Exhibit 10.15
EMPLOYMENT AGREEMENT entered on the 27th day of September, 1999.
AMONG: HF HOLDINGS, INC., a Delaware corporation.
("COMPANY")
ICON HEALTH & FITNESS, INC., a Delaware
corporation.
("SUBSIDIARY")
GARY E. STEVENSON, acting in his personal
capacity, of the City of PROVIDENCE, State
of UTAH.
("EMPLOYEE")
THE PARTIES AGREE AS FOLLOWS:
1. PREAMBLE
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1.1. The COMPANY and the SUBSIDIARY have made an exchange offer for all
outstanding 13% Senior Subordinated Notes due 2002 of the SUBSIDIARY,
15% Senior Secured Discount Notes due 2004 of IHF Holdings, Inc. and
14% Senior Discount Notes due 2006 of ICON Fitness Corporation,
pursuant to an Exchange Offer and Consent Solicitation, dated July
30, 1999, as supplemented (the "Exchange Offer").
1.2. It is recorded that the COMPANY, in connection with the Restructuring
(as defined in the Equity Letter Agreement (the "Equity Letter"),
dated July 8, 1999, attached, as amended, to the Exchange Offer as
Annex H) desires to conclude an agreement for the employment of the
EMPLOYEE as President and Chief Operating Officer of the COMPANY,
according to the terms and conditions to be set forth in this
Agreement.
1.3. This Agreement is to record the terms and conditions which govern
the mutual relations of the parties hereto with respect to its
subject matter.
1.4. In this Agreement, "BUSINESS" means the manufacture, sale and
distribution of SPORTING GOODS as carried on by the COMPANY, the
SUBSIDIARY, and their respective various divisions and subsidiaries,
from time to time. "SPORTING GOODS" means fitness equipment and
accessories, which presently involve treadmills, home gyms, aerobic
exercises, trampolines, weights and benches and exercise accessories,
but the content of such product lines may vary from time to time.
1.5. In this Agreement, AFFILIATES means any entity in which the COMPANY
or the SUBSIDIARY holds more than a 20% voting interest direct or
indirect.
2. EMPLOYMENT AND ONE-TIME BONUS
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2.1. This Agreement shall come into effect on the date hereof ("EFFECTIVE
DATE").
2.2. The COMPANY hereby employs the EMPLOYEE and the EMPLOYEE agrees to
serve the COMPANY in the positions of President and Chief Operating
Officer for a term of three (3) years from the EFFECTIVE DATE,
subject to earlier termination as hereinafter provided (the "TERM").
2.3. Although this agreement is concluded between the COMPANY and the
EMPLOYEE, it is agreed that the duties and obligations of the
EMPLOYEE hereunder extend to the SUBSIDIARY and to all of the
COMPANY's other subsidiaries, present and future, although the
EMPLOYEE will not necessarily be an employee of such entities. The
EMPLOYEE agrees to serve, if requested by the COMPANY, as an officer
or director of the SUBSIDIARY and any other subsidiaries, in each
case without additional consideration.
2.4. Upon the execution and delivery hereof, the COMPANY shall pay the
EMPLOYEE a one-time bonus of FIVE HUNDRED THOUSAND DOLLARS
($500,000).
3. BASE SALARY, EXPENSES AND BENEFITS
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3.1. In consideration for the faithful performance of services by the
EMPLOYEE to be rendered to the COMPANY as herein provided, the
COMPANY shall pay to the EMPLOYEE during the TERM an annual base
salary of FOUR HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ($475,000)
payable in semi-monthly installments or in accordance with the
general policy of the COMPANY which may change from time to time but
in no event less frequently than monthly.
3.2. The annual base salary mentioned in Section 3.1 above shall be
reviewed by the Board of Directors of the COMPANY and may be adjusted
upwards in the Board's discretion, annually for each year of the
TERM, taking into account, among other things:
a) the performance by the EMPLOYEE of his duties and functions
pursuant to this Agreement,
b) the general economic situation,
c) the development and performance of the BUSINESS, and
d) other matters deemed relevant by the Board of Directors such as
an increase in shareholder equity and the rate on return on
investment.
3.3. The COMPANY shall reimburse the EMPLOYEE for all reasonable expenses
which are incurred by the EMPLOYEE in the performance of his duties
hereunder and (i) subject to the COMPANY's annual budget or (ii) as
authorized by the Board of Directors of the COMPANY or (iii) in
accordance with the policies and procedures established from time to
time by the Board of Directors of the COMPANY or a committee
delegated for such purpose.
