EMPLOYMENT AGREEMENT
This EMPLYOMENT AGREEMENT ("Agreement"), effective as of the 6th
day of October, 1997 (the "Effective Date"), is entered into by and between
Xxxxxx X. Xxxxxx ("Employee") and Oakley, Inc., a Washington corporation
("Company").
In consideration of the mutual agreements hereinafter set forth,
Employee and the Company have agreed and do hereby agree as follows:
1. EMPLOYMENT. The Company does hereby employ, engage and hire Employee as
Chief Financial Officer of the Company, and Employee does hereby accept and
agree to such hiring, engagement and employment. In such capacity, Employee
shall have such executive and managerial powers and duties with respect to
the Company as may be from time to time reasonably assigned to him by the
Board of Directors or the President, Chief Executive Officer or Chief
Operating Officer of the Company, including without limitation responsibility
for the accounting, finance and investor relations functions of the Company.
Except for sick leave, reasonable vacations and excused leaves of absence,
Employee shall, throughout his period of employment, devote substantially all
his working time, attention, knowledge and skills, diligently and to the best
of his ability, to the performance of such duties in furtherance of the
business of the Company.
1. TERM OF AGREEMENT. The term ("Term") of this Agreement shall commence on
the Effective Date and shall continue for a period of two (2) years;
PROVIDED, HOWEVER, that on each anniversary of the Effective Date the Term of
the Agreement shall automatically be extended for one additional year unless,
not less than three months prior to any such anniversary, either party shall
have given written notice to the other that it does not wish to extend the
Term of the Agreement.
1. COMPENSATION.
(a) BASE SALARY. The Company shall pay Employee an annual base salary no
less than at the rate of $195,000 per year, payable in equal biweekly
installments or at such other times as Employee and the Company shall agree.
Employee's base salary may be increased as determined by the Board of
Directors of the Company in its sole discretion.
(b) BONUS. Commencing January 1, 1998, Employee shall be eligible to
participate in the Company's Performance Bonus Plan. Employee's annual
target bonus under the Performance Bonus Plan shall not be less than $80,000.
Employee shall not be eligible to receive an annual performance bonus with
respect to the year ending December 31, 1997.
(a) STOCK OPTION GRANT. The Board of Directors of the Company has determined
to grant Employee a stock option (the "Option") to purchase 90,000 shares of
Oakley common stock, par value $.01 per share (the "Common Stock"). The
Option shall (i) be an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code to the extent permitted by law, and a
non-qualified stock option otherwise, (ii) be effective as of
[the date hereof] (the "Date of Grant"), (iii) have a term of 10 years from
the Date of Grant, (iv) have an exercise price equal to the closing price of
the Common Stock on the New York Stock Exchange on the Date of Grant, (v)
vest and become exercisable in equal 25% installments on each of the first
four anniversaries of the Date of Grant, and (vi) contain such other terms
and conditions as generally apply to option grants made to the Company's
senior executives.
(a) RELOCATION. As a condition of his employment with the Company, Employee
agrees to relocate his principal residence from San Diego County to Orange
County, California as soon as reasonably practicable. In accordance
therewith, Employee agrees (i) to purchase a home in Orange County (the
"Orange County Residence") as soon as reasonably practicable (but in no event
later than January 31, 1998), (ii) to move his principal residence to the
Orange County Residence as soon as reasonably practicable after the date of
such purchase, and (iii) thereafter to maintain his principal residence in
Orange County throughout the remainder of the Term. In consideration
thereof, and to assist Employee in acquiring the Orange County Residence,
Company agrees to provide Employee with the following relocation benefits:
i) DATE OF HIRE BONUS. On Employee's first day of work at the
Company, the Company shall pay Employee a one-time cash bonus in the
amount of $10,000.
