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Severance And Consulting Agreement

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Sectors: Consumer Products (Durables)
Governing Law: California , View California State Laws
Effective Date: October 11, 2002
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Exhibit 10(d)(12)


SEVERANCE AND CONSULTING AGREEMENT


This Severance and Consulting Agreement (" Agreement" ) is entered into by and between Richard M. Rodstein (" Executive" ) and K2 Inc. (" the Company" ) as of the 11th day of October, 2002.

WHEREAS, Executive has held the position of President and Chief Executive Officer of the Company pursuant to an Employment Agreement (the " Employment Agreement" ) dated as of May 8, 2001, and has served as a Director of the Company; and

WHEREAS, Executive and the Company desire to terminate Executive' s employment relationship with the Company and Executive desires to resign as a Director of the Company; and


WHEREAS, the Executive and the Company desire to enter into a consulting relationship for a period of three years from the date hereof;

NOW THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the adequacy and sufficiency of which is hereby acknowledged, Executive and the Company do hereby agree as follows:

1. Not later than the close of business on October 11, 2002, the Company shall make payment to Executive of the sum of $1,597,190.52, less legal deductions and withholding.


2. All stock options held by Executive will automatically be deemed amended, without further action on the part of the Company or the Executive, so that all such options will be fully vested and not subject to forfeiture or expiration by reason of the Executive' s termination of employment or resignation as a Director; provided however that options granted under 1988 and 1994 Incentive Stock Option Plans may not be exercised after one year from the date hereof.


3. Executive shall be entitled to the following with respect to benefits, and the other matters set forth below:

a. (x) All benefits provided under any insurance, hospitalization, medical, dental, health, accident, disability or similar plan or program of the Company now existing or established hereafter to the extent that he is eligible under the general provisions thereof and (y) all fringe benefits which are offered by the Company to any of its senior executives on the date hereof, as set forth below, will continue until the earlier of (i) three years from the date hereof; or (ii) such time as Executive is entitled to comparable benefits under the benefit programs of another company by which he is employed. Notwithstanding the foregoing, to the extent any such benefit cannot be provided through the applicable plan of the Company, the Company will provide such benefit outside of the plan or will provide a cash lump sum payment equal to the value of such additional benefit. The insurance and fringe benefits which are provided to the Executive on the date hereof and are to be continued hereunder include life insurance and an executive medical reimbursement plan, in addition to the plans and programs referred to in (x) above.


b. The Company shall meet its obligation under (a) above, in connection with its group medical/dental plan for the period ending on the earlier to occur of: (i) the end of the period described in (a) above, or (ii) the date the Executive ceases to be eligible for continuation coverage under the Company' s group medical/dental plan pursuant to the provisions of COBRA, by providing the continuation of such coverage at Company expense, contingent upon the Executive' s timely election of such coverage under COBRA.


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c. To the extent required to avoid adverse tax consequences under Section 105(h) of the Internal Revenue Code of 1986 (the " Code" ), the Company' s payments under this Section 3 will be recognized by the Executive in his taxable income (" Covered Payments" ) and the Executive will receive, in addition, a " gross-up" payment covering the tax liability attributable to such recognized income. The " gross-up" payment shall be determined by: (i) dividing the Covered Payments plus any deductions disallowed for Federal, state or local income tax purposes because of the inclusion of the Covered Payments in the Executive' s adjusted gross income, by the amount obtained by subtracting from 1.0 the highest applicable marginal rate of Federal, state, and local income and employment taxation, respectively, for the calendar year in which the " gross up" payment is made; and (ii) subtracting from such quotient the sum of the covered Payment and the disallowed deductions. For purposes of this Section 3(c) the Executive will be deemed to pay (Y) Federal income and employment taxes at the highest applicable marginal rate of Federal income and employment taxation for the calendar year in which the " gross-up" payment is to be paid and (Z) any applicable state and local income and employment taxes at the highest applicable marginal rate of taxation for the calendar year in which such " gross-up" payment is to be paid, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year (determined without regard to limitations on deductions based upon the amount of the Executive' s adjusted gross income).

d. Executive will be entitled to receive benefits under all retirement plans, including the Company' s tax qualified pension plan, 401(k) plan and employee stock ownership plan in accordance with the terms of such plans.

e. Executive will continue to have all rights to indemnification, advancement of costs and other rights under Article Eighteenth of the Company' s Restated Certificate of Incorporation as in effect on the date hereof. The Company shall continue to cover the Executive under directors and officers liability insurance for as long as potential liability exists (but not less than six years) in the same amount and to the same extent, if any, as the Company covers its officers and directors; provided that such coverage can be obtained. Notwithstanding the foregoing, if there is any additional premium expense for such coverage, and provided that Executive is treated no less favorably in respect of such insurance than other former officers or directors of the Company, it shall be a condition of the Company' s obligation to provide such coverage that Executive shall pay his proportional share of such additional premium expense.

f. Executive shall be entitled to reimbursement for business expenses incurred prior to the date hereof in accordance with the Company' s normal policy for expense reimbursements.

g. Executive shall be entitled to reimbursement of reasonable costs incurred for outplacement services after the date hereof, and for reasonable attorneys fees in connection with entering into this Agreement, not in excess of $20,000 in the aggregate.

4. In consideration of the payments and performance of the covenants set forth herein,


a. The Employment Agreement is hereby terminated;


b. Executive hereby resigns from all positions as an officer and director of the Company and each subsidiary of the Company;


c. Executive does forever release and discharge the Company and all its parent, subsidiary and affiliated entities and all their past, pr
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