UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 1, 2003
HANSEN NATURAL CORPORATION
(Exact name of registrant as specified in charter)
DELAWARE 0-18761 39-1679918
(State or other jurisdiction of (Commission (IRS employer
incorporation) file number) identification no.)
1010 Railroad Street 92880-5471
Corona, California (Zip Code)
(Address of principal executive offices)
(Registrant's telephone number, including area code): (909) 739-6200
Item 5. Other Events and Required FD Disclosure.
Hansen Natural Corporation (the "Company") entered into an employment
agreement dated as of June 1, 2003 with Rodney C. Sacks, its Chairman and Chief
Executive Officer. The Company also entered into an employment agreement dated
as of June 1, 2003 with Hilton H. Schlosberg, its Vice Chairman, President and
Chief Financial Officer. Both agreements were effective immediately.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
The following exhibits are filed as part of this report:
Exhibit Description
- -------- ----------------------------------------------------------------
10.18 Employment agreement between the Company and Rodney C. Sacks,
dated as of June 1, 2003.
10.19 Employment agreement between the Company and Hilton H. Schlosberg,
dated as of June 1, 2003.
-2-
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: September 17, 2003
HANSEN NATURAL CORPORATION
By: /s/ RODNEY C. SACKS
Rodney C. Sacks
Chairman of the Board
and Chief Executive Officer
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EMPLOYMENT AGREEMENT
AGREEMENT dated as of June 1, 2003, by and between HANSEN NATURAL
CORPORATION, a Delaware corporation (the "Corporation"), and RODNEY C. SACKS
(the "Executive").
WHEREAS, the Corporation and the Executive are parties to that certain
Employment Agreement dated as of January 1, 1999 (the "1999 Employment
Agreement"); and
WHEREAS, the Corporation and the Executive desire to terminate the 1999
Employment Agreement and replace the 1999 Employment Agreement with this
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and other good and valuable consideration, the Corporation and
the Executive agree as follows:
1. Termination of 1999 Employment Agreement. The 1999 Employment Agreement
is hereby terminated effective June 1, 2003 and is void and shall have no
further force or effect as of such date.
2. Employment. The Corporation shall employ the Executive and the Executive
agrees to serve as an executive of the Corporation, in such capacities and upon
such conditions as are hereinafter set forth.
3. Definitions.
(a) "Cause" shall mean (i) an act or acts of dishonesty or gross misconduct
on the Executive's part which result or are intended to result in material
damage to the Corporation's business or reputation or (ii) repeated material
violations by the Executive of his obligations under Section 5 of this Agreement
which violations are demonstrably willful and deliberate on the Executive's part
and which result in material damage to the Corporation's business or reputation
and as to which material violations the Board of Directors of the Corporation
has notified the Executive in writing.
(b) "Constructive Termination" shall mean:
(i) without the written consent of the Executive, (A) the assignment
to the Executive of any duties inconsistent in any substantial respect with
the Executive's position, authority or responsibilities as contemplated by
Section 5 of this Agreement, or (B) any other substantial adverse change in
such position, including titles, authority or responsibilities;
(ii) any failure by the Corporation to comply with any of the
provisions of this Agreement, other than an insubstantial or inadvertent
failure remedied by the Corporation promptly after receipt of notice
thereof given by the Executive;
(iii) the Corporation's requiring the Executive without his consent to
be based at any office or location outside of Orange County, California
except for travel reasonably required in the performance of the Executive's
responsibilities; or
(iv) any failure by the Corporation to obtain the assumption and
agreement to perform this Agreement by a successor as contemplated by
Section 13(b), provided that the successor has had actual written notice of
the existence of this Agreement and its terms and an opportunity to assume
the Corporation's responsibilities under this Agreement during a period of
10 business days after receipt of such notice.
4. Employment Period. The "Employment Period" shall be the period
commencing June 1, 2003, and ending on December 31, 2008, subject to extension
or termination as hereinafter provided. On December 31, 2008, and on each
December 31 thereafter, the Employment Period shall be automatically extended by
one additional year unless prior to June 30, 2008, or any subsequent June 30,
the Corporation shall deliver to the Executive or the Executive shall deliver to
the Corporation written notice that the Employment Period will not be extended
(a "Non-Renewal Notice"), in which case the Employment Period will end at its
then scheduled expiration date and shall not be further extended except by
written agreement of the Corporation and the Executive.
5. Position and Duties.
(a) No Reduction in Position. During the Employment Period, the Executive's
position (including titles), authority and responsibilities (including, without
limitation, reporting authority and responsibility) shall be at least
commensurate with the position of Chairman of the Board of Directors and CEO. It
is understood that, for purposes of this Agreement, such position, authority and
responsibilities shall not be regarded as not commensurate merely by virtue of
the fact that a successor shall have acquired all or substantially all of the
business and/or assets of the Corporation as contemplated by Section 13(b) of
this Agreement, provided that the Executive shall continue to have a position
and authority and responsibilities with respect to such successor or affiliated
company substantially corresponding to that of the Executive with respect to the
Corporation prior to such acquisition. As used in this Agreement, the term
"affiliated company" means any company controlling, controlled by, or under
common control with the Corporation. During the Employment Period, the Executive
also agrees to serve without additional compensation as Chairman of the Board of
Directors of Hansen Beverage Company ("HBC"), the Corporation's wholly-owned
subsidiary.
