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EXHIBIT 10.7
Raleigh Industries Limited
(1)
-and-
Phillip Darnton
(2)
SERVICE AGREEMENT
as Managing Director
Lovells
65 Holborn Viaduct
London EC1A 2DY
B2/MJTS/NMF
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Contents
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Clause Page no
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1. APPOINTMENT AND TERM 1
2. DUTIES 1
3. REMUNERATION AND BONUS 2
4. PENSION AND INSURANCE BENEFITS 3
5. EXPENSES 4
6. MOTOR CAR 4
7. RELOCATION EXPENSES 4
8. HOLIDAYS AND HOLIDAY PAY 4
9. SICKNESS/INCAPACITY 5
10. CONFIDENTIAL INFORMATION 5
11. INVENTIONS 5
12. RESTRICTIVE COVENANTS 5
13. PAYMENT ON TERMINATION 7
14. TERMINATION ON THE HAPPENING OF CERTAIN EVENTS 8
15. OBLIGATIONS UPON TERMINATION OF EMPLOYMENT 8
16. OTHER TERMS AND CONDITIONS 9
17. DEFINITION 10
18. APPLICABLE LAW 10
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Service Agreement
This Agreement made the 11th day of August 2000
Between:
(1) Raleigh Industries Limited (Registered Number 139076) whose registered
office is at Triumph Road, Nottingham, NG7 2DD (the "Company") and
(2) Phillip Darnton of 75 Limerston Street, London SW10 0BL (the "Executive").
Whereas:
The Company wishes to employ the Executive and the Executive has agreed to serve
the Company as Managing Director on the terms and conditions set out in this
Agreement.
It is agreed:
1. Appointment and term
1.1 The Company shall employ the Executive and the Executive shall serve the
Company as Managing Director with effect from 4 January 2000. During the
first year of the Executive's employment hereunder, either the Executive or
the Company may terminate the employment at any time by giving to the other
not less than six calendar months' notice in writing. Thereafter, either
the Executive or the Company may terminate the employment at any time by
giving to the other not less than one year's notice in writing. The
Company reserves the right to terminate the Executive's employment by
payment of a sum equivalent to the amount of the Executive's net salary and
the value of other contractual benefits during his notice period.
1.2 The Executive shall be a member of the Derby Cycle Corporation Executive
Board of Directors and shall be entitled to receive notice of and shall
attend all meetings thereof.
2. Duties
2.1 During his employment hereunder the Executive shall:
(a) perform the duties and exercise the powers and functions which from
time to time may reasonably be assigned to or vested in him by the
Group Chief Executive of the Derby Cycle Corporation (the "Group Chief
Executive") in relation to the Company and any Associated Company (as
herein defined) at such place or places both within and outside the
United Kingdom as the Group Chief Executive or the Board of Directors
of the Company ("the Board") shall determine;
(b) unless prevented by sickness, injury or other incapacity, during
working hours devote the whole of his time, attention and ability to
his duties hereunder and shall faithfully
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and loyally serve the Company to the best of his ability and use his
utmost endeavours to promote its interests in all respects;
(c) comply with all reasonable requests, instructions and regulations
given or made by the Group Chief Executive (or by any one authorised
by him) and promptly provide such explanations, information and
assistance as to his activities or the business of the Company as the
Group Chief Executive (or the Board) may reasonably require; and
(d) not engage in any activities which would detract from the proper
performance of his duties hereunder, nor without the prior written
consent of the Group Chief Executive in any capacity including as
director, shareholder, principal, consultant, agent, partner or
employee of any other company, firm or person (save as the holder for
investment of securities which do not exceed three per cent (3%) in
nominal value of the share capital or stock of any class of any
company quoted on a recognised stock exchange) engage or be concerned
or interested directly or indirectly in any other trade, business or
occupation whatsoever.
2.2 Without prejudice to the provisions of clause 2.1 (b) and (d), the
Executive may (with the prior written consent of the Group Chief Executive)
in the first two years' of his employment hereunder devote up to ten
working days' per annum to service in his role as a non-executive director
of non-group companies provided that such activities do not give rise to
any conflict of interest. The foregoing limit will be reviewed on the
second anniversary of the commencement of the Executive's employment
hereunder.
