AGREEMENT
Exhibit 10.4
AGREEMENT
AGREEMENT made and entered into by and between Xxxxxx-Xxxx Sports, Inc. (the
“Company”) and Xxx Xxxxxxx (the “Executive”) as of the 16th day of March, 2006 (the
“Effective Date”).
For good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Executive agree as follows:
1. Employment. Subject to the terms and conditions set forth in this Agreement, the
Company hereby offers, and the Executive hereby accepts, employment.
2. Term. Subject to earlier termination as hereafter provided, the Executive’s
employment hereunder shall be for a term of eighteen (18) months, commencing as of the Effective
Date, and shall automatically renew thereafter for successive terms of one year each. The term of
this Agreement, as from time to time renewed, is hereafter referred to as “the term of this
Agreement” or “the term hereof.”
3. Capacity and Performance.
(a) Commencing on April 13, 2006, the Executive shall serve the Company as its President of
Team Sports. In addition, and without further compensation, the Executive shall serve as a
director and/or officer of one or more of the Company’s Sports Affiliates (as defined in Section 13
hereof), if so elected or appointed from time to time. The Executive shall report to the Chief
Executive Officer of the Company (the “CEO”).
(b) During the term hereof, the Executive shall be employed by the Company on a full-time
basis. As President of Team Sports, the Executive shall have the duties and responsibilities of
that position and other duties and responsibilities, reasonably consistent with that position, with
respect to the business operations of the Company and designated Sports Affiliates, as assigned by
the CEO or the Board of Directors of the Company (the “Board”) from time to time.
(c) Subject to business travel as necessary or desirable for the performance of the
Executive’s duties and responsibilities hereunder, the Executive’s primary worksite during the term
hereof shall be at the location of the Company’s offices in Van Nuys, California as of the
Effective Date (the “Van Nuys Location”) or such other site as the Company may select from
time to time, provided such site is no more than thirty-five (35) miles from the Van Nuys Location
unless the Executive has expressly consented in writing thereto.
(d) During the term hereof, the Executive shall devote his full business time and best
efforts, business judgment, skill and knowledge exclusively to the advancement of the business and
interests of the Company and its Sports Affiliates and to the discharge of his duties and
responsibilities hereunder. During the term of this Agreement, the Executive
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may engage in passive management of his personal investments and in such community and
charitable activities as do not individually or in the aggregate give rise to a conflict of
interest or otherwise interfere with his performance of his duties and responsibilities hereunder.
The Executive shall not engage in any other business activity except with the express prior written
approval of the Board, it also being agreed that if the Board subsequently determines that any
previously approved activity does detract from the Executive’s performance or give rise to a
conflict of interest, the Executive shall cease such activity promptly following notice from the
Company.
4. Compensation and Benefits. As compensation for all services performed by the
Executive under and during the term hereof and subject to performance of the Executive’s duties and
of the obligations of the Executive to the Company and its Affiliates, pursuant to this Agreement
or otherwise:
(a) Base Salary. Initially during the term hereof, the Company shall pay the
Executive a base salary at the rate of Three Hundred and Fifty Thousand Dollars ($350,000) per
annum, payable in accordance with the payroll practices of the Company for its executives and
subject to annual review by the compensation committee of the Board and to increase, but not
decrease, in the discretion of such committee or the Board. The Executive’s base salary, as from
time to time increased, is hereafter referred to as the “Base Salary.”
(b) Bonus Compensation. For each fiscal year completed during the term hereof, the
Executive shall have the opportunity to earn an annual bonus (“Annual Bonus”) under the
Company’s executive incentive plan for the combined businesses of the Company and the Sports
Affiliates in accordance with the terms thereof. The Executive’s target bonus under the executive
incentive plan shall be sixty percent (60%) of the Base Salary for achievement of the consolidated
annual business plan for the Company and the Sports Affiliates (the “Business Plan”), with
a potential for the Annual Bonus to exceed target if achievement exceeds the Business Plan, all as
approved by the compensation committee of the Board after consultation with the CEO. For 2006
only, the Annual Bonus shall be not less than that for which the Executive would have been eligible
under the Easton Sports, Inc. (“ESI”) formula applicable to him immediately prior to the Closing
Date (as defined in Section 13 hereof) based on an annual salary of $265,000, which formula is
contained in the Easton Sports, Inc. FY2006 Bonus Plan, attached as Exhibit B hereto. In
any fiscal year during the term hereof in which a new Sports Affiliate is acquired, the Executive’s
Annual Bonus for that fiscal year shall be not less than the Annual Bonus he would have received
for that fiscal year under the terms of the then-existing bonus plan had the acquisition not
occurred. Except as otherwise provided in Section 5 hereof, the Executive must be employed on the
last day of a fiscal year in order to be eligible to earn an Annual Bonus for that fiscal year.
(c ) Equity Participation. The Executive will be eligible to participate in the
Easton Xxxx Sports, LLC 2006 Equity Incentive Plan as amended from time to time (the
“Plan”). Any award granted the Executive thereunder shall be at the discretion of the
Board of Managers of Easton Xxxx Sports, LLC and shall be subject to the terms of the agreement
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captioned “Easton Xxxx Sports, LLC Class B Common Unit Certificate” (the “Unit
Certificate”), which the Executive must execute in order to receive the award, to the terms of
the Plan, and to the terms of the Easton Xxxx Sports, LLC Second and Restated Limited Liability
Company Agreement as amended from time to time (the “LLC Agreement”).
(d) Employee Benefit Plans. During the term hereof, the Executive shall be entitled
to participate in all “Employee Benefit Plans,” as that term is defined in Section 3(3) of
ERISA, including both health and welfare plans and retirement plans, from time to time in effect
for executives of the Company generally, except to the extent any of the Employee Benefit Plans is
duplicative of a benefit otherwise provided to the Executive under this Agreement (e.g., a
severance pay plan). The Executive’s participation shall be subject to the terms of the applicable
Employee Benefit Plan documents and generally applicable Company policies.
