Exhibit 10.1
EMPLOYMENT
AGREEMENT
This E MPLOYMENT A GREEMENT (the “ Agreement ” )
is dated as of February 12, 2007 (the “ Effective
Date ” ), by and between K2 Inc. (the “
Company ” ) and Richard J. Heckmann (the
“ Executive ” ). The Company and the
Executive are hereinafter collectively referred to as the
“ Parties, ” and individually referred to
as a “ Party . ”
R ECITALS
A. Executive has been Chief Executive Officer of
the Company since October 2002 and Chairman of the Board of
Directors of the Company since April 2000.
B. The Company and Executive entered into an
employment agreement on February 14, 2005 (the “
Former Contract ”).
C. The Company and Executive desire to enter into a
successor agreement for the continuing services of the Executive as
Executive Chairman and Chairman of the Board of Directors of the
Company.
D. The Executive desires to continue in the employ
of the Company and is willing to accept such continued employment
on the terms and conditions set forth in this Agreement.
A GREEMENT
In consideration of the foregoing
Recitals and the mutual promises and covenants herein contained,
and for other good and valuable consideration, the Parties,
intending to be legally bound, agree as follows:
1. A MENDMENT OF F ORMER C ONTRACT .
1.1 Impact of this
Agreement. The Parties
agree that this Agreement shall supersede the Former Contract and
no payments nor rights thereto shall be due under the Former
Contract or the Company’s Severance Benefit Plan as a result
of their entering into this Agreement.
2. E MPLOYMENT .
2.1 Title . The Executive shall serve as the
Company’s Executive Chairman and shall serve in such other
capacities as the Company may from time to time
prescribe.
2.2 Duties
. The Executive shall perform all
services and actions necessary or advisable to conduct the business
of the Company and which are normally associated with the positions
the Executive holds in a corporation of the size and nature of the
Company, including without limitation, providing support to the
Chief Executive Officer to develop current growth
1.
initiatives and identify new opportunities,
directing and executing capital market/financing initiatives,
directing and executing merger and acquisition initiatives and
directing and executing investor relations.
3. L OYAL AND C ONSCIENTIOUS P ERFORMANCE ; N ONCOMPETITION .
3.1 Loyalty
. During the Executive’s
employment with the Company, the Executive shall devote the
Executive’s full business energies, interest, abilities and
productive time to the proper and efficient performance of the
Executive’s duties under this Agreement; provided,
however, that Executive may devote a reasonable amount of time
and energies for personal investment and civic and charitable
duties.
3.2 Agreement Not to Participate
in Company’s Competitors . Except with the prior written consent of the
Company’s Board of Directors (the “ Board
”), the Executive shall not, during the Executive’s
employment with the Company and any Severance Period (as defined
below), assume or participate in, directly or indirectly, any
position, investment or interest known by the Executive to be
adverse or antagonistic to the Company, its business or prospects,
financial or otherwise, or in any company, person or entity that
is, directly or indirectly, in competition with the business of the
Company or any of its subsidiaries. Ownership by the Executive, as
a passive investment, of less than five percent (5%) of the
outstanding shares of capital stock of any corporation with one or
more classes of its capital stock listed on a national securities
exchange or publicly traded on the Nasdaq Stock Market or in the
over-the-counter market shall not constitute a breach of this
paragraph.
4. C OMPENSATION OF THE E XECUTIVE .
4.1 Base Salary
. The Company shall pay the
Executive a base salary of Seven Hundred Fifty Five Thousand
Dollars ($755,000) per year, payable in regular periodic payments
in accordance with Company policy. Such base salary shall be
prorated for any partial year of employment on the basis of a
365-day fiscal year.
4.2 Bonus . In addition to the Executive’s base
salary, the Executive shall be eligible to receive an annual bonus
(the “Bonus” ). The Bonus (if any) will
be awarded based on the achievement of Company and personal
milestones to be established by the Board or Compensation Committee
thereof and communicated to the Executive. The good faith
determinations of the Board (or its Compensation Committee) with
respect to the payment of the Bonus shall be final and
binding.
4.3 Changes to
Compensation . The
Executive’s compensation shall be reviewed from time to time
by the Board or the Compensation Committee thereof as it deems
appropriate and may be changed upon mutual written agreement
between the Executive and the Board or the Compensation Committee
thereof.
4.4 Employment Taxes
. All of the Executive’s
compensation (in any form) shall be subject to all required
withholding taxes, employment taxes and other deductions required
by law.
2.
4.5 Benefits
. The Executive shall, in accordance
with Company policy and the terms of the applicable plan documents,
be eligible to participate in benefits under any benefit plan or
arrangement which may be in effect from time to time and made
available to the Company’s employees. In addition, the
Executive shall be eligible for paid vacation, in accordance with
Company policy as in effect from time to time.
5. T ERMINATION .
5.1 Termination By the
Company . The
Executive’s employment with the Company may be terminated
under the following conditions:
5.1.1 Termination for Death or
Disability . The
Executive’s employment with the Company shall terminate
effective upon the date of the Executive’s death or Complete
Disability (as defined below).