(b) Business Time. During the Employment Period, the Executive agrees to
devote his full business time during normal business hours to the business and
affairs of the Corporation and to use his best efforts to perform faithfully and
efficiently the responsibilities assigned to him hereunder, to the extent
necessary to discharge such responsibilities.
6. Compensation.
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(a) Base Salary. During the Employment Period, the Executive shall receive
a base salary (the "Base Salary"), payable bi-weekly or in such other
installments as may be agreed upon, at an annual rate of $230,000 for the
7-month period ending December 31, 2003, and $245,000 for the 12-month period
ending December 31, 2004, and increasing by a minimum of 5% for each subsequent
12-month period during the Employment Period. The Corporation shall review the
Base Salary annually and in light of such review may, in the discretion of the
Board of Directors of the Corporation increase (but not decrease) the Base
Salary by more than the minimum 5% per annum increase taking into account any
change in the Executive's responsibilities, increases in compensation of other
executives with comparable responsibilities, performance of the Executive and
other pertinent factors, and such adjusted Base Salary shall then constitute the
"Base Salary" for purposes of this Agreement.
(b) Bonus. In addition to the Base Salary, the Executive may be granted a
bonus ("Bonus"), payable at such times, and in such amounts, as may be fixed
from time to time at the discretion of the Board of Directors.
(c) Incentive and Savings Plans; Retirement and Life Insurance Programs. In
addition to the Base Salary and Bonus payable as hereinabove provided, during
the Employment Period, the Executive shall be entitled to participate in all
incentive and savings plans and programs, including stock option plans and other
equity-based compensation plans, and in all retirement and life insurance plans
which the Corporation may from time to time make available to the Executive
and/or any other executives of the Corporation or any affiliated company.
(d) Benefit Plans. During the Employment Period, the Executive, his spouse
or domestic partner and the members of his immediate family (to the extent
permitted by, the applicable plan), as the case may be, shall be entitled to
participate in or be covered under all medical, dental, disability, group life,
accidental death and travel accident insurance plans and programs of the
Corporation and its affiliated companies (at the most favorable level of
participation and providing highest levels of benefits available to him) as in
effect (i) on the date hereof or (ii) if more favorable to the Executive, as in
effect at any time thereafter with respect to the Executive or other executives
with comparable responsibilities. To the extent member's of the Executive's
immediate family or his domestic partner are not entitled to coverage under any
of the Corporation's benefit plans, the Corporation shall obtain coverage for
any such family members on an individual basis.
(e) Club Memberships. During the Employment Period, the Corporation shall
pay all initial and annual fees and all other reasonable expenses relating to
membership in up to two (2) business or social clubs to be selected by the
Executive in his sole discretion.
(f) Automobile. During the Employment Period, the Corporation shall pay all
costs and expenses relating to the purchase or lease, use, and maintenance of a
luxury automobile to be dedicated to the sole use of the Executive.
(g) Expenses. During the Employment Period, the Executive shall be entitled
to receive prompt reimbursement for all reasonable travel, entertainment and
other expenses incurred by the Executive in connection with the performance of
his duties hereunder in accordance with such policies and procedures as the
Corporation may from time to time establish.
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(h) Vacation and Fringe Benefits. During the Employment Period, the
Executive shall be entitled to paid vacation consisting of four (4) weeks per
year to be taken at such times selected by the Executive and reasonably
acceptable to the Corporation, such vacation to accrue ratably during the
Employment Period; such other paid holidays as may be accorded to employees of
the Corporation as well as up to ten (10) paid personal days per year to be
taken at such times as may be selected by the Executive.
(i) Stock Options. Simultaneously with the execution of this Agreement the
Corporation shall grant to the Executive options to purchase up to 150,000
shares of the Corporation's common stock, par value $.005 per share, pursuant to
the terms of a Stock Option Agreement in the form of Exhibit A hereto.
7. Termination.
(a) Death or Disability. This Agreement shall terminate automatically upon
the Executive's death. The Corporation may terminate this Agreement, after
having established the Executive's Disability, by giving to the Executive
written notice of its intention to terminate his employment, and his employment
with the Corporation shall terminate effective on the 90th day after receipt of
such notice if, within 90 days after such receipt, the Executive shall fail to
return to full-time performance of his duties. For purposes of this Agreement,
"Disability" means disability which would entitle the Executive to receive full
long-term disability benefits under the Corporation's long-term disability plan,
or if no such plan shall then be in effect, any physical or mental disability or
incapacity which renders the Executive incapable of performing the services
required of him in accordance with his obligations under Section 5 hereof for a
period of more than 120 days in the aggregate during any 12-month period during
the Employment Period.
