EXHIBIT 10.3
[QUICKSILVER LOGO]
August 1, 2004
PERSONAL AND CONFIDENTIAL
Xxxxxxx X. Xxxx, Esq.
c/o Quiksilver, Inc.
00000 Xxxxxx Xxxxxx
Huntington Beach, California 92649
Re: Employment at Quiksilver, Inc.
Dear Xxxxxxx:
This letter ("Agreement") will confirm our understanding and
agreement regarding your continued employment with Quiksilver, Inc.
("Quiksilver" or the "Company"). This Agreement is effective August 1, 2004, and
completely supersedes and replaces any existing or previous oral or written
understandings or agreements, express or implied, between you and the Company
regarding your employment, including, without limitation, our August 1, 2000,
letter.
1. Position; Exclusivity. The Company hereby agrees to employ you
as its Executive Vice President, Business and Legal
Affairs-International, reporting to the President or Chief
Executive Officer. During your employment with Quiksilver, you
will devote your full professional and business time,
interest, abilities and energies to the Company and will not
render any services to any other person or entity, whether for
compensation or otherwise, or engage in any business
activities competitive with or adverse to the Company's
business or welfare, whether alone, as an employee, as an
attorney, as a partner, as a member, or as a shareholder,
officer or director of any other corporation, or as a trustee,
fiduciary or in any other similar representative capacity of
any other entity. The Company agrees that you will be insured
against, indemnified or otherwise covered for legal
malpractice or similar claims that may arise out of your
carrying out your duties and responsibilities hereunder.
2. Base Salary. Your base salary will be $29,166.66 per month
($350,000 on an annualized basis), less applicable
withholdings and deductions, paid on the Company's regular
payroll dates. Your salary will be reviewed at the time
management salaries are reviewed periodically and may be
adjusted (but not below $29,166.66 per month) at the Company's
discretion in light of the Company's performance, your
performance, market conditions and other factors deemed
relevant by the Company.
3. Bonus. For the fiscal year ending October 31, 2004 and each
fiscal year thereafter, you shall be eligible to receive a
discretionary bonus under the terms approved by
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the Board of Directors for such bonus. Any such bonus shall be
paid within ten (10) days following the date the Company
publicly releases its annual audited financial statements (the
"Bonus Payment Date"). In the event that your employment with
the Company terminates prior to the end of the applicable
fiscal year, your eligibility to receive a pro rata portion of
the bonus is governed by Paragraph 9 below. Any bonus payments
shall be less applicable withholdings and deductions.
4. Vacation. You will accrue 20 days of vacation each year up to
a maximum of 35 days. Once the maximum is reached, additional
vacation accrual will cease until you have used some vacation
to fall below the maximum accrual allowed.
5. Health and Disability Insurance. You (and any eligible
dependents you elect) will be covered by the Company's group
health insurance programs on the same terms and conditions
applicable to comparable employees. You will also be covered
by the long-term disability plan for senior executives on the
same terms and conditions applicable to comparable employees.
The Company reserves the right to change, modify, or eliminate
such coverages in its discretion.
6. Clothing Allowance. You will be provided a clothing allowance
of $2,000 per year at the Company's wholesale prices.
7. Stock Options. You shall continue to be a participant in
Quiksilver's Stock Incentive Plan, or any successor equity
plan. The amount and terms of any restricted stock, stock
options, stock appreciation rights or other interests to be
granted to you will be determined by the Board of Directors in
its discretion and covered in separate agreements, but shall
be substantially similar to those granted to other senior
executives of Quiksilver of equivalent level. Stock options
granted to you after the date hereof through the termination
of your employment shall provide that if you are terminated by
the Company without Cause (as hereinafter defined) or you
terminate your employment for Good Reason (as hereinafter
defined) within twelve (12) months following a Change of
Control (as defined in Addendum "A"), any such options
outstanding will automatically vest in full on an accelerated
basis so that the options will immediately prior to such
termination become exercisable for all option shares.
8. Life Insurance. The Company will pay the premium on a term
life insurance policy on your life with a company and policy
of our choice, and a beneficiary of your choice, in the face
amount determined by the Company of not less than $1,000,000.
Our obligation to obtain and maintain this insurance is
contingent upon your establishing and maintaining
insurability, and we are not required to pay premiums for such
a policy in excess of $2,500 annually.
9. Unspecified Term; At Will Employment; Termination.
(a) Notwithstanding anything to the contrary in this
Agreement or in your prior employment relationship with the
Company, express or implied, your employment is for an
unspecified term and either you or Quiksilver may terminate
your employment at will and with or without Cause (as defined
below) or notice at any time for any reason; provided,
however, that you agree to provide the Company with
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thirty (30) days advance written notice of your resignation
(during which time the Company may elect, in its discretion,
to relieve you of all duties and responsibilities). This
at-will aspect of your employment relationship can only be
changed by an individualized written agreement signed by both
you and an authorized officer of the Company.
