Exhibit 10.15
CHANGE IN CONTROL SEVERANCE
AGREEMENT
This CHANGE IN CONTROL SEVERANCE
AGREEMENT (this “Agreement”) is made as of the 2nd day
of January, 2008, between Under Armour, Inc., a corporation
organized under the laws of the State of Maryland (together with
its affiliates, the “Company”), and Peter Mahrer (the
“Executive”).
WITNESSETH THAT:
WHEREAS, should Under Armour, Inc.
or shareholders of Under Armour, Inc. receive any proposal from a
third person regarding a possible Change in Control, the Board of
Directors of Under Armour, Inc. (the “Board”) believes
it is important that the Company should be able to rely upon the
Executive to continue in his position until after such Change in
Control and that Under Armour, Inc. be able to receive and rely
upon the Executive’s advice, if requested, as to the best
interest of Under Armour, Inc. and its shareholders in connection
with any such Change in Control, without concern that the Executive
might be distracted or his advice affected by the personal
uncertainties and risks created by such a Change in
Control.
NOW THEREFORE, in order to provide
an incentive to the Executive for the continued dedication of
Executive and the availability of his advice and counsel
notwithstanding the possibility of a Change in Control, and to
encourage Executive to remain in the employ of the Company, and for
other good and valuable consideration, the Company and Executive
hereby agree as follows:
1. Definitions .
(i) “Accrued
Obligations” shall mean the sum of the following:
(a) the full base salary earned by the Executive through the
Termination Date and unpaid as of the Termination Date, calculated
at the highest rate of base salary in effect at any time during the
twelve (12) months immediately preceding the Termination Date;
(b) the amount of any base
P RIVATE AND C ONFIDENTIAL
1
salary attributable to vacation earned by the
Executive but not taken before the Termination Date; (c) any
Bonus accrued to the Executive with respect to the calendar year
preceding the termination of employment and unpaid as of the
Termination Date; (d) a pro-rata Bonus for the year in which
the Change in Control occurs, equal to the Bonus times a fraction,
the numerator of which is the number of days during the calendar
year preceding the Termination Date and the denominator of which is
365; and (e) all other amounts earned by the Executive and
unpaid as of the Termination Date.
(ii) “Bonus” shall
mean the greater of: (a) the annual average of the
Executive’s bonus paid to the Executive with respect to the
two (2) calendar years prior to Executive’s termination
of employment with the Company or (b) the Executive’s
target bonus for the year of such termination of
employment.
(iii) “Cause” shall mean
the occurrence of any of the following: (a) the
Executive’s material misconduct or neglect in the performance
of his duties; (b) the Executive’s commission of any
felony; offense punishable by imprisonment in a state or federal
penitentiary; any offense, civil or criminal, involving material
dishonesty, fraud, moral turpitude or immoral conduct; or any crime
of sufficient import to potentially discredit or adversely affect
the Company’s ability to conduct its business in the normal
course; (c) the Executive’s use of illegal drugs or
abusive use of prescription drugs; (d) the Executive’s
material breach of the Company’s written Code of Conduct, as
in effect from time to time; (e) the Executive’s
commission of any act that results in severe harm to the Company
excluding any act taken by the Executive in good faith that he
reasonably believed was in the best interests of the Company; or
(f) the Executive’s material breach of this Agreement,
including, but not limited to, a material breach of the Employee
Confidentiality, Non-Competition, Side Activities, Intellectual
Property and Non-Solicitation Agreement attached hereto as
Attachment A.
(iv) “Change in Control”
shall mean the occurrence of any of the following:
|
|
a.
|
Any
‘person’ (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becomes
the ‘beneficial owner’ (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of Under Armour,
Inc. representing fifty percent (50%) or more of the total
voting power represented by Under Armour Inc.’s
then-outstanding voting securities, provided ,
|
P RIVATE AND C ONFIDENTIAL
2
|
|
however that a Change in Control
shall not be deemed to occur if an employee benefit plan (or a
trust forming a part thereof) maintained by Under Armour, Inc.,
and/or Kevin Plank and/or his immediate family members, directly or
indirectly, become the beneficial owner, of more than fifty percent
(50%) of the then-outstanding voting securities of Under
Armour, Inc. after such acquisition;
|
|
|
b.
|
A
change in the composition of the Board occurring within a two-year
period, as a result of which fewer than a majority of the directors
are Incumbent Directors. ‘Incumbent Directors’
shall mean directors who either (A) are directors of Under
Armour, Inc. as of the date hereof, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such
election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors to
Under Armour, Inc.);
|
|
|
c.
|
The
consummation of a merger or consolidation of Under Armour, Inc.
with any other corporation, other than a merger or consolidation
which would result in (a) the voting securities of Under
Armour, Inc. outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or being converted into
voting securities of the surviving entity) at least fifty percent
(50%) of the total voting power represented by the voting
securities of Under Armour, Inc. or such surviving entity
outstanding immediately after such merger or consolidation in
substantially the same proportion as prior to such merger or
consolidation; or (b) the directors of Under Armour, Inc.
immediately prior thereto continuing to represent at least fifty
percent (50%) of the directors of Under Armour, Inc. or such
surviving entity immediately after such merger or consolidation;
or
|
|
|
d.
|
The
consummation of the sale or disposition by Under Armour, Inc. of
all or substantially all of Under Armour Inc.’s
assets.
|
P RIVATE AND C ONFIDENTIAL
3
(v) “Contract Period”
shall mean the period staring on the date hereof and ending on the
second anniversary of the date hereof. The Company, in its
sole discretion, shall have the right to extend the Contract
Period.