3.4. During the Term, the COMPANY shall provide the EMPLOYEE with the use
of a new automobile of his choice, acting reasonably (and
consistently with his past practice) every 3 years for the purposes
of his employment commensurate with the position of the EMPLOYEE and
having regard to COMPANY policy in force from time to time.
The COMPANY shall assume all costs and expenses of said automobile
and its operation, including, without limitation, insurance,
maintenance, gas and use of such automobile. Upon the expiry of the
TERM, the EMPLOYEE shall deliver such automobile to the COMPANY.
3.5. During the Term, the EMPLOYEE shall be entitled to participate in the
COMPANY's life, welfare, and health insurance plans for senior
executives on the same terms as those of other senior executives.
3.6. During the Term, the EMPLOYEE shall be entitled to participate in
fringe benefit programs which are not less favorable than those
extended by the COMPANY to its senior executives, including without
limitation an as yet to be defined deferred compensation plan to be
established by the Board of Directors, but excluding for this purpose
any such plan or program adopted exclusively for the benefit of
junior management.
4. ANNUAL BONUS
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4.1. The EMPLOYEE shall receive with respect to (i) each fiscal year
ending during the Term, and (ii) that portion of any fiscal year
ending after Term during which he is employed hereunder, a bonus
equal to one and one-tenth percent (1.10%) of the consolidated EBITDA
(as that term is defined in the Credit Agreement of even date
herewith among the SUBSIDIARY, General Electric Capital Corporation
and the other lenders thereunder, without regard to any amendments
thereto) of the SUBSIDIARY and its subsidiaries (but not including
the COMPANY), provided that such bonus shall not be payable with
respect to any such fiscal year unless such EBITDA for such fiscal
year exceeds five and one-half percent (5.5%) of the consolidated net
sales of the SUBSIDIARY and its subsidiaries (but not including the
COMPANY) determined in accordance with generally accepted accounting
principles and provided, further, that for purposes of this
Agreement, EBITDA shall be calculated without regard to any bonuses
payable hereunder.
4.2. The sole basis for the bonus calculation shall be the auditied
financial statements of the SUBSIDIARY and its subsidiairies for the
fiscal year in question.
4.3. Any bonus to which EMPLOYEE is entitled under the provisions of this
Agreement for any fiscal year shall be paid to him (regardless of
whether the TERM has terminated) in accordance with the COMPANY'S
previous practice, with a first installment equal to forty percent
(40%) of a good faith estimate of the bonus for such year, to be paid
during the month of December of such year and a final installment to
be paid as promptly as reasonably practicable after the end of, but
not later than the 75th day after the end of each such fiscal year.
5. DUTIES
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5.1. The EMPLOYEE shall perform those functions which are normally the
functions of the President and Chief Operating Officer of the COMPANY
and such other offices as he may hold pursuant to Section 2.3, and
shall further perform those functions which shall be reasonably
determined from time to time by the Board of Directors of the
COMPANY, such functions not to be inconsistent with those herein set
forth. The EMPLOYEE shall report to, and be subject to the authority
of, the Board of Directors of the COMPANY.
5.2. The COMPANY shall give the EMPLOYEE a notice of six (6) months prior
to any relocation of the EMPLOYEE.
5.3. It is the specific responsibility of the EMPLOYEE, between regular
meetings of the Board, to apprise Board Members of significant
business matters.
5.4. The EMPLOYEE shall, during the TERM, devote his entire working time,
attention and energies to the business of the COMPANY, the
SUBSIDIARY, and their respective AFFILIATES.
5.5. The EMPLOYEE shall not, during the TERM, except under Section 5.6, be
engaged in any other business activity, whether or not such business
activity is pursued for gain, profit or other pecuniary advantage.
Notwithstanding the prohibition contained in the present clause, the
EMPLOYEE shall be entitled to continue to sit on the boards of
directors of the companies listed on Schedule I hereto, and on the
boards of directors of other companies if such activity is approved
in writing by the Board of Directors of the COMPANY. In the case of
non-profit corporations or charities, such approval shall not be
unreasonably withheld, but in all other cases, the Board shall have
sole discretion to grant, delay or withhold approval, with or without
conditions.