i) RELOCATION BONUS. If Employee purchases the Orange County
Residence on or before January 31, 1998 and moves his principal
residence to the Orange County Residence as soon as reasonably
practicable thereafter, then, within five (5) business days following
the date Executive begins permanent residence in the Orange County
Residence, the Company shall pay Employee an additional one-time cash
bonus in the amount of $60,000.
i) ADVANCE. The Company agrees to provide Employee with an advance
(the "Advance") on his base salary in the amount of $50,000, such
amount to be paid to Employee within five (5) business days following
the date Employee commences employment with the Company. To offset
the Advance, Employee's base salary as set forth in Section 3(a)
shall be reduced on a pro rata basis during the two-year period
following the Effective Date, with the entire remaining amount of the
Advance to be repaid by Employee in full immediately in the event
Employee's employment with the Company is terminated under any
circumstances prior to the end of such two-year period. Employee
agrees that the Company shall have the right to offset the amount of
any remaining portion of the Advance against any severance or other
payments or obligations of the Company upon or following such
termination of employment.
i) HOUSING ALLOWANCE. During the Term, until such time as Employee
no longer reasonably requires a second residence in San Diego County,
California, the Company shall pay Employee a housing allowance in the
amount of $1,500 per month. It is expressly understood that
Employee's requirement of a San Diego residence relates solely to his
desire to permit his existing children to complete their primary
education in San Diego County, and that the housing allowance
provided for herein shall terminate at such time as none of such
children is attending junior or senior high school in San Diego
County. Employee agrees to provide the Company timely notice of any
change in circumstances relating to his requirement of a San Diego
residence.
(a) FRINGE BENEFITS. Employee shall be entitled to participate in any fringe
and other benefit programs adopted from time to time by the Company for the
benefit of its senior executives.
1. TERMINATION OF EMPLOYMENT.
(a) DEATH. If Employee dies while employed by the Company, his employment
shall immediately terminate and the Company's obligation to pay Employee's
base salary shall cease as of the date of death. Within ten (10) days
following such death, the Company shall pay to Employee's estate an amount
equal to Employee's then current target bonus under the Performance Bonus
Plan, prorated through the date of death. Employee's beneficiaries or his
estate shall receive benefits in accordance with any Company plans then in
effect.
(a) DISABILITY. If as a result of Employee's incapacity due to physical or
mental illness ("Disability"), Employee shall have been absent from the
full-time performance of his duties with the Company for six consecutive
months, the Company may, upon 30 days' notice to Employee, terminate
Employee's employment. Within ten (10) days following such termination for
Disability, the Company shall pay Employee an amount equal to one year's base
salary plus an amount equal to Employee's target bonus under the Performance
Bonus Plan, prorated through the date of such termination. Such payment
shall not affect Employee's rights under any Company disability plan in which
Employee may then be a participant.
(a) TERMINATION FOR CAUSE. The Company shall have the right to terminate
Employee's employment for Cause by giving Employee written notice of the
effective date of such termination. For purposes of this Agreement, "Cause"
shall mean (i) fraud, misappropriation, embezzlement or other act of material
misconduct against the Company, or (ii) substantial or willful failure to
perform specific and lawful directives of the Board of Directors or the
President, Chief Executive Officer or Chief Operating Officer of the Company
consistent with Employee's employment or (iii) other material breach of this
Agreement by Employee. If the Company terminates Employee's employment for
Cause, the Company shall have no further obligation under this Agreement from
and after the date of termination.
(a) VOLUNTARY TERMINATION BY EMPLOYEE. In the event that Employee's
employment with the Company is voluntarily terminated by Employee other than
for Good Reason, the Company shall have no further obligation under this
Agreement from and after the date of termination. In addition, if such
termination occurs prior to the one year anniversary of the Effective Date,
Employee shall be required to repay to the Company immediately a pro rata
portion of the hiring and relocation bonuses provided for in Sections 3(d)(i)
and (ii) above, such proration to be calculated by multiplying the amount of
such bonuses by a fraction, the numerator of which is the number of days
between the date of such termination and October 6, 1998, and the denominator
of which is 365. For purposes of this Agreement, "Good Reason" shall mean
any material breach by the Company of any provision of this Agreement.