(e) Vacations. During the term hereof, the Executive shall be entitled to three (3)
weeks of vacation per year, to be taken at such times and intervals as shall be determined by the
Executive, subject to the reasonable business needs of the Company and with the approval of the
CEO. Vacation shall be governed by the policies of the Company, as in effect from time to time.
(f) Business Expenses. The Company shall pay or reimburse the Executive for all
reasonable, customary and necessary business expenses incurred or paid by the Executive in the
performance of his duties and responsibilities hereunder, subject to any maximum annual limit and
other restrictions on such expenses set by the Board and to such reasonable substantiation and
documentation as may be specified by the Company from time to time.
(g) Directors & Officers Insurance Coverage. The Company, at its sole cost and
expense, shall obtain and maintain in effect directors and officers (“D&O”) liability insurance
under which the Executive is a named insured. The Company will maintain such insurance throughout
the term hereof and for at least four (4) years thereafter.
5. Termination of Employment and Post-Employment Payments. Notwithstanding the
provisions of Section 2 hereof, the Executive’s employment hereunder shall terminate during the
term hereof under the following circumstances:
(a) Death. In the event of the Executive’s death during the term hereof, the
Executive’s employment hereunder shall immediately and automatically terminate. In such event, the
Company shall pay promptly to the beneficiary designated by the Executive in writing on the form
attached to this Agreement as Exhibit C or, if none has been so designated, to his estate,
(i) Base Salary earned but not paid through the date of termination of the Executive’s employment
with the Company (hereafter, the “Date of Termination”), (ii) pay at the rate of the Base
Salary for any vacation earned but not used through the Date of Termination, (iii) any Annual Bonus
earned but unpaid for the fiscal year preceding that in which the Date of Termination occurs and
(iv) any business expenses incurred by the Executive but un-reimbursed on the Date of Termination,
provided that such expenses and
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required substantiation and documentation are submitted prior to or within sixty (60) days
after the Date of Termination and that such expenses are reimbursable under Company policy (all of
the foregoing, “Final Compensation”). In addition to Final Compensation, (A) the Company
shall pay to the beneficiary designated by the Executive in writing or, if none, his estate, an
Annual Bonus for the fiscal year in which the Date of Termination occurs, determined by multiplying
the Annual Bonus the Executive would have received had he continued employment through the last day
of the fiscal year by a fraction, the numerator of which is the number of days he was employed
during the fiscal year, through the Date of Termination, and the denominator of which is 365 (a
“Final Pro-Rated Bonus”), which Final Pro-Rated Bonus will be payable at the time annual
bonuses are paid to Company executives generally under its executive incentive plan, and (B) the
Company will pay the full premium cost of health and dental plan coverage for each of the
Executive’s qualified beneficiaries until the earlier to occur of the conclusion of twelve (12)
months from the Date of Termination or the date the qualified beneficiary ceases to be eligible for
coverage continuation under COBRA; provided, however, that in order to be eligible for the
Company’s payments hereunder the qualified beneficiary must elect in a timely manner to continue
coverage under the Company’s health and dental plans under COBRA. Any equity in the LLC held by
the Executive on the Date of Termination shall be governed by the terms of the Unit Certificate,
the Plan and the LLC Agreement, as applicable. The Executive’s rights with respect to
indemnification shall be in accordance with Section 12 hereof.
(b) Disability.
(i) The Company may terminate the Executive’s employment hereunder, upon notice to the
Executive, in the event that the Executive becomes disabled during his employment through
any illness, injury, accident or condition of either a physical or psychological nature and,
as a result, is unable to perform, in any material respect, his duties and responsibilities
hereunder, notwithstanding the provision of any reasonable accommodation (exclusive of the
leave of absence provided hereunder), for one hundred and eighty (180) days during any
period of three hundred and sixty-five (365) consecutive calendar days. In the event of
such termination, and provided that the Executive satisfies in full all of the conditions
set forth in Section 5(h) hereof, then, in addition to Final Compensation, the Company shall
provide the Executive the following: (A) The Company will pay the Executive a Final
Pro-Rated Bonus for the fiscal year in which the Date of Termination occurs, payable at the
time annual bonuses are paid to Company executives generally under its executive incentive
plan or, if later, on the tenth (10th) business day following the later of the
effective date of the Release of Claims, as defined in Section 5(h) below, or the date the
Release of Claims is received by the Chair of the Board on behalf of the Company; (B) the
Company will pay the full premium cost of health and dental plan coverage for the Executive
and his qualified beneficiaries until the earlier to occur of the conclusion of twelve (12)
months or the date the Executive and his qualified beneficiaries cease to be eligible for
coverage continuation under COBRA; provided, however, that in order to be eligible for the
Company’s payments hereunder the Executive and each qualified beneficiary must elect in a
timely manner to continue coverage under the Company’s health and dental plans under COBRA
and (C) in the
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event that the Company had not provided the Executive the opportunity to participate in
a long-term disability insurance plan paid or provided by the Company, the Company shall
continue to pay the Executive the Base Salary from the Date of Termination until the
expiration of six months thereafter or, if earlier, until the date the Executive recovers
sufficiently from his illness or injury to resume work on a substantially full-time basis
(the “Recovery Date”), with payments commencing at the next regular Company payday for
executives which is at least five business days following the later of the effective date of
the Release of Claims or the date the Release of Claims signed by the Executive is received
by the Chair of the Board, but with the first payment retroactive to the day immediately
following the Date of Termination or, in the event that any long-term disability insurance
plan paid or provided by the Company fails to provide the Executive income replacement
benefits equal to the Base Salary (or income replacement benefits not subject to federal
income tax which are equal to the Base Salary net of federal income tax), the Company will
pay the Executive the difference between the Base Salary and income replacement benefits
received (after giving effect to any tax savings of the Executive if such benefits are not
subject to federal or state income tax) until the earlier of the expiration of six months
following the Date of Termination or the Recovery Date. Any equity in the LLC held by the
Executive on the Date of Termination hereunder shall be governed by the terms of the Unit
Certificate, the Plan and the LLC Agreement, as applicable. The Executive’s rights with
respect to indemnification shall be in accordance with Section 12 hereof.