5.6. The EMPLOYEE shall not invest his personal assets in any business
other than NON-COMPETING BUSINESSES, and even in the case of such
investments:
a) No services are required or furnished on the part of the
EMPLOYEE in the operations of the companies in which such
investments are made and in which his participation is solely
that of an investor provided that this subsection is not
infringed by the EMPLOYEE's providing counseling (and not
acting in a "line" capacity) on a non-remunerative basis to
all such companies for a maximum of 5 hours per week and 200
hours per year; and
b) If the EMPLOYEE purchases securities in any corporatio whose
securities are regularly traded in a recognized securities
market, such purchases shall not result in his collectively
owning beneficially at any time five percent (5%) or more of
the equity securities of any corporation engaged in a business
other than a NON-COMPETING BUSINESS.
The foregoing restrictions shall not apply to any investment of
whatever extent the EMPLOYEE may take in the shares of the COMPANY or
of any successor company.
For the purposes of this subsection, NON-COMPETING BUSINESSES are all
businesses other than those which compete with:
a) the BUSINESS; or
b) any other business carried on in the future by the COMPANY,
the SUBSIDIARY or any AFFILIATES, provided that the EMPLOYEE
has access to confidential information concerning such
business.
Moreover, the EMPLOYEE shall not knowingly assist any RELATIVE to
make any investment which the EMPLOYEE is not permitted to make by
this section.
5.7. The EMPLOYEE is a member of the Board of Directors and acknowledges
that he has a significant interest in this Agreement and undertakes
the following:
5.7.1. To seek independent legal counsel at the COMPANY's expense to
negotiate and review this Agreement on the EMPLOYEE's behalf;
5.7.2. To disclose his interest in this Agreement to the other
members of the Board of Directors; and
5.7.3. To retire from and abstain from the discussion and vote at any
meeting of the Board of Directors at which this Agreement or
any default by EMPLOYEE or matter arising therefrom is the
subject of a discussion or a vote.
5.8. The EMPLOYEE also undertakes the following:
5.8.1. To use every best effort (including the establishment of
written procedures known to operation personnel) to promptly
bring to the attention of the Board of Directors of the
COMPANY any matter requiring the COMPANY's decision or action
where his own interests or those of a RELATIVE are involved
and to abstain from taking such decision or action until the
Board of Directors decides.
5.8.2. If requested, to be absent from and abstain from the
discussion and vote at any meeting of the aforementioned Board
of Directors where the subject matter being discussed and
voted upon is any matter covered by section 5.8.l.
5.8.3. For the purposes of this Agreement RELATIVE means the
EMPLOYEE's spouse, parent, sibling, child or sibling's
children, the spouses of the foregoing and any other person
who could be claimed as a dependent on the EMPLOYEE's or
RELATIVE's federal income tax return, any corporation or
partnership in which a RELATIVE or the EMPLOYEE holds a five
percent (5%) interest or of which a RELATIVE or the EMPLOYEE
is an officer or director, and any trust of which any of the
foregoing is a beneficiary.
6. EQUITY GRANT
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6.1. Contemporaneously herewith, the COMPANY will issue to the EMPLOYEE
291,700 shares of Common Stock of the COMPANY, at no cost to
EMPLOYEE, which the COMPANY represents and warrants is equal to
2.91617% of the COMPANY's Common Stock outstanding on a fully diluted
basis upon closing of the Restructuring.
7. CONFIDENTIALITY, ETC.
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7.1. The EMPLOYEE recognizes and acknowledges that the confidential
information, trade secrets and proprietary processes of the COMPANY,
its AFFILIATES and subsidiaries as they may exist from time to time
are valuable, special and unique assets of the BUSINESS of the
COMPANY, its AFFILIATES and subsidiaries, access to and knowledge of
which are essential to the performance of the EMPLOYEE's duties
hereunder. The EMPLOYEE will not, during the TERM of his employment
or at any time within five (5) years following its termination, for
any reason whatsoever, in whole or in part, disclose such
confidential information, secrets or processes to any person, firm,
corporation, association or other entity for any reason or purpose
whatsoever, nor shall the EMPLOYEE make use of such property for his
own purposes or for the benefit of any person, firm, corporation or
other entity (except the COMPANY, its AFFILIATES and subsidiaries)
under any circumstances whatsoever, except as may be required in the
fulfillment of his function with the COMPANY within the terms of this
Agreement or except as provided by law; provided these restrictions
shall not apply to such information, secrets and processes which are
then in the public domain (provided that the EMPLOYEE was not
responsible, directly or indirectly, for permitting such secrets or
process to enter the public domain without the COMPANY's consent).
