EXHIBIT 10.1
[QUIKSILVER LOGO]
August 1, 2004
PERSONAL AND CONFIDENTIAL
Xxxxxx X. XxXxxxxx, Xx.
Quiksilver, Inc.
00000 Xxxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, XX 00000
Re: Employment at Quiksilver
Dear Xxx:
This letter ("Agreement") will confirm our understanding and
agreement regarding your continued employment with Quiksilver, Inc.
("Quiksilver" or the "Company"). This Agreement is effective August 1, 2004 and
completely supersedes and replaces any existing or previous oral or written
understandings or agreements, express or implied, between you and the Company
regarding your employment.
1. Position; Exclusivity. The Company hereby agrees to employ you
as its Chief Executive Officer. During your employment with
Quiksilver, you will devote your full professional and
business time, interest, abilities and energies to the Company
and will not render any services to any other person or
entity, whether for compensation or otherwise, or engage in
any business activities competitive with or adverse to the
Company's business or welfare, whether alone, as an employee,
as a partner, as a member, or as a shareholder, officer or
director of any other corporation, or as a trustee, fiduciary
or in any other similar representative capacity of any other
entity.
2. Base Salary. Your base salary will be $66,667 per month
($800,000 on an annualized basis), less applicable
withholdings and deductions, paid on the Company's regular
payroll dates. Your salary will be reviewed at the time
management salaries are reviewed periodically and may be
adjusted (but not below $66,667 per month) at the Company's
discretion in light of the Company's performance, your
performance, market conditions and other factors deemed
relevant by the Company.
3. Bonus. For the fiscal year ending October 31, 2004 and each
fiscal year thereafter so long as such plans remain in effect
and the requisite stockholder approval of such plans under
Section 162(m) of the Internal Revenue Code has been obtained
to ensure the deductibility of payments made pursuant thereto,
you shall be eligible to receive a bonus under the Company's
stockholder approved Annual Incentive Plan and/or Long-Term
Incentive Plan of up to 300% of your original base salary
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hereunder based on achievement of certain incentive
goals established by the Compensation Committee of the
Board of Directors. Any bonus earned pursuant to the
Annual Incentive Plan shall be paid within ten (10) days
following the date the Company publicly releases its
annual audited financial statements (the "Bonus Payment
Date"). In the event that your employment with the
Company terminates prior to the end of the applicable
fiscal year for any reason other than termination for
Cause (as defined in Paragraph 9(b), but excluding
subparagraphs (i) and (ii) thereof), you shall be
entitled to receive a pro rata portion of the bonus
otherwise payable to you under the Annual Incentive Plan
based upon the actual number of days which you were
actively employed by the Company during the applicable
fiscal year, which shall be paid on the Bonus Payment
Date. Payment of any bonus earned under the Long-Term
Incentive Plan and proration thereof on termination of
your employment shall be governed by the terms of the
Long-Term Incentive Plan. Any bonus payments shall be
less applicable withholdings and deductions.
4. Vacation. You will accrue 20 days of vacation each year
up to a maximum of 35 days. Once the maximum is reached,
additional vacation accrual will cease until you have
used some vacation to fall below the maximum accrual
allowed.
5. Health and Disability Insurance. You (and any eligible
dependents you elect) will be covered by the Company's
group health insurance programs on the same terms and
conditions applicable to comparable employees. You will
also be covered by the long-term disability plan for
senior executives on the same terms and conditions
applicable to comparable employees. The Company reserves
the right to change, modify, or eliminate such coverages
in its discretion.
6. Clothing Allowance. You will be provided a clothing
allowance of $2,000 per year at the Company's wholesale
prices.
