
performance of senior executives of the Company and its Subsidiaries at all
times;
(h) to the extent elected by the Company's shareholders, serve as a
member of the Board of Directors of the Company and those Subsidiaries of the
Company agreed between the Executive and the chairman of the Company;
(i) in cooperation with the Board of Directors and the chairman of the
Company, maintain communication with the shareholders of and lenders to the
Company and its Subsidiaries;
(j) obtain and review data and information with respect to the
business of the Company and its Subsidiaries, as well as the sporting goods and
bicycle industries throughout the world, for the purpose of evaluating the
competitive position of the Company and its Subsidiaries and formulating
recommendations to the Board of Directors for acquisitions, disposals or
cooperative business arrangements appropriate for the Company or its
Subsidiaries; and
A-1
(k) perform such other duties as may be assigned to the Executive by
the Board of Directors of Company from time to time which are consistent with
the status of the Executive as president and chief executive of the Company.
X-0
XXXXXXXX X
TO EMPLOYMENT AGREEMENT
1. As the full and complete remuneration of the Executive for his
services under the Agreement to which this Appendix B is attached, the Company
shall:
(a) 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
thousand pounds sterling ((Pounds)200,000) a year, payable on the fifteenth
(15th) day of each month in twelve (12) equal installments;
(b) pay to the Executive a bonus for the 1998 fiscal year as follows:
(i) (Pounds)125,000 so long as PBIT (as defined below) is at
least (Pounds)14 million; plus
(ii) 2.5% of PBIT over (Pounds)14 million; plus
(iii) 2.5% of PBIT over (Pounds)15 million; plus
(iv) 1% of PBIT over (Pounds)18 million.
For example purposes only, Executive's bonus can be illustrated in tabular form
as follows:
PBIT (im million pounds sterling) Bonus
--------------------------------- -----
less than 14 (Pounds)0
14 (Pounds)125,000
15 (Pounds)150,000
16 (Pounds)200,000
17 (Pounds)250,000
18 (Pounds)300,000
19 (Pounds)360,000
20 (Pounds)420,000
21 (Pounds)480,000
"PBIT" means consolidated profits on ordinary activities before interest
payments and taxation of the Company and its Subsidiaries for the 1998 fiscal
year, as shown on the audited financial statements of the Company and its
Subsidiaries for such year. PBIT shall include profits from acquisitions with
the exception of Diamondback, GT and other acquisitions of similar scope and
size. PBIT excludes non-executive director's fees and expenses.
Any bonus due the Executive shall be paid by the Company to the Executive within
the earlier of (i) seven (7) days after the date on which the Company's auditors
have both signed the Company's accounts and produced a certificate setting forth
the amount of, and calculations for, any bonus payment due the Executive, or
(ii) a later mutually agreed upon date .
(c) keep and maintain in effect during the Employment Period non-
contributory pension arrangements which provide to the Executive a pension at
age sixty (60) equal to two-thirds (2/3) of average annual base salary during
the last three (3) years of his employment prior to
B-1
retirement age (or during the last year of such employment, if higher), with
lump-sum commutation benefits equal to the maximum permitted for approved
pension plans by the United Kingdom Inland Revenue.
(d) keep and maintain in effect during the Employment Period life and
disability insurance for the Executive which provides to his beneficiaries a
lump-sum benefit equal to four (4) times his base salary during the preceding
calendar year, together with widow's or dependent's pension and child allowances
related to the pension and life insurance benefits provided for herein;
(e) keep and maintain in effect during the Employment Period such
medical insurance and other employee health or accident benefits for the
Executive as shall be provided for from time to time in accordance with the
policy of the Company for persons of employee's age, grade and status, but in
any event to include all members of the Executive's immediate family; and
(f) pay or reimburse an agreed proportion of providing to the
Executive a suitable car approved by the chairman of the Company for use by him
in connection with his duties, including all charges and expenses in respect of
licenses, comprehensive insurance, repairs and maintenance, as well as the cost
of petrol and oil used by the Executive.
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.
B-2