7.2. The EMPLOYEE furthermore agrees that upon termination of the TERM he
will remit to the COMPANY all writings and materials, in his
possession or under his control, which either belong to the COMPANY
and AFFILIATES or which may contain confidential information
concerning the COMPANY and AFFILIATES. The EMPLOYEE may, however,
retain his personal diary/agenda after removing or destroying all
confidential COMPANY or AFFILIATES material therein.
7.3. Any and all inventions, discoveries, developments, methods,
processes, compositions, works, concepts and ideas (whether or not
patentable or copyrightable) conceived, made, developed, created or
reduced to practice by the EMPLOYEE (whether at the request or
suggestion of the COMPANY or otherwise, whether alone or in
conjunction with others, and whether during regular hours of work or
otherwise) during the period of his employment by the COMPANY or any
of its subsidiaries which may relate to the business, ventures or
other activities of or products manufactured or sold by the COMPANY
or any of its subsidiaries (collectively, "Proprietary Rights"),
shall be promptly and fully disclosed by the EMPLOYEE to an
appropriate executive officer of the COMPANY and shall be the
COMPANY's exclusive property as against the EMPLOYEE and his heirs
and personal representatives, and the EMPLOYEE hereby assigns to the
COMPANY his entire right, title and interest therein and shall
promptly deliver to an appropriate executive officer of the COMPANY
all papers, drawings models, data and other material relating to any
of the foregoing Proprietary Rights, conceived, made, developed,
created or reduced to practice by him as aforesaid. All copyrightable
Proprietary Rights shall be considered "works made for hire."
The EMPLOYEE shall, upon the COMPANY's request and without any
payment therefor, execute any documents reasonably necessary or
advisable in the opinion of the COMPANY's counsel to assign, and
confirm the COMPANY's title in, his entire right, title and interest
in the foregoing Proprietary Rights and to direct issuance of patents
or copyrights to the COMPANY with respect to such Proprietary Rights
as are the COMPANY's exclusive property as against the EMPLOYEE and
his heirs and personal representatives under this Section 7.3 or to
vest in the COMPANY title to such Proprietary Rights as against the
EMPLOYEE and his heirs and personal representatives, the expense of
securing any such patent or copyright, however, to be borne by the
COMPANY. In addition, the Company shall reimburse the EMPLOYEE for
any reasonable expenses incurred in having such documents reviewed by
EMPLOYEE's counsel.
8. VACATION
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8.1. The EMPLOYEE shall have the right to an annual paid vacation of no
less duration than four (4) weeks.
9. TERMINATION OF EMPLOYMENT
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9.1. Notwithstanding any other provision contained herein, the COMPANY may
on or after the EFFECTIVE DATE send to the EMPLOYEE notice of one of
the following events and should the EMPLOYEE fail to cure the matter
giving rise to the notice within thirty (30) days after receipt of
such notice, the TERM shall terminate without any delay stipulated
therein or any indemnity payable in lieu thereof:
a) EMPLOYEE's willful misconduct or gross negligence;
b) The commission of a criminal act by the EMPLOYEE against the
COMPANY involving material harm (whether nor not charges are
filed);
c) The commission by the EMPLOYEE of a criminal act of moral
turpitude bringing the COMPANY into disrepute (whether or not
charges are filed);
d) Willful insubordination to any directive of the Board of
Directors provided reasonable prior notice of such directive is
given; or
e) Actions contrary to Sections 5.4, 5.5, 5.6, 5.8, 7 or 10
causing COMPANY or AFFILIATES material harm.
9.2. Notwithstanding any other provision contained herein, the TERM shall
terminate automatically, without notice or indemnity in lieu thereof,
upon the occurrence of one of the following events:
a) The bankruptcy or voluntary state insolvency filing of the
EMPLOYEE; or
b) The death of the EMPLOYEE.
9.3. The EMPLOYEE may terminate the TERM by sending his resignation in
writing to Board of Directors not less than six (6) months prior to
the effective date of such resignation or, if such resignation is
submitted in good faith so that the EMPLOYEE can perform full time
church service, not less than three (3) months prior to the effective
date of such resignation, failing which notice the EMPLOYEE may be
subject to any and all damages incurred as a result of such failure.
In the event the EMPLOYEE has given such a notice to the COMPANY, the
COMPANY may, at its option, earlier terminate EMPLOYEE's employment.