(b) Voluntary Termination. Notwithstanding anything in this agreement to
the contrary, the Executive may, upon not less than 90 days' written notice to
the Corporation, voluntarily terminate employment for any reason, provided that
any termination by the Executive pursuant to Section 7(d) on account of
Constructive Termination shall not be treated as a voluntary termination under
this Section 7(b).
(c) Cause. The Corporation may terminate the Executive's employment for
Cause.
(d) Constructive Termination. The Executive may terminate his employment
for Constructive Termination.
(e) Notice of Termination. Any termination by the Company for Cause or by
the Executive for Constructive Termination shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 14(c).
For purposes of this Agreement, a "Notice of Termination" means a written notice
given, in the case of a termination for Cause, within 30 business days of the
Corporation's having actual knowledge of the events giving rise to such
termination, and in the case of a termination for Constructive Termination,
within 90 days of the Executive's having actual knowledge of the events giving
rise to such termination, and which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date of this Agreement (which date shall be not more than 15 days
after the giving of such notice). The failure by the Executive to set forth in
the Notice of Termination any fact or circumstance which contributes to a
showing of Constructive Termination shall not waive any right of the Executive
hereunder or preclude the Executive from asserting such fact or circumstance in
enforcing his rights hereunder.
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(f) Date of Termination. For the purpose of this Agreement, the term "Date
of Termination" means (i) in the case of a termination for which a Notice of
Termination is required, the date of receipt of such Notice of Termination or,
if later, the date specified therein, as the case may be and (ii) in all other
cases, the actual date on which the Executive's employment terminates during the
Employment Period.
8. Obligations of the Corporation upon Termination. Upon termination of
this Agreement the Corporation shall have the following obligations:
(a) Death. If the Executive's employment is terminated during the
Employment Period by reason of the Executive's death, the Corporation shall (i)
continue to pay to the Executive's legal representatives the Executive's full
Base Salary for a period of one year from the Date of Termination, (ii) provide
the Executive's family members with the benefits provided under Sections 6(d)
and 6(f) for a period of one year from the Date of Termination, (iii) pay to the
Executive's legal representatives any compensation previously deferred by the
Executive and not yet paid by the Corporation and any accrued vacation pay not
yet paid by the Corporation and (iv) pay to the Executive's legal
representatives any other amounts or benefits owing to the Executive's
beneficiaries under the then applicable employee benefit plans or policies of
the Corporation (such amounts specified in clauses (iii) and (iv) are
hereinafter referred to as "Accrued Obligations").
(b) Disability. If the Executive's employment is terminated by reason of
the Executive's Disability, the Corporation shall (i) continue to pay to the
Executive his full Base Salary for a period of one year from the Date of
Termination, (ii) provide the Executive and his family members with the benefits
provided under Sections 6(d) and 6(f) for a period of one year from the Date of
Termination, and (iii) pay to the Executive the Accrued Obligations.
(c) Cause and Voluntary Termination. If, during the Employment Period, the
Executive's employment shall be terminated for Cause or voluntarily terminated
by the Executive (other than on account of Constructive Termination), the
Corporation shall pay the Executive all Base Salary and benefits to which the
Executive is entitled pursuant to Section 6 through the Date of Termination and
the Accrued Obligations. Unless otherwise directed by the Executive, the
Executive shall be paid all such Accrued Obligations in a lump sum in cash
within 30 days of the Date of Termination and the Corporation shall have no
further obligations to the Executive under this Agreement.
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(d) Termination by Corporation other than for Cause or Disability and
Termination by the Executive for Constructive Termination. If, during the
Employment Period, the Corporation gives a Non-Renewal Notice or terminates the
Executive's employment other than for Cause or Disability, or the Executive
terminates his employment for Constructive Termination, the Corporation shall
pay or provide to the Executive the following:
(i) Cash Payment. First, the Corporation shall pay to the Executive in
a lump sum in cash within 15 days after the Date of Termination the
aggregate of the following amounts:
(A) if not theretofore paid, the Executive's Base Salary through
the date of Termination (plus, in the case of termination without
Cause, two weeks of Base Salary in lieu of notice) at the rate in
effect on the Date of Termination;
(B) a cash amount equal to any amounts described in Section
8(a)(iv); and
(C) the present value of the Executive's Base Salary for the
period through December 31, 2008, or through the date which is twelve
months from the Date of Termination, whichever period is longer, at
the rate in effect on the Date of Termination, discounted at the
interest rate payable on one year Treasury Bills in effect on the day
that is 30 business days prior to the Date of Termination, as if paid
monthly from the Date of Termination in arrears.
