EXHIBIT 10.2
EXECUTIVE RETIREMENT AGREEMENT
This Executive Retirement Agreement (the "AGREEMENT") dated as of
August 28, 2002, is made by and between Gadzooks Management, L.P., a Texas
limited partnership (the "COMPANY"), and Xxxxxx X. Xxxxxxxxxxx ("EXECUTIVE").
RECITALS
A. Executive is currently employed by the Company.
B. The Company and Executive desire to enter into certain agreements
providing for certain events upon Executive's retirement from the Company.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Eligibility. Executive or his estate, devisees or heirs, as the case
may be, shall be eligible to receive the benefits provided for in this Agreement
so long as he is an officer of the Company at or above the level of vice
president (an "EXECUTIVE OFFICER") on the termination date of Executive's
employment with the Company as a result of either (i) Executive's death, (ii)
the Company's termination, without Cause (as defined herein), of Executive's
employment with the Company (solely with respect to the benefits set forth in
Sections 6 and 7 of this Agreement), or (iii) Executive's retirement from
employment with the Company (each, the "RETIREMENT DATE"). Executive shall cease
to be eligible for the benefits provided for in this Agreement if his employment
with the Company is terminated by the Company for Cause, and this Agreement
shall automatically terminate and be of no further force or effect upon the date
of such termination. The Company shall have the right to terminate Executive's
employment at any time for any of the following reasons, each of which is
referred to herein as "Cause": (i) any act of fraud or dishonesty with respect
to any aspect of the Company's or any affiliate's business; (ii) continued use
of illegal drugs; (iii) as a result of Executive's gross negligence or willful
misconduct, Executive shall violate, or cause the Company to violate, any
applicable federal or state securities or banking law or regulation and as a
result of such violation, shall become, or shall cause the Company or any
affiliate to become the subject of any legal action or administrative proceeding
seeking an injunction from further violations or a suspension of any right or
privilege; (iv) as a result of Executive's gross negligence or willful
misconduct, Executive shall commit any act that causes, or shall knowingly fail
to take reasonable and appropriate action to prevent, any material injury to the
financial condition or business reputation of the Company or any affiliate; (v)
substantial failure of performance, repeated or continued after written notice
of such failure and explanation of such failure of performance, which is
reasonably determined by the Board of Directors to be materially injurious to
the business or interests of the Company or any affiliate; or (vi) conviction of
a felony or of a crime involving moral turpitude.
2. Notice. Executive shall provide the Company with 180 days written
notice of his retirement from employment with the Company.
3. Insurance Coverage. After the Retirement Date and until the death of
Executive or Executive's spouse, whichever is later, the Company will reimburse
Executive (and Executive's spouse, if applicable) for all medical, dental and
life insurance premiums paid on behalf of Executive (and Executive's spouse, if
applicable) by the Company on the Retirement Date (the "INSURANCE COVERAGE");
provided, however, once Executive or his spouse becomes eligible for Medicare
coverage, the Insurance Coverage will automatically be reduced with respect to
such person by the amount of Medicare coverage, irrespective of whether
Executive or his spouse actually obtains such coverage, and thereafter the
Insurance Coverage with respect to such person will only be supplemental to
Medicare coverage. The Insurance Coverage may be modified by the Company at any
time subsequent to the Retirement Date as long as such modifications are
pursuant to and to the same extent as any modifications to the Company's
insurance coverage provided to the Executive Officers in office on the date of
such modifications and such modifications do not result in a substantial
reduction in benefits under the Insurance Coverage.
4. Consultant Arrangement. During the 24 months immediately following
the Retirement Date (the "CONSULTING PERIOD"), the Company will retain the
services of Executive to facilitate an orderly transition of Executive's duties
and responsibilities to Executive's successor(s) (the "SERVICES"). Execute shall
devote such time and attention as are necessary to faithfully and diligently
complete the Services; provided that Executive shall not be required to expend
over ten (10) hours per week in performing the Services over the Consulting
Period. The Company shall pay Executive, and Executive shall accept as full
consideration for performance of the Services, a consulting fee of $300,000 per
annum (the "CONSULTING FEE"), which will be payable on a bi-weekly basis.
Should Executive suffer physical or mental disability (so that
Executive is not reasonably able to complete the Services) for any consecutive
six month period during the Consulting Period, the Company may, at any time
after such six month period, at the Company's written election and written
notice to Executive, immediately terminate payment of the Consulting Fee. In the
event of any termination of payment pursuant to the foregoing provisions of this
paragraph, both the Company and Executive shall be released and discharged of
and from all further obligations under this Section 4 except for any accrued but
unpaid portion of the Consulting Fee due Executive for Services rendered prior
to the date of such Termination. The Company's non-enforcement of this provision
in one instance shall not be deemed to preclude it from subsequent enforcement
of this provision thereafter.