9.4. Except under the circumstances described in Section 9.6, the
COMPANY may terminate the TERM by sending a notice in writing to
the EMPLOYEE.
9.5. The EMPLOYEE may immediately terminate the TERM by sending a notice
of termination to the Board of Directors with immediate effect
following any material diminution of the EMPLOYEE's responsibilities
or in the event that the EMPLOYEE is asked by the Board of Directors
to perform any act which a reasonable person would consider illegal
or unethical and the COMPANY has not withdrawn its request to the
EMPLOYEE to perform such act within five (5) days of receiving a
written notice from the EMPLOYEE to withdraw such a request.
9.6. The COMPANY may immediately terminate the TERM by sending a notice in
writing to the EMPLOYEE with immediate effect:
9.6.1. after a period of six (6) consecutive months (or aggregating
six (6) months in any twelve (12) month period) of absence by
the EMPLOYEE from his employment as a result of sickness or
disability, or
9.6.2. after sixty (60) days of absence by the EMPLOYEE from his
employment as a result of sickness or disability and a
certification by three (3) physicians that the EMPLOYEE is
likely to be disabled for a period of at least six (6) months
from the initial date of sickness or disability. One (1) such
physician shall be chosen by the EMPLOYEE, one (1) shall be
chosen by the COMPANY and the third shall be chosen by the
other two (2) selected physicians. The EMPLOYEE agrees that in
the event of his sickness, he shall submit himself for
examination by such physicians if reasonably requested to do
so by the COMPANY. For the purposes of this section,
"disabled" or "disability" shall mean a temporary or permanent
substantial inability because of a physical or mental illness
to continue to discharge the EMPLOYEE's duties hereunder.
Notwithstanding any other provision hereof, the EMPLOYEE's
compensation during any period of the EMPLOYEE'S disability shall be
reduced to the extent of any payments to the EMPLOYEE for such period
under any disability plan or program maintained for the EMPLOYEE by
the COMPANY for his benefit.
9.7. In the event of the termination of the TERM by virtue of section 9.6
in addition to the payments described therein, the COMPANY shall pay
to the EMPLOYEE a severance pay equal to one (1) month base salary in
effect at termination for each calendar year, or part thereof, of the
EMPLOYEE's employment with the COMPANY, the SUBSIDIARY, IHF Capital,
Inc. or IHF Holdings, Inc. (or any predecessor companies of the
COMPANY, the SUBSIDIARY, IHF Capital, Inc., or IHF Holdings, Inc.)
after January 1, 1988.
9.8. In the event of the termination of the TERM by virtue of Section 9.3,
9.4 or 9.5, the COMPANY shall pay to the EMPLOYEE a severance pay
equal to the EMPLOYEE's base salary then in effect and the bonus
referred to in Section 4 hereof, pro-rated for the period of the
payment, for two (2) years following the termination of the TERM,
provided, however, that if, due to the EMPLOYEE's resignation, there
is a termination of the TERM, without any action by the COMPANY,
during the one (1) year period following the EFFECTIVE DATE, the
EMPLOYEE shall forego FIVE HUNDRED THOUSAND DOLLARS ($500,000) of any
severance pay to which he would otherwise be entitled under this
Section 9.8, unless the resignation resulting in such termination is
submitted (i) in good faith by EMPLOYEE pursuant to Section 9.3 so
that the EMPLOYEE can perform full time church service, or (ii)
pursuant to Section 9.5. The bonuses shall be paid to the EMPLOYEE
within ninety (90) days from the end of the COMPANY's applicable
fiscal year, and the base salary shall be paid to the EMPLOYEE on the
same payment schedule as was applicable to the EMPLOYEE during his
employment.
10. RESTRICTIVE COVENANT
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10.1. EMPLOYEE shall not, during the TERM of his employment hereunder and
for a period of four (4) years from its termination, either directly
or indirectly, individually or in partnership, carry on or be engaged
in, or concerned with or interested in, in any capacity whatsoever
(including that of principal, agent, shareholder (subject to section
5.6(b)), consultant, employee, lender or surety), any person, firm,
association, syndicate or company engaged in or concerned with or
interested in the conception, development, fabrication,
transformation, marketing, distribution, advertising, franchising or
sale in Canada, the United States or the European Economic Community,
or any of them, of any products or services similar or identical to
any of those manufactured, distributed, or sold by the COMPANY or any
of its subsidiaries in the course of his employment with the COMPANY,
its AFFILIATES and subsidiaries.
