FINAL EXHIBIT 10.59
Effective January 1, 2002
Mr. Xxxxx Xxxxxx
Reebok International Ltd.
RE: EMPLOYMENT AGREEMENT
Dear Xxxxx:
This letter will evidence the agreement between you and Reebok
International Ltd. (referred to as "Reebok", "RIL" or the "Company") relating to
your continued employment by Reebok effective as of January 1, 2002 (the
"Effective Date"). Our agreement is as follows:
1. YOUR POSITION; DUTIES AND RESPONSIBILITIES. Reebok hereby agrees to
continue your employment beginning as of January 1, 2002, on the terms and
subject to the conditions set out in this Agreement. You are hereby designated
during the Employment Term (as defined in Section 2 below) as Executive Vice
President of RIL and President and CEO of the Reebok Brand. In such capacity,
you will have all duties, responsibilities and authorities normally associated
with such position, including responsibility for executing the strategic
direction and for operating results of the business in the Reebok Brand on a
worldwide basis. You will devote your full business time and your best efforts
in carrying out the duties, responsibilities and authorities of that position,
and you will operate within corporate policies, guidelines, regulations, and
strategies, and mutually-agreed budgets, cash flows and capital authorization
levels established by the Board of Directors of the Company or its Chief
Executive Officer. Subject to the provisions of Section 10B, your duties and
responsibilities may be changed from time to time. You will report to the
President and COO of RIL (currently Xxx Xxxxxxxx) or an individual with the same
or higher level title.
You shall not be prevented from accepting positions of responsibility
in outside business and charitable organizations, such as directorships of
outside business corporations and public charities, subject to the limitation
that such activities shall not interfere with your discharge of your
responsibilities to Reebok hereunder and shall not include any involvement with
any competing enterprise. You will comply with whatever policies are in
existence in this regard, including the current policy, which limits senior
executives to serving on no more than two (2) for-profit boards of directors.
2. EMPLOYMENT TERM.
A. EMPLOYMENT TERM. The term of your employment under this Agreement
shall commence as of the Effective Date and will continue until December 31,
2004 (the period of time shall be referred to as the "Initial Employment Term").
Subject to the terms and conditions of this Agreement, if this Agreement has not
been terminated pursuant to Section 10 below prior to the expiration of the
Initial Employment Term, then this Agreement shall automatically be extended for
up to two (2) additional one (1) year terms (the "Renewal Terms"). The Initial
Page 1/11
Employment Term and any Renewal Terms are herein collectively referred to as the
"Employment Term."
B. SURVIVAL OF CERTAIN PROVISIONS. The obligations set forth in the
Employee Agreement, Non-Competition Agreement, and the Code of Conduct referred
to in Section 9 will continue in effect, to the extent applicable after
termination, after the termination of your employment with the Company and/or
after the expiration of the Employment Term.
3. BASE SALARY. Your initial base salary will be at an annualized rate
of $600,000 payable in accordance with Reebok's normal pay practices. Your base
salary will next be reviewed in March of 2002, and annually thereafter in
accordance with Board practices. You understand, however, that any increase in
base salary for 2002 shall not occur until increases are provided to other
senior executives.
4. ANNUAL INCENTIVE COMPENSATION.
(i) EXECUTIVE PERFORMANCE INCENTIVE PLAN. For each calendar year of
the Employment Term, you will participate in the same incentive
compensation plan as the other senior executives of the Company,
and to the extent that you share financial performance criteria
with those other executives under the plan, your required level
of financial performance will be set at the same level as for
those other executives. Your annual incentive compensation has
been targeted at 100% of your base salary for fiscal year 2002.
Actual payment levels under the incentive compensation program
will be based on your achievement of financial and management
performance goals, with such goals to be established each year by
the Company's Chief Executive Officer or Board of Directors, and
payments will be made in accordance with the terms and subject to
the conditions of the incentive plan then in effect for the
senior executives of the Company. You will be eligible to receive
a bonus award with respect to any plan year for which you are
actively employed as of December 31 of such plan year.
(ii) PAYMENT IN 2002. You will remain eligible to receive an incentive
payment in 2002 (attributable to fiscal year 2001) in the amount
otherwise payable under the terms of the 2001 Executive
Performance Incentive Plan. The Company will make such payment,
if any, in accordance with its usual practice for the payment of
incentive compensation to senior executives; however, it is
anticipated that the Company will make such payment in mid-March
of 2002. You will receive any payments under this Section 4(ii)
unless your employment is terminated pursuant to Section 10A or
Section 10C prior to actual payment.
(iii) DISPUTES. In the event of any disagreement concerning whether
incentive plan goals have been achieved and/or the percentage
bonus to be awarded pursuant to the incentive plan, the decision
of the Company's Chief Executive Officer shall be final. If you
believe that the decision of the Company's Chief Executive
Officer has not been made in good faith, you may submit your
position on the matter in writing to the Compensation Committee
of the Company's Board of Directors,
Page 2/11
which will consider your position at its next regular meeting.
The Compensation Committee has full discretion to determine the
issue and its determination will fully bind the parties.
5. CHANGE OF CONTROL. Attached as EXHIBIT A is a Change of Control
Agreement approved in form by the Compensation Committee of the Board of
Directors.
6. STOCK OPTIONS.
(i) GENERAL. The Company may grant you so-called "non-qualified"
stock options with respect to its common stock under the
Company's 1994 Equity Incentive Plan and any subsequent
additional or successor plan in effect at a relevant time (such
plans are referred to herein as the "Option Plan"). The terms of
the Option Plan and any agreement under the Option Plan relating
to the options will govern the exercise and all other matters
relating to the options. The amount of any options will be in
accordance with Board practices and with the approval of the
Compensation Committee.
(ii) STOCK OPTION GRANT. 100,000 "non-qualified" stock options will be
granted to you under the Option Plan to acquire additional shares
of Reebok common stock, at $24.00 per share (the market price of
Reebok's common stock upon the closing of the market as of the
December 5, 2001 date of grant). This stock option grant will
expire ten (10) years after the date of grant and will become
ratably exercisable over a four (4) year period on the
anniversary of the date of grant.
7. FRINGE BENEFITS AND BUSINESS RELATED EXPENSES.
(i) GENERAL. You will be eligible to participate in or receive
benefits under any pension plan, 401(k) retirement plan, medical
and dental benefits plan, life insurance plan, short-term and
long-term disability plans, supplemental and/or incentive
compensation plans, or any other employee benefit or fringe
benefit plan, generally made available by the Company to senior
executives in accordance with the specific eligibility and
approval requirements of such plans and subject to the terms and
conditions set forth in this Agreement. Notwithstanding the
foregoing, you will not be eligible to participate in the Reebok
International Ltd. Severance Policy during or at the end of the
Employment Term.
(ii) PERSONAL ALLOWANCE. In addition, the Company will provide to you
during the Employment Term a personal allowance of $2,500 per
month to be used in your discretion. This personal allowance may
be increased, decreased or eliminated, but in no event will you
be treated less favorably than other similarly situated executive
officers.
(iii) EXPENSES. The Company will promptly reimburse you for the
reasonable and necessary business expenses incurred by you in the
performance of the duties under this Agreement in accordance with
its customary practices applicable to
Page 3/11
senior executives, provided that such expenses are incurred and
accounted for in accordance with the Company's policy.
