EMPLOYMENT AGREEMENT
Exhibit
10.32
SPORT
CHALET, INC., a Delaware corporation ("Employer"), and XXXXXX XXXXXXXX
("Executive"), in consideration of the mutual promises made herein, do, as
of
March 31, 2008, agree as follows:
A. Executive
is employed as the Executive Vice President - Chief Merchandising Officer;
and
B. Employer
is willing to employ Executive, and Executive desires to be so employed, on
the
terms and conditions set forth in this Agreement.
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1.
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TERM
OF EMPLOYMENT
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1.1 Specified
Term.
Employer hereby employs Executive, and Executive hereby accepts employment
with
Employer, for an initial term beginning on March 31, 2008 and ending at the
close of business on March 31, 2009. Executive's employment hereunder shall
automatically renew for succeeding twelve-month periods, unless notice of
termination is given by either party at least 30 days prior to the end of the
initial term or any renewal term. Executive's employment may also terminate
earlier as otherwise provided in this Agreement.
1.2 "Employment
Term."
The
phrase "Employment Term" shall mean the entire period of Executive's employment
by Employer hereunder, whether for the periods provided above, or whether
terminated earlier as hereinafter provided or extended by mutual agreement
between Employer and Executive.
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2.
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DUTIES
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2.1 General
Duties.
Executive shall serve as the Executive Vice President - Chief Merchandising
Officer of Employer. In this capacity, Executive shall, to the best of his
ability, perform all services, acts or things (i) necessary or advisable to
manage and conduct the business of Employer as it relates to merchandising,
planning, marketing and advertising, and in-store merchandise presentation,
(ii)
as are provided in Employer's Certificate of Incorporation and Bylaws, (iii)
as
may be assigned by Employer's President, Chief Executive Officer or Board of
Directors or (iv) as may be specified in the job description or performance
objectives adopted from time to time by Employer's Board of Directors, President
and Chief Executive Officer. Executive shall perform such duties subject at
all
times to the policies of Employer and its Board of Directors and the direction
of Employer's President, or Chief Executive Officer. Executive shall report
to
Employer's President and Chief Executive Officer.
2.2 Conduct
of Executive.
Executive shall at all times during the Employment Term conduct himself in
a
manner consistent with his position with Employer and shall not knowingly
perform any act which he knew or should have known was contrary to the best
interests of Employer.
2.3 Devotion
to Employer's Business.
(a) Executive
shall devote the full working portion of his entire productive time, ability
and
attention to the business of Employer during the Employment Term.
(b) During
the Employment Term, Executive shall not engage in any other business duties
or
pursuits whatsoever, or directly or indirectly render any services of a
business, commercial or professional nature to any other person or organization,
whether for compensation or otherwise, without the prior consent of Employer's
Board of Directors, President or Chief Executive Officer; provided,
however, that the expenditure of reasonable amounts of time for educational,
charitable or professional activities shall not be deemed a breach of this
Agreement if those activities do not materially interfere with the services
required under this Agreement and shall not require the prior written consent
of
Employer as set forth above.
(c) This
Section 2.3 shall not be interpreted to prohibit Executive from making passive
personal investments or conducting private business affairs if those activities
do not materially interfere with the services required under this Agreement.
Notwithstanding the foregoing, Executive shall not, to the best of his
knowledge, directly acquire, hold or retain any interest in any vendor or
supplier of Employer.
2.4 Competitive
Activities.
Except
as otherwise expressly provided in this Agreement, during the Employment Term,
Executive shall not, directly or indirectly, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer or
director, or in any other individual or representative capacity, engage or
participate in any business that is in competition in any manner whatsoever
with
the business of Employer.
2.5 Trade
Secrets.
(a) Executive
shall not, without the prior written consent of Employer in each instance,
disclose or use in any way, either during his employment by Employer or
thereafter, except as required in the course of such employment, any
confidential business or technical information or trade secret of Employer
acquired in the course of such employment, whether or not patentable,
copyrightable or otherwise protected by law, and whether or not conceived of
or
prepared by him (collectively, the "Trade Secrets"), including, without
limitation, any confidential information concerning customer lists, products,
procedures, operations, investments, financing, costs, employees, purchasing,
accounting, marketing, merchandising, sales, salaries, pricing, profits and
plans for future development, the identity, requirements, preferences, practices
and methods of doing business of specific parties with whom Employer transacts
business, and all other information which is related to any product, service
or
business of Employer, other than information which is generally known in the
industry in which Employer transacts business or is acquired from public sources
or was known to Executive prior to his employment by Employer; all of which
Trade Secrets are the exclusive and valuable property of Employer.