2.3 Notwithstanding the provisions of clause 2 the Company shall:
(a) (in the event of the Executive's absence from work for a consecutive
period of three months by reason of illness, accident or other
incapacity) be entitled at any time to appoint another person or
persons to act jointly with the Executive;
(b) have the right to require the Executive at any time to carry out such
special projects or functions commensurate with his abilities as the
Company shall in its absolute discretion determine; and
(c) be under no obligation to assign to or vest in the Executive any
powers, duties or functions or to provide any work for the Executive
and may at any time suspend the Executive from the performance of any
duties or exclude him from any premises of the Company.
3. Remuneration and bonus
3.1 As remuneration for his services hereunder the Company shall pay to the
Executive a salary at the rate of one hundred and fifty thousand pounds
((Pounds)150,000) per annum (which shall be deemed to accrue from day to
day) payable in arrears by equal monthly instalments on the
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fourteenth day of each month such salary being inclusive of any fees to
which the Executive may be entitled as a director of the Company or of any
Associated Company. The said salary shall be reviewed annually by the Board
by no later than the end of the first quarter of each calendar year and the
rate thereof may be increased (but not, without the Executive's consent,
decreased) with effect from 4 January in that year.
3.2 The Executive will be entitled to be a member of the Derby Cycle
Corporation Executive Bonus Scheme ("the Bonus Scheme"). Any payments
under the Bonus Scheme are entirely discretionary and will be made in
accordance with the terms of the Bonus Scheme.
3.3 Without prejudice to the Company's discretion in respect of the Bonus
Scheme, the Company will pay the Executive a guaranteed bonus of at least
(Pounds)75,000 (subject to the deduction of any tax, national insurance and
any other deductions) in respect of the first year of his employment
hereunder. This bonus (the final amount of which will be determined by the
Group Chief Executive in his absolute discretion and will be dependent on
the performance of the Company) will be paid on or about 15 April 2001 and
is conditional upon the Executive still being employed by the Company on 31
December 2000 and not working out any period of notice given by him. For
the avoidance of doubt, the Executive shall not be entitled to any pro rata
proportion of this bonus payment if he is no longer employed by the Company
on 31 December 2000.
3.4 For the purposes of the Employment Rights Act 1996 and otherwise the
Executive hereby consents to the deduction of any sums owing by him to the
Company at any time from his salary or any other payment due from the
Company to the Executive and the Executive hereby also agrees to make any
payment to the Company of any sums owed by him to the Company upon demand
by the Company at any time.
4. Pension and Insurance Benefits
4.1 The Executive shall be entitled to be a member of the contributory Raleigh
Pension Scheme and the non-contributory Raleigh and Sturmey-Archer
Executive Pension Scheme, particulars of which are set out in the Company's
letter to the Executive dated 15 December 1999 (a copy of which is attached
as Schedule I). The Executive's membership of the said schemes shall be
subject to the provisions thereof as amended from time to time.
4.2 The Company shall provide the Executive with medical insurance (details of
which are available from the Personnel department) in respect of him and
(in the event of his marriage) his spouse and any dependent children. The
Company shall also provide the Executive with life assurance (in accordance
with the terms of the Raleigh and Sturmey-Archer Executive Pension Scheme).
The Company shall have the right to change its arrangements for the
provision of such benefits, but shall continue to provide benefits of a
reasonably equivalent nature and value.
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4.3 The Executive agrees that the maximum weekly working time as set out in
regulation 4 of the Working Time Regulations 1998 shall not apply in
relation to his employment. This condition shall apply indefinitely
subject to the Executive's right to withdraw his agreement to the exclusion
of the maximum weekly working time on providing three months' written
notice.
5. Expenses
The Company shall reimburse to the Executive all travelling, hotel,
entertainment and other expenses properly and reasonably incurred by him in
the performance of his duties hereunder and properly claimed and vouched
for in accordance with the Company's expense reporting procedure in force
from time to time.
6. Motor car
The Company shall provide the Executive with a motor car appropriate to his
status in accordance with the Company's current car scheme policy for his
business and personal use. The Company shall pay all taxation, insurance
premiums, maintenance and repair expenses. Upon termination of his
employment for whatever reason or if the Executive ceases for any reason to
hold a valid driving licence the Executive shall forthwith return the motor
car to the Company.
7. Relocation expenses
The Company will either provide the Executive with temporary accommodation
in Nottingham for a period of 12 months from 4 January 2000 or reimburse to
the Executive relocation expenses properly and reasonably incurred by the
Executive in moving to Nottingham on or before 3 January 2001. The maximum
amounts paid by the Company in respect of such temporary accommodation
and/or relocation expenses will together be no more than (Pounds)35,000
(net of any taxes). After the said period