(iv) SERP. The Company will recommend to the Compensation Committee of
the Board of Directors that you participate in the Company's
Supplemental Executive Retirement Plan as it may be amended
("SERP") in the event that your employment extends beyond the
Initial Employment Term of this Agreement in the same or higher
capacity, and that you fulfill all other eligibility requirements
for participation in the SERP, as they may be modified from time
to time. You acknowledge that the Company is reviewing its
executive long-term incentive programs, including the SERP, and
that as a result of the review the Company may determine that no
additional employees will participate in the SERP. If you would
have become eligible for participation in the SERP pursuant to
this paragraph and the eligibility terms but for such a decision
to discontinue additional participants in the SERP, the Company
will recommend you for enrollment in the other long-term
incentive programs next adopted by the Company and offered
generally to senior executives.
8. VACATION. You will be entitled to vacation in accordance with normal
Reebok policy for senior executives, with any additional amount to be determined
by the Company's Chief Executive Officer.
9. CONFIDENTIALITY, NON-COMPETITION AND CODE OF CONDUCT.
(i) GENERAL. During the Employment Term and thereafter you will be
subject to the terms and conditions of each of the following
standard employee agreements as modified pursuant to Section
9(ii) below: the standard Reebok Employee Agreement attached
hereto as EXHIBIT B (the "Employee Agreement"); the standard
Reebok Non-Competition Agreement attached hereto as EXHIBIT C
(the "Non-Competition Agreement"); and the Reebok Code of Conduct
attached hereto as EXHIBIT D (the "Code of Conduct"). The
Employee Agreement, Non-Competition Agreement, and the Code of
Conduct, as modified by this Agreement, will continue in effect,
to the extent applicable, after the termination of your
employment with the Company.
(ii) ANCILLARY AGREEMENT MODIFICATIONS.
(a) EMPLOYEE AGREEMENT [EXHIBIT B]. The Employee Agreement
attached hereto as Exhibit B is modified as follows:
(I) Section 5 of the Employee Agreement is modified by
adding a new second sentence to read as follows:
"Notwithstanding the preceding sentence, in no event
will I hold any equity or other interest of any kind in
Nike, adidas, Timberland, K Swiss, Puma, Stride Rite,
New Balance and Fila or their affiliates."
Page 4/11
(II) Section 7 of the Employee Agreement is deleted and
Section 2 of this Agreement is substituted therefor.
(b) NON-COMPETITION AGREEMENT. The Non-Competition Agreement
attached hereto as Exhibit C is modified by adding the
following new sentence at the end of Section I.A. to read as
follows: "Notwithstanding the preceding sentence, you may
invest in 1% or less of the equity securities of any
publicly traded company; provided, however, that in no event
will you hold any equity or other interest of any kind in
Nike, adidas, Timberland, K Swiss, Puma, Stride Rite, New
Balance and Fila or their affiliates."
(c) CODE OF CONDUCT. The Code of Conduct attached hereto as
Exhibit D is modified as follows:
(I) The second paragraph of the section entitled
"Investments in or Affiliations with Suppliers,
Customers or Competitors" under "Conflicts of Interest"
is modified to read as follows: "Generally, ownership
interests of less than 1% of the equity or other
securities of a publicly traded corporation will not be
considered to create a conflict. However, employees
should not hold any ownership or other interest in the
following competitors of Reebok or their affiliates:
Nike, adidas, Timberland, K Swiss, Puma, Stride Rite,
New Balance and Fila. From time to time, the Company
may distribute an updated list of some of our
competitors for whom any stock ownership would be
prohibited."
(II) The last paragraph of the Code of Conduct is modified
by adding the following new sentence at the end thereof
to read as follows: "Notwithstanding the foregoing,
your employment shall be subject to the terms and
conditions of any written employment agreement in
effect between you and the Company."
10. EMPLOYMENT TERMINATION. Notwithstanding the provisions of Section 2
above, your employment under this Agreement may be terminated prior to the end
of the Employment Term in any of the following cases:
A. VOLUNTARY TERMINATION WITHOUT GOOD REASON. You may terminate your
employment under this Agreement, without "good reason," upon ninety
(90) days prior written notice to the Company. Such written notice will
set forth the date your employment ends.
B. VOLUNTARY TERMINATION WITH GOOD REASON. You may terminate your
employment under this Agreement with "good reason" upon at least
fourteen (14) days prior written notice to the Company; provided,
however, that you must first provide written notice of the "good
reason" to the Company, and the Company must fail to cure such "good
reason" within thirty (30) days after the date on which you give
written notice of such "good
Page 5/11
reason" within thirty (30) days after the date on which you give
written notice of such "good reason." For purposes of this Agreement,
"good reason" will mean the occurrence of any of the following:
(i) A material diminution in the overall level of your
responsibilities, duties, powers or authority, except in
connection with the cessation of your employment by a) death, b)
by the Company for cause or your incapacity, as defined in
Section 10E, or c) by you other than for "good reason" as defined
in this Section 10B.
(ii) Any reduction in Base Salary or short or long-term incentive
compensation, except for across-the-board salary or incentive
compensation reductions similarly affecting all senior executives
of the Company;
(iii) The failure by the Company to pay you when due any material
amount of your current compensation or any material amount of
your compensation payable under any plan, agreement or
arrangement of or with the Company, within ten (10) days after
you make written demand for such amount.
(iv) The failure of the Company to maintain your relative level of
coverage under the Company's employee benefit plans, policies,
practices, or arrangements in which you participate, both in
terms of the amount and timing of benefits provided and the
relative level of your participation. For this purpose, the
Company may eliminate and/or modify existing employee benefit,
incentive compensation, retirement, or material fringe benefit
plans, policies, practices, or arrangements and coverage levels
on a consistent and non-discriminatory basis applicable to all
such executives; provided, however, that your level of coverage
under all such programs must be at least as great as is such
coverage provided to employees who have the same or lesser levels
of reporting responsibilities within the Company's organization.
(v) The changing of your reporting relationship to a position lower
than President and COO of RIL so long as you deliver your
resignation within six (6) months of the change and provide at
least three (3) months advance notice and transition time
Your continued employment shall not constitute consent to, or a waiver
of rights with respect to, any act or failure to act constituting Good Reason
hereunder.
C. CAUSE. The Company may terminate your employment under this
Agreement for cause, upon written notice to you. For purposes of this
Agreement, "cause" will mean:
(i) fraud, embezzlement, or other intentional misappropriation from
the Company or an affiliate thereof;
Page 6/11
(ii) your conviction of a felony or a misdemeanor involving moral
turpitude;
(iii) any other conduct on your part involving fraud, gross negligence
or willful misconduct, or other action which materially damages
the reputation of the Company or an affiliate thereof; or
(iv) your default of any material obligations under this Agreement,
provided, however, that the Company must first provide written
notice of the default to you, and you must fail to cure such
default within thirty (30) days after the date on which the
Company gives you written notice of such default.
It is understood and agreed that a failure to achieve financial or
other business results is not a basis for a "for cause" termination. No
termination of your employment for cause shall be deemed to have
occurred unless you have been given notice of the reason therefore
including the allegations which may constitute reason for such
termination and after (a) you have been provided an opportunity to be
heard by the Board of Directors of the Company or the Executive
Committee thereof, and (b) such decision has been upheld by the Board
or Executive Committee.
D. DEATH. Your employment will terminate immediately upon your death,
subject to the payment obligations set forth in Section 11B below.
E. INCAPACITY. Upon written notice to you, the Company may terminate
your employment under this Agreement in the event of your incapacity,
subject, however, to any legal obligations that mandate continued
employment. For purposes of this Agreement, "incapacity" will mean such
incapacity or disability as would qualify you for long-term disability
coverage under the Company's long-term disability insurance plan.
F. ANY OTHER REASONS. Subject to the payment obligations set forth in
Section 11C, the Company may terminate your employment for any other
reason, upon written notice to you stating the date of termination.