(b) All
files, accounts, records, documents, books, forms, notes, reports, memoranda,
studies, compilations of information, correspondence and all copies, abstracts
and summaries of the foregoing, and all other physical items related to
Employer, other than a merely personal item, whether of a public nature or
not,
and whether prepared by Executive or not, are and shall remain the exclusive
property of Employer and shall not be removed from the premises of Employer
except as required in the course of Executive's employment, without the prior
written consent of Employer in each instance, and the same shall be promptly
returned to Employer by Executive on the expiration or termination of his
employment or at any time prior thereto upon the request of
Employer.
(c) Executive
hereby acknowledges and agrees that it would be difficult to fully compensate
Employer for damages resulting from the breach or threatened breach of Sections
2.4 or 2.5 and, accordingly, that Employer shall be entitled to temporary and
injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, to enforce such provisions without the
necessity of proving actual damages and without the necessity of posting any
bond or other undertaking in connection therewith. This provision with respect
to injunctive relief shall not, however, diminish Employer's right to claim
and
recover damages.
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3.
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COMPENSATION
AND BENEFITS.
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3.1 Compensation.
As
compensation for the services to be performed hereunder, Executive shall receive
a salary in the amount of Two Hundred Eighty-Five Thousand Dollars ($285,000)
per annum, payable in arrears on a bi-weekly basis. Effective July 1, 2009,
Executive's salary shall increase to Two Hundred Ninety-Five Thousand Dollars
($295,000) per annum. Executive shall receive such other increases in salary,
if
any, as may be determined by the Board of Directors in its sole discretion.
The
annual salary excluding bonuses, profit sharing, stock options and all other
forms of compensation is referred to as the "Base Salary."
3.2 Tax
Withholding.
Employer shall have the right to deduct or withhold from any amounts due to
Executive hereunder (including, without limitation, the Severance Amount which
may be payable pursuant to Sections 4.1(b) and 4.1(e)) any and all federal,
state or local taxes, withholdings and deductions now applicable or that may
be
enacted and become applicable in the future, including, but not limited to,
federal income and Social Security taxes.
3.3 Bonus.
Executive shall be eligible to participate in such executive bonus programs
as
Employer may establish from time to time. Under the "Senior Management Bonus
Plan" currently in effect, Executive's maximum target annual bonus shall be
forty percent (40%) of his base salary for the applicable fiscal year payable
pursuant to Section 3.1. This Bonus Plan and any target bonus are subject to
change at the discretion of the Employer, but Executive shall be eligible to
participate in any such bonus programs as long as Employer offers such plans
to
its Executive Vice Presidents. Executive must be employed as of the time of
payment (typically June) to be eligible for any bonus. There are no pro rata
payments of the Bonus Plan if Executive is not employed as of the time of
payment. Provided that Executive is still employed in June 2009, Executive
is
guaranteed a minimum bonus of Twenty-Eight Thousand Five Hundred Dollars
($28,500) for the fiscal year ending March 2009. Provided Executive is still
employed in June 2010, Executive is guaranteed a minimum bonus of Twenty-Nine
Thousand Five Hundred Dollars ($29,500) for the fiscal year ending March
2010.
3.4 Stock
Options.
Executive has been granted Non-Qualified Stock Options ("NQSOs") to purchase
Employer's common stock on the terms set forth on Exhibit A and in accordance
with Employer's 2004 Incentive Award Plan as amended and a Key Employee Stock
Option Incentive Award Agreement which is incorporated herein by this
reference.
3.5 Annual
Vacation.
Executive shall be entitled to vacation or personal leave in accordance with
Employer's policies for executive vacations for a period of up to three calendar
weeks per year, with prior approval of the Chief Executive Officer. The vacation
is subject to the Employer's rules on accrual of vacation.
3.6 Automobile
Allowance.
Employer shall pay to Executive an automobile allowance in the annual amount
of
Eleven Thousand Five Hundred Dollars ($11,500) payable bi-weekly.
3.7 Medical
Coverage.
Employer shall include Executive and his immediate family in such health care
plans as may be provided to Executive Vice Presidents of Employer generally
and
under the same terms and conditions.
3.8 Life
Insurance.
Employer shall provide to Executive such life insurance, if any, as is currently
provided to Executive Vice Presidents of Employer generally and under the same
terms and conditions.
3.9 Long
Term Disability Plan.