7. Stock Options. You shall continue to be a participant in
Quiksilver's Stock Incentive Plan, or any successor
equity plan. The amount and terms of any restricted
stock, stock options, stock appreciation rights or other
interests to be granted to you will be determined by the
Board of Directors in its discretion and covered in
separate agreements, but shall be substantially similar
to those granted to other senior executives of
Quiksilver of equivalent level. Stock options granted to
you after the date hereof through the termination of
your employment shall provide that if you are terminated
by the Company without Cause (as hereinafter defined) or
you terminate your employment for Good Reason (as
hereinafter defined) within twelve (12) months following
a Change of Control (as defined in Addendum "A"), any
such options outstanding will automatically vest in full
on an accelerated basis so that the options will
immediately prior to such termination become exercisable
for all option shares.
8. Life Insurance. The Company will pay the premium on a
term life insurance policy on your life with a company
and policy of our choice, and a beneficiary of your
choice, in the face amount determined by the Company of
not less than $2,000,000. Our obligation to obtain and
maintain this insurance is contingent upon your
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establishing and maintaining insurability, and we are
not required to pay premiums for such a policy in excess
of $5,000 annually.
9. Unspecified Term; At Will Employment; Termination.
(a) Notwithstanding anything to the contrary in this
Agreement or in your prior employment relationship with
the Company, express or implied, your employment is for
an unspecified term and either you or Quiksilver may
terminate your employment at will and with or without
Cause (as defined below) or notice at any time for any
reason; provided, however, that you agree to provide the
Company with thirty (30) days advance written notice of
your resignation (during which time the Company may
elect, in its discretion, to relieve you of all duties
and responsibilities). This at-will aspect of your
employment relationship can only be changed by an
individualized written agreement signed by both you and
an authorized officer of the Company.
(b) The Company may also terminate your employment
immediately, without notice, for Cause, which shall
include, but not be limited to, (i) your death, (ii)
your permanent disability which renders you unable to
perform your duties and responsibilities for a period in
excess of three consecutive months, (iii) willful
misconduct in the performance of your duties, (iv)
commission of a felony or violation of law involving
moral turpitude or dishonesty, (v) self-dealing, (vi)
willful breach of duty, (vii) habitual neglect of duty,
or (viii) a material breach by you of your obligations
under this Agreement. If the Company terminates your
employment for Cause, or you terminate your employment
other than for Good Reason (as defined below), you (or
your estate or beneficiaries in the case of your death)
shall receive your base salary and other benefits earned
and accrued prior to the termination of your employment
and, in the case of a termination pursuant to
subparagraphs (i) or (ii) only, a pro rata portion of
your bonus, if any, as provided in Paragraph 3 for the
fiscal year in which such termination occurs, less
applicable withholdings and deductions, and you shall
have no further rights to any other compensation or
benefits hereunder on or after the termination of your
employment.
(c) If Quiksilver elects to terminate your employment
without Cause, or if you terminate your employment with
the Company for Good Reason within six (6) months of the
action constituting Good Reason, the Company will (i)
continue to pay your base salary (but not any employment
benefits) on its regular payroll dates for a period of
twenty-four (24) months, (ii) pay you a pro rata portion
of your bonus, if any, as provided by Paragraph 3 for
the fiscal year in which such termination occurs, less
applicable withholdings and deductions and (iii) pay you
an amount equal to two (2) times the average annual
bonus earned by you pursuant to Paragraph 3 during the
two (2) most recently completed fiscal years of the
Company payable over a two-year period following
termination in equal installments on the Company's
regular payroll dates, less applicable withholdings and
deductions. Notwithstanding the foregoing, if such
termination without Cause or for Good Reason occurs
within twelve (12) months immediately following a Change
of Control (as defined in Addendum "A") the Company will
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instead (i) continue to pay your base salary (but not
any employment benefits) on its regular payroll dates
for a period of thirty-six (36) months, (ii) pay you a
pro rata portion of your bonus, if any, as provided by
Paragraph 3 for the fiscal year in which such
termination occurs, less applicable withholdings and
deductions, and (iii) pay you an amount equal to three
(3) times the average annual bonus earned by you
pursuant to Paragraph 3 during the two (2) most recently
completed fiscal years of the Company payable over a
three year period following termination in equal
installments on the Company's regular payroll dates,
less applicable withholdings and deductions. In order
for you to be eligible to receive the payments specified
in this Paragraph 9(c), you must execute a general
release of claims in a form reasonably acceptable to the
Company. You shall have no further rights to any other
compensation or benefits hereunder on or after the
termination of your employment. You shall not have a
duty to seek substitute employment and the Company shall
not have the right to offset any compensation due you
against any compensation or income received by you after
the date of such termination.