(a) OTHER TERMINATION. If Employee's employment is terminated (i) by the
Company for any reason other than Employee's death or disability or for Cause
or (ii) by Employee for Good Reason, the Company shall pay Employee (x) his
base salary for a period equal to the lesser of twelve months or the
remaining Term of this Agreement (the "Severance Period"), in either case as
if Employee had remained in the Company's employ at an annual rate of
compensation equal to his base salary as of the date of termination, and (y)
an amount equal to the product of (A) Employee's annual target bonus under
the Performance Bonus Plan as in effect at the time of such termination and
(B) a fraction, the numerator of which is the number of full months in the
Severance Period, and the denominator of which is 12.
1. ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS.
(a) DEFINITION OF "INVENTIONS". As used herein, the term "Inventions" shall
mean all inventions, discoveries, improvements, trade secrets, formulas,
techniques, data, programs, systems, specifications, documentation,
algorithms, flow charts, logic diagrams, source codes, processes, and other
information, including works-in-progress, whether or not subject to patent,
trade-xxxx, copyright, trade secret, or mask work protection, and whether or
not reduced to practice, which are made, created, authored, conceived, or
reduced to practice by Employee, either alone or jointly with others, during
the period of employment with the Company which (A) relate to the actual or
anticipated business, activities, research, or investigations of the Company
or (B) result from or is suggested by work performed by Employee for the
Company (whether or not made or conceived during normal working hours or on
the premises of the Company) or (C) which result, to any extent, from use of
the Company's premises or property.
(a) WORK FOR HIRE. Employee expressly acknowledges that all copyrightable
aspects of the Inventions are to be considered "works made for hire" within
the meaning of the Copyright Act of 1976, as amended (the "Act"), and that
the Company is to be the "author" within the meaning of such Act for all
purposes. All such copyrightable works, as well as all copies of such works
in whatever medium fixed or embodied, shall be owned exclusively by the
Company as of its creation, and Employee hereby expressly disclaims any and
all interest in any of such copyrightable works and waives any right of DROIT
MORALE or similar rights.
(a) ASSIGNMENT. Employee acknowledges and agrees that all Inventions
constitute trade secrets of the Company and shall be the sole property of the
Company or any other entity designated by the Company. In the event that
title to any or all of the Inventions, or any part or element thereof, may
not, by operation of law, vest in the Company, or such Inventions may be
found as a matter of law not to be "works made for hire" within the meaning
of the Act, Employee hereby conveys and irrevocably assigns to the Company,
without further consideration, all his right, title and interest, throughout
the universe and in perpetuity, in all Inventions and all copies of them, in
whatever medium fixed or embodied, and in all written records, graphics,
diagrams, notes, or reports relating thereto in Employee's possession or
under his control, including, with respect to any of the foregoing, all
rights of copyright, patent, trademark, trade secret, mask work, and any and
all other proprietary rights therein, the right to modify and create
derivative works, the right to invoke the benefit of any priority under any
international convention, and all rights to register and renew same.
(a) PROPRIETARY NOTICES; NO FILINGS; WAIVER OF MORAL RIGHTS. Employee
acknowledges that all Inventions shall, at the sole option of the Company,
bear the Company's patent, copyright, trademark, trade secret, and mask work
notices.
Employee agrees not to file any patent, copyright, or trademark
applications relating to any Invention, except with prior written consent of
an authorized representative of the Company (other than Employee).
Employee hereby expressly disclaims any and all interest in any
Inventions and waives any right of DROIT MORALE or similar rights, such as
rights of integrity or the right to be attributed as the creator of the
Invention.