(vi) “Disability” shall
mean a physical or mental incapacity of the Executive which
entitles the Executive to benefits at least as favorable as the
benefits provided under the long term disability plan applicable to
and maintained by the Company as in effect immediately prior to the
Change in Control.
(vii) “Good Reason”
shall mean the occurrence of any of the following events:
(a) a diminishment in the scope of the Executive’s
duties or responsibilities with the Company; (b) a reduction
in the Executive’s current base salary, bonus opportunity or
a material reduction in the aggregate benefits or perquisites;
(c) a requirement that the Executive relocate more than fifty
(50) miles from his primary place of business as of the date
of a Change in Control, or a significant increase in required
travel as part of the Executive’s duties and responsibilities
with the Company; (d) a failure by any successor to the
Company to assume this Agreement pursuant to Section 5(a)
hereof; or (e) a material breach by the Company of any of the
terms of this Agreement.
(vii) “Protection
Period” shall mean the twelve (12) month period
following a Change in Control.
(viii) “Termination
Date” shall mean the effective date as provided hereunder of
the termination of Executive’s Employment.
(ix) “Without Cause”
shall mean the termination of the Executive’s employment by
the Company other than for Cause or death.
2. Application of this
Agreement . This Agreement shall apply if and only if:
(a) the Executive’s employment terminates during the
Protection Period and (b) the Change in Control occurs during
the Contract Period. This Agreement shall not apply to any
termination of the Executive’s employment other than what is
described in the preceding sentence. Notwithstanding the foregoing,
if three (3) months prior to the date on which a Change in
Control occurs, the Executive’s employment with the Company
is terminated by the Company other than by reason of the
Executive’s death, Disability or circumstances that would
constitute Cause or the
P RIVATE AND C ONFIDENTIAL
4
terms and conditions of the Executive’s
employment are adversely changed in a manner which would constitute
grounds for a termination of employment by the Executive for Good
Reason, and it is reasonably demonstrated that such termination of
employment or adverse change (i) was at the request of a third
party who has taken steps reasonably calculated to effect the
Change in Control, or (ii) otherwise arose in connection with
or in anticipation of the Change in Control, then for all purposes
of this Agreement such termination of employment shall be deemed to
have occurred during the Protection Period and shall be considered
either termination of the Executive’s employment Without
Cause by the Company or termination of the Executive’s
employment by the Executive for Good Reason, as the case may
be.
3. Termination of Employment of
Executive . The Executive’s employment may be terminated
by following the procedures specified in this
Section 3.
(i) Cause . The Executive may
not be terminated for Cause unless and until a notice of intent to
terminate the Executive’s employment for Cause, specifying
the particulars of the conduct of the Executive forming the basis
for such termination, is given to the Executive by the Company and,
subsequently, a majority of the Board finds, after reasonable
notice to the Executive (but in no event less than fifteen
(15) days prior notice) and an opportunity for the Executive
and his counsel to be heard by the Board, that termination of the
Executive’s employment for Cause is
justified. Termination of the Executive’s employment for
Cause shall become effective after such finding has been made by
the Board and five (5) business days after the Board gives to
the Executive notice thereof, specifying in detail the particulars
of the conduct of the Executive found by the Board to justify
termination for Cause. It shall not constitute Good Reason to the
Executive to the extent the Executive is relieved of any duties and
responsibilities during the period the Board is considering whether
such termination for Cause is justified.
(ii) Termination Without
Cause . At all times, the Company shall have the right by
notice to the Executive of the Company’s intention to
terminate Executive’s employment Without
Cause. Termination of Executive’s employment by the
Company Without Cause shall become effective immediately upon the
receipt by the Executive of such notice.
(iii) Voluntary Termination by
the Executive . The Executive may terminate his employment with
the Company by giving a notice of voluntary termination to the
Company, and if such termination is for Good Reason, such notice
shall set forth in reasonable detail the acts and circumstances
claimed by the Executive to constitute Good
Reason. Termination of the
P RIVATE AND C ONFIDENTIAL
5
Executive’s employment by the Executive
without Good Reason shall be effective five (5) business days
after the Executive gives notice thereof to the Company. The
Company shall have twenty (20) days after receipt of such
notice from the Executive of claimed Good Reason to cure any Good
Reason. If the Company is unable to cure the Good Reason during
such cure period, termination of the Executive’s employment
by the Executive for Good Reason shall be effective five
(5) business days after the expiration of such cure
period.