"Good Reason" for you to terminate employment means a
voluntary termination as a result of (i) the assignment
to you of duties materially inconsistent with your
position as set forth above without your consent, (ii) a
material change in your reporting level from that set
forth in this Agreement without your consent, (iii) a
material diminution of your authority without your
consent, (iv) a material breach by the Company of its
obligations under this Agreement, (v) a failure by the
Company to obtain from any successor, before the
succession takes place, an agreement to assume and
perform the obligations contained in this Agreement, or
(vi) the Company requiring you to be based (other than
temporarily) at any office or location outside of the
Southern California area without your consent.
Notwithstanding the foregoing, Good Reason shall not
exist unless you provide the Company notice of
termination on account thereof and, if such event or
condition is curable, the Company fails to cure such
event or condition within thirty (30) days of such
notice.
(d) In the event that any payment or benefit received
or to be received by you (collectively, the "Payments")
would constitute a parachute payment within the meaning
of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), then the following limitation
shall apply:
The aggregate present value of those Payments shall be
limited in amount to the greater of the following dollar
amounts (the "Benefit Limit"):
(i) 2.99 times your Average Compensation (as defined
below), or
(ii) the amount which yields you the greatest after-tax
amount of Payments under this Agreement after taking
into account any excise tax imposed under Code Section
4999 on those Payments.
The present value of the Payments will be measured as of
the date of the Change in Control and determined in
accordance with the provisions of Code Section
280G(d)(4).
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Average Compensation means the average of your W-2 wages
from the Company for the five (5) calendar years
completed immediately prior to the calendar year in
which the Change in Control is effected. Any W-2 wages
for a partial year of employment will be annualized, in
accordance with the frequency which such wages are paid
during such partial year, before inclusion in Average
Compensation.
10. Trade Secrets; Confidential and/or Proprietary
Information. The Company owns certain trade secrets and
other confidential and/or proprietary information which
constitute valuable property rights, which it has
developed through a substantial expenditure of time and
money, which are and will continue to be utilized in the
Company's business and which are not generally known in
the trade. This proprietary information includes the
list of names of the customers and suppliers of
Quiksilver, and other particularized information
concerning the products, finances, processes, material
preferences, fabrics, designs, material sources, pricing
information, production schedules, sales and marketing
strategies, sales commission formulae, merchandising
strategies, order forms and other types of proprietary
information relating to our products, customers and
suppliers. You agree that you will not disclose and will
keep strictly secret and confidential all trade secrets
and proprietary information of the Company, including,
but not limited to, those items specifically mentioned
above.
11. Expense Reimbursement. The Company will reimburse you
for documented reasonable and necessary business
expenses incurred by you while engaged in business
activities for the Company's benefit on such terms and
conditions as shall be generally available to other
executives of the Company.
12. Compliance With Business Policies. You will devote your
full business time and attention to Quiksilver and will
not be involved in other business ventures without
written authorization from the Company's Board of
Directors. You will be required to observe the Company's
personnel and business policies and procedures as they
are in effect from time to time. In the event of any
conflicts, the terms of this Agreement will control.
13. Entire Agreement. This Agreement, its addenda, and any
stock option agreements the Company may enter into with
you contain the entire integrated agreement between us
regarding these issues, and no modification or amendment
to this Agreement will be valid unless set forth in
writing and signed by both you and an authorized officer
of the Company.