(a) FURTHER ASSURANCES. Employee agrees to assist the Company, or any party
designated by the Company, promptly on the Company's request, whether before
or after the termination of employment, however such termination may occur,
in perfecting, registering, maintaining, and enforcing, in any jurisdiction,
the Company's rights in the Inventions by performing all acts and executing
all documents and instruments deemed necessary or convenient by the Company,
including, by way of illustration and not limitation:
i) Executing assignments, applications, and other documents and
instruments in connection with (A) obtaining patents, copyrights,
trademarks, mask works, or other proprietary protections for the
Inventions and (B) confirming the assignment to the Company of all
right, title, and interest in the Inventions or otherwise
establishing the Company's exclusive ownership rights therein.
i) Cooperating in the prosecution of patent, copyright, trademark and
mask work applications, as well as in the enforcement of the
Company's rights in the Inventions, including, but not limited to,
testifying in court or before any patent, copyright, trademark or
mask work registry office or any other administrative body.
Employee shall be reimbursed for all out-of-pocket costs incurred in
connection with the foregoing, if such assistance is requested by the Company
after the termination of Employee's employment. In addition, to the extent
that, after the termination of employment for whatever reason, Employee's
technical expertise shall be required in connection with the fulfillment of
the aforementioned obligations, the Company shall compensate Employee at a
reasonable rate for the time actually spent by Employee at the Company's
request rendering such assistance.
(a) POWER OF ATTORNEY. Employee hereby irrevocably appoints the Company to
be his Attorney-In-Fact to execute any document and to take any action in his
name and on his behalf and to generally use his name for the purpose of
giving to the Company the full benefit of the assignment provisions set forth
above.
(a) DISCLOSURE OF INVENTIONS. Employee shall make full and prompt disclosure
to the Company of all Inventions subject to assignment to the Company, and
all information relating thereto in Employee's possession or under his
control as to possible applications and use thereof.
1. NO VIOLATION OF THIRD-PARTY RIGHTS. Employee represents, warrants, and
covenants that he:
(a) will not, in the course of employment, infringe upon or violate any
proprietary rights of any third party (including, without limitation, any
third party confidential relationships, patents, copyrights, mask works,
trade secrets, or other proprietary rights);
(a) is not a party to any conflicting agreements with third parties which
will prevent him from fulfilling the terms of employment and the obligations
of this Agreement;
(a) does not have in his possession any confidential or proprietary
information or documents belonging to others and will not disclose to the
Company, use, or induce the Company to use, any confidential or proprietary
information or documents of others; and
(a) agrees to respect any and all valid obligations which he may now have to
prior employers or to others relating to confidential information,
inventions, or discoveries which are the property of those prior employers or
others, as the case may be.
Employee has supplied or shall promptly supply to the Company a copy of
each written agreement to which Employee is subject (other than any agreement
to which the Company is a party) which includes any obligation of
confidentiality, assignment of Inventions, or non-competition.
Employee agrees to indemnify and save harmless the Company from any loss,
claim, damage, cost or expense of any kind (including without limitation,
reasonable attorney fees) to which the Company may be subjected by virtue of
a breach by Employee of the foregoing representations, warranties, and
covenants.
1. CONFIDENTIAL INFORMATION AND NON-COMPETITION.
(a) CONFIDENTIALITY. Employee acknowledges that in his employment hereunder
he will occupy a position of trust and confidence. Employee shall not, except
as may be required in the normal course of business to perform his duties
hereunder or as required by applicable law, without limitation in time or
until such information shall have become public other than by Employee's
unauthorized disclosure, disclose to others or use, whether directly or
indirectly, any Confidential Information regarding the Company, its
subsidiaries and affiliates. "Confidential Information" shall mean
information about the Company, its subsidiaries and affiliates, and their
respective clients and customers that is not disclosed by the Company for
financial reporting purposes and that was learned by Employee in the course
of his employment by the Company, its subsidiaries and affiliates, including
(without limitation) any proprietary knowledge, trade secrets, data,
formulae, information and client and customer lists and all papers, resumes,
and records (including computer records) of the documents containing such
Confi-
dential Information. Employee acknowledges that such Confidential
Information is specialized, unique in nature and of great value to the
Company, its subsidiaries and affiliates, and that such information gives the
Company a competitive advantage. The Employee agrees to (i) deliver or
return to the Company, at the Company's request at any time or upon
termination or expiration of his employment or as soon thereafter as
possible, (A) all documents, computer tapes and disks, records, lists, data,
drawings, prints, notes and written information (and all copies thereof)
furnished by the Company, its subsidiaries and affiliates, or prepared by the
Employee during the term of his employment by the Company, its subsidiaries
and affiliates, and (B) all notebooks and other data relating to research or
experiments or other work conducted by Employee in the scope of employment or
any Inventions made, created, authored, conceived, or reduced to practice by
Employee, either alone or jointly with others, and (ii) make full disclosure
relating to any Inventions.