11. PAYMENT OBLIGATION IN THE EVENT OF TERMINATION. In the event of any
termination pursuant to Section 10, Reebok shall have the following payment
obligations:
A. VOLUNTARY TERMINATION WITHOUT GOOD REASON AND TERMINATION FOR CAUSE.
In the event your employment is terminated pursuant to Section 10A
[voluntary termination without good reason] or Section 10C [termination
for cause],
(i) Your right to receive compensation under this Agreement shall
cease as of the effective date of such termination.
(ii) The Company shall pay the following amounts to you: any accrued
but unpaid base salary for services rendered to the date of
termination; any accrued but unpaid expenses required to be
reimbursed and any vacation accrued to the date of termination.
Page 7/11
(iii) Except as may be provided under the terms of any incentive
compensation, employee benefit, or fringe benefit plan applicable
to the you at the time of your termination or resignation of
employment prior to the end of the Employment Term, you shall
have no right to receive any other compensation, or to
participate in any other plan, arrangement or benefit, with
respect to future periods after such termination or resignation.
B. TERMINATION FOR DEATH OR INCAPACITY. In the event of your employment
is terminated pursuant to Section 10D [death] or Section 10E
[incapacity], you will be entitled to payment of your base salary only
until the last day of your employment and no further payments of any
kind will be due you from the Company. However, upon termination of
your employment because of death or upon termination of your employment
because of disability, as defined in the Option Plan, all outstanding
stock options will become immediately exercisable pursuant to the
provisions of the Option Plan. Additionally, you or your beneficiaries
will be entitled to receive any benefits that are payable with respect
to your termination of employment under the terms of any pension or
profit-sharing plan, or life insurance or disability plan of the
Company in which you participated before your employment ended. You
will, however, not be entitled to receive any benefit under any
severance plan, arrangement or agreement of the Company other than the
payments from the Company described in this Section 11B.
C. VOLUNTARY TERMINATION WITH GOOD REASON OR INVOLUNTARY TERMINATION
FOR ANY OTHER REASON. In the event that you terminate your employment
under this Agreement pursuant to Section 10B [voluntary termination
with "good reason"], or the Company terminates your employment for any
reason pursuant to Section 10F, including without cause (as cause is
defined in Section 10C), you will be entitled to the following:
(i) a severance period whereby you could collect your base salary at
the times and in the amounts that would have been paid for a
maximum period of eighteen (18) months (the "Severance Period");
(ii) continuation on any Company-provided medical coverage in effect
for you and your family as of the date of termination through the
Severance Period;
(iii) continuation of life, supplemental life and AD&D insurance
coverage to the same extent through the Severance Period;
(iv) entitlement for the severance pay and benefits offered pursuant
to this Section 11C will not extend beyond the date that you
obtain new employment, and continuation of medical and dental
coverage will end on the last day of the month in which such new
employment is obtained.
(v) as an incentive to find a new job, however, if you obtain new
employment prior to the expiration of the Severance Period you
will receive a lump-sum payment equal to one-half of the
remaining weeks in the Severance Period. "New employment" shall
mean a full-time job; or a part-time job or consulting
relationship in which
Page 8/11
you earn a substantial portion of your previous compensation at
RIL, as determined by the Company in its sole discretion.
However, "new employment" shall not include employment in
teaching, government, public service or service as a corporate
director, or work for fewer than twenty-five (25) hours per work
either as a consultant or employee of a not-for-profit company.
(vi) you agree to provide information and services (including without
limitation, cooperation in litigation and transition assistance)
to the Company, if so requested, during the Severance Period for
no additional compensation. These services, however, shall not
exceed sixteen (16) hours per week during the Severance Period;
provided, however, that the Company will reimburse you for any
reasonable expenses incurred on its behalf. If you are re-hired
by RIL or any RIL subsidiary or affiliated organization, the
Severance Period will cease on the date of re-employment and you
shall not be entitled to any lump sum or other payment.
(vii) the payments and benefits set forth in this Section will be
contingent upon your execution of a general release contained in
a Separation Agreement in a form acceptable to you and the
Company, and will be in lieu of payments and other benefits, if
any, to which you may be entitled under any other severance
agreement or severance plan or arrangement of the Company.
12. [INTENTIONALLY LEFT BLANK]
13. MISCELLANEOUS
(i) SUCCESSORS, ASSIGNS, AMENDMENT, ETC. This Agreement shall be
binding upon and shall inure to the benefit of Reebok and its
successors and assigns. Unless such assumption would otherwise
occur by operation of law, the Company shall not enter into any
agreement for the merger, consolidation, restructuring, sale of
assets or other reorganization of the Company, without providing
for the express assumption of this Agreement by the Company's
successor. This Agreement shall be binding upon you and shall
inure to the benefit of your heirs, executors, administrators and
legal representatives, but shall not be assignable by you. This
Agreement may be amended or altered only by the written agreement
of Reebok and you.
(ii) NOTICE. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be
hand delivered or mailed by certified mail, postage prepaid,
addressed as follows: If to Reebok, to General Counsel, Reebok
International Ltd., 1895 X. X. Xxxxxx Xxxxxxxxx, Xxxxxx, XX
00000, or to such other address as may have been furnished to you
in writing as herein provided; or, if to you, to the address set
forth above, or to such other address as may have been furnished
to Reebok by you as herein provided in writing and with a copy to
your attorney: H. Xxxxx Xxxxxxx, Xxxxxxx, Xxxxx &
Page 0/00
Xxxxx, Xxxxxx, Xxxxxxxxxxxxx. Any notice or other communication
so addressed and so mailed shall be deemed to have been given
three days after said mailing.
(iii) APPLICABLE LAW. This Agreement has been executed and delivered by
both parties in the Commonwealth of Massachusetts and shall be
governed by the internal law of the Commonwealth of Massachusetts
without reference to its choice of law rules or to any rule of
any jurisdiction which would cause the rule of another
jurisdiction to apply. The venue of any action relating to this
Agreement will be the state and federal courts located in the
Commonwealth of Massachusetts. Respecting any such action, the
parties waive any right they may have (i) to contest venue on the
ground of inconvenient forum, and (ii) to have such action heard
before a jury or an advisory jury.
(iv) SEVERABILITY. Each provision of this Agreement is severable from
the others, and if any provision hereof shall be to any extent
unenforceable, it and the other provisions hereof shall continue
to be enforceable to the full extent allowable by any court of
competent jurisdiction, as if such offending provision had not
been a part of this Agreement.
(v) WITHHOLDING. The Company will cause any federal, state or local
income, withholding , employment or other tax to be withheld from
payments hereunder.
(vi) HEADINGS; CONSTRUCTION. Section headings are for convenience of
reference only and do not form part of the text of this
Agreement. Whenever the context requires, the singular will
include the plural and vice versa.
(vii) WAIVER. The failure of a party to insist on strict adherence to
any term of this Agreement on any occasion will not be considered
a waiver thereof or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of
this Agreement.
(viii) ENTIRE AGREEMENT. This Agreement, constitutes the entire
agreement between the parties concerning its subject matter, and
supersedes any and all prior agreements, understandings,
warranties or representations between the parties except for the
agreements specifically referred to as exhibits to this
Agreement.
(ix) INDEMNIFICATION. The Company will indemnify and hold you harmless
to the extent permitted by the Company's certificate of
incorporation, by-laws or resolutions of the Company's Board of
Directors against all liability, expense or loss (including
reasonable attorneys's fees and penalties) incurred by you by
reason of the fact that you are or were a director or officer of
the Company acting within the scope of your duties and
authorities.