(ii) Benefits Continuation. Second, for the period from the Date of
Termination to December 31, 2008, or through the date which is twelve
months from the Date of Termination, whichever period is longer, the
Corporation shall provide to the Executive, his spouse or domestic partner
and members of his immediate family, as the case may be, the benefits
described in Section 6(d) on the same terms as described in Section 6(d),
and for the automobile provided under Section 6(f). All rights under this
Section 8(d)(ii) shall cease immediately upon the Executive's violation of
Section 12(b).
(iii) Deferred Payment. Third, the Corporation shall pay the Executive
any amounts payable under Section 8(a)(iii) on the terms and conditions of
the applicable plan or policy.
(iv) Discharge of Corporation's Obligations. Subject to the
performance of its obligations under this Section 8(d), the Corporation
shall have no further obligations to the Executive under this Agreement in
respect of any termination by the Executive for Constructive Termination or
by the Corporation other than for Cause or Disability, except to the extent
expressly provided under Sections 11 or 13 hereof or under any of the plans
referred to in Sections 6(c) or 6(d) hereof.
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9. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Corporation or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise prejudice such rights as the Executive may have under
any other agreements with the Corporation or any of its affiliated companies,
including, but not limited to, stock option or restricted stock agreements.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan or program of the Corporation or any of its affiliated
companies at or subsequent to the Date of Termination shall be payable in
accordance with such plan or program.
10. Full Settlement. Except as provided in Sections 8(d)(ii) and 12(b), the
Corporation's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Corporation may have against the
Executive or others whether by reason of the subsequent employment of the
Executive or otherwise. In no event shall the Executive be obligated to seek
other employment by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement. In the event that the Executive
shall in good faith give a Notice of Termination for Constructive Termination
and it shall thereafter be determined that Constructive Termination did not take
place, the employment of the Executive shall, unless the Corporation and the
Executive shall otherwise mutually agree, be deemed to have terminated, at the
date of giving such purported Notice of Termination, by mutual consent of the
Corporation and the Executive and, except as provided in the last preceding
sentence, the Executive shall be entitled to receive only those payments and
benefits which he would have been entitled to receive at such date had he
terminated his employment voluntarily at such date under this Agreement.
11. Legal Fees and Expenses. In the event that a claim or payment or
benefits under this Agreement is disputed, the Corporation shall pay all
reasonable attorney fees and expenses incurred by the Executive in pursuing such
claim, provided that Executive is successful as to at least part of the disputed
claim by reason of arbitration (as set forth in Section 14(g)) or settlement.
12. Special Obligations of the Executive.
(a) Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Corporation all secret or confidential
information, knowledge or data relating to the Corporation or any of its
affiliated companies, and their respective businesses, (i) obtained by the
Executive during his employment by the Corporation or any of its affiliated
companies and (ii) not otherwise public knowledge (other than by reason of an
unauthorized act by the Executive). After termination of the Executive's
employment with the Corporation, the Executive shall not without the prior
written consent of the Corporation, unless compelled pursuant to an order of a
court or other body having jurisdiction over such matter, communicate or divulge
any such information, knowledge or data to anyone other than the Corporation and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 12(a) constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
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(b) Noncompetition. In order for the Corporation to reasonably protect its
interests against the competitive use of any confidential information, knowledge
or relationships concerning the business of the Corporation and its affiliated
companies to which the Executive has access because of the special nature of his
employment, the Executive shall not during the Employment Period and for a
period of six months thereafter, directly or indirectly, by ownership of
securities or otherwise, engage in any business organization whose activities
are competitive in any state of the United States or in any foreign country with
activities in which the Corporation and/or its affiliated companies are engaged
in such state or country, or become associated with or render services to any
person, business or enterprise so engaged. Mere ownership as an investor of not
more than 5% of the securities of a corporation or other business enterprise
shall not be deemed an association with such corporation or enterprise.
13. Successors.
(a) This Agreement is personal to the Executive and, without the prior
written consent of the Corporation, shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Corporation and its successors. The Corporation shall require any successor to
all or substantially all of the business and/or assets of the Corporation,
whether direct or indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, by an agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent as the Corporation would be required to perform if
no such succession had taken place. For purposes of this Section 13(b), the term
"Corporation" shall include the Corporation and HBC.
14. Miscellaneous.
(a) Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, applied without reference
to principles of conflict of laws.
(b) Amendments. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(c) Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand-delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
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If to the Executive:
14 Vienne
Irvine, California 92606
If to the Corporation:
Hansen Natural Corporation
1010 Railroad Street
Corona, CA 92882
Attention: Board of Directors
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(d) Tax Withholding. The Corporation may withhold from any amounts payable
under this Agreement such federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(e) Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(f) Captions. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
(g) Arbitration. Except with respect to the rights of the Corporation to
apply to a court of law or equity for equitable relief in the event of the
breach by the Executive of any of the provisions of Section 12 of this
Agreement, any controversy or claim arising out of or relating to this Agreement
or its termination shall be settled by arbitration in accordance with the rules
of the American Arbitration Association, and judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction thereof. Any
such arbitration shall take place in Los Angeles, California or at such other
location as may be agreed by the parties.
