EXHIBIT 10.2
[QUICKSILVER LOGO]
August 1, 2004
PERSONAL AND CONFIDENTIAL
Xxxxxxx Xxxxxxxx
Xxxxxxxxxx, Inc.
00000 Xxxxxx Xxxxxx
Huntington Beach, CA 92649
Re: Employment at Quiksilver
Dear Xxxxxxx:
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 President, currently reporting to the 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 $45,833 per month
($550,000 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 $45,833 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 $1,000,000.
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 $2,500
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 eighteen (18) 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 one and
one-half (1-1/2) 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 an eighteen
(18) month 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
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Company will instead (i) continue to pay your base salary (but
not any employment benefits) on its regular payroll dates for
a period of thirty (30) 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 and one-half (2-1/2) 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 thirty (30) month 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 France or 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
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for such controversy, claim or dispute. In any such
arbitration, the parties may 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,
__________________________________
Xxxxxx X. XxXxxxxx, Xx.
Chief Executive Officer
Enclosure
ACKNOWLEDGED AND AGREED:
_______________________________
Xxxxxxx Xxxxxxxx
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~