(x) COUNTERPARTS. This Agreement my be executed in any number of
counterparts, each of which will be considered an original and
such counterparts will together be one agreement.
Page 10/11
If you accept and agree to the foregoing, please signify by signing the
enclosed counterpart of this letter in the space provided for that purpose at
the foot thereof and delivering the signed counterpart to me, whereupon this
letter will become a binding agreement between you and the Company as of the
Effective Date.
Very truly yours,
REEBOK INTERNATIONAL LTD.
By: /s/ Xxxxx X. Xxxxx, III
-----------------------------------
Xxxxx X. Xxxxx, III
Senior Vice President and
Chief Human Resources Officer
Accepted and agreed to as of this 1st day of January, 2002:
/s/ Xxxxx Xxxxxx
------------------------
Xxxxx Xxxxxx
Page 11/11
FINAL
CHANGE OF CONTROL AGREEMENT
---------------------------
This Change of Control Agreement (the "Agreement") is made as of
this 13th day of February, 2002 by and between Xxxxx Xxxxxx (the "Executive")
and Reebok International Ltd. (the "Company").
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its shareholders
for the Company to agree to provide benefits under circumstances described
below to Executive; and
WHEREAS, the Board recognizes that the possibility of a change of control
of the Company followed by a termination of the Executive's employment is
unsettling to the Executive and wishes to make arrangements at this time to
help assure his continuing dedication to his duties to the Company and its
shareholders, notwithstanding any attempts by outside parties to gain control
of the Company; and
WHEREAS, the Board believes it important, should the Company receive
proposals from outside parties, to enable the Executive, without being
distracted by the uncertainties of his own employment situation, to perform his
regular duties,
NOW, THEREFORE, in consideration of the premises and the mutual convenants
contained herein, the parties hereto agree as follows:
1. In the event that any individual, corporation, partnership, company,
or other entity (a "Person"), which term shall include a "group" (within the
meaning of section 13(d) of the Securities Exchange Act of 1934 (the "Act")),
begins a tender or exchange offer, circulates a proxy to the Company's
shareholders, or takes other steps to effect a "Change of Control" (as
defined in paragraph 3 below), Executive agrees that he will not voluntarily
leave the employ of the Company and will render the services contemplated in
the recitals to this Agreement until such Person has terminated the efforts to
effect a Change of Control or until a Change of Control has occurred.
2. If, within 24 months following a Change of Control, Executive's
employment with the Company terminates other than as a result of the death,
total disability or retirement of the Executive at or after his normal
retirement date, (i) by the Company other than for "Cause" (as defined in
paragraph 4 below), or (ii) by Executive for "Good Reason" (as defined in
paragraph 4 below), then:
-1-
FINAL
a. The Company will pay to Executive within 30 days of such termination
of employment a lump-sum cash payment equal to 300% of the aggregate
of (i) his then-current annual base salary (or, if his base salary
has been reduced at any time after the Change of Control, his base
salary in effect prior to the reduction), (ii) his target bonus for
the then-current year or, if higher, his bonus for the most recent
calendar year ended before the Change of Control, (iii) the amount
of his then-current annual automobile allowance and (iv) the annual
cost of life insurance then furnished to him by the Company.
b. All of Executive's outstanding stock options, restricted shares and
other similar incentive interests and rights will become immediately
and fully vested and exercisable.
c. Executive will be treated for purposes of the Company's
Supplemental Executive Retirement Plan (the "SERP") as having
three additional Years of Continuous Service to the extent approved
for participation by the Board for the SERP. The Company will,
within 30 days of his termination, pay to him, in a single lump-sum
cash payment, the present value of his benefit under the SERP.
Present value will be determined by applying the "applicable
mortality table" and "applicable interest rate" then in effect
for purposes of section 417(e)(3)(A) of the Internal Revenue Code or
any successor provision.
d. The Company will pay to Executive, in a single lump-sum cash
payment, an amount equal to the difference, if any, between (i) the
total distribution that he receives following his termination under
the Company's Profit-Sharing and Retirement Plan and its Excess
Benefits Plan and (ii) the total distribution that he would have
received under such plans had he accumulated three additional Years
of Service for Vesting prior to termination. The payment will be
made at the same time that he receives his distribution from those
plans.
e. Executive, together with his dependents, will continue following
such termination of employment to participate fully, with no
contribution to the cost required of him or them, in all accident
and health plans maintained or sponsored by the Company immediately
prior to the Change of Control, or receive substantially the
equivalent coverage (or the full value thereof in cash) from the
Company, until the third anniversary of such termination.
-2-
FINAL
f. The Company will promptly reimburse Executive for any and all legal
fees and expenses incurred by him as a result of such termination of
employment, including without limitation all fees and expenses
incurred in connection with efforts to enforce the provisions of
this Agreement (provided such efforts result in Executive's recovery
of any sum from the Company, whether through court award or
settlement).
3. A Change of Control will occur for purposes of this Agreement if (i)
any Person who does not currently own directly or indirectly 10% or more of the
combined voting power of the Company's outstanding securities becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act) of securities of
the Company representing more than 30% (or, if higher, the aggregate percentage
of the combined voting power of the Company's then-outstanding securities held
by or for the benefit of Xxxx Xxxxxxx and his family) of the combined voting
power of the company's then-outstanding securities, (ii) there is a change of
control of the Company of a kind which would be required to be reported under
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Act (or a
similar item in a similar schedule or form), whether or not the Company is then
subject to such reporting requirement, (iii) the Company is a party to a
merger, consolidation, sale of assets or other reorganization, or a proxy
contest, as a consequence of which members of the Board in office immediately
prior to such transaction or event constitute less than a majority of the Board
thereafter, or (iv) individuals who, at the date hereof, constitute the Board
(the "Continuing Directors")cease for any reason to constitute a majority
thereof, provided, however, that any director who is not in office at the date
hereof but whose election by the Board or whose nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the date hereof or
whose election or nomination for election was previously so approved shall be
deemed to be a Continuing Director for purposes of this Agreement.
Notwithstanding the foregoing provisions of this paragraph 3, a "Change
of Control" will not be deemed to have occurred solely because of (i) the
acquisition of securities of the Company (or any reporting requirement under
the Act relating thereto) by an employment benefit plan maintained by the
Company for its employees or (ii) the occurrence of a leveraged buy-out or
recapitalization of the Company in which Executive participates as an equity
investor.
-3-
FINAL
4. Definitions
a. "Cause" means only: conviction of the Executive for a felony or a
crime involving moral turpitude.
b. "Good Reason" means any one or more of the following:
(i) Failure by the Company to maintain Executive in the
positions, with the titles, that he held immediately prior to
the Change of Control or downgrading of his responsibilities
or authority. If, following the Change of Control, the
Company is part of a controlled group of entities,
Executive's responsibilities and authority will be deemed for
this purpose to have been reduced unless he is given and
retains the same responsibilities and authority with the
entity that controls the group as he held with the Company
immediately prior to the Change of Control.
(ii) Reduction of Executive's base salary or failure in any year to
pay to him a bonus at least equal to his target bonus for the
year in which the Change of Control occurs.
(iii) Material reduction in the health, disability or life insurance
benefits that the Company was providing Executive immediately
prior to the Change of Control.
(iv) Failure by the Company to provide Executive with the
opportunity to participate in any executive compensation or
benefit plan or program that is then generally available to
other senior executives of the Company.
(v) Relocation of Executive's principal place of business more
than 30 miles from the its location immediately prior to the
Change of Control.