(ii) The Board may designate another employee to act in the Executive’s place during
any period of the Executive’s disability. Notwithstanding any such designation, the
Executive shall continue to receive compensation and benefits in accordance with Sections
4(a) through 4(d) of this Agreement and the terms and conditions of any plans, policies,
agreements and other documents to which reference is made therein (collectively, the
“Plan Documents”) until the Executive becomes eligible for disability income
benefits under any disability plan in which he is a participant as a result of his
employment with the Company or until he recovers sufficiently to resume his duties and
responsibilities hereunder (provided he does so within the aforesaid one hundred and eighty
(180) days or such longer period as the Board in its discretion may provide) or until the
termination of his employment, whichever shall first occur. If, while his employment
hereunder continues, the Executive is receiving disability income benefits under any such
disability plan, the Executive shall be entitled to receive the Base Salary reduced by the
amount of such disability income benefits (after giving effect to any tax savings of the
Executive if such benefits are not subject to federal or state income tax) and shall
continue to be eligible for payments and benefits in accordance with Sections 4(b) through
4(d) of this Agreement and the terms and conditions of the Plan Documents, until the earlier
to occur of his recovery or the termination of his employment under this Agreement.
(iii) If any question shall arise as to whether during any period the Executive is
disabled through any illness, injury, accident or condition of either a physical or
psychological nature so as to be unable to perform in any material respect
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his duties and responsibilities hereunder, the Executive may, and at the request of the
Company shall, submit to a medical examination by a physician selected by the Company to
whom the Executive or his duly appointed guardian, if any, has no reasonable objection to
determine whether the Executive is so disabled and such determination shall for the purposes
of this Agreement be conclusive of the issue. If such question shall arise and the
Executive shall fail to submit to such medical examination, the Company’s determination of
the issue shall be binding on the Executive.
(c) By the Company for Cause. The Company may terminate the Executive’s employment
hereunder for Cause at any time upon notice to the Executive setting forth in reasonable detail the
nature of such Cause. For purposes of this Agreement, “Cause” shall be limited to: (i) Executive’s
indictment, charge or conviction of, or plea of nolo contendere to, (A) a felony or any crime
involving fraud or material dishonesty or (B) any felony or crime involving moral turpitude that
might be reasonably expected to, or does, adversely effect the Company or any of its Affiliates;
(ii) Executive’s gross negligence or willful misconduct with regard to the Company or any of its
Affiliates, including but not limited to its Sports Affiliates, which has a material adverse impact
on the Company or its Affiliates, whether economic or to reputation or otherwise; (iii) Executive’s
refusal or willful failure to substantially perform his duties or to follow a lawful written
directive of the Board or its designee within the scope of the Executive’s duties hereunder which
in either case remains uncured or continues after twenty (20) days’ written notice from the Board
which references the potential for a “for Cause” termination and specifies in reasonable detail the
nature of the refusal or willful failure which must be cured; (iv) Executive’s theft, fraud or any
material act of dishonesty related to the Company or any of its Affiliates; (v) any representations
or warranties of the Executive under this Agreement that there is no legal impediment to
employment, no disclosure of third party confidential information and no breach of any existing
employment agreement prove false in a material respect; provided that Executive has been provided
with written notification of any of the foregoing and has been given five (5) days to present any
mitigating, corrective or clarifying information to the Board; (vi) the Executive’s breach of a
fiduciary duty owed to the Company or any of its Affiliates, including but not limited to any
breach or violation of those provisions of this Agreement setting forth the Executive’s obligations
with respect to confidentiality, non-competition and non-solicitation; or (vii) the Executive’s
breach of any other material provision of this Agreement unless corrected by the Executive within
twenty (20) days of the Company’s written notification to the Executive of such breach. In the
event of such termination, the Company shall have no obligation to the Executive under this
Agreement other than provision of Final Compensation. Any equity in the LLC held by the Executive
on the Date of Termination hereunder shall be governed by the terms of the Unit Certificate, the
Plan and the LLC Agreement, as applicable. The definition of “Cause” set forth in this Section
5(c) shall supersede the definition of “Cause” in the 2006 Equity Incentive Plan if the 2006 Equity
Incentive Plan expressly provides for such supersession.
(d) By the Company other than for Cause. The Company may terminate the Executive’s
employment hereunder other than for Cause at any time upon notice to the Executive. In the event
of such termination, and provided that the Executive satisfies in full
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all of the conditions set forth in Section 5(h) hereof, then, in addition to Final
Compensation, the Executive, as compensation for his satisfying of those conditions, shall be
entitled to the following: (i) the Company shall pay the Executive a Final Pro-Rated Bonus for
the fiscal year in which the Date of Termination occurs, payable at the time annual bonuses are
paid to Company executives generally under its executive incentive plan or, if later, on the tenth
(10th) business day following the later of the effective date of the Release of Claims
or the date the Release of Claims, signed by the Executive, is received by the Chair of the Board
on behalf of the Company; (ii) the Company shall provide the Executive compensation for the period
of eighteen (18) months following the Date of Termination at the rate of one-twelfth of the Base
Salary per month, commencing on the next regular Company payday for its executives that is at least
five (5) business days following the later of the effective date of the Release of Claims or the
date the Release of Claims, signed by the Executive, is received by the Chair of the Board, but
with the first payment being retroactive to the day immediately following the Date of Termination;
and (iii) the Company will pay the full premium cost of health and dental plan coverage for the
Executive and his qualified beneficiaries until the earliest to occur of the conclusion of the
period defined in clause (ii) immediately above or the date the Executive becomes eligible for
participation in health and dental plans of another employer or the date the Executive ceases to be
eligible for participation under the Company’s health and dental plans under COBRA; provided,
however, that in order to be eligible for the Company’s payments hereunder the Executive and each
of his qualified beneficiaries must elect in a timely manner to continue coverage under the
Company’s health and dental plans under COBRA. Any equity in the LLC held by the Executive on the
Date of Termination shall be governed by the terms of the Unit Certificate, the Plan and the LLC
Agreement, as applicable. The Executive’s rights with respect to indemnification shall be in
accordance with Section 12 hereof.