(h) Entire Agreement. This Agreement (including the exhibit hereto)
contains the entire agreement between the parties with respect to the subject
matter hereof, supersedes the 1999 Employment Agreement and there are no
agreements, understandings, representations or warranties between the parties
other than those set forth or referred to herein.
9
IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Corporation has caused this Agreement to be executed in its name on its behalf,
all as of the day and year first above written.
HANSEN NATURAL CORPORATION
By: /s/ Hilton H. Schlosberg
_______________________________
Title: President
EXECUTIVE:
/s/ Rodney C. Sacks
__________________________________
Rodney C. Sacks
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EMPLOYMENT AGREEMENT
AGREEMENT dated as of June 1, 2003, by and between HANSEN NATURAL
CORPORATION, a Delaware corporation (the "Corporation"), and HILTON H.
SCHLOSBERG (the "Executive").
WHEREAS, the Corporation and the Executive are parties to that certain
Employment Agreement dated as of January 1, 1999 (the "1999 Employment
Agreement"); and
WHEREAS, the Corporation and the Executive desire to terminate the 1999
Employment Agreement and replace the 1999 Employment Agreement with this
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and other good and valuable consideration, the Corporation and
the Executive agree as follows:
1. Termination of 1999 Employment Agreement. The 1999 Employment Agreement
is hereby terminated effective June 1, 2003 and is void and shall have no
further force or effect as of such date.
2. Employment. The Corporation shall employ the Executive and the Executive
agrees to serve as an executive of the Corporation, in such capacities and upon
such conditions as are hereinafter set forth.
3. Definitions.
(a) "Cause" shall mean (i) an act or acts of dishonesty or gross misconduct
on the Executive's part which result or are intended to result in material
damage to the Corporation's business or reputation or (ii) repeated material
violations by the Executive of his obligations under Section 5 of this Agreement
which violations are demonstrably willful and deliberate on the Executive's part
and which result in material damage to the Corporation's business or reputation
and as to which material violations the Board of Directors of the Corporation
has notified the Executive in writing.
(b) "Constructive Termination" shall mean:
(i) without the written consent of the Executive, (A) the assignment
to the Executive of any duties inconsistent in any substantial respect with
the Executive's position, authority or responsibilities as contemplated by
Section 5 of this Agreement, or (B) any other substantial adverse change in
such position, including titles, authority or responsibilities;
(ii) any failure by the Corporation to comply with any of the
provisions of this Agreement, other than an insubstantial or inadvertent
failure remedied by the Corporation promptly after receipt of notice
thereof given by the Executive;
(iii) the Corporation's requiring the Executive without his consent to
be based at any office or location outside of Orange County, California
except for travel reasonably required in the performance of the Executive's
responsibilities; or
(iv) any failure by the Corporation to obtain the assumption and
agreement to perform this Agreement by a successor as contemplated by
Section 13(b), provided that the successor has had actual written notice of
the existence of this Agreement and its terms and an opportunity to assume
the Corporation's responsibilities under this Agreement during a period of
10 business days after receipt of such notice.
4. Employment Period. The "Employment Period" shall be the period
commencing June 1, 2003, and ending on December 31, 2008, subject to extension
or termination as hereinafter provided. On December 31, 2008, and on each
December 31 thereafter, the Employment Period shall be automatically extended by
one additional year unless prior to June 30, 2008, or any subsequent June 30,
the Corporation shall deliver to the Executive or the Executive shall deliver to
the Corporation written notice that the Employment Period will not be extended
(a "Non-Renewal Notice"), in which case the Employment Period will end at its
then scheduled expiration date and shall not be further extended except by
written agreement of the Corporation and the Executive.
5. Position and Duties.
(a) No Reduction in Position. During the Employment Period, the Executive's
position (including titles), authority and responsibilities (including, without
limitation, reporting authority and responsibility) shall be at least
commensurate with the position of President and COO. It is understood that, for
purposes of this Agreement, such position, authority and responsibilities shall
not be regarded as not commensurate merely by virtue of the fact that a
successor shall have acquired all or substantially all of the business and/or
assets of the Corporation as contemplated by Section 13(b) of this Agreement,
provided that the Executive shall continue to have a position and authority and
responsibilities with respect to such successor or affiliated company
substantially corresponding to that of the Executive with respect to the
Corporation prior to such acquisition. As used in this Agreement, the term
"affiliated company" means any company controlling, controlled by, or under
common control with the Corporat ion. During the Employment Period, the
Executive also agrees to serve without additional compensation as President of
Hansen Beverage Company ("HBC"), the Corporation's wholly-owned subsidiary.
(b) Business Time. During the Employment Period, the Executive agrees to
devote his full business time during normal business hours to the business and
affairs of the Corporation and to use his best efforts to perform faithfully and
efficiently the responsibilities assigned to him hereunder, to the extent
necessary to discharge such responsibilities.