5. In the event that it is determined that any payment or benefit
provided by the Company to or for the benefit of Executive, either under this
Agreement or otherwise, will be subject to the excise tax imposed by section
4999 of the Internal Revenue Code or any successor provision ("section 4999"),
the Company will, prior to the date on which any amount of the excise tax must
be paid or withheld, make an additional lump-sum payment (the "gross-up
payment") to Executive. The gross-up payment will be sufficient, after giving
effect to all federal, state and other taxes and charges (including interest
and penalties, if any) with respect to the gross-up payment, to make Executive
whole for all taxes (including withholding taxes) and any associated interest
and penalties, imposed under or as a result of section 4999.
-4-
FINAL
Determinations under this Section 5 will be made by Ernst & Young unless
Executive has reasonable objections to the use of that firm, in which case the
determinations will be made by a comparable firm chosen by Executive after
consultation with the Company (the firm making the determinations to be
referred to as the "Firm"). The determinations of the Firm will be binding
upon the Company and Executive except as the determinations are established in
resolution (including by settlement) of a controversy with the Internal Revenue
Service to have been incorrect. All fees and expenses of the Firm will be paid
by the Company.
If the Internal Revenue Service asserts a claim that, if successful, would
require the Company to make a gross-up payment or an additional gross-up
payment, the Company and Executive will cooperate fully in resolving the
controversy with the Internal Revenue Service. The Company will make or advance
such gross-up payments as are necessary to prevent Executive from having to
bear the cost of payments made to the Internal Revenue Service in the course
of, or as a result of, the controversy. The Firm will determine the amount of
such gross-up payments or advances and will determine after final resolution of
the controversy whether any advances must be returned by Executive to the
Company. The Company will bear all expenses of the controversy and will gross
Executive up for any additional taxes that may be imposed upon Executive as a
result of its payment of such expenses.
6. If the Company is at any time before or after a Change of Control
merged or consolidated into or with any other corporation or other entity
(whether or not the Company is the surviving entity), or if substantially all
of the assets thereof are transferred to another corporation or other entity,
the provisions of this Agreement will be binding upon and inure to the benefit
of the corporation or other entity resulting from such merger or consolidation
or the acquirer of such assets, and this paragraph 6 will apply in the event of
any subsequent merger or consolidation or transfer of assets.
In the event of any merger, consolidation, or sale of assets described
above, nothing contained in this Agreement will detract from or otherwise limit
Executive's right to participate or privilege of participation in any stock
option or purchase plan or any bonus, profit sharing, pension, group insurance,
hospitalization, or other incentive or benefit plan or arrangement which may be
or become applicable to executives of the corporation resulting from such
merger or consolidation or the corporation acquiring such assets of the Company.
In the event of any merger, consolidation or sale of assets described
above, references to the Company in this Agreement shall unless the context
suggests otherwise be deemed to include the entity resulting from such merger
or consolidation or the acquirer of such assets of the Company.
7. All payments required to be made by the Company hereunder to Executive
or his dependents, beneficiaries, or estate will be subject to the withholding
of such amounts relating to tax and/or other payroll deductions as may be
required by law.
-5-
FINAL
8. There shall be no requirement on the part of the Executive to seek
other employment or otherwise mitigate damages in order to be entitled to the
full amount of any payments and benefits to which Executive is entitled under
this Agreement, and the amount of such payments and benefits shall not be
reduced by any compensation or benefits received by Executive from other
employment.
9. Nothing contained in this Agreement shall be construed as a contract
of employment between the Company and the Executive, or as a right of the
Executive to continue in the employ of the Company, or as a limitation of the
right of the Company to discharge the Executive with or without Cause; the
Executive may, subject to the terms and conditions of this Agreement, have the
right to receive upon termination of his employment the payments and benefits
provided in this Agreement and shall not be deemed to have waived any rights he
may have either at law or in equity in respect of such discharge.
10. No amendment, change, or modification of this Agreement may be made
except in writing, signed by both parties. Payments made by the Company
pursuant to this Agreement shall be in lieu of payments and other benefits, if
any, to which Executive may be entitled under any other severance agreement or
severance plan of the Company. The provisions of this Agreement shall be
binding upon and shall inure to the benefit of Executive, his executors,
administrators, legal representatives and assigns, and the Company and its
successors. The validity, interpretation, and effect of this Agreement shall be
governed by the laws of The Commonwealth of Massachusetts.
The Company shall have no right of set-off or counterclaims, in respect of
any claim, debt, or obligation, against any payments to Executive, his
dependents, beneficiaries or estate provided for in this Agreement. The
invalidity or unenforceability of any provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
No right or interest to or in any payments or benefits hereunder shall be
assignable by the Executive; provided, however, that this provision shall not
preclude him from designating one or more beneficiaries to receive any amount
that may be payable after his death and shall not preclude the legal
representative of his estate from assigning any right hereunder to the person
or persons entitled thereto under his will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to
his estate. The term "beneficiaries" as used in this Agreement shall mean a
beneficiary or beneficiaries so designated to receive any such amount, or if no
beneficiary has been so designated, the legal representative of the Executive's
estate.
-6-
FINAL
No right, benefit, or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt, or obligation, or to
execution, attachment, levy, or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void, and of no effect.
IN WITNESS WHEREOF, Reebok International Ltd. and Executive have each
caused this Agreement to be duly executed and delivered as of the date set
forth above.
REEBOK INTERNATIONAL LTD.
By /s/ Xxxxx X. Xxxxx III
______________________
Agreed:
/s/ Xxxxx Xxxxxx
_______________________
Xxxxx Xxxxxx
-7-
EMPLOYEE AGREEMENT
In consideration of my present and continuing employment by Reebok
International Ltd. ("Reebok", which term shall include all entities directly
or indirectly owned by, owning or under common ownership with it), I agree as
follow:
1. Treatment of Confidential Information. I acknowledge that during the
course of my employment I may develop Confidential Information for Reebok and I
may learn of Confidential Information developed or owned by Reebok or entrusted
to Reebok by others. I will comply with Reebok's policies and procedures for
protecting Confidential Information, including, without limitation, Reebok's
Proprietary Information Protection Policy, and I will never, directly or
indirectly, use any Confidential Information, or disclose, copy or allow access
to any Confidential Information to any other person, corporation or entity,
except as required by the normal and proper course of my duties for Reebok. I
understand that my obligations regarding Reebok's Confidential Information
shall survive as long as the confidential nature of the information is
maintained. I also understand that these restrictions will continue to apply
after my employment terminates, regardless of the reason for termination.
1.1 Definition of Confidential Information. Confidential Information
means any and all information not generally known by others outside of Reebok.
Confidential Information includes, but is not limited to, all information
proprietary to Reebok, whether or not reduced to writing or other tangible
medium of expression, and whether or not patented, patentable, capable of trade
secret protection, or protected as an unpublished or published work under the
United States Copyright Act of 1976 as amended. Confidential Information also
includes information relating to the Intellectual Property and Business
Practices of Reebok. Confidential Information also includes comparable
information that Reebok may receive or has received from others who do business
with Reebok. Confidential Information does not include information which (a)
was already known by me prior to my employment with Reebok as established by my
personal records, (b) becomes generally available to the public other than
through a breach of this Employment Agreement, or (c) is furnished to me by a
third party who is lawfully in possession of such information and who lawfully
conveys that information.
1.2 Definition of Intellectual Property. Intellectual Property
includes information relating to Reebok's research and development, inventions,
discoveries, developments, improvements, methods and processes, know-how,
drawings, blueprints, specifications, product briefs, algorithms, computer
programs and software, compositions, works, concepts, designs, ideas,
prototypes, models, samples, screens, molds, lasts, patents, copyrights,
trademarks, trade names, trade secrets, formulae, writings, notes and patent,
trademark, and copyright applications.