5.1.2 Termination by the Company
For Cause . The Company
may terminate the Executive’s employment under this Agreement
for Cause (as defined below). A notice of termination given
pursuant to this Section 4.1.2 shall effect termination as of
the date specified, or, in the event no such date is specified, on
the date upon which the notice is given.
5.1.3 Termination by the Company
For Any Reason Other Than Cause . The Executive’s employment by the
Company shall be “at will.” The Company may terminate
the Executive’s employment under this Agreement at any time,
for any or no reason and with or without cause or advance notice.
This is the full and complete agreement between the Executive and
the Company on this term. Although the Executive’s duties,
title, compensation and benefits may change, the “at
will” nature of the Executive’s employment relationship
with the Company may only be modified in an express written
agreement signed by the Executive and the Board.
5.2 Termination by Mutual
Agreement of the Parties . The Executive’s employment pursuant to
this Agreement may be terminated at any time upon the mutual
written agreement of the Parties. Any such termination of
employment shall have the consequences specified in such
writing.
5.3 Termination by the
Executive . The
Executive’s employment by the Company shall be “at
will.” The Executive shall have the right to resign or
terminate the Executive’s employment at any time, with or
without cause, notice or Good Reason.
5.4 Compensation Upon
Termination .
5.4.1 Termination Not in
Connection With a Change in Control . If the Executive’s employment is
terminated (either by the Company, by the Executive, or due to the
Executive’s death or Complete Disability), then the Company
shall pay the Executive’s base salary and any accrued and
unused vacation benefits earned through the date of termination,
and the Company shall thereafter have no further obligations to the
Executive under this Agreement, except as expressly provided
herein.
3.
5.4.2 Termination in Connection
With a Change in Control . If within four (4) months before or
twelve (12) months following a Change in Control (as defined
below), the Company terminates the Executive’s employment
without Cause or the Executive resigns for Good Reason, then the
Company shall pay the Executive’s base salary and any accrued
and unused vacation benefits earned through the date of
termination. In addition, the Company shall provide the Executive
with the following severance benefits:
5.4.2.1 The Company shall continue to pay the
Executive’s base salary until the end of the period following
the termination of the Executive’s employment equal to 2.99
years (the “ Severance Period ”). Such
severance payments shall be subject to standard deductions and
withholdings and paid in accordance with the Company’s
regular payroll policies and practices. For purposes of calculating
the amount to be paid pursuant this Section 4.4.2.1, the
Company shall use the greater of (x) the Executive’s
base compensation in effect on the date of termination and
(y) the Executive’s base compensation immediately prior
to the Change in Control.
5.4.2.2 Each month during the Severance
Period, the Company shall pay the Executive an amount equal to
one-twelfth (1/12 th
) of the
greatest of (i) the average of the three (3) annual
bonuses paid to the Executive by the Company prior to the date of
termination, (ii) the last annual bonus paid to the Executive
by the Company prior to the date of termination, (iii) the
average of the three (3) annual bonuses paid to the Executive
by the Company prior to the date of the Change in Control, and
(iv) the last annual bonus paid to the Executive by the
Company prior to the date of the Change in Control. Such payment
shall be subject to standard deductions and withholdings and paid
in equal monthly installments over the Severance Period in
accordance with the Company’s regular payroll policies and
practices.
5.4.2.3 All Company equity awards held by Executive
shall vest immediately and, during the Severance Period, Executive
shall have continued exercisability of all Company stock options
held by the Executive (if any).
5.4.2.4 Assuming the Executive timely and accurately
elects to continue his health insurance benefits under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“
COBRA ”), the Company shall reimburse him for
the COBRA expenses he pays on behalf of himself and his family
until the earliest of (i) the end of the Severance Period,
(ii) the expiration of the Executive’s continuation
coverage under COBRA and any applicable state COBRA-like statute
that provides mandated continuation coverage or (iii) the date
the Executive becomes eligible for health insurance benefits of a
subsequent employer.
5.4.2.5 To the extent required by Section 409A of
the Internal Revenue Code of 1986, as amended (the “
Code ”), any payments otherwise due under this
section within the six- (6-) month period following
Executive’s termination shall be delayed to the minimum
extent necessary ( e.g. , payments to which Executive would
otherwise be entitled during the first six months following
separation from service shall accumulate and be paid at the
expiration of such period, unless a permitted distribution event
occurs during such period) so that such benefits are not subject to
the provisions of Section 409A(a)(1) of the Code. The Board
may attach conditions to or adjust the amounts paid pursuant to
Section 4 to preserve, as closely
4.
as possible, the economic consequences that
would have applied in the absence of this Section 5.4.2.5;
provided, however , that no such condition or adjustment
shall result in the payments being subject to
Section 409A(a)(1) of the Code.
5.4.3 Release
. Notwithstanding the foregoing, the
Executive shall not receive any of the severance payments or
benefits set forth under Section 4.4.2 unless upon
Executive’s termination of employment the Executive furnishes
the Company with an effective waiver and release of claims (the
“Release” ) in a form acceptable to the
Parties and substantially as attached hereto as
Exhibit A . If a majority of the Board determines in
good fait