If Employee would like to keep certain property, such as material
relating to professional societies or other non-confidential material, upon
the termination of employment with the Company, he agrees to discuss such
issues with the Company. Where such a request does not put Confidential
Information of the Company at risk, the Company will customarily grant the
request.
(a) NON-COMPETITION. During the Term of this Agreement and for a period of
two (2) years thereafter, Employee shall not, directly or indirectly, without
the prior written consent of the Company, provide consultative services or
otherwise provide services to (whether as an employee or a consultant, with
or without pay), own, manage, operate, join, control, participate in, or be
connected with (as a stockholder, partner, or otherwise), any business,
individual, partner, firm, corporation, or other entity that is then a
competitor of the Company, its subsidiaries and affiliates, including without
limitation any entity engaged in the design, manufacture and/or distribution
of eyewear (each such competitor a "Competitor of the Company"); PROVIDED,
HOWEVER, that the "beneficial ownership" by Employee, either individually or
as a member of a "group," as such terms are used in Rule 13d of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), of not more than five percent (5%) of the voting stock
of any publicly held corporation shall not alone constitute a violation of
this Agreement; provided, however, that if Employee's employment is
terminated (i) by the Company without Cause, (ii) by Employee for Good Reason
or (iii) by reason of the expiration of the Term of this Agreement, the
non-competition agreement provided for in this subparagraph (b) shall
terminate as of the date of such termination of employment. Employee and the
Company acknowledge and agree that the business of the Company is global in
nature, and that the terms of the non-competition agreement set forth herein
shall apply on a worldwide basis.
(a) NON-SOLICITATION OF CUSTOMERS AND SUPPLIERS. During the Term of this
Agreement and for a period of two (2) years thereafter, Employee shall not,
directly or indirectly, influence or attempt to influence customers or
suppliers of the Company or any of its subsidiaries or affiliates, to divert
their business to any Competitor of the Company; PROVIDED, HOWEVER, that if
Employee's employment is terminated (i) by the Company without Cause, (ii) by
Employee for Good Reason or (iii) by reason of the expiration of the Term of
this Agreement, the non-solicitation agreement provided for in this
subparagraph (c) shall terminate as of the date of such termination of
employment.
(a) NON-SOLICITATION OF EMPLOYEES. Employee recognizes that he possesses and
will possess confidential information about other employees of the Company,
its subsidiaries and affiliates, relating to their education, experience,
skills, abilities, compensation and benefits, and inter-personal
relationships with customers of the Company, its subsidiaries and affiliates.
Employee recognizes that the information he possesses and will possess about
these other employees is not generally known, is of substantial value to the
Company, its subsidiaries and affiliates in developing their business and in
securing and retaining customers, and has been and will be acquired by him
because of his business position with the Company, its subsidiaries and
affiliates. Employee agrees that, during the Term of this Agreement and for
a period of two (2) years thereafter, he will not, directly or indirectly,
solicit or recruit any employee of the Company, its subsidiaries and
affiliates for the purpose of being employed by him or by any Competitor of
the Company on whose behalf he is acting as an agent, representative or
employee and that he will not convey any such confidential information or
trade secrets about other employees of the Company, its subsidiaries and
affiliates to any other person.