Employer shall include Executive in such long term disability plans as may
be
provided to Executive Vice Presidents of Employer and under the same terms
and
conditions.
3.10 Qualified
Plans.
Employee shall be entitled to participate in Employer's qualified plans in
accordance with the terms and conditions of the plan documents.
3.11 Reimbursement
of Business Expenses.
Employer shall promptly reimburse Executive for all reasonable and necessary
business expenses incurred by Executive in connection with the business of
Employer subject to compliance by Executive with Employer's Standard Operating
Procedures with respect to the amount, documentation and verification of such
expenses as the same may be amended from time to time.
3.12 Signing
Bonus.
Subject
to employment on the specified dates, Executive shall receive the following
signing bonus, payable as follows: (1) Twenty Thousand Dollars ($20,000) payable
on April 1, 2008; (2) Twenty Thousand Dollars ($20,000) payable on April 1,
2009; Ten Thousand Dollars ($10,000) payable on April 1, 2010.
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4.
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TERMINATION
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4.1 Termination.
In
addition to an expiration of this Agreement pursuant to Section 1.1, the
Employment Term and Executive's employment shall cease under the following
circumstances:
(a) Death
or Disability.
The
Employment Term shall terminate automatically upon the death of Executive.
The
Employment Term and employment shall also terminate upon the "Disability" of
Executive provided Employer shall have given Executive written notice of such
termination not less than thirty (30) days prior to the date of
termination. "Disability" shall mean a physical or mental disability of
Executive which has continued, or is reasonably likely to continue, for a period
of at least four (4) consecutive months and that has prevented, or would
prevent Executive from performing his essential functions of his position (even
with a reasonable accommodation that is not an undue hardship) under this
Agreement during such period. Such disability shall be determined by Executive's
regular physician or two physicians selected by the Board of Directors. Upon
termination because of death or disability, Executive shall not be entitled
to
any additional Base Salary, bonus, or other compensation or benefits after
the
date of such termination.
(b) Termination
by Employer Without Cause or Termination of Employment By
Non-Renewal.
Employer shall be entitled to terminate Executive's employment without "Cause"
at any time during Executive's employment. Written notice of the termination
without Cause shall be delivered to Executive and shall specify the date of
termination. Except as provided in this Section 4.1(b), Executive shall not
be
entitled to any Base Salary, bonus, or other compensation or benefits after
the
date of such termination. If Employer terminates the employment relationship
and
this Agreement without Cause, or if Employer decides not to renew this Agreement
and thereby terminates Executive's employment, Executive shall receive the
following after execution of the standard form of Severance Agreement and
Release: i) a Lump Sum Payment equal to six months Base Salary, and
ii) if Executive is terminated after the end of the fiscal year (which is
the end of March) but before the payment of the annual bonus for that year,
the
annual bonus, if any, Executive would have earned for the prior fiscal year,
had
he remained employed until the payment date. The Lump Sum Payment shall be
paid
to Executive within 60 days of the date of the termination. The payment of
the
annual bonus, if any, shall be made at the same time as the other executives
of
Employer receive their bonus payments, but in no event later than July 15 of
the
year of the termination. Additionally, in the event Executive elects to continue
his medical and dental coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and remains eligible for coverage under
COBRA, Employer will pay directly to the insurance carriers the full cost of
Executive's monthly COBRA premium for medical and dental coverage for the first
six months of such coverage in accordance with the COBRA regulations. The
aggregate amount paid under the preceding sentences is referred to herein as
the
"Severance Amount." Payment of the Severance Amount shall be in lieu of all
other claims, damages or liabilities Executive might otherwise assert against
Employer, including, without limitation, those for breach of this Agreement
or
for discrimination. The Severance Amount shall be paid as severance and only
upon execution by Executive of Employer's standard form of Severance Agreement
and Release. The Severance Agreement and Release will require Executive to
release all claims against Employer and its employees in order to receive the
Severance Amount. Notwithstanding the foregoing, if Executive is determined
by
the Employer to be a specified employee (as defined in Section 409A(a)(2)(B)
of
the Internal Revenue Code of 1986, as amended, and determined pursuant to
related Treasury Regulations or other guidance promulgated thereunder) and
if
required under Section 409A of the Code, the Lump Sum Payment shall be paid
on
the first day of the seventh month following the termination of
employment.
(c) Termination
by Employer With Cause.