(b) The Company may also terminate your employment
immediately, without notice, for Cause, which shall include,
but not be limited to, (i) your death, (ii) your permanent
disability which renders you unable to perform your duties and
responsibilities for a period in excess of three consecutive
months, (iii) willful misconduct in the performance of your
duties, (iv) commission of a felony or violation of law
involving moral turpitude or dishonesty, (v) self-dealing,
(vi) willful breach of duty, (vii) habitual neglect of duty,
or (viii) a material breach by you of your obligations under
this Agreement. If the Company terminates your employment for
Cause, or you terminate your employment other than for Good
Reason (as defined below), you (or your estate or
beneficiaries in the case of your death) shall receive your
base salary and other benefits earned and accrued prior to the
termination of your employment and, in the case of a
termination pursuant to subparagraphs (i) or (ii) only, a pro
rata portion of your bonus, if any, as provided in Paragraph 3
for the fiscal year in which such termination occurs, less
applicable withholdings and deductions, and you shall have no
further rights to any other compensation or benefits hereunder
on or after the termination of your employment.
(c) If Quiksilver elects to terminate your employment
without Cause, or if you terminate your employment with the
Company for Good Reason within six (6) months of the action
constituting Good Reason, the Company will (i) continue to pay
your base salary (but not any employment benefits) on its
regular payroll dates for a period of twelve (12) months, (ii)
pay you a pro rata portion of a bonus adopted pursuant to
Paragraph 3, if any, for the fiscal year in which such
termination occurs, less applicable withholdings and
deductions, and (iii) pay you an amount equal to one times the
average annual bonus earned by you pursuant to Paragraph 3
during the two (2) most recently completed fiscal years of the
Company, payable over a twelve (12) month period following
termination in equal installments on the Company's regular
payroll dates, less applicable withholdings and deductions.
Notwithstanding the foregoing, if such termination without
Cause or for Good Reason occurs within twelve (12) months
immediately following a Change of Control (as defined in
Addendum "A"), the Company will instead (i) continue to pay
your base salary (but not any employment benefits) on its
regular payroll dates for a period of twenty-four (24) months,
(ii) pay you a pro rata portion of a bonus, if any, for the
fiscal year in which such termination occurs, less applicable
withholdings and deductions, and (iii) pay you an amount equal
to two (2) times the average annual bonus earned by you
pursuant to Paragraph 3 during the two (2) most recently
completed fiscal years of the Company, payable over a
twenty-four (24) month period following termination in equal
installments on the Company's regular payroll dates, less
applicable withholdings and deductions. In order for you to be
eligible to receive the payments specified in this Paragraph
9(c), you must execute a general release of claims in a form
reasonably acceptable to the Company. You shall have no
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further rights to any other compensation or benefits hereunder
on or after the termination of your employment. You shall not
have a duty to seek substitute employment, and the Company
shall not have the right to offset any compensation due you
against any compensation or income received by you after the
date of such termination.
"Good Reason" for you to terminate employment means a
voluntary termination as a result of (i) the assignment to you
of duties materially inconsistent with your position as set
forth above without your consent, (ii) a material change in
your reporting level from that set forth in this Agreement
without your consent, (iii) a material diminution of your
authority without your consent, (iv) a material breach by the
Company of its obligations under this Agreement, (v) a failure
by the Company to obtain from any successor, before the
succession takes place, an agreement to assume and perform the
obligations contained in this Agreement, or (vi) the Company
requiring you to be based (other than temporarily) at any
office or location outside of the Southern California area
without your consent. Notwithstanding the foregoing, Good
Reason shall not exist unless you provide the Company notice
of termination on account thereof and, if such event or
condition is curable, the Company fails to cure such event or
condition within thirty (30) days of such notice.
(d) In the event that any payment or benefit received
or to be received by you (collectively, the "Payments") would
constitute a parachute payment within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the
"Code"), then the following limitation shall apply:
The aggregate present value of those Payments shall be limited
in amount to the greater of the following dollar amounts (the
"Benefit Limit"):
(i) 2.99 times your Average Compensation (as defined below),
or
(ii) the amount which yields you the greatest after-tax
amount of Payments under this Agreement after taking into
account any excise tax imposed under Code Section 4999 on
those Payments.
The present value of the Payments will be measured as of the
date of the Change in Control and determined in accordance
with the provisions of Code Section 280G(d)(4).
Average Compensation means the average of your W-2 wages from
the Company for the five (5) calendar years completed
immediately prior to the calendar year in which the Change in
Control is effected. Any W-2 wages for a partial year of
employment will be annualized, in accordance with the
frequency which such wages are paid during such partial year,
before inclusion in Average Compensation.
10. Trade Secrets; Confidential and/or Proprietary Information.
The Company owns certain trade secrets and other confidential
and/or proprietary information which constitute valuable
property rights, which it has developed through a substantial
expenditure of time and money, which are and will continue to
be utilized in the
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Company's business and which are not generally known in the
trade. This proprietary information includes the list of names
of the customers and suppliers of Quiksilver, and other
particularized information concerning the products, finances,
processes, material preferences, fabrics, designs, material
sources, pricing information, production schedules, sales and
marketing strategies, sales commission formulae, merchandising
strategies, order forms and other types of proprietary
information relating to our products, customers and suppliers.
