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EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"AGREEMENT") is entered into as of November 3, 1997, by and between Pacific
Sunwear of California, Inc., a California corporation (the "Company"), and Xxxx
X. Xxxxxx ("Executive").
The Company desires to employ Executive, and Executive desires
to be an employee of the Company, pursuant to the terms and conditions set forth
herein.
In consideration of the foregoing and the promises and
covenants set forth below, the parties agree as follows:
1. EMPLOYMENT. The Company hereby employs Executive as
Chairman of the Board of Directors and Chief Executive Officer, and Executive
agrees to be employed in such positions during the term of this Agreement.
Executive shall devote his full time and efforts to perform his duties
faithfully and diligently and, to the best of his ability, to advance the
interests of the Company.
2. COMPENSATION. The Company shall pay Executive a base salary
of $500,000 per year, with such increases as may be approved by the Company's
Board of Directors, payable in accordance with the Company's practices in effect
from time to time. Notwithstanding the foregoing, the minimum annual adjustment
to the base salary of Executive, commencing November 3, 1997, shall be equal to
the greater of (i) the percentage by which the Consumer Price Index for the last
month of the then current year of the term of this Agreement shall have
increased as compared to the Consumer Price Index of the same month of the
immediately preceding year and (ii) 5% of Executive's then annual base salary.
"Consumer Price Index" refers to the Consumer Price Index - Los Angeles
Metropolitan Area - All items compiled by the U.S. Department of Labor, Bureau
of Labor Statistics, based on 1967 as 100.
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In addition, Executive shall receive a monthly car lease
allowance of $800 per month, reimbursement for all other automobile expenses,
family medical insurance, five weeks vacation per year and other benefits that
are comparable to the benefits offered to other executive officers of the
Company in general. The Company also shall provide Executive with a $1,000,000
term life insurance policy wherein Executive or a person designated by Executive
is the beneficiary, subject to Executive completing and passing any required
physical examinations. The Company also shall reimburse Executive for all
out-of-pocket expenses reason- ably incurred and paid by him in the performance
of his duties pursuant to this Agreement. Such reimbursement shall be in
accordance with the Company's policies, and Executive shall furnish to the
Company the documentation required to support the deductibility of such expenses
for federal income tax purposes. All payments made under this Agreement are
subject to all deductions required by law.
Executive also shall be entitled to participate in an annual
bonus program wherein Executive shall receive (i) with regard to 1998 and
thereafter, a bonus equal to a percentage of his base salary, not to exceed 150%
(100% x 150%) of his base salary and (ii) with regard to 1997, 112.5% (75% x
150%) using $400,000 as the base salary for three quarters of 1997 and using
$500,000 as the base salary for one quarter of 1997), based upon the achievement
of financial performance criteria to be established by the Company in
consultation with Executive. The bonus payment, if any, shall be made reasonably
promptly after audited financial statements are available to the Company for the
purpose of determining the satisfaction of the financial performance criteria.
Nothwithstanding the foregoing, if the Company determines in
good faith that there is a reasonable likelihood that any bonus payable to
Executive would not be deductible by the Company for federal income tax purposes
solely by reason of the limitation under Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Section 162(m)"), then to the extent reasonably
deemed necessary by the Company to ensure that the entire amount of such bonus
is deductible, the Company may defer payment of all or any
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portion of such bonus. The amount of bonus so deferred shall accrue interest at
the rate of 7.5% per year, compounded monthly, until paid. The amount of such
deferred bonus and accrued interest shall be paid to Executive (or his estate in
the event of his death) at the earliest possible date, as determined by the
Company in good faith, on which the deductibility of compensation paid or
payable to Executive for the taxable year of the Company for which the payment
is made will not be limited by Section 162(m).
3. TERM.
(a) The term of this Agreement (the "Term") shall commence on
the date hereof and shall terminate on January 15, 1999; provided,
however, if the Company does not give Executive written notice at least
60 days prior to the end of the Term of the Company's intention to not
have the Term extended for a one year period, then the Term shall
automatically be extended for one year and shall be automatically
extended each year thereafter unless the Company gives Executive
written notice at least 60 days prior to the end of the Term (any such
notice being a "60 Day Notice") of the Company's intention not to
extend the Term.
(b) The Term may be terminated at any time upon the occurrence
of any of the following events:
(i) The death or permanent disability of
Executive;
(ii) Executive's voluntary resignation;
(iii) Executive's discharge for cause; or
(iv) Upon the 30th day following written notice of
termination other than for cause (the "Termination Without
Cause Notice") from the
Company to Executive.
(c) Executive shall be considered permanently disabled if
Executive is absent from employment or unable to render services
hereunder on a full-time
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basis by reason of physical or mental illness or disability for six
months or more in the aggregate in any consecutive twelve month period
during the Term.
(d) As used in Paragraph 3(b)(ii), "voluntary resignation"
means Executive has resigned for any reason other than at the express
written request, whether or not for cause, of the Board.
