exv10w1



 





Exhibit 10.1









April 12, 2007




PERSONAL AND CONFIDENTIAL




Mr. Joseph Scirocco

c/o Quiksilver, Inc.

15202 Graham Street

Huntington Beach, California 92649




Re: Employment at Quiksilver, Inc.




Dear Joe:




     This letter (“Agreement”) will confirm our understanding and agreement regarding your
employment with Quiksilver, Inc. (“Quiksilver” or the “Company”), commencing Monday, April 16,
2007. This Agreement 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, including without limitation the Letter of Intent provided to you earlier this month.




	 	1.	 	Position; Exclusivity. The Company hereby agrees to
employ you as its Executive Vice President and Chief Financial Officer,
reporting to the President or 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 without the prior written consent of the President or Chief
Executive Officer.
	 
	 	2.	 	Base Salary. Your base salary will be $45,833.33 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 $45,833.33 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.




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	 	3.	 	Bonus. For the fiscal year ending October 31, 2007,
and each fiscal year thereafter, you shall be eligible to receive a
discretionary bonus under the terms approved by the Board of Directors for such
bonus on the same basis as other comparable executives of the Company. Any
such bonus shall be paid within thirty (30) 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, your eligibility to receive a pro rata
portion of the bonus is governed by Paragraph 9 below. Any bonus payments
shall be less applicable withholdings and deductions.
	 
	 	4.	 	Vacation. Since Quiksilver does not have a vacation
policy for executives of your level, no vacation days will be treated as earned
or accrued.
	 
	 	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 $4,000 per year at the Company’s wholesale prices.
	 
	 	7.	 	Stock Options. You shall become and 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), as a result
of your death or permanent disability, or you terminate your employment for
Good Reason (as hereinafter defined), 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
and remain exercisable until the earlier to occur of (i) the first anniversary
of such termination, (ii) the end of the option term, or (iii) termination
pursuant to other provisions of the applicable option plan or agreement (e.g.,
a corporate transaction).
	 
	 	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 $2,000,000. Our obligation to obtain and maintain
this insurance is
contingent upon your establishing and maintaining insurability, and we are
not required to pay premiums for such a policy in excess of $5,000 annually.




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	 	9.	 	Unspecified Term; At Will Employment; Termination






(a) Notwithstanding anything to the contrary in this Agreement, 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) pay
the full amount of any unpaid discretionary bonus from the preceding fiscal
year, if any, (ii) continue to pay your base salary (but not any employment
benefits) on its regular payroll dates for a period of eighteen (18) months,
(iii) pay you a pro rata portion of a bonus adopted pursuant to Paragraph 3,
if any, for the fiscal year in which such termination occurs, less
applicable withholdings and deductions, and (iv) pay you an amount equal to
two (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)



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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 Company will instead (i) continue to
pay your base salary (but not any employment benefits) on its regular
payroll dates for a period of twenty-four (24) months, (ii) pay you a pro
rata portion of a bonus, if any, for the fiscal year in which such
termination occurs, less applicable withholdings and deductions, and (iii)
pay you an amount equal to two (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 twenty-four (24) 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
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:



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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).




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.




(e) Notwithstanding the foregoing, to the extent the Company reasonably
determines that any payment or benefit under this Agreement is subject to
Section 409A of the Code, such payment or benefit shall be made at such
times and in such forms as the Company reasonably determines are required to
comply with Code Section 409A (including, without limitation, in the case of
a “specified employee” within the meaning of Code Section 409A, any payments
that would otherwise be made during the six-month period following
separation of service will be paid in a lump sum after the end of the
six-month period) and the Treasury Regulations and the transitional relief
thereunder; provided, however, that in no event will the Company be required
to provide you with any additional payment or benefit in the event that any
of your payments or benefits trigger additional income tax under Code
Section 409A or in the event that the Company changes the time or form of
your payments or benefits in accordance with this paragraph.




	 	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




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	 	 	 	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, restricted stock, stock appreciation rights or other similar
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”) Employment Arbitration Rules, as
the exclusive remedy 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




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	 	 	 	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.




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,





	 
	 	 	 
	 	Charles S. Exon	 
	 	Executive Vice President, Business & Legal	 
	 	Affairs, Secretary and General Counsel	 
	 	 	 
	 	 	 
	 	 	 
	 



Enclosure




ACKNOWLEDGED AND AGREED:




———————————————

Joseph Scirocco




———————————————

          Dated




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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.




-Addendim A-