10.2. (a) EMPLOYEE shall not, during the TERM of his employment hereunder
and for a period of twelve (12) months from its termination,
directly or indirectly, hire any Designated Employee.
(b) EMPLOYEE shall not, during the TERM of his employment hereunder
and for a period of eighteen (18) months from its termination,
directly or indirectly, solicit, interfere with or endeavor to
entice away, any Designated Employee.
(c) For purposes of this Section 10.2., the term "Designated
Employee" shall mean any person if that person is or was a
Senior Employee of the COMPANY or any of its AFFILIATES or
subsidiaries during the period beginning six (6) months prior to
the termination of the TERM and ending (i) in the case of clause
(a), twelve (12) months thereafter and (ii) in the case of
clause (b), eighteen (18) months thereafter, but shall exclude
Scott R. Watterson or any RELATIVE. For purposes of this Section
10.2 "Senior Employee" shall mean each of the two hundred (200)
most highly compensated employees of the COMPANY or any of its
subsidiaries or AFFILIATES.
10.3. Notwithstanding the foregoing, if termination of employment occurs
under Section 9.3, 9.4 or 9.5, the period stipulated by Section 10.1
is reduced to two (2) years; provided, however, that such period
shall be extended by written notice to the EMPLOYEE within thirty
(30) days of such termination up to two (2) years (i.e., up to a
total of four (4) years from the termination of EMPLOYEE's
employment) to the extent that the COMPANY, at its option, pays to
the EMPLOYEE a severance pay equal to the EMPLOYEE's base salary then
in effect and the bonus referred to in Section 4 hereof, pro-rated
for the period of the payment, for a period of up to an additional
two (2) years beyond that required to be paid by the COMPANY to the
EMPLOYEE under Section 9.8. If paid at the COMPANY's option, such
bonuses are to be paid within ninety (90) days from the end of the
COMPANY's applicable fiscal year, and the base salary shall be paid
to the EMPLOYEE on the same payment schedule as was applicable to the
EMPLOYEE during his employment.
11. REASONABLENESS AND REMEDIES
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11.1. The EMPLOYEE agrees that all the conditions and restrictions
established in this Agreement are reasonable taking into account the
circumstances surrounding this Agreement.
11.2. The EMPLOYEE recognizes that in the view of the serious and
irreparable harm which a violation hereof would have on the COMPANY,
and without prejudice to the COMPANY's other remedies, injunctive
relief would constitute an available and appropriate remedy and, to
the extent permitted by law, the COMPANY shall not be required to
furnish any security or bond in respect thereof.
12. [INTENTIONALLY DELETED]
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13. GENERAL LIMIT ON EMPLOYEE'S LIABILITY
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13.1. As a general and overall limitation of the EMPLOYEE's liability to
the COMPANY and AFFILIATES, the COMPANY agrees that the EMPLOYEE
shall not be liable, for any reason except as set forth below, to the
COMPANY or any of its AFFILIATES for an amount in excess of the
amount provided in the next sentence hereof. Accordingly, as and for
their sole remedy against the EMPLOYEE, the COMPANY agrees that for
any claim or cause of action that the COMPANY or any of its
AFFILIATES may have against the EMPLOYEE, whether past or future,
their sole remedy shall be the forfeiture of the EMPLOYEE's salary,
bonus and other compensation (but not the equity grant under Section
6.1 hereof, which shall not be subject to forfeiture) received by the
EMPLOYEE during the COMPANY's fiscal year in which the EMPLOYEE's
termination occurred plus subsequently accruing compensation. In this
regard, the COMPANY agrees, to the extent permitted by applicable
law, to indemnify the EMPLOYEE from and against any liability the
EMPLOYEE may have in excess of that provided in the immediately
preceding sentence (i) hereunder or (ii) for any other claim the
COMPANY or any of its AFFILIATES may have against the EMPLOYEE.