(e) By the Executive for Good Reason. The Executive may terminate his employment
hereunder for Good Reason upon notice to the Company setting forth in reasonable detail the nature
of such Good Reason. For purposes of this Agreement, “Good Reason” shall mean, without the
Executive’s consent, the occurrence of any one or more of the following events: (i) breach of this
Agreement by the Company which is not cured, if curable, within twenty (20) days after written
notice to the Company specifying in reasonable detail the nature of such breach; (ii) a material
diminution of any of the Executive’s significant duties or the assignment to the Executive of
material duties inconsistent with his position or the material impairment of the Executive’s
ability to function in his position, in each case only after the Company shall have had an
opportunity and failed to cure (any cure to be effected within twenty (20) days after written
notice to the Company by the Executive specifying in reasonable detail the nature of such Good
Reason); (iii) any reduction in or failure to pay the Base Salary or any failure to pay any Annual
Bonus to which the Executive is entitled hereunder or any failure to provide benefits in accordance
with this Agreement, in each case only after the Company has been given an opportunity, and has
failed, to cure any such event within twenty (20) days following the Executive’s written notice to
the Company specifying in reasonable detail the nature of the reduction or failure; or (iv) any
relocation of the Executive’s primary worksite to a site that is more than thirty-five (35) miles
from the Van Nuys Location or (v) subjection of the Executive to a working environment sufficiently
hostile or otherwise adverse as to satisfy the general legal standard for a constructive
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discharge, provided that the Executive provides the Company written notice specifying in
reasonable detail the circumstances rendering the working environment hostile or otherwise adverse
and the Company fails within twenty (20) days of that notice to take remedial action to mitigate
those circumstances. For the avoidance of doubt, neither an assignment of the Executive to serve
as a director or officer of one or more of the Company’s Affiliates nor any termination of such
service shall constitute Good Reason for termination. In the event of termination in accordance
with this Section 5(e), and provided that the Executive satisfies in full all of the conditions set
forth in Section 5(h) hereof, then, in addition to Final Compensation, the Company shall provide
the Executive the same payments he would have received under clauses (i), (ii) and (iii) of
Section 5(d) had his employment been terminated by the Company other than for Cause. Any equity in
the LLC held by the Executive on the Date of Termination shall be governed by the terms of the Unit
Certificate, the Plan and the LLC Agreement, as applicable. The Executive’s rights with respect to
indemnification shall be in accordance with Section 12 hereof.
(f) By the Executive Other than for Good Reason. The Executive may terminate his
employment hereunder at any time upon sixty (60) days’ notice to the Company. In the event of
termination of the Executive pursuant to this Section 5(f), the Board may elect to waive the period
of notice, or any portion thereof, and, if the Board so elects, the Company will pay the Executive
his Base Salary for the initial sixty (60) days of the notice period (or for any remaining portion
thereof). The Company’s only other obligation to the Executive hereunder shall be for Final
Compensation, if any. Any equity in the LLC held by the Executive on the Date of Termination
hereunder shall be governed by the terms of the Unit Certificate, the Plan and the LLC Agreement,
as applicable.
(g) Termination Following a Change of Control.
(i) In the event that there occurs a Change of Control, as defined in clause (g)(ii)
immediately below, and during the period commencing on the day immediately following the
occurrence of a Change of Control and ending twenty-four (24) months thereafter, the Company
terminates the Executive’s employment hereunder other than for Cause in accordance with
Section 5(d) or the Executive terminates his employment hereunder for Good Reason in
accordance with Section 5(e) hereof and provided that the Executive satisfies in full all of
the conditions set forth in Section 5(h) hereof, then, in addition to Final Compensation,
the Executive, in lieu of any payment for which he would have been eligible under Section
5(d) or Section 5(e) hereof, will be eligible for (A) a single lump sum payment equal to
eighteen (18) months of Base Salary, without offset for other earnings; (B) a Final
Pro-Rated Bonus for the fiscal year in which the Date of Termination occurs, payable at the
rime bonuses are paid generally; and (C) health and dental plan premium payments (or, as
applicable, reimbursements) on the same terms and conditions applicable in the event of a
termination other than for Cause or for Good Reason prior to a Change of Control.
Notwithstanding anything to the contrary herein, however, no payments shall be due hereunder
until five (5) business days following the later of the effective date of the Release of
Claims or the date the Release of Claims, signed by the
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Executive, is received by the Chair of the Board. The Executive’s rights with respect
to indemnification shall be in accordance with Section 12 hereof.
(ii) For purposes of this Agreement, “Change of Control” shall mean the occurrence,
after the Closing Date, of (a) any change in the ownership of the capital equity of Easton
Xxxx Sports, LLC, if, immediately after giving effect thereto, (A) the Investors (as defined
below) and their Affiliates will hold, directly or indirectly, less than 50% of the number
of Common Units held by the Investors and their Affiliates as of the Closing Date or (ii)
any Person (as defined in this paragraph, below) other than the Investors and their
Affiliates will hold, directly or indirectly, greater than 50% of the number of outstanding
Common Units of Easton Xxxx Sports, LLC; or (b) any sale or other disposition of all or
substantially all of the assets of Easton Xxxx Sports, LLC (including, without limitation,
by way of a merger or consolidation or through the sale of all or substantially all of the
stock or membership interests of its subsidiaries or sale of all or substantially all of the
assets of Easton Xxxx Sports, LLC and its direct and indirect subsidiaries, taken as a
whole) to another Person (the “Change of Control Transferee”) if, immediately after giving
effect thereto, any Person (or group of Persons acting in concert) other than the Investors
and their Affiliates will have the power to elect a majority of the members of the board of
managers or board of directors (or other similar governing body) of the Change of Control
Transferee. For purposes of this Section 5(g): A “Person” shall have the meaning ascribed
to that term in section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 and
“Investors” shall mean all Unit-holders of Easton Xxxx Sports, LLC as of the date of this
Agreement, including without limitation Fenway Partners, Inc., Teachers Private Capital,
York Street Capital Partners, American Capital Strategies Ltd., Antares Capital Corporation,
Xxxx Sports Holdings, LLC, Xxxx Sports 2001, LLC, Xxxx Sports 2001 Coinvestors, LLC and Xxxx
Sports 2001 Investments, LLC.