You agree that you will not disclose and will keep strictly
secret and confidential all trade secrets and proprietary
information of the Company, including, but not limited to,
those items specifically mentioned above.
11. Expense Reimbursement. The Company will reimburse you for
documented reasonable and necessary business expenses incurred
by you while engaged in business activities for the Company's
benefit on such terms and conditions as shall be generally
available to other executives of the Company.
12. Compliance With Business Policies. You will devote your full
business time and attention to Quiksilver and will not be
involved in other business ventures without written
authorization from the Company's Board of Directors. You will
be required to observe the Company's personnel and business
policies and procedures as they are in effect from time to
time. In the event of any conflicts, the terms of this
Agreement will control.
13. Entire Agreement. This Agreement, its addenda, and any stock
option agreements the Company may enter into with you contain
the entire integrated agreement between us regarding these
issues, and no modification or amendment to this Agreement
will be valid unless set forth in writing and signed by both
you and an authorized officer of the Company.
14. Arbitration as Exclusive Remedy. To the fullest extent allowed
by law, any controversy, claim or dispute between you and the
Company (and/or any of its affiliates, owners, shareholders,
directors, officers, employees, volunteers or agents) relating
to or arising out of your employment or the cessation of that
employment will be submitted to final and binding arbitration
in Orange County, California, for determination in accordance
with the American Arbitration Association's ("AAA") National
Rules for the Resolution of Employment Disputes, as the
exclusive remedy for such controversy, claim or dispute. In
any such arbitration, the parties may conduct discovery to the
same extent as would be permitted in a court of law. The
arbitrator shall issue a written decision, and shall have full
authority to award all remedies which would be available in
court. The Company shall pay the arbitrator's fees and any AAA
administrative expenses. Any judgment upon the award rendered
by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Possible disputes covered by the above
include (but are not limited to) unpaid wages, breach of
contract, torts, violation of public policy, discrimination,
harassment, or any other employment-related claims under laws
including but not limited to, Title VII of the Civil Rights
Act of 1964, the Americans With Disabilities Act, the Age
Discrimination in Employment Act, the California Fair
Employment and Housing Act, the California Labor Code and any
other statutes or laws relating to an employee's relationship
with his/her employer, regardless of whether such dispute is
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initiated by the employee or the Company. Thus, this bilateral
arbitration agreement fully applies to any and all claims that
the Company may have against you, including (but not limited
to) claims for misappropriation of Company property,
disclosure of proprietary information or trade secrets,
interference with contract, trade libel, gross negligence, or
any other claim for alleged wrongful conduct or breach of the
duty of loyalty. Nevertheless, claims for workers'
compensation benefits or unemployment insurance, those arising
under the National Labor Relations Act, and any other claims
where mandatory arbitration is prohibited by law, are not
covered by this arbitration agreement, and such claims may be
presented by either the Company or you to the appropriate
court or government agency. BY AGREEING TO THIS BINDING
ARBITRATION PROVISION, BOTH YOU AND THE COMPANY GIVE UP ALL
RIGHTS TO TRIAL BY JURY. This mutual arbitration agreement is
to be construed as broadly as is permissible under applicable
law.
15. Successors and Assigns. This Agreement will be assignable by
the Company to any successor or to any other company owned or
controlled by the Company, and will be binding upon any
successor to the business of the Company, whether direct or
indirect, by purchase of securities, merger, consolidation,
purchase of all or substantially all of the assets of the
Company or otherwise.
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Please sign, date and return the enclosed copy of this letter to me for our
files to acknowledge your agreement with the above.
Very truly yours,
__________________________________
Xxxxxx X. XxXxxxxx, Xx.
Chief Executive Officer
Enclosure
ACKNOWLEDGED AND AGREED:
_______________________________
Xxxxxxx X. Xxxx
Date Effective: _________, 2004
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ADDENDUM A
DEFINITION OF CHANGE IN CONTROL
"Change in Control" means the occurrence of one or more of the
following events: (i) any corporation, partnership, person, other entity, or
group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) (collectively, a "Person") acquires shares of capital stock of the
Company representing more than 50% of the total number of shares of capital
stock that may be voted for the election of directors of the Company, (ii) a
merger, consolidation, or other business combination of the Company with or into
another Person is consummated, or all or substantially all of the assets of the
Company are acquired by another Person, as a result of which the stockholders of
the Company immediately prior to the consummation of such transaction own,
immediately after consummation of such transaction equity securities possessing
less than 50% of the voting power of the surviving or acquiring Person (or any
Person in control of the surviving or acquiring Person, the equity securities of
which are issued or transferred in such transaction), or (iii) the stockholders
of the Company approve a plan of complete liquidation, dissolution or winding up
of the Company.
~ADDENDUM A~