Should Executive die at any time during the Consulting Period, the
Company shall be released and discharged of and from all further obligations
under this Section 4, except for any accrued but unpaid portion of the
Consulting Fee due Executive for services rendered prior to the date of such
termination.
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5. Pro Rated Bonus Payment. Within 30 days after the Retirement Date,
the Company will pay to Executive or his estate, devisees, or heirs, as the case
may be, an amount equal to (i) the target bonus that Executive would have
received if he was still an Executive Officer at the end of the fiscal year in
which the Retirement Date occurs multiplied by (ii) a fraction, the numerator of
which is equal to the number of days from the first day of the fiscal year that
includes the Retirement Date to the Retirement Date, and the denominator of
which is equal to 365.
6. Stock Options - Acceleration of Vesting. Immediately after the
Retirement Date and notwithstanding the provisions of any applicable Company
stock option agreements, all of Executive's unexpired Company stock options
granted pursuant to any Company stock option plan shall become vested in full.
7. Stock Options - Amendment of Term. Immediately after the Retirement
Date and notwithstanding the provisions of any applicable Company stock option
agreements, all of Executive's Company stock options with an exercise price
equal to or greater than $9.00 shall be amended to include a term equal to the
lesser of (i) three years from the Retirement Date or (ii) the original
expiration date of such Company stock options.
8. Non-Competition, Non-Solicitation, Non-Interference and
Confidentiality.
(a) Executive agrees that for a period of two years from the
Retirement Date (the "RESTRICTED PERIOD"), he will not, without the prior
written consent of the Company, alone or with or for others, in whatever
capacity, directly or indirectly, solicit or attempt to solicit clients or
customers of the Company, or solicit or attempt to solicit employees of the
Company to leave the Company's employ.
(b) Executive agrees that during the Restricted Period he will
not interfere with the relationship between the Company and any of its vendors.
(c) Executive agrees that, during the Restricted Period, he
shall not, for himself or any third party, directly or indirectly, engage in any
business activity or accept employment with any entity that is or may be
competitive to a material extent with the Company in the field of retail sales
(including, but not limited to, internet retail sales and mail-order retail
sales), of moderately priced men's and women's casual apparel and accessories
targeted primarily at the 13 year old to 19 year old age group ("COMPETITOR"),
without prior written consent of the Company. Executive agrees that, prior to
engaging in any such activity or accepting employment with a Competitor or any
entity that could reasonably be deemed a Competitor during the Restricted
Period, Executive shall advise the Company in writing of Executive's intentions
and seek the Company's approval. Company approval shall apply only with respect
to the activity or position approved and Executive shall be obligated to obtain
Company approval with respect to any subsequent change of activity or position
or employment during the Restricted Period. Executive also agrees that, during
the Restricted Period, Executive shall not hold any stock in a Competitor other
than passive minority interests comprising less than 2% of the outstanding stock
of a publicly-traded Competitor.
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(d) Without the prior written consent of the Company, except
to the extent required by an order of a court having competent jurisdiction or
under subpoena from an appropriate government agency, Executive shall not
disclose any trade secrets, customer lists, supplier lists, drawings, designs,
information regarding product development, marketing plans, sales plans,
management plans, management organization information (including data and other
information relating to members of the Board and management), operating policies
or manuals, business plans, financial records or any other financial,
commercial, business or technical information relating to the Company or
information designated as confidential or proprietary that the Company may
receive belonging to suppliers, customers or others who do business with the
Company (collectively, "CONFIDENTIAL INFORMATION") to any third person unless
such Confidential Information has been previously disclosed to the public by the
Company or is in the public domain (other than by reason of Executive's breach
of this Section 8(d)).
9. Not a Contract of Employment. This Agreement shall not be deemed to
constitute an express or implied obligation of the Company to continue to employ
Executive.
10. Successors. The provisions of this Agreement shall be binding upon
the Company and its successors and assigns.
11. Governing Law. This Agreement will be construed and enforced
according to the laws of the State of Texas.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered on the day and year first above written.
GADZOOKS MANAGEMENT, L.P.
By: Gadzooks, Inc., its general partner
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: Chief Financial Officer
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/s/ Xxxxxx X. Xxxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxxx
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