(h) Conditions. The Executive’s eligibility to receive and retain any
“Post-Employment Payments” (meaning any and all payments provided under this Agreement in
connection with or following termination of employment, exclusive of Final Compensation) is subject
to full satisfaction of all of the following as well as the covenant of confidentiality set forth
in Section 7 below and the assignment of rights to Intellectual Property (as hereafter defined),
but with the express understanding and agreement of the parties that the Executive is free to elect
not to comply with clause (i) below and is free not to forbear from competition or solicitation as
set forth in clauses (ii), (iii) and (iv) immediately below, but that his right to any
Post-Employment Payments under this Agreement is expressly conditioned on compliance with said
clause (i) and the forbearance required under all of said clauses (ii), (iii) and (iv), as well as
his full satisfaction of the covenant of confidentiality and assignment of rights to Intellectual
Property. The conditions to receipt of the Post-Employment Payments are as follows:
(i) The Executive’s execution and return, to the Chair of the Board, of a timely and
effective release of claims in the form attached hereto and marked Exhibit A
(“Release of Claims”). The Release of Claims creates legally binding
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obligations and the Company therefore advises the Executive to consult an attorney
before signing it.
(ii) Forbearance by the Executive for eighteen (18) months following termination of
the Executive’s employment with the Company from competition with the Company or any of its
Sports Affiliates anywhere in the world where the Company or any of those Sports Affiliates
is doing business, whether as owner, partner, investor, consultant, agent, employee,
co-venturer or otherwise. Specifically, but without limiting the foregoing, the Executive
shall not engage in any activity that is competitive, or is in preparation to engage in
competition, with the business of the Company or any of its Sports Affiliates as conducted
or under consideration at any time during the Executive’s employment and further the
Executive shall not, in any capacity, whether as an employee, independent contractor or
otherwise, whether with or without compensation, work for, or provide services to, any
person or entity engaged in, or in preparation to engage in, any business that is
competitive with the business of the Company or any of its Sports Affiliates, as conducted
or in planning during his employment. The foregoing, however, shall not be breached solely
by the Executive’s passive ownership of less than 3% of the equity securities of any
publicly traded company.
(iii) Forbearance by the Executive for eighteen (18) months following termination of
his employment from any direct or indirect solicitation or encouragement of any of the
Customers of the Company or any of its Sports Affiliates to terminate or diminish their
relationship with the Company or any of its Sports Affiliates and from any direct or
indirect solicitation or encouragement of any of the Customers or Prospective Customers of
the Company or any of its Sports Affiliates to conduct with himself or any other Person (as
defined in Section 13 hereof) any business or activity which such Customer or Prospective
Customer conducts or could conduct with the Company or any of its Sports Affiliates. For
purposes of this Section 5(h), a Customer is a person or entity which was such at any time
during the twelve (12) months prior to the Date of Termination and a Potential Customer is a
person or entity contacted by the Company or any of its Sports Affiliates to become such at
any time within twelve (12) months prior to the Date of Termination other than by general
advertisement, provided, in each case, that the Executive had contact with such Customer or
Potential Customer through his employment or other associations with the Company or had
access to Confidential Information that would assist in his solicitation of such Customer or
Potential Customer in competition with the Company or any of its Sports Affiliates.
(iv) Forbearance by the Executive for eighteen (18) months following termination of
his employment with the Company from directly or indirectly hiring or otherwise engaging the
services of any employee, independent contractor or other agent providing services to the
Company or any of its Sports Affiliates and from soliciting any such employee, independent
contractor or agent to terminate or diminish his/her/its relationship with the Company or
any of its Sports Affiliates. For purposes
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of this Section 5(h), an employee, independent contractor or agent means any Person who
was performing services for the Company or any of its Sports Affiliates in such capacity at
any time during the twelve (12) months immediately preceding the Date of Termination.
(i) Timing of Payments. In the event that, at the time the Executive’s employment
with the Company terminates, the Company is publicly traded (as defined in Section 409A of the
Internal Revenue Code) or the limitation on payments or provision of benefits imposed by Section
409A(a)(2)(B) otherwise would be applicable, any amounts payable under this Section 5 that would
otherwise be considered deferred compensation subject to the additional twenty percent (20%) tax
imposed by Section 409A if paid within six (6) months following the Date of Termination shall be
paid at the later of the time otherwise provided in Section 5 or the time that will prevent such
amounts from being considered deferred compensation.
6. Effect of Termination. The provisions of this Section 6 shall apply to any
termination of the Executive’s employment under this Agreement, whether pursuant to Section 5 or
otherwise.
(a) Provision by the Company of Final Compensation and Post- Employment Payments, if any, to
which the Executive is entitled under the applicable termination provision of Section 5 shall
constitute the entire obligation of the Company to the Executive hereunder following termination of
his employment by the Company. The Executive shall promptly give the Company notice of all facts
necessary for the Company to determine the amount and duration of its obligations in connection
with any termination pursuant to Section 5 hereof.
(b) The Executive and his qualified beneficiaries may have a right to continue participation
in the Company’s health and dental plans in accordance with COBRA following termination of the
Executive’s employment with the Company. The Executive’s participation in all other Employee
Benefit Plans shall terminate pursuant to the terms of the applicable Plan Documents based on the
Date of Termination and, for the avoidance of doubt, no continuation of Base Salary or other
payment to the Executive following the Date of Termination shall serve to extend the Executive’s
employment with the Company or his eligibility, or that of his qualified beneficiaries, to
participate in any Employee Benefit Plans.
(c) Provisions of this Agreement shall survive any termination if so provided herein or if
necessary or desirable to accomplish the purposes of other surviving provisions, including without
limitation the conditions to receipt of Post-Employment Payments set forth in Section 5(h) and the
obligations of the Executive under Sections 7 and 8 hereof. The Executive recognizes that, except
as expressly provided in Section 5(d), Section 5(e) or Section 5(f) (with respect to Base Salary
for any notice period waived) or Section 5(g), no compensation is earned after termination of
employment.