Employer shall be entitled to terminate Executive's employment under this
Agreement for Cause, in which case Executive shall not be entitled to any
additional Base Salary, bonus, or other compensation or benefits after the
date
of such termination. "Cause" means (i) the commission of any material
criminal act or any act of fraud or material dishonesty with respect to
Employer; (ii) misconduct; (iii) material breach of the provisions of this
Agreement, (iv) insubordination or refusal to perform required duties, or
(v) an order of a court, administrative board or judge, or regulatory
authority which precludes Executive from performing his duties. Written notice
of the termination with Cause shall be delivered to Executive and shall specify
the date of termination and that the termination is for "Cause".
(d) Termination
by Executive For Any Reason.
Executive shall be entitled to terminate his employment under this Agreement
at
any time upon thirty (30) days prior written notice to Employer, in which case
Executive shall not be entitled to any additional Base Salary, bonus, or other
compensation or benefits after the date of such termination.
(e) Termination
by Executive for Good Reason.
Executive may terminate his employment for "Good Reason" within four months
of
the initial existence of "Good Reason", by sending written notice of termination
to Employer stating that the termination is for "Good Reason" and specifying
the
basis for the Good Reason. In the event the Executive fails to terminate his
employment within such period, but Executive terminates after such period,
then
the termination shall be deemed without Good Reason. "Good Reason" shall mean
any of the following events:
(i) An
involuntary material diminution in the Executive's authority or
duties;
(ii) An
involuntary material diminution in Executive's Base Salary; or
(iii) A
material breach of Section 3 of this Agreement.
In
order
for the termination to be one for "Good Reason", Executive must first give
the
Employer written notice which shall identify with reasonable specificity the
grounds for Good Reason within 60 days of the initial existence of Good Reason,
upon the notice of which the Employer shall have 30 days to cure the alleged
grounds for Good Reason contained in the notice. In the event Executive fails
to
notify the Employer of the existence of Good Reason within such 60 day period
or
the Employer cures the alleged grounds for Good Reason in that 30 day cure
period, but Executive's employment under this Agreement in fact terminates
at
the initiation of Executive, such termination shall be deemed a termination
by
Executive without Good Reason. If Executive terminates his employment with
the
Employer for Good Reason in accordance with this Section 4.1(e), then Executive
shall not be entitled to any additional Base Salary, bonus, or other
compensation or benefits except the following: upon execution by Executive
of
Employer's standard form of Severance Agreement and Release, Executive shall
receive a Lump Sum Payment equal to six months Base Salary, payable within
60
days following the termination of employment. The amount paid under the
preceding sentence is referred to as the "Severance Amount". Executive shall
not
be entitled to any other compensation or benefits after the date of termination.
Payment of the Severance Amount shall be in lieu of all other claims, damages
or
liabilities Executive might otherwise assert against Employer, including,
without limitation, those for breach of contract or for discrimination. The
Severance Amount shall be paid only upon execution by Executive of Employer's
standard form of Severance Agreement and Release. The Severance Agreement and
Release will require Executive to release all claims against Employer and its
employees in order to receive the Severance Amount. Notwithstanding the
foregoing, if Executive is determined by the Employer to be a specified employee
(as defined in Section 409A(a)(2)(B) of the Code and determined pursuant to
related Treasury Regulations or other guidance promulgated thereunder) and
if
required under Section 409A of the Code, the Lump Sum Payment shall be paid
on
the first day of the seventh month following the termination of
employment.
(f) Severance
Amount Shall Not Constitute Excess Parachute Payments.
It is
the intention of the parties that any payment of the Severance Amount shall
not
constitute "excess parachute payments" within the meaning of Section 280G of
the
Internal Revenue Code of 1986, as amended, and any regulations thereunder.
If
the independent accountants acting as auditors for Employer (or another
accounting firm designated by them) determine that any payment of the Severance
Amount may constitute "excess parachute payments," the payments may be reduced
to the maximum amount which may be paid without the payments being "excess
parachute payments." The determination shall take into account (i) whether
the
payments are "parachute payments" under Section 280(3) and, if so, (ii) the
amount of payments under this Agreement that constitutes reasonable compensation
under Section 280G.
4.2 Duties
Upon Termination.
In the
event that Executive's employment by Employer under this Agreement is
terminated, neither Employer nor Executive shall have any remaining duties
or
obligations hereunder, except that (i) Employer shall promptly pay to Executive,
or his estate, all reimbursable expenses incurred by Executive hereunder as
of
such date, and such compensation as is due pursuant to Sections 3.1 and 3.5,
prorated through the date of termination, (ii) Employer shall provide to
Executive such Severance Amount as may be due pursuant to Sections 4.1(b)
or 4.1(e), and (iii) Executive shall continue to be bound by
Section 2.5.