However, nothing in this Section 13 shall limit the EMPLOYEE's
liability to the COMPANY or any of its AFFILIATES or provide the
EMPLOYEE any indemnity (i) for any act by the EMPLOYEE involving
theft, fraud or embezzlement against the COMPANY or any of its
AFFILIATES, (ii) in respect of any equitable remedy against the
EMPLOYEE, (iii) in respect of any agreement listed on Schedule I of
the Old Employment Agreement (as defined in that separate Termination
Agreement among IHF Capital, Inc., IHF Holdings, Inc., SUBSIDIARY and
EMPLOYEE, dated an even date hereof (the "Termination Agreement")) or
any agreement heretofore or hereafter entered into by the EMPLOYEE
after the date of the Old Employment Agreement, (iv) in respect of
any claim or cause of action asserted by the COMPANY or any of its
AFFILIATES as a counterclaim (to the extent of any liability the
COMPANY or any of its AFFILIATES may have by reason of the EMPLOYEE
claim in question) or as a set off, or (v) under Section 7, 9.3 or 10
of this Agreement or under the Non-Competition Agreement (as defined
in the First Amended and Restated Master Transaction Agreement dated
as of October 12, 1994 among ICON Health & Fitness, Inc. and the
other parties thereto (the "Master Transaction Agreement"));
provided, however, that the aggregate of the liability of the
EMPLOYEE to the COMPANY or any of its AFFILIATES under Section 7, 9.3
or 10 of this Agreement or to the COMPANY, any of its AFFILIATES, IHF
Capital, Inc. or any of its AFFILIATES (as defined in the Old
Employment Agreement) under the Non-Competition Agreement and of the
liability of the EMPLOYEE to IHF Capital, Inc. or any of its
AFFILIATES (as so defined) in respect of claims subject to the
$18,000,000 limits set forth in the third to last sentence of Section
10.3.1.1 of the Master Transaction, shall not exceed $1,240,000.
14. AMENDMENTS
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14.1. This Agreement may be amended only by written instrument duly
executed by all the parties hereby and approved by the Board of
Directors of the COMPANY.
15. NO ASSIGNMENT
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15.1. No party hereto shall assign, in whole or in part, this agreement or
any of its or his respective rights and obligations hereunder without
the express prior written consent of the other parties hereto; for
this purpose the merger or reorganization of the COMPANY or the
SUBSIDIARY or any AFFILIATE shall not be considered an assignment.
16. NO WAIVER
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16.1 No waiver by any party of any breach of the obligations of any other
party hereunder shall be a waiver of any subsequent breach or of any
other obligation, nor shall any forbearance to seek a remedy for any
breach be a waiver of any rights and remedies with respect to any
subsequent breach.
17. SEVERABILITY
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17.1. The invalidity of one of the provisions of this Agreement shall not
invalidate or otherwise affect any of the other provisions of this
Agreement, which shall remain in full force and effect, and each such
invalid provision shall be construed by limiting it so as to be valid
for the maximum extent permitted by law.
18. CURRENCY, ETC.
--------------
18.1. All references in this Agreement to dollar of $ mean lawful currency
of the United States of America.
18.2. The COMPANY shall have the right to withhold, from or in respect of
any payment, benefit or other item of compensation due to the
EMPLOYEE hereunder, any federal, state or local taxes of any kind
required by law to be withheld with respect thereto. In the event
that at the time any withholding is required hereunder, the amount of
cash payments from which the applicable withholding taxes may be
deducted is less than the withholding taxes due, the EMPLOYEE shall
pay to the COMPANY, in immediately available funds, an amount equal
to such shortfall.
19. GOVERNING LAW; ARBITRATION
--------------------------
19.1. This Agreement shall be governed by and construed in accordance with
the domestic substantive laws of the State of Utah, without giving
effect to any choice or conflict of law provision or rule that would
cause the application of the domestic substantive laws of any other
jurisdiction; provided, however, that any dispute relating to the
provisions of Section 19.2 shall be governed by the United States
Arbitration Act as then in force.
19.2. Except solely as set forth in Section 19.4, each dispute, difference,
controversy or claim arising in connection with or related or
incidental to, or question occurring under, this Agreement or the
subject matter hereof shall be finally settled under the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA")
by an arbitral tribunal composed of three (3) arbitrators, at least
one (1) of whom shall be an attorney experienced in corporate
transactions, appointed by agreement of the parties in accordance
with said Rules. In the event the parties fail to agree upon a panel
of arbitrators from the first list of potential arbitrators proposed
by the AAA, the AAA will submit a second list in accordance with said
Rules. In the event the parties shall have failed to agree upon a
full panel of arbitrators from said second list, any remaining
arbitrators to be selected shall be appointed by the AAA in
accordance with said Rules. If, at the time of the arbitration, the
parties agree in writing to submit the dispute to a single
arbitrator, said single arbitrator shall be appointed by agreement of
the parties in accordance with the foregoing procedure, or, failing
such agreement, by the AAA in accordance with said Rules. The
foregoing arbitration proceedings may be commenced by any party by
notice to all other parties.