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7. Confidential Information.
(a) The Executive acknowledges that the Company and its Affiliates continually develop
Confidential Information (as defined in Section 13 hereof); that the Executive may develop
Confidential Information for the Company or its Affiliates; and that the Executive may learn of
Confidential Information during the course of employment. The Executive will comply with the
policies and procedures of the Company and its Affiliates for protecting Confidential Information
and shall not disclose to any Person or use, other than as required by applicable law or for the
proper performance of his duties and responsibilities to the Company and its Affiliates, any
Confidential Information obtained by the Executive incident to his employment or other association
with the Company or any of its Affiliates. The Executive understands that this restriction shall
continue to apply after his employment terminates, regardless of the reason for such termination.
(b) All documents, records, tapes and other media of every kind and description relating to
the business, present or otherwise, of the Company or any of its Affiliates and any copies, in
whole or in part, thereof (the “Documents”), whether or not prepared by the Executive, shall be the
sole and exclusive property of the Company and its Affiliates. The Executive shall safeguard all
Documents and shall surrender to the Company at the time his employment terminates, or at such
earlier time or times as the Board or its designee may specify, all Documents and all other
property of the Company and its Affiliates then in the Executive’s possession or control.
8. Assignment of Rights to Intellectual Property. The Executive shall promptly and
fully disclose all Intellectual Property (as defined in Section 13 hereof) to the Company. The
Executive hereby assigns and agrees to assign to the Company (or as otherwise directed by the
Company) the Executive’s full right, title and interest in and to all Intellectual Property. The
Executive agrees to execute any and all applications for domestic and foreign patents, copyrights
or other proprietary rights and to do such other acts (including without limitation the execution
and delivery of instruments of further assurance or confirmation) requested by the Company to
assign the Intellectual Property to the Company and to permit the Company to enforce any patents,
copyrights or other proprietary rights to the Intellectual Property. The Executive will not charge
the Company for time spent in complying with these obligations. All copyrightable works that the
Executive creates during the course of his employment by the Company and which pertains to the
business of the Company or any of its Affiliates or is suggested by any work performed by the
Executive for the Company or any of its Affiliates or makes use of Confidential Information shall
be considered “work made for hire” and, upon creation, shall be owned exclusively by the Company or
its applicable Affiliate.
9. Restricted Activities. The Executive agrees that certain restrictions on his
activities during his employment are necessary to protect the goodwill, Confidential Information
and other legitimate interests of the Company and its Affiliates:
(a) While the Executive is employed by the Company, the Executive shall not, directly or
indirectly, whether as owner, partner, investor, consultant, agent, employee, co-venturer or
otherwise, compete with the Company or any of its Affiliates anywhere in the
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world or undertake any planning for competition with the Company or any of its Affiliates.
Specifically, but without limiting the foregoing, the Executive agrees not to engage in any manner
in any activity that is directly or indirectly competitive or potentially competitive with the
business of the Company or any of its Affiliates as conducted or under consideration at any time
during the Executive’s employment or to provide services in any capacity to a Person which is a
competitor of the Company or any of its Affiliates.
(b) The Executive further agrees that, while he is employed by the Company, and excluding any
activities undertaken on behalf of the Company or any of its Affiliates in the course of his
duties, he will not hire or attempt to hire any employee of the Company or any of its Affiliates;
assist in such hiring by any Person; encourage any such employee to terminate his or her
relationship with the Company or any of its Affiliates; or solicit or encourage any customer of the
Company or any of its Affiliates to terminate or diminish its relationship with them; or solicit or
encourage any customer or potential customer or the Company or any of its Affiliates to conduct
with any Person any business or activity which such customer or potential customer conducts or
could conduct with the Company or any of its Affiliates.
(c) The Executive agrees that during his employment by the Company he shall not publish any
work that disparages the Company or any of its Affiliates, their management or their business or
the Products.
10. Enforcement of Covenants. The Executive acknowledges that he has carefully read
and considered all the terms and conditions of this Agreement, including the restraints imposed
upon him pursuant to Sections 7, 8 and 9 hereof. The Executive agrees that those restraints are
necessary for the reasonable and proper protection of the Company and its Affiliates and that each
and every one of the restraints is reasonable in respect to subject matter, length of time and
geographic area. The Executive further acknowledges that, were he to breach any of the covenants
contained in Sections 7, 8 or 9 hereof, the damage to the Company and its Affiliates would be
irreparable. The Executive therefore agrees that the Company, in addition to any other remedies
available to it, shall be entitled to preliminary and permanent injunctive relief against any
breach or threatened breach by the Executive of any of said covenants, without having to post bond.
The parties further agree that, in the event that any provision of Section 7, 8 or 9 hereof shall
be determined by any court of competent jurisdiction to be unenforceable by reason of its being
extended over too great a time, too large a geographic area or too great a range of activities,
such provision shall be deemed to be modified to permit its enforcement to the maximum extent
permitted by law.
11. Conflicting Agreements. The Executive hereby represents and warrants that the
execution of this Agreement and the performance of his obligations hereunder will not breach or be
in conflict with any other agreement to which the Executive is a party or is bound and that the
Executive is not now subject to any covenants against competition or similar covenants or any court
order or other legal obligation that would affect the performance of his obligations hereunder.
The Executive will not disclose to or use on behalf of the Company any proprietary information of a
third party without such party’s consent.
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12. Indemnification. The Company shall indemnify the Executive to the fullest extent
permitted by applicable law. Executive’s right to indemnification shall include the right to be
paid by the Company the expenses incurred in defending any covered proceeding in advance of its
final disposition, provided that Executive shall repay any advanced amounts if it shall be
ultimately determined that the Executive is not entitled to be indemnified for such expenses under
this Agreement or otherwise. The Executive agrees promptly to notify the Company of any actual or
threatened claim arising out of or as a result of his employment or offices with the Company or any
of its Affiliates.