1.3 Definition of Business Practices. Business Practices includes
information relating to Reebok's intellectual property, business plans,
financial information, products, services, manufacturing processes and methods,
costs, sources of supply, advertising and marketing plans, customer lists,
sales, profits, pricing methods, personnel, and business relationships.
2. Disclosure of Intellectual Property and Assignment of Rights. I will
promptly and fully disclose to Reebok all Intellectual Property conceived,
made, created, developed or reduced to practice by me (whether alone or with
others, whether or not during normal business hours and whether or not on
Reebok's premises) during my employment or within six months thereafter that
relates in any way to the business or prospective activities of Reebok or that
results from, or is suggested by, work I do for Reebok. I hereby assign and
agree to assign to Reebok, or its designees, my full right, title, and interest
in and to all such Intellectual Property. I agree that, during and subsequent
to my employment by Reebok, I will, at Reebok's request and expense, execute
any and all applications for domestic and foreign patents, copyrights or other
rights and otherwise provide assistance (including, but not limited to, the
execution and delivery of instruments of further assurance or confirmation) to
assign such Intellectual Property to Reebok and to permit Reebok to enforce any
patents, copyrights or other rights in and to such Intellectual Property. All
copyrightable works that I create shall be considered "works made for hire".
3. List of Previous Intellectual Property. I attach hereto_____pages,
which comprise a list of all intellectual property reduced to practice by me
before the commencement of my employment by Reebok, which intellectual property
shall be excluded from this Agreement, and I agree that said list is complete.
IF LIST OF INTELLECTUAL PROPERTY IS ATTACHED, EMPLOYEE INITIAL HERE. ________
4. Protection of Documents and Return of Property. I will protect all
documents, records, tapes and other media in which Confidential Information is
contained ("Confidential Documents") and abide by Reebok's Proprietary
Information Protection Policy. I acknowledge that such Confidential Documents
are and shall remain the sole and exclusive property of Reebok. I will not copy
any Confidential Documents or remove any Confidential Documents, or copies
thereof, from Reebok premises, except as required by the normal and proper
course of my duties for Reebok. I agree to return to Reebok promptly upon the
termination of my employment, or at any other time when requested by Reebok,
any and all property of Reebok, including, but not limited to, all Confidential
Documents and copies thereof in my possession or control.
1
5. Non-Competition. While I am employed by Reebok, I will not compete
with it. Competition prohibited includes, but is not limited to, any direct or
indirect, sole or joint, ownership, management, operation, control or
investment in the securities of (except ownership of 1% or less of the equity
securities of any publicly traded company), loans or advances to, employment or
consulting with, or any other connection or affiliation with, (1) any
enterprise that is engaged in, or is about to become engaged in, research,
development, production, marketing or selling of (a) any product, process or
service in which Reebok has engaged in research, development, production,
marketing or selling, or has had under consideration during the period of my
employment or (b) any product, process or service that may be used in
substitution thereof; or (2) any enterprise that is a customer, consultant or
supplier of Reebok. I will promptly provide in writing at Reebok's request any
and all information necessary or desirable to confirm my compliance with this
provision.
6. Non-Recruitment. For a period of one year after my employment with
Reebok terminates, I will not and will not assist anyone else to, hire any
employee of Reebok or seek to persuade any employee of Reebok to discontinue
employment or to become employed in any business which is directly or
indirectly in competition with Reebok's business, nor seek to persuade any
independent contractor to discontinue his/her relationship with Reebok.
7. Employment Status. I understand and acknowledge that I am being
employed on an "at will" basis and that either Reebok or I may terminate our
employment relationship at any time, for any reason.
8. Prior Obligations. I represent and warrant to Reebok that my
employment by Reebok and execution and performance of this Agreement do not
conflict with any prior obligations to third parties and I agree that I will
not disclose to or use on behalf of Reebok any confidential information
belonging to third parties, including my prior employers, unless written
authorization from such third parties is first obtained.
9. Remedies. I acknowledge that, were I to breach the provisions of this
Agreement, the harm to Reebok would be irreparable, I therefore agree that in
the event of such a breach or threat of such a breach Reebok shall, in addition
to other remedies available to it, have the right to obtain preliminary and
permanent injunctive relief against any such breach without having to post a
bond.
10. General. This Agreement shall continue in effect after the
termination of my employment, regardless of the reason for termination, shall
be binding upon my heirs, executors, administrators, representatives and
assigns and shall be governed by the laws of The Commonwealth of Massachusetts.
This Agreement does not create an obligation on the part of Reebok or any other
person to continue my employment. This Agreement may not be modified or amended
except by a written amendment signed by me and an authorized officer of Reebok.
A breach of any provision of this Agreement may only be waived by an authorized
officer of Reebok and the waiver of such breach shall not operate or be
construed as a waiver of any subsequent breach. If any provision of this
Agreement should, for any reason, be held invalid or unenforceable in any
respect, the remainder of this Agreement shall be enforced to the full extent
permitted by law.
11. Reaffirmation. I understand that as a condition of my continuing
employment I may be requested to reaffirm this Agreement periodically and I
agree to do so on a timely matter by signing a copy of this Agreement when so
requested.
Intending to be legally bound hereby, the Employee has signed this Agreement as
an instrument under seal as of the date set forth below.
REEBOK INTERNATIONAL LTD.
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxx
_________________________ _______________________
Signature of Employee Signature
Xxxxx X. Xxxxxx Director of H.R.
_________________________ _______________________
Employee's Printed Name Title
Date: 6/29/98
___________________
2
NON-COMPETITION AGREEMENT
This Agreement ("Agreement") is entered into on this 26 day of June,
__ ____
1998, between Reebok International Ltd. ("Reebok") and Xxxxx Xxxxxx ("you").
____________
WHEREAS, you have been made aware of or may hereafter be made aware of
highly confidential and sensitive information owned or controlled by Reebok,
and WHEREAS, Reebok desires to protect its highly confidential and sensitive
information from use by or disclosure to parties other than Reebok;
In consideration of the mutual promises contained herein, the parties
agree as follows:
I. Non-Competition
---------------
A. During Term of Employment.
You agree that while employed by Reebok, you will not, directly or
indirectly, own, manage, operate, control, invest in, make loans or advances
to, be employed by, act as an officer, director, agent or consultant for, or be
in any other way connected with, any enterprise anywhere in the world which is
engaged in the athletic footwear business, athletic apparel business, or any
other business which competes with Reebok or any of its subsidiaries or
affiliates (the "Non-Competition Requirement").
B. After Termination of Employment.
(1) In the event that your employment with Reebok is terminated for any
reason, Reebok will have the right, in its sole discretion, to extend the
duration of the Non-Competition Requirement described in Section I.A. for a
period of up to one (1) year after termination by providing written notice to
you within fourteen (14) days after your effective date of termination. The
written notice will specify the length of time that Reebok desires to extend
the Non-Competition Requirement. Except as otherwise provided in this
Agreement, for the Non-Competition period specified in Reebok's written notice,
Reebok will pay to you an amount equal to one-half (1/2) of your base salary as
of the date of your termination in accordance with Reebok's customary pay
practices in effect at the time each payment is made (which amount shall be
reduced by the amount of any severance you receive from Reebok). Reebok has the
option, for whatever reason, to elect to waive all or any portion of the
Non-Competition period by giving you written notice of such election at least
thirty (30) days in advance. In such event, Reebok shall not be obligated to
pay you the benefits specified above for any period for which the
Non-Competition Requirement has been waived.