19.3. The place of arbitration shall be Salt Lake City, Utah.
19.4. The parties hereto exclude any right of appeal to any court on the
merits of the dispute. The provisions of this Section 19 may be
enforced in any court having jurisdiction over the award of any of
the parties or any of their respective assets and judgment on the
award (including without limitation equitable remedies) granted in
any arbitration hereunder may be entered in any such court. Nothing
contained in this Section 19 shall prevent any party from seeking
interim measures of protection in the form of pre-award attachment of
assets or preliminary or temporary equitable relief.
19.5. To the extent not prohibited by applicable law which cannot be
waived, each of the parties hereto hereby waives, and covenants that
he or it will not assert (whether as plaintiff, defendant, or
otherwise), any right to trial by jury in any forum in respect of any
issue, claim, demand, cause of action, action, suit or proceeding
arising out of or based upon this Agreement or the subject matter
hereof, in each case whether now existing or hereafter arising and
whether in contract or tort or otherwise. Any of the parties hereto
may file an original counterpart or a copy of this Section 19.5 with
any court as written evidence of the consent of each of the parties
hereto to the waiver of his or its right to trial by jury.
19.6. Each of the parties hereto acknowledges that he or it has been
informed by each other party that the provisions of Section 19
constitute a material inducement upon which such party is relying and
will rely in entering into this Agreement and the transactions
contemplated hereby.
20. BINDING ON HEIRS
----------------
20.1. This Agreement binds and inures to the benefit of the parties, their
heirs, executors, administrators, successors and permitted assigns
(subject to Section 9.2(b)).
21. ENTIRE AGREEMENT
----------------
21.1 This Agreement embodies the entire Agreement between the parties
hereto concerning the subject matters mentioned herein and supersedes
all previous discussions, correspondence, understandings or
agreements, whether written or oral, with respect to such matters,
except as provided in the Termination Agreement. This agreement shall
constitute an agreement between employer and employee of the type
referred to in Section 1, Chapter 28, Title 34 of the Utah Code,
Annotated.
22. ATTORNEY'S FEES
---------------
22.1. In the event that any party hereto shall be found in default or in
breach of this Agreement pursuant to arbitral or judicial
proceedings, such party shall be liable to pay all reasonable
attorney's fees, court costs and other related collection costs and
expenses incurred by the non-defaulting or non-breaching party in
pursuing its rights hereunder.
23. NOTICES
23.1. All notices and other communications necessary or contemplated under
this Agreement shall be in writing and shall be delivered in the
manner specified herein or, in the absence of such specification,
shall be deemed to have been duly given three (3) business days after
mailing by certified mail, when delivered by hand, or when delivered
by facsimile upon confirmation of receipt, or one (1) day after
sending by overnight delivery service, to the respective addresses of
the parties set forth below:
a) for notices and communications to the COMPANY or the SUBSIDIARY:
HF HOLDINGS, INC.
ICON HEALTH & FITNESS, INC.
1500 South 1000 East
Logan, Utah 84321
Fax: 435-750-5238
Attn: Board of Directors
b) For notices and communications to the EMPLOYEE:
Gary E. Stevenson
370 Abbey Lane
Providence, Utah 84332
c) With a copy in each case to:
Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, MA 02110
Fax: 617-951-1295
Attn: Charles W. Robins, Esq.
and
Ropes & Gray
One International Place
Boston, MA 02110
Fax: 617-951-7050
Attn: R. Newcomb Stillwell, Esq.
24. JOINT AND SEVERAL LIABILITY
---------------------------
24.1. The COMPANY and the SUBSIDIARY shall be jointly and severally
liable in respect of all payment obligations of the COMPANY
hereunder.
IN WITNESS WHEREOF the parties have hereto signed this 27th day of September,
1999.
HF HOLDINGS, INC.
______________________________ By: /s/ S. Fred Beck
----------------
Witness Title: Vice President
ICON HEALTH & FITNESS, INC.
______________________________ By: /s/ S. Fred Beck
-----------------
Witness Title: Vice President
______________________________ /s/ Gary E. Stevenson
---------------------
Witness GARY E. STEVENSON
SCHEDULE I
To
EMPLOYMENT AGREEMENT
Among
HF HOLDINGS, INC.
ICON HEALTH & FITNESS, INC.
And
GARY E. STEVENSON
Board Seats
Boy Scots of America, Local Council
Utah State Business College