13. Definitions. Words or phrases which are initially capitalized or are within
quotation marks shall have the meanings provided in this Section and as provided elsewhere herein.
For purposes of this Agreement, the following definitions apply:
(a) “Affiliates” means all persons and entities directly or indirectly controlling, controlled
by or under common control with the entity specified, where control may be by management authority
or equity interest.
(b) “Sports Affiliates” means Easton Xxxx Sports, LLC and any entities established or acquired
after the Effective Date through the Company or Easton Xxxx Sports, LLC, or through any parent or
direct or indirect subsidiary of the Company or Easton Xxxx Sports, LLC or through any successor of
any of the foregoing or any assign of all or substantially all of the business or assets of any of
the foregoing.
(c) “Closing Date” means the date of the closing of the transaction described in the Stock
Purchase Agreement dated as of February 1, 2006, by and between Xxxxxxx Xxxx Holdings, Inc. and
Xxx. X. Xxxxxx, Inc. (the “Stock Purchase Agreement”), which closing occurred on March 16, 2006.
(d) “Confidential Information” shall mean any and all information of the Company and its
Affiliates that is not generally known by those with whom the Company or any of its Affiliates
competes or does business, or with whom the Company or any of its Affiliates plans to compete or do
business, including without limitation (i) information related to the Products, technical data,
methods, processes, know-how and inventions of the Company and its Affiliates, (ii) the
development, research, testing, marketing and financial activities and strategic plans of the
Company and its Affiliates, (iii) the manner in which they operate, (iv) their costs and sources of
supply, (v) the identity and special needs of the customers and prospective customers of the
Company and its Affiliates and (vi) the persons and entities with whom the Company and its
Affiliates have business relationships and the nature and substance of those relationships.
Confidential Information also includes any information that the Company or any of its Affiliates
may receive or has received from customers, subcontractors, suppliers or others, with any
understanding, express or implied, that the information would not be disclosed. Confidential
Information does not include information that enters the public domain, other than through a breach
by the Executive or another Person of an obligation of confidentiality to the Company or one of its
Affiliates.
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(e) “Intellectual Property” means any invention, formula, process, discovery, development,
design, innovation or improvement (whether or not patentable or registrable under copyright
statutes) made, conceived, or first actually reduced to practice by the Executive solely or jointly
with others, during his employment by the Company; provided, however, that, as used in this
Agreement, the term “Intellectual Property” shall not apply to any invention that the Executive
develops on his own time, without using the equipment, supplies, facilities or trade secret
information of the Company or any of the Sports Affiliates to which the Executive has access as a
result of his employment, unless such invention relates at the time of conception or reduction to
practice of the invention (i) to the business of the Company or such Sports Affiliate, (ii) to the
actual or demonstrably anticipated research or development of the Company or of any Sports
Affiliates to which the Executive has access as a result of his employment or (iii) results from
any work performed by the Executive for the Company.
(f) “Person” means an individual, a corporation, a limited liability company, an association,
a partnership, an estate, a trust and any other entity or organization, other than the Company or
any of its Affiliates.
(g) “Products” means all products planned, researched, developed, tested, manufactured, sold,
licensed, leased or otherwise distributed or put into use by the Company or any of its Affiliates,
together with all services provided or planned by the Company or any of its Affiliates, during the
Executive’s employment.
14. Withholding. All payments made by the Company under this Agreement shall be
reduced by any tax or other amounts required to be withheld by the Company under applicable law.
15. Assignment. Neither the Company nor the Executive may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise, without the prior written
consent of the other; provided, however, that the Company may assign its rights and obligations
under this Agreement without the consent of the Executive in the event the Company shall hereafter
effect a corporate reorganization, consolidate with, or merge into, any Person or transfer all or
substantially all of its properties or assets to any Person. This Agreement shall inure to the
benefit of and be binding upon the Company and the Executive, their respective successors,
executors, administrators, heirs and permitted assigns.
16. Severability. If any portion or provision of this Agreement shall to any extent
be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in circumstances other than those
as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
17. Waiver. No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of either party to require the performance of
any term or obligation of this Agreement, or the waiver by either party of any
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breach of this Agreement, shall not prevent any subsequent enforcement of such term or
obligation or be deemed a waiver of any subsequent breach.
18. Notices. Any and all notices, requests, demands and other communications provided
for by this Agreement shall be in writing and shall be effective when delivered in person,
consigned to a reputable national courier or deposited in the United States mail, postage prepaid,
registered or certified, and addressed to the Executive at his last known address on the books of
the Company or, in the case of the Company, to it c/o Xxxx X. Xxxxxxxx, Fenway Partners, Inc.,
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000, with a copy to Xxxx Xxxxxxxx,
Fenway Partners, Inc., 000 X. 00xx Xx., 00xx Xxxxx, Xxx Xxxx, XX 00000 or to such other address as
either party may specify by notice to the other actually received.
19. Entire Agreement. This Agreement contains the entire agreement of the parties,
and supersedes all prior agreements, whether written or oral, with respect to the Executive’s
employment and all related matters.
20. Amendment. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by an expressly authorized representative of the Board.
21. Waiver of Certain Rights. The Executive expressly and irrevocably waives any and
all rights that he has had in the past, now has, or might now have, or hereafter acquire, under
the agreement captioned “Change of Control Agreement” between the Executive and Easton Sports, Inc.
(“Easton Sports Agreement”) or otherwise, as a result of the signing of the Stock Purchase
Agreement (as defined in Section 13 hereof) or the consummation of the transaction contemplated by
the Stock Purchase Agreement or any event related thereto being a “Change of Control” as that term
is defined in the Easton Sports Agreement or otherwise, as applicable and, without limiting the
generality of the foregoing, agrees specifically that he will be entitled to no termination pay or
other benefits of any kind as a result thereof.
22. Headings. The headings and captions in this Agreement are for convenience only
and in no way define or describe the scope or content of any provision of this Agreement.
23. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be an original and all of which together shall constitute one and the same instrument.