(iv) Death . Termination
of the Executive’s employment for death shall be effective on
the date of the Executive’s death.
Pursuant to the disability law of
The Netherlands and the Executive’s employment agreement with
the Under Armour Europe, B.V., upon the Executive’s
Disability, the Company shall continue to employ the Executive for
two years at his then current salary.
4. Benefits Upon Termination of
Employment .
(i) Termination Without Cause or
by the Executive for Good Reason . Upon the termination of the
employment of Executive Without Cause by the Company or by the
Executive for Good Reason, the Company shall pay or provide to the
Executive:
|
|
(a)
|
a
lump sum payment equal to the sum of the following:
|
|
|
1.
|
the
Accrued Obligations; and
|
|
|
2.
|
an
amount equal to the sum of the annual base salary inclusive holiday
allowance of the Executive at the highest rate in effect during the
Protection Period and the Bonus.
|
The payment described in this
Section 4(i)(a) shall be made by the Company not later than
the earlier of the date required by applicable law or five
(5) days following the Termination Date. Executive shall
not be required to mitigate the amount of the payment provided for
in this Section 4(i)(a) by seeking other employment or
otherwise. The amount of the payment provided for in this
Section 4(i)(a) shall not be reduced by any compensation or
other amounts paid to or
P RIVATE AND C ONFIDENTIAL
6
earned by Executive as the result of employment
with another employer after the date on which his employment with
the Company terminates or otherwise.
(b) the continuance of the
Executive’s life, medical, dental, prescription drug and long
and short-term disability plans, programs or arrangements, whether
group or individual, of the Company in which the Executive was
entitled to participate at any time during the twelve
(12) month period prior to the Termination Date until the
earliest to occur of (1) one (1) year after the
Termination Date; (2) the Executive’s death (provided
that compensation and benefits payable to his beneficiaries shall
not terminate upon his death); or (3) with respect to any
particular plan, program or arrangement, the date the Executive is
afforded a comparable benefit at a comparable cost to the Executive
by a subsequent employer. In the event that the Executive’s
participation in any such plan, program or arrangement of the
Company is prohibited, the Company shall arrange to provide the
Executive with compensation and benefits substantially similar to
those which the Executive is entitled to receive under such plan,
program or arrangement for such period.
(ii) Death . Upon a
termination of the Executive’s employment on account of the
Executive’s death, the Company shall pay to his estate or
beneficiary, the Accrued Obligations within five (5) days of
the Termination Date and the Company shall provide to his estate or
beneficiary such benefits that the Company provides in the event of
an employee’s death.
(iii) Cause, Voluntary
Termination by the Executive . Upon the termination of the
Executive’s employment by the Company for Cause or by the
Executive without Good Reason, the Company shall pay to the
Executive the Accrued Obligations within five (5) days of the
Termination Date.
P RIVATE AND C ONFIDENTIAL
7
(iv) Effect of Stock Options and
Other Equity Awards . The terms and conditions of the
Executive’s award agreements or employment agreement (as
applicable to such Executive) shall govern the effect of
termination of the Executive’s employment on equity awards
granted by the Company and held by the Executive as of the
Termination Date.
(v) Conditions to Receiving
Benefits . The benefits described in Sections 4(i)(a)(2) and
4(i)(b) shall be subject to the Executive’s execution of the
Employee Confidentiality, Non-Competition, Side Activities,
Intellectual Property and Non-Solicitation Agreement attached
hereto as Attachment A and the benefits described in Sections
4(i)(a)(2) and 4(i)(b) will not be paid to the Executive unless and
until the Executive executes the release attached hereto as
Attachment B, and such release becomes effective and
irrevocable.
(vi) No Further Payments due to
Executive . Except as provided in this Section 4, the
Company shall have no obligation to make any other payment, in the
nature of severance or termination pay unless required by
applicable law(s).
(vii) Exception to Benefit
Entitlements . The Executive shall not receive the payments and
benefits under this Agreement if the Executive has executed an
individually negotiated employment contract, agreement or offer
letter with the Company relating to severance benefits that is in
effect on the Termination Date, unless the Executive waives any
such severance benefits under such contract, agreement or
letter.
(viii) Retirement Payments
. No amounts paid pursuant to this Agreement will constitute
compensation for any purpose under any retirement plan or other
employee benefit plan, program, arrangement or agreement of the
Company or any of its affiliates, unless such plan, program,
arrangement or agreement specifically so provides.
5. Successors; Binding
Agreement .
(a) This Agreement shall be binding
upon any successor (whether direct or indirect, by purchase,
merger, consolidation, liquidation or otherwise) to all or
substantially all of the business and/or assets of Under Armour,
Inc. Additionally, Under Armour, Inc. shall require any such
successor expressly to agree to assume and to assume of the
obligations of the Company
P RIVATE AND C ONFIDENTIAL
8
under this Agreement upon or prior to such
succession taking place. A copy of such assumption and agreement
shall be delivered to the Executive promptly after its execution by
the