6. Compensation.
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(a) Base Salary. During the Employment Period, the Executive shall receive
a base salary (the "Base Salary"), payable bi-weekly or in such other
installments as may be agreed upon, at an annual rate of $230,000 for the
7-month period ending December 31, 2003, and $245,000 for the 12-month period
ending December 31, 2004, and increasing by a minimum of 5% for each subsequent
12-month period during the Employment Period. The Corporation shall review the
Base Salary annually and in light of such review may, in the discretion of the
Board of Directors of the Corporation increase (but not decrease) the Base
Salary by more than the minimum 5% per annum increase taking into account any
change in the Executive's responsibilities, increases in compensation of other
executives with comparable responsibilities, performance of the Executive and
other pertinent factors, and such adjusted Base Salary shall then constitute the
"Base Salary" for purposes of this Agreement.
(b) Bonus. In addition to the Base Salary, the Executive may be granted a
bonus ("Bonus"), payable at such times, and in such amounts, as may be fixed
from time to time at the discretion of the Board of Directors.
(c) Incentive and Savings Plans; Retirement and Life Insurance Programs. In
addition to the Base Salary and Bonus payable as hereinabove provided, during
the Employment Period, the Executive shall be entitled to participate in all
incentive and savings plans and programs, including stock option plans and other
equity-based compensation plans, and in all retirement and life insurance plans
which the Corporation may from time to time make available to the Executive
and/or any other executives of the Corporation or any affiliated company.
(d) Benefit Plans. During the Employment Period, the Executive, his spouse
or domestic partner and the members of his immediate family (to the extent
permitted by, the applicable plan), as the case may be, shall be entitled to
participate in or be covered under all medical, dental, disability, group life,
accidental death and travel accident insurance plans and programs of the
Corporation and its affiliated companies (at the most favorable level of
participation and providing highest levels of benefits available to him) as in
effect (i) on the date hereof or (ii) if more favorable to the Executive, as in
effect at any time thereafter with respect to the Executive or other executives
with comparable responsibilities. To the extent member's of the Executive's
immediate family or his domestic partner are not entitled to coverage under any
of the Corporation's benefit plans, the Corporation shall obtain coverage for
any such family members on an individual basis.
(e) Club Memberships. During the Employment Period, the Corporation shall
pay all initial and annual fees and all other reasonable expenses relating to
membership in up to two (2) business or social clubs to be selected by the
Executive in his sole discretion.
(f) Automobile. During the Employment Period, the Corporation shall pay all
costs and expenses relating to the purchase or lease, use, and maintenance of a
luxury automobile to be dedicated to the sole use of the Executive.
(g) Expenses. During the Employment Period, the Executive shall be entitled
to receive prompt reimbursement for all reasonable travel, entertainment and
other expenses incurred by the Executive in connection with the performance of
his duties hereunder in accordance with such policies and procedures as the
Corporation may from time to time establish.
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(h) Vacation and Fringe Benefits. During the Employment Period, the
Executive shall be entitled to paid vacation consisting of four (4) weeks per
year to be taken at such times selected by the Executive and reasonably
acceptable to the Corporation, such vacation to accrue ratably during the
Employment Period; such other paid holidays as may be accorded to employees of
the Corporation as well as up to ten (10) paid personal days per year to be
taken at such times as may be selected by the Executive.
(i) Stock Options. Simultaneously with the execution of this Agreement the
Corporation shall grant to the Executive options to purchase up to 150,000
shares of the Corporation's common stock, par value $.005 per share, pursuant to
the terms of a Stock Option Agreement in the form of Exhibit A hereto.
7. Termination.
(a) Death or Disability. This Agreement shall terminate automatically upon
the Executive's death. The Corporation may terminate this Agreement, after
having established the Executive's Disability, by giving to the Executive
written notice of its intention to terminate his employment, and his employment
with the Corporation shall terminate effective on the 90th day after receipt of
such notice if, within 90 days after such receipt, the Executive shall fail to
return to full-time performance of his duties. For purposes of this Agreement,
"Disability" means disability which would entitle the Executive to receive full
long-term disability benefits under the Corporation's long-term disability plan,
or if no such plan shall then be in effect, any physical or mental disability or
incapacity which renders the Executive incapable of performing the services
required of him in accordance with his obligations under Section 5 hereof for a
period of more than 120 days in the aggregate during any 12-month period during
the Employment Period.
(b) Voluntary Termination. Notwithstanding anything in this agreement to
the contrary, the Executive may, upon not less than 90 days' written notice to
the Corporation, voluntarily terminate employment for any reason, provided that
any termination by the Executive pursuant to Section 7(d) on account of
Constructive Termination shall not be treated as a voluntary termination under
this Section 7(b).
(c) Cause. The Corporation may terminate the Executive's employment for
Cause.
(d) Constructive Termination. The Executive may terminate his employment
for Constructive Termination.