(2) You agree that for a period of one (1) year following the date of
termination of your employment at Reebok, you will inform Reebok, prior to the
acceptance of any job or any work as an independent contractor, of the identity
of any new employer or other entity to which you are providing consulting or
other services, along with your starting date, title, job description and any
other information which Reebok may reasonably request to confirm your
compliance with the terms of this Agreement.
II. Non-Recruitment
---------------
You agree that while employed by Reebok, and for a period of one (1) year
following the termination of your employment with Reebok (regardless of who
initiated the termination and the circumstances of the termination), you will
not solicit, hire, attempt to hire, or assist in the hiring of any employee of
Reebok or any of its subsidiaries or affiliates, or otherwise persuade or
attempt to persuade any such employee to discontinue his/her employment
relationship with Reebok or any of its subsidiaries or affiliates. This
requirement is independent of the Non-Competition Requirement set forth in
Section I of this Agreement and is not dependent on pay or benefit continuation
of any kind.
III. General
-------
A. In the event that you violate Section I or Section II of this
Agreement, the time period during which that Section remains in effect will be
extended during the time that you are in breach.
B. It is acknowledged that the provisions of this Agreement are
reasonable and a condition of your employment by Reebok. However, should any
provision of this Agreement be found unreasonable or invalid by any court of
competent jurisdiction, the parties agree to accept, in its stead, any lesser
restrictions which the court deems reasonable. In the event of your breach of
this Agreement, it is agreed that Reebok may cease making payments to you under
this Agreement and that you will be obligated to refund to Reebok all payments
made to you or on your behalf under this Agreement. In addition, you agree that
the remedy at law for any breach of the provisions of this Agreement will be
inadequate and that, in the event of breach, Reebok will be entitled to
injunctive relief in addition to any other remedy it may have.
C. This Agreement supplements, and does not supersede, your Reebok
Employee Agreement. This Agreement will be construed under and governed by the
laws of the Commonwealth of Massachusetts. The Massachusetts courts (state and
federal) will have exclusive jurisdiction of any controversy between you and
Reebok, and no court action may be brought by either party against the other
outside of Massachusetts. This Agreement does not create an obligation on the
part of Reebok or any other person to continue your employment. This Agreement
may not be modified or amended except by a written amendment signed by you and
an authorized officer of Reebok. A breach of any provision of this Agreement
may only be waived by an authorized officer of Reebok and such a waiver will
not be construed as a waiver of any later breach.
Accepted by: Agreed to:
Reebok International Ltd.
By: /s/ Xxxxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxx
________________________ ________________________________
Signature Signature of Employee
Director of H.R. Xxxxx X. Xxxxxx
____________________________ ________________________________
Title Employee's Typed or Printed Name
6/29/98
__________________ Dated: 6/26/98
Date _________________________
Reebok International Ltd.
CODE OF CONDUCT
---------------
INTRODUCTION
------------
At Reebok International Ltd. (often referred to in the Code of Conduct as the
"Company" or "Reebok"), we conduct our business with high standards of
professional conduct and integrity and in compliance with applicable laws. This
Code of Conduct (the "Code") sets forth standards of business conduct and
provides guidance in certain areas where ethical issues may arise. The Code
provides a general framework for measuring our business conduct and does not
address every possible situation.
The Code applies to all employees of Reebok International Ltd., its divisions,
subsidiaries and affiliates, worldwide. Employees must read and become familiar
with the Code and are expected to comply fully with the Code on an on-going
basis. If you have a question whether particular conduct complies with the
Code, you should discuss the situation with an attorney in the Company's Legal
Department. If you become aware of any breach of the Code, you should promptly
report it to your supervisor or an attorney in the Company's Legal Department.
CONFLICTS OF INTEREST
---------------------
Employees should avoid situations which may place them in a conflict of
interest with the Company or which may create the appearance of a conflict. A
conflict of interest arises when an employee has a direct or indirect financial
or other interest which might influence the employee's judgment on behalf of
the Company. A conflict of interest exists if there is the potential for
influence, whether or not the employee's judgment is actually affected. In
determining whether a conflict exists, an employee should treat the interests
of members of his or her immediate family (which shall include as an employee's
spouse, children, parents, any person regularly residing in the employee's
home, or other relatives, depending on the circumstances, of the employee) in
the same manner as the employee treats his or her own interests.
If you think you may be involved in a situation that creates a conflict of
interest or the appearance of a conflict, you should advise the Company's Legal
Department. While the Company usually will require that the conflict be
eliminated, there may be some limited situations where the conflict may be
acceptable because procedures can be put in place to protect the Company. The
Company will have full discretion to determine how a conflict will be handled
and its decision in this regard will be final. Although it is impossible to
list all of the situations that might be considered conflicts of interest, some
of the more common examples are described below:
Investments in or Affiliations with Suppliers, Customers or Competitors.
Employees most promptly disclose to the Legal Department any financial or other
interests in, or participation as a director, officer, employee, consultant,
agent, creditor, lender, or in any similar capacity in: (1) any business which
supplies goods or services to Reebok or its subsidiaries; (2) any business to
which Reebok or its subsidiaries sell goods or services; or (3) any business
with which Reebok or its subsidiaries compete. As discussed above, Reebok will
then determine if an unacceptable conflict of interest exists.
Generally, ownership interests of less than 1% (as long as such interests have
a value of less than $10,000) will not be considered to create a conflict.
However, employees should not hold any ownership interest in a competitor of
Reebok or its subsidiaries. Some of our competitors for this purpose include
Nike, Adidas, Timberland, L.A. Gcar, K. Swiss, Puma, Stride Rite, New Balance
and Converse. Smaller start-up companies can also be competitors. From time to
time, the Company may distribute an updated list of some of our competitors for
whom any stock ownership would be prohibited.
Gifts and Entertainment. Employees should not accept gifts, discounts,
payments, or other personal benefits or favors from individuals or firms which
do business or propose to do business with Reebok. In certain cases, because of
protocol or courtesy, it may be appropriate to accept an unsolicited gift of
nominal value (but in no event greater than $200 in any one year period);
however, under no circumstances shall gifts of money (or equivalents such as
stocks or bonds or other financial assets) be accepted. It may also be
appropriate to accept unsolicited reasonable forms of entertainment (such as
lunches, dinners, concerts or tickets to sporting events) in connection with
business dealings. If an employee accepts a gift or entertainment in excess of
$50 (but less than the $200 cap), it must be reported in all cases in writing
to his or her manager. Managers will be responsible for monitoring the
acceptances and determining the appropriateness of the gift.
As a guideline for helping you to determine whether a particular gift,
entertainment or other benefit is appropriate, you should consider whether it
would be considered extravagant or excessive or whether a disinterested third
party might infer that it could affect your judgment. If so, the gift,
entertainment or other benefit should not be accepted. If you receive a gift,
entertainment or other benefit which does not comply with this policy, or are
unsure if it complies, it should be reported in writing to the Company's Legal
Department who may choose to accept it on behalf of the Company, determine that
it is appropriate for you to keep, or require that it be returned. In addition,
employees shall not receive any form of compensation from a third party for
services that he or she normally would perform on behalf of the Company within
the scope of his or her employment.
Use of Company Position or Assets. Employees may not use their position in
Reebok or use Company assets or Company property for personal gain (financial
or otherwise). Specifically, no Reebok employee may use Reebok property for his
or her own personal benefit, including trading or bartering property, or selling
Reebok product for personal gain. Company property includes product made by the
Company, but not purchased by the employee, other items or product from
suppliers or endorsers and computer equipment and software.