14. Arbitration as Exclusive Remedy. To the fullest extent
allowed by law, any controversy, claim or dispute
between you and the Company (and/or any of its
affiliates, owners, shareholders, directors, officers,
employees, volunteers or agents) relating to or arising
out of your employment or the cessation of that
employment will be submitted to final and binding
arbitration in Orange County, California, for
determination in accordance with the American
Arbitration Association's ("AAA") National Rules for the
Resolution of Employment Disputes, as the exclusive
remedy for such controversy, claim or dispute. In any
such arbitration, the parties may
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conduct discovery to the same extent as would be
permitted in a court of law. The arbitrator shall issue
a written decision, and shall have full authority to
award all remedies which would be available in court.
The Company shall pay the arbitrator's fees and any AAA
administrative expenses. Any judgment upon the award
rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof. Possible disputes
covered by the above include (but are not limited to)
unpaid wages, breach of contract, torts, violation of
public policy, discrimination, harassment, or any other
employment-related claims under laws including but not
limited to, Title VII of the Civil Rights Act of 1964,
the Americans With Disabilities Act, the Age
Discrimination in Employment Act, the California Fair
Employment and Housing Act, the California Labor Code
and any other statutes or laws relating to an employee's
relationship with his/her employer, regardless of
whether such dispute is initiated by the employee or the
Company. Thus, this bilateral arbitration agreement
fully applies to any and all claims that the Company may
have against you, including (but not limited to) claims
for misappropriation of Company property, disclosure of
proprietary information or trade secrets, interference
with contract, trade libel, gross negligence, or any
other claim for alleged wrongful conduct or breach of
the duty of loyalty. Nevertheless, claims for workers'
compensation benefits or unemployment insurance, those
arising under the National Labor Relations Act, and any
other claims where mandatory arbitration is prohibited
by law, are not covered by this arbitration agreement,
and such claims may be presented by either the Company
or you to the appropriate court or government agency. BY
AGREEING TO THIS BINDING ARBITRATION PROVISION, BOTH YOU
AND THE COMPANY GIVE UP ALL RIGHTS TO TRIAL BY JURY.
This mutual arbitration agreement is to be construed as
broadly as is permissible under applicable law.
15. Successors and Assigns. This Agreement will be
assignable by the Company to any successor or to any
other company owned or controlled by the Company, and
will be binding upon any successor to the business of
the Company, whether direct or indirect, by purchase of
securities, merger, consolidation, purchase of all or
substantially all of the assets of the Company or
otherwise.
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Please sign, date and return the enclosed copy of this letter to me for our
files to acknowledge your agreement with the above.
Very truly yours,
______________________________________
Xxxxxxx Xxxxxxxx
President
Enclosure
ACKNOWLEDGED AND AGREED:
_________________________________
Xxxxxx X. XxXxxxxx, Xx.
Date Effective: ________, 2004
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ADDENDUM A
DEFINITION OF CHANGE IN CONTROL
"Change in Control" means the occurrence of one or more of the
following events: (i) any corporation, partnership, person, other entity, or
group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) (collectively, a "Person") acquires shares of capital stock of the
Company representing more than 50% of the total number of shares of capital
stock that may be voted for the election of directors of the Company, (ii) a
merger, consolidation, or other business combination of the Company with or into
another Person is consummated, or all or substantially all of the assets of the
Company are acquired by another Person, as a result of which the stockholders of
the Company immediately prior to the consummation of such transaction own,
immediately after consummation of such transaction equity securities possessing
less than 50% of the voting power of the surviving or acquiring Person (or any
Person in control of the surviving or acquiring Person, the equity securities of
which are issued or transferred in such transaction), or (iii) the stockholders
of the Company approve a plan of complete liquidation, dissolution or winding up
of the Company.
~Addendum A~