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5.
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GENERAL
PROVISIONS
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5.1 Notices.
Any
notices to he given hereunder by either party to the other shall be in writing
and may he transmitted by personal delivery or by mail, registered or certified,
postage prepaid with return receipt requested. Mailed notices shall be addressed
to the parties at the addresses appearing on the signature pages hereof, but
each party may change that address by written notice in accordance with this
section. Notices delivered personally shall be deemed communicated as of the
date of actual receipt; mailed notices shall be deemed communicated as of the
third day following the date of mailing.
5.2 Arbitration.
Any
controversy between Employer and Executive involving the construction or
application of any of the terms, provisions, or conditions of this Agreement
shall on the written request of either party served on the other be submitted
to
arbitration. Arbitration shall comply with and be governed by the provisions
of
the California Arbitration Act and that certain Agreement to Arbitrate Claims
previously entered into by Employer and Executive, which Agreement is
incorporated herein by this reference.
5.3 Attorneys'
Fees and Costs.
If any
legal or arbitration action based in contract law is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to
reasonable attorneys' fees, costs, and necessary disbursements in addition
to
any other relief to which that party may be entitled. This provision shall
be
construed as applicable to the entire contract.
5.4 SEC
Compliance.
Executive acknowledges that concurrently herewith he has been provided with
a
copy of and will abide by the Employer's Statement of Company Policy Re:
Securities Trades by Company Personnel as the same may be amended from time
to
time by Employer, which Statement is incorporated herein by this reference.
5.5 Remedy
For Certain Breaches.
If
Employer breaches Sections 2.1, 3.1, or 3.3 through 3.12, and Executive
does not give notice of termination for Good Reason, the Executive is limited
to
a maximum of six months period for damages for any such breach.
5.6 Entire
Agreement.
This
Agreement, together with its exhibits, and the arbitration agreement supersede
any and all other agreements, either oral or in writing, between the parties
hereto with respect to the employment of Executive by Employer and contain
all
of the covenants and agreements between the parties with respect to that
employment in any manner whatsoever. Each party to this Agreement acknowledges
that no representation, inducements, promises, or agreements, orally or
otherwise, have been made by any party, or anyone acting on behalf of any party,
which are not embodied herein, and that no other agreement, statement, or
promise not contained in this agreement shall be valid or binding on either
party.
5.7 Modifications.
Any
modification of this Agreement will be effective only if it is in writing and
signed by the party to be charged and approved by the Board of Directors of
Employer.
5.8 Effect
of Waiver.
The
failure of either party to insist on strict compliance with any of the terms,
covenants, or conditions of this Agreement by the other party shall not be
deemed a waiver of that term, covenant, or condition, nor shall any waiver
or
relinquishment of any right or power at any one time or times be deemed a waiver
or relinquishment of that right or power for all or any other
times.
5.9 Partial
Invalidity.
If any
provision in this Agreement is held by a court of competent jurisdiction to
be
invalid, void, or unenforceable, the remaining provisions shall nevertheless
continue in full force without being impaired or invalidated in any
way.
5.10 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of California except that, with respect to matters of corporate
governance, the laws of the State of Delaware shall govern.
5.11 Sums
Due Deceased Executive.
If
Executive dies prior to the expiration of the Employment Term, any sums that
may
be due him from Employer under this agreement as of the date of death shall
be
paid to Executive's executors, administrators, heirs, personal representatives,
successors, and assigns.
5.12 Insurance.
Executive shall be covered by any policy of directors' and officers' liability
insurance maintained by Employer.
5.13 Consultation.
Executive acknowledges that he has had sufficient time to consult with the
advisor of his choice.
5.14 Construction.
This
Agreement was reviewed by each party hereto and is the product of informed
negotiations between the parties hereto. If any part of this Agreement is deemed
to be unclear or ambiguous, it shall be construed as if it were drafted jointly
by the parties. Each party hereto acknowledges that no party was in a superior
bargaining position regarding the substantive terms of this
Agreement.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the
date and year first set forth above.
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Employer:
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SPORT
CHALET, INC.
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/S/
Xxxxx Xxxxx
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XXXXX
XXXXX, CHAIRMAN AND CEO
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Executive:
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/s/
Xxxxxx Xxxxxxxx
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XXXXXX
XXXXXXXX
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