(e) Notice of Termination. Any termination by the Company for Cause or by
the Executive for Constructive Termination shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 14(c).
For purposes of this Agreement, a "Notice of Termination" means a written notice
given, in the case of a termination for Cause, within 30 business days of the
Corporation's having actual knowledge of the events giving rise to such
termination, and in the case of a termination for Constructive Termination,
within 90 days of the Executive's having actual knowledge of the events giving
rise to such termination, and which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date of this Agreement (which date shall be not more than 15 days
after the giving of such notice). The failure by the Executive to set forth in
the Notice of Termination any fact or circumstance which contributes to a
showing of Constructive Termination shall not waive any right of the Executive
hereunder or preclude the Executive from asserting such fact or circumstance in
enforcing his rights hereunder.
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(f) Date of Termination. For the purpose of this Agreement, the term "Date
of Termination" means (i) in the case of a termination for which a Notice of
Termination is required, the date of receipt of such Notice of Termination or,
if later, the date specified therein, as the case may be and (ii) in all other
cases, the actual date on which the Executive's employment terminates during the
Employment Period.
8. Obligations of the Corporation upon Termination. Upon termination of
this Agreement the Corporation shall have the following obligations:
(a) Death. If the Executive's employment is terminated during the
Employment Period by reason of the Executive's death, the Corporation shall (i)
continue to pay to the Executive's legal representatives the Executive's full
Base Salary for a period of one year from the Date of Termination, (ii) provide
the Executive's family members with the benefits provided under Sections 6(d)
and 6(f) for a period of one year from the Date of Termination, (iii) pay to the
Executive's legal representatives any compensation previously deferred by the
Executive and not yet paid by the Corporation and any accrued vacation pay not
yet paid by the Corporation and (iv) pay to the Executive's legal
representatives any other amounts or benefits owing to the Executive's
beneficiaries under the then applicable employee benefit plans or policies of
the Corporation (such amounts specified in clauses (iii) and (iv) are
hereinafter referred to as "Accrued Obligations").
(b) Disability. If the Executive's employment is terminated by reason of
the Executive's Disability, the Corporation shall (i) continue to pay to the
Executive his full Base Salary for a period of one year from the Date of
Termination, (ii) provide the Executive and his family members with the benefits
provided under Sections 6(d) and 6(f) for a period of one year from the Date of
Termination, and (iii) pay to the Executive the Accrued Obligations.
(c) Cause and Voluntary Termination. If, during the Employment Period, the
Executive's employment shall be terminated for Cause or voluntarily terminated
by the Executive (other than on account of Constructive Termination), the
Corporation shall pay the Executive all Base Salary and benefits to which the
Executive is entitled pursuant to Section 6 through the Date of Termination and
the Accrued Obligations. Unless otherwise directed by the Executive, the
Executive shall be paid all such Accrued Obligations in a lump sum in cash
within 30 days of the Date of Termination and the Corporation shall have no
further obligations to the Executive under this Agreement.
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(d) Termination by Corporation other than for Cause or Disability and
Termination by the Executive for Constructive Termination. If, during the
Employment Period, the Corporation gives a Non-Renewal Notice or terminates the
Executive's employment other than for Cause or Disability, or the Executive
terminates his employment for Constructive Termination, the Corporation shall
pay or provide to the Executive the following:
(i) Cash Payment. First, the Corporation shall pay to the Executive in
a lump sum in cash within 15 days after the Date of Termination the
aggregate of the following amounts:
(A) if not theretofore paid, the Executive's Base Salary through
the date of Termination (plus, in the case of termination without
Cause, two weeks of Base Salary in lieu of notice) at the rate in
effect on the Date of Termination;
(B) a cash amount equal to any amounts described in Section
8(a)(iv); and
(C) the present value of the Executive's Base Salary for the
period through December 31, 2008, or through the date which is twelve
months from the Date of Termination, whichever period is longer, at
the rate in effect on the Date of Termination, discounted at the
interest rate payable on one year Treasury Bills in effect on the day
that is 30 business days prior to the Date of Termination, as if paid
monthly from the Date of Termination in arrears.
(ii) Benefits Continuation. Second, for the period from the Date of
Termination to December 31, 2008, or through the date which is twelve
months from the Date of Termination, whichever period is longer, the
Corporation shall provide to the Executive, his spouse or domestic partner
and members of his immediate family, as the case may be, the benefits
described in Section 6(d) on the same terms as described in Section 6(d),
and for the automobile provided under Section 6(f). All rights under this
Section 8(d)(ii) shall cease immediately upon the Executive's violation of
Section 12(b).
(iii) Deferred Payment. Third, the Corporation shall pay the Executive
any amounts payable under Section 8(a)(iii) on the terms and conditions of
the applicable plan or policy.