IMPROPER PAYMENTS
-----------------
Political Contributions. Political contributions of Company funds made directly
or indirectly to candidates for political office or political organizations
are in most instances considered illegal in the United States and in many
foreign countries. Where lawful, corporate political contributions may be made
only when specifically approved in advance by the Company's General Counsel and
the Chief Executive Officer. Employees are free to make personal political
contributions within applicable limits, but will not be compensated or
reimbursed by the Company for any such contributions.
Other Improper Payments, Kickbacks. No bribes, illicit rebates, kickbacks or
other illegal payments shall be made to government officials, customers,
suppliers, prospective suppliers or customers, or anyone else, either directly
or indirectly, whether by money or through use of Company assets. Gifts, favors
or entertainment may be extended to such individuals or companies only if all
of the following conditions are met:
. They do not violate applicable laws.
. They are not extended to obtain a specific action by a government
official, supplier or customer.
. They are of such limited value and are in such form that they can not
be construed as a bribe, payoff or deal.
. Public disclosure of the facts surrounding them would not embarrass the
Company or the recipients in any way.
Allowable Payments. In some countries, it may be necessary to pay small amounts
of money or provide small gifts to facilitate or expedite the performance of
tasks such as customs clearance, visa applications and exchange transactions.
While such "expediting or facilitating" payments should be avoided, if
possible, they are allowable if they are made only to enable timely and correct
performance of these routine tasks, and not to deter or circumvent these tasks
in any way. Such payments may not be made to induce foreign officials to fail
to perform their duties or to perform them in an incorrect manner. In the event
you have any question concerning whether a possible payment is appropriate you
should consult with the Company's Legal Department.
Bookkeeping and Accurate Recordkeeping. Reebok is required to establish and
maintain appropriate accounting procedures and accurate books and records that
reflect all corporate assets, liabilities and transactions, and which ensure
that the Company's funds are not being put to improper use. All transactions of
any nature must be recorded accurately in the Company's books and records and
all payments should be made with the understanding that such payment is for the
specific purpose described by the documents supporting such payment. All
payments must be supported by appropriately approved invoices or receipts,
expense reports or other customary documents, in accordance with established
policies and procedures. Employees should accurately disclose all transactions
to the Company's internal and external auditors.
XXXXXXX XXXXXXX AND CONFIDENTIAL INFORMATION
--------------------------------------------
Xxxxxxx Xxxxxxx. The United States and many foreign countries have laws that
deal with purchasing and selling Company stock. These laws are designed to
protect the investing public by prohibiting the purchase or sale of stock based
on "inside" information. Any employee who knows information about Reebok that
a reasonable investor would consider important in making a decision to buy,
hold or sell stock (in short, any information which could reasonably affect the
price of the stock) and which has not been disclosed to the general public,
possesses "inside" information.
Common examples of possible "inside" information are: projections (or changes
in projections) of future earnings or losses; information on results of
operations of the Company or significant operating units before results are
announced; news of a proposed merger, sequisition or tender offer; news of a
significant sale of assets or the sale of a subsidiary; changes in dividend
policies; the declaration of a stock split or the offering of additional
securities; changes in senior management; significant new products; impending
bankruptcy problems; major litigation developments; and the gain or loss of a
substantial customer or supplier.
Information generally will be regarded as having become public when it has
effectively been disclosed to the public--generally through its publication in
the news media or by filings with the Securities and Exchange Commission--and
the public has had sufficient time to
2
consider and act upon it. Generally, you can feel safe in assuming that
information has become public as of the third business day after it has been
released.
The securities laws prohibit any Reebok employee from trading (either
personally or on behalf of others) in Reebok stock on the basis of information
or having others trade for him or her on the basis of that information. It is
also illegal to communicate (to "tip") inside information to others so that
they may trade in Reebok stock based on that information. These illegal
activities are commonly referred to as "xxxxxxx xxxxxxx." Transactions that
may be necessary or justifiable for independent reasons (such as your need to
raise money for an emergency) are not an exception to this rule. Certain
employees are also subject to the Company's trading windows policy that limits
the time period in which they may trade Reebok stock.
Although it is most likely that any inside information you might learn will be
about Reebok, the prohibitions described above also apply to trading in the
securities of any company about which you have such information. Failure to
abide by these rules can lead to serious consequences (including criminal
penalties) for both Reebok and the employee involved. If you have any questions
as to whether you possess "inside" information or whether you should trade in
securities, you should consult the Company's Legal Department.
In addition to prohibiting employees from trading on "inside" information, as
a matter of policy the Company requires its employees to keep confidential all
non-public material information regarding Reebok's business or operations. Such
matters should not be discussed with family members or friends, and employees
should take all steps necessary to ensure that the confidentiality of such
information is maintained.
Disclosing Confidential Information. Employees may not directly or indirectly
divulge Company confidential information to any unauthorized recipient, use or
divulge such information for the purpose of securing personal profit, or retain
the confidential information following termination of employment. The Employee
Agreement signed by each employee contains more specific provisions concerning
confidential information.
ANTITRUST AND COMPETITION LAWS
------------------------------
Antitrust and competition laws are designed to promote fair and open
competition by prohibiting unfair, restrictive or collusive business practices.
It is the Company's policy to comply fully with all such laws.
U.S. antitrust laws prohibit among other things agreements or arrangements
between competitors to fix or influence price, or agreements requiring
purchasers or distributors to adhere to a specific resale price and agreements
to allocate customers or markets. Unlawful agreements need not take the form of
a written agreement, but can be based on oral commitments or informal
understandings. Thus, employees should use caution when communicating with
competitors or discussing pricing issues with our customers. In addition to
prohibiting price fixing or resale price maintenance agreements and allocation
of customers or markets, the U.S. antitrust laws forbid unfair or deceptive
trade practices and other activities which may restrain or reduce competition.
You should be aware that U.S. antitrust laws may apply to activities that occur
outside the U.S. if such activities have a significant and foreseable effect on
commerce within the U.S. Moreover, the European Community and other foreign
countries have competition laws similar to the U.S. antitrust laws which must
also be followed when dealing in international markets.
Because of the complexity of these laws and the serious consequences to both
the Company and the employees involved if such laws are violated the Company's
Legal Department should be consulted if there is any question as to whether a
particular practice or transaction complies with such laws.
COMPLIANCE WITH CUSTOMS AND IMPORT/EXPORT LAWS
----------------------------------------------
It is crucial to the Company's business that its products are able to be sold
in all international markets in which we operate. The Company thus requires
employees to follow all applicable import/export laws and regulations so that
its trading privileges are not jeopardized.
Employees involved in import/export transactions should ensure that all
required documents are accurately completed and maintained, and that all
import/export transactions are conducted in compliance with applicable laws and
regulations. Because of the complexity of such laws and regulations, the
Company's Legal Department should be consulted if any questions arise.
3
MISCELLANEOUS
-------------
Reebok also publishes several other policies and guidelines relating to proper
business conduct that must be followed, including without limitation, policies
on the usage of computer software, the internet and E-mail; Preventing
Harassment; use of sample and promat accounts; and travel and expense
reimbursement.
REPORTING VIOLATIONS
--------------------
If you believe you are in violation of any of the provisions of this Code of
Conduct, please contact an attorney in the Company's Legal Department to discuss
the matter. In addition, in order to help the Company maintain compliance with
the Code, you may disclose any other violation of the Code, of which you are
aware, so that appropriate action may be taken by the Company.
**
Employees should understand that this document is not intended to create a
contract of employment between you and Reebok. Neither Reebok nor you are
obligated to continue the employment relationship if either does not with to do
so. Furthermore, after receiving a copy of Reebok's Code of Conduct, you should
read the document, understand it and comply with the Code.
4