24. Governing Law. This is a California contract and shall be construed and enforced
under and be governed in all respects by the laws of the State of California, without regard to the
conflict of laws principles thereof, and, for the avoidance of doubt, shall include both the
statutory and common law of California, except to the extent preempted by federal law.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, this Agreement has been executed by the Company, by its duly authorized
representative, and by the Executive, as of the date first above written.
| THE EXECUTIVE: | THE COMPANY: | |||||
| XXXXXX-XXXX SPORTS, INC. | ||||||
/s/ Xxx Xxxxxxx
|
By: | /s/ Xxxx Xxxxxxxx | ||||
Xxx Xxxxxxx |
||||||
| Title: | Vice President | |||||
Easton
Xxxx Sports, LLC shall be a party to this Agreement, but solely for the purposes of Section 4(c) hereof.
| EASTON XXXX SPORTS, LLC | ||||
| By: | /s/ Xxxx Xxxxxxxx | |||
| Name: | Xxxx Xxxxxxxx | |||
| Title: | Vice President | |||
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EXHIBIT A
RELEASE OF CLAIMS
FOR AND IN CONSIDERATION OF the benefits to be provided me in connection with the termination
of my employment, as set forth in the agreement between me and Xxxxxx-Xxxx Sports, Inc. (the
“Company”) dated as of March 16, 2006 (the “Agreement”), which are conditioned,
inter alia, on my signing this Release of Claims and to which I am not otherwise entitled, and for
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
I, on my own behalf and on behalf of my heirs, executors, administrators, beneficiaries,
representatives and assigns, and all others connected with me, hereby release and forever discharge
the Company and its Affiliates (as that term is defined in the Agreement) and all of their
respective past, present and future officers, directors, trustees, shareholders, employees, agents,
general and limited partners, members, managers, joint venturers, representatives, successors and
assigns, and all others connected with any of them (all of the foregoing, collectively, the
“Released”), both individually and in their official capacities, from any and all causes of
action, rights and claims of any type or description, known or unknown, which I have had in the
past, now have, or might now have, through the date of my signing of this Release of Claims,
including without limitation any causes of action, rights or claims in any way resulting from,
arising out of or connected with my employment by the Company or any of its Affiliates or the
termination of that employment or pursuant to any federal, state or local law, regulation or other
requirement, including without limitation Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Americans with Disabilities Act and the fair employment
practices laws of the state or states in which I have been employed by the Company or any of its
Affiliates, each as amended from time to time, (all of the foregoing, in the aggregate,
“Claims”)
In signing this Release of Claims, I expressly waive and relinquish all rights and benefits
afforded by Section 1542 of the Civil Code of the State of California, and do so understanding and
acknowledging the significance of such specific waiver of Section 1542, which Section states as
follows:
A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.
Thus, notwithstanding the provisions of Section 1542, and for the purpose of implementing a full
and complete release and discharge of the Released, I expressly acknowledge that this Release of
Claims is intended to include in its effect, without limitation, all Claims which I do not know or
suspect to exist in my favor at the time of execution hereof, and that this Release of Claims
contemplates the extinguishment of all such Claims.
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Excluded from the scope of this Release of Claims is (i) any claim arising under the terms of the
Agreement after the effective date of this Release of Claim and (ii) any right of indemnification
or contribution that I have pursuant to the Articles of Incorporation or By-Laws of the Company or
any of its Sports Affiliates (as defined in the Agreement).
In signing this Release of Claims, I acknowledge my understanding that I may not sign it prior to
the termination of my employment, but that I may consider the terms of this Release of Claims for
up to twenty-one (21) days (or such longer period as the Company may specify) from the date my
employment with the Company terminates. I also acknowledge that I am advised by the Company and
its Affiliates to seek the advice of an attorney prior to signing this Release of Claims; that I
have had sufficient time to consider this Release of Claims and to consult with an attorney, if I
wished to do so, or to consult with any other person of my choosing before signing; and that I am
signing this Release of Claims voluntarily and with a full understanding of its terms.
I further acknowledge that, in signing this Release of Claims, I have not relied on any promises or
representations, express or implied, that are not set forth expressly in the Agreement. I
understand that I may revoke this Release of Claims at any time within seven (7) days of the date
of my signing by written notice to the Company c/o Xxxx X. Xxxxxxxx, Fenway Partners, Inc., 00000
Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000, with a copy to Xxxx Xxxxxxxx, Fenway
Partners, Inc., 000 X. 00xx Xx., 00xx Xxxxx, Xxx Xxxx, XX 00000, or to such other address as the
Company party may specify and that this Release of Claims will take effect only upon the expiration
of such seven-day revocation period and only if I have not timely revoked it.
Intending to be legally bound, I have signed this Release of Claims as of the date written below.
Signature:
|
||||
| Xxx Xxxxxxx | ||||
Date Signed: |
||||
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EXHIBIT B
[Insert Memorandum to Bonus Plan Participants
from Xxxxx Xxxx dated December 29, 2005
Subject: Easton Sports, Inc. (ESI)—FY2006 Bonus Plan]
from Xxxxx Xxxx dated December 29, 2005
Subject: Easton Sports, Inc. (ESI)—FY2006 Bonus Plan]
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EXHIBIT C
Designation of Beneficiary
Reference is made to the employment agreement between the undersigned and Xxxxxx-Xxxx Sports,
Inc. dated as of March 16, 2006 (the “Employment Agreement”). All capitalized terms not
defined on this form shall have the meaning ascribed to them in the Employment Agreement.
I hereby designate the following person as my beneficiary to receive any Final Compensation
and any Final Pro-Rated Bonus under Section 5(a) of the Employment Agreement in the event of my
death during the term of the Employment Agreement:
Name of Beneficiary:
Social Security Number:
Date of Birth:
Relationship:
Current Address:
I understand that it is my obligation to inform the Company in writing of any change of address for
my designated beneficiary. I also understand that I may change my designated beneficiary at any
time by submission of a new form fully completed, signed by me and dated. The form with the latest
date shall govern in the event of my death.
Signature:
|
||||
| Xxx Xxxxxxx | ||||
Date: |
||||
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