(e) As used in Paragraph 3(b)(iii), "cause" shall mean only
that (i) Executive has refused to perform or discharge his material
obligations or duties hereunder for 30 days after notice from the Board
of such refusal, or (ii) Executive has engaged in illegal or other
wrongful conduct substantially detrimental to the business or
reputation of the Company.
(f) If this Agreement is terminated pursuant to Paragraphs
3(b)(i), 3(b)(ii) or 3(b)(iii), this Agreement shall terminate
immediately or at such later date as shall be designated by the Board
and all of Executive's rights hereunder shall terminate effective upon
such termination, except for payment of amounts earned by or owed to
Executive prior to Executive's termination hereunder, including,
without limitation, a Pro Rata Portion of the Bonus (as defined below).
Except as provided above and as otherwise specified
in any notice of termination, Executive shall not continue after
termination to be an employee of the Company for any purpose and all
rights Executive might thereafter have as an employee pursuant to any
plan shall cease except as expressly provided to the contrary in
writing under any such plan.
(g) If the Company should terminate this Agreement pursuant to
Paragraph 3(b)(iv) by giving a Termination Without Cause Notice or
shall at any time give a 60 Day Notice:
(i) Executive shall cease to be Chairman of the Board
of Directors and Chief Executive Officer of the Company, and
to hold such other office or
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position Executive then holds in the Company or any subsidiary
or affiliate thereof, effective upon the date specified in the
Termination Without Cause Notice or the 60 Day Notice, as the
case may be (the "Effective Date"), and if requested by a
majority of the members of the Board, shall resign from the
Board and from any of the Boards of Directors of the Company's
subsidiaries or affiliated companies of which Executive may be
a member.
(ii) The Company shall be obligated and shall continue
to pay Executive a salary at Executive's then annual salary
(without regard to any bonus) for a period of one year
following the Effective Date. Such payments shall be made in
installments payable as provided in Section 2 hereof. The
Company also shall pay Executive in a single payment within 60
days of the end of the Company's fiscal year a Pro Rata
Portion of the Bonus (as defined below). "Pro Rata Portion of
the Bonus" means an amount equal to any bonus to which
Executive would have been entitled had Executive remained an
employee for the balance of the fiscal year in which his
employment terminated multiplied by a fraction, the numerator
of which is the number of days from February 1 to the date of
Executive's termination, and the denominator of which is 365.
(h) Executive must give the Company written notice of at least
60 days prior to Executive's voluntary resignation.
4. RETURN OF DOCUMENTS AND PROPERTY. Upon the termination of
Executive's employment by the Company, or at any time upon the request of the
Company, Executive (or his heir or personal representative) shall deliver to the
Company (a) all documents and materials containing trade secrets and other
confidential information relating to the Company's business and affairs, and (b)
all other documents, materials and other property belonging to the Company or
its
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affiliated companies that are in the possession or under the control of
Executive.
5. ASSIGNMENT. Executive's rights and obligations under this
Agreement shall not be assignable by Executive. The Company's rights and
obligations under this Agreement shall not be assignable by the Company except
as incident to the transfer, by merger, liquidation, or otherwise, of all or
substantially all of the business of the Company.
6. NOTICES. Any notice required or permitted under this
Agreement shall be given in writing and shall be deemed to have been effectively
made or given if personally delivered, or if telegraphed, telexed, cabled, or
mailed to the other party at its address set forth below in this Section 6, or
at such other address as such party may designate by written notice to the other
party hereto. Any effective notice hereunder shall be deemed given on the date
personally delivered or on the date telegraphed, telexed, cabled or deposited in
the United States mail (sent by certified mail, return receipt requested)
mailed, as the case may be at the following address:
(i) If to the Company:
Pacific Sunwear of California, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Secretary
(ii) If to the Executive:
Xx. Xxxx X. Xxxxxx
c/o Pacific Sunwear of California, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
7. MISCELLANEOUS. This Agreement constitutes the entire
agreement of the parties hereto relating to the subject matter hereof, and there
are no written or oral terms or representations made by either party other than
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those contained herein. This Agreement supersedes all prior agreements between
the parties concerning the subject matter hereof, including that certain
Severance Agreement dated February 6, 1996, between the Company and Executive
which is hereby deemed terminated as of the date of this Agreement. This
Agreement may only be amended in writing signed by both parties. No waiver by
any party of any breach of this Agreement shall be deemed to be a waiver by any
party of any preceding or succeeding breach. The validity, interpretation,
performance and enforcement of this Agreement shall be governed by the laws of
the State of California without regard to conflicts of laws principles. The
headings contained herein are for reference purposes only and shall not in any
away affect the meaning or interpretation of this Agreement. This Agreement may
be executed in one or more counterparts, each of which shall be deemed to be an
original, all such counterparts together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
PACIFIC SUNWEAR OF CALIFORNIA, INC.
By: ______________________________
XXXX X. XXXXXX
Chief Financial Officer,
Vice President of Finance
and Secretary
"EXECUTIVE"
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XXXX X. XXXXXX
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