(iv) Discharge of Corporation's Obligations. Subject to the
performance of its obligations under this Section 8(d), the Corporation
shall have no further obligations to the Executive under this Agreement in
respect of any termination by the Executive for Constructive Termination or
by the Corporation other than for Cause or Disability, except to the extent
expressly provided under Sections 11 or 13 hereof or under any of the plans
referred to in Sections 6(c) or 6(d) hereof.
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9. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Corporation or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise prejudice such rights as the Executive may have under
any other agreements with the Corporation or any of its affiliated companies,
including, but not limited to, stock option or restricted stock agreements.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan or program of the Corporation or any of its affiliated
companies at or subsequent to the Date of Termination shall be payable in
accordance with such plan or program.
10. Full Settlement. Except as provided in Sections 8(d)(ii) and 12(b), the
Corporation's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Corporation may have against the
Executive or others whether by reason of the subsequent employment of the
Executive or otherwise. In no event shall the Executive be obligated to seek
other employment by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement. In the event that the Executive
shall in good faith give a Notice of Termination for Constructive Termination
and it shall thereafter be determined that Constructive Termination did not take
place, the employment of the Executive shall, unless the Corporation and the
Executive shall otherwise mutually agree, be deemed to have terminated, at the
date of givin g such purported Notice of Termination, by mutual consent of the
Corporation and the Executive and, except as provided in the last preceding
sentence, the Executive shall be entitled to receive only those payments and
benefits which he would have been entitled to receive at such date had he
terminated his employment voluntarily at such date under this Agreement.
11. Legal Fees and Expenses. In the event that a claim or payment or
benefits under this Agreement is disputed, the Corporation shall pay all
reasonable attorney fees and expenses incurred by the Executive in pursuing such
claim, provided that Executive is successful as to at least part of the disputed
claim by reason of arbitration (as set forth in Section 14(g)) or settlement.
12. Special Obligations of the Executive.
(a) Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Corporation all secret or confidential
information, knowledge or data relating to the Corporation or any of its
affiliated companies, and their respective businesses, (i) obtained by the
Executive during his employment by the Corporation or any of its affiliated
companies and (ii) not otherwise public knowledge (other than by reason of an
unauthorized act by the Executive). After termination of the Executive's
employment with the Corporation, the Executive shall not without the prior
written consent of the Corporation, unless compelled pursuant to an order of a
court or other body having jurisdiction over such matter, communicate or divulge
any such information, knowledge or data to anyone other than the Corporation and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 12(a) constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
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(b) Noncompetition. In order for the Corporation to reasonably protect its
interests against the competitive use of any confidential information, knowledge
or relationships concerning the business of the Corporation and its affiliated
companies to which the Executive has access because of the special nature of his
employment, the Executive shall not during the Employment Period and for a
period of six months thereafter, directly or indirectly, by ownership of
securities or otherwise, engage in any business organization whose activities
are competitive in any state of the United States or in any foreign country with
activities in which the Corporation and/or its affiliated companies are engaged
in such state or country, or become associated with or render services to any
person, business or enterprise so engaged. Mere ownership as an investor of not
more than 5% of the securities of a corporation or other business enterprise
shall not be deemed an association with such corporation or enterprise.
13. Successors.
(a) This Agreement is personal to the Executive and, without the prior
written consent of the Corporation, shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Corporation and its successors. The Corporation shall require any successor to
all or substantially all of the business and/or assets of the Corporation,
whether direct or indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, by an agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent as the Corporation would be required to perform if
no such succession had taken place. For purposes of this Section 13(b), the term
"Corporation" shall include the Corporation and HBC.
14. Miscellaneous.
(a) Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, applied without reference
to principles of conflict of laws.
(b) Amendments. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(c) Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand-delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
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If to the Executive:
2 Nidden
Irvine, California 92612
If to the Corporation:
Hansen Natural Corporation
1010 Railroad Street
Corona, CA 92882
Attention: Board of Directors
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(d) Tax Withholding. The Corporation may withhold from any amounts payable
under this Agreement such federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(e) Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(f) Captions. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
(g) Arbitration. Except with respect to the rights of the Corporation to
apply to a court of law or equity for equitable relief in the event of the
breach by the Executive of any of the provisions of Section 12 of this
Agreement, any controversy or claim arising out of or relating to this Agreement
or its termination shall be settled by arbitration in accordance with the rules
of the American Arbitration Association, and judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction thereof. Any
such arbitration shall take place in Los Angeles, California or at such other
location as may be agreed by the parties.
(h) Entire Agreement. This Agreement (including the exhibit hereto)
contains the entire agreement between the parties with respect to the subject
matter hereof, supersedes the 1999 Employment Agreement and there are no
agreements, understandings, representations or warranties between the parties
other than those set forth or referred to herein.
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IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Corporation has caused this Agreement to be executed in its name on its behalf,
all as of the day and year first above written.
HANSEN NATURAL CORPORATION
By: /s/ Rodney C. Sacks
_______________________________
Title: Chairman
EXECUTIVE:
/s/ Hilton H. Schlosberg
__________________________________
Hilton H. Schlosberg
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