(a) INJUNCTIVE RELIEF. It is expressly agreed that the Company will or would
suffer irreparable injury if Employee were to compete with the Company or any
subsidiary or affiliate of the Company in violation of any of the provisions
of this Section 7 and that the Company would by reason of such competition be
entitled to injunctive relief in a court of appropriate jurisdiction, and
Employee further consents and stipulates to the entry of such injunctive
relief in such a court prohibiting Employee from so competing with the
Company or any subsidiary or affiliate of the Company in violation of this
Agreement.
(a) SURVIVAL OF PROVISIONS. The obligations contained in this Section 7
shall survive the termination or expiration of Employee's employment with the
Company and shall be fully enforceable thereafter. If it is determined by a
court of competent jurisdiction in any state that any restriction in this
Section 7 is excessive in duration or scope or is unreasonable or
unenforceable under the laws of that state, it is the intention of the
parties that such restriction may be modified or amended by the court to
render it enforceable to the maximum extent permitted by the law of that
state.
1. NOTICES. All notices and other communications under this Agreement shall
be in writing and shall be given by fax or first class mail, certified or
registered with return receipt requested, and shall be deemed to have been
duly given three (3) days after mailing or twenty-four (24) hours after
transmission of a fax to the respective persons named below:
If to Company: Oakley, Inc.
One Icon
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
If to Employee: Xxxxxx X. Xxxxxx
0000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Either party may change such party's address for notices by notice duly given
pursuant hereto.
1. INDEMNIFICATION. The Company shall indemnify and hold Employee harmless
to the maximum extent permitted under applicable law.
1. NO MITIGATION; NO OFFSET. Except as provided in Section 3(d)(iii) hereof,
Employee shall not be required in any way to mitigate the amount
of any payment provided for in this Agreement, and such payments shall not be
subject to offset against compensation earned as the result of employment
with another employer.
1. ATTORNEYS' FEES. In the event judicial determination is necessary of any
dispute arising as to the parties' rights and obligations hereunder, each
party shall have the right, in addition to any other available relief, to
attorneys' fees based on a determination by the court of the extent to which
each party has prevailed as to the material issues raised in determination of
the dispute.
1. ASSIGNMENT; SUCCESSORS. This Agreement is personal in nature and neither
of the parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder; PROVIDED,
that in the event of the merger, consolidation, transfer or sale of all or
substantially all of the assets of the Company with or to any other
individual or entity, this Agreement shall be binding upon and inure to the
benefit of such successor, and such successor shall discharge and perform all
the promises, covenants, duties and obligations of the Company hereunder.
1. GOVERNING LAW. This Agreement and the legal relations thus created
between the parties hereto shall be governed by and construed under and in
accordance with the laws of the State of California.
1. WAIVER; MODIFICATION. Failure to insist upon strict compliance with any
of the terms, covenants, or conditions hereof shall not be deemed a waiver of
such term, covenant, or condition, nor shall any waiver or relinquishment of,
or failure to insist upon strict compliance with, any right or power
hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times. This Agreement shall not be
modified in any respect except by a writing executed by each party hereto.
1. SEVERABILITY. In the event that a court of competent jurisdiction
determines that any portion of this Agreement is in violation of any statute
or public policy, only the portions of this Agreement that violate such
statute or public policy shall be stricken. All portions of this Agreement
that do not violate any statute or public policy shall continue in full force
and effect. Further, any court order striking any portion of this Agreement
shall modify the stricken terms as narrowly as possible to give as much
effect as possible to the intentions of the parties under this Agreement.
1. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together
will constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer, and Employee has hereunto signed this
Agreement, as of the date referred to above.
OAKLEY, INC.
---------------------------------
By: R. Link Xxxxxxx
Its: Chief Executive Officer
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XXXXXX X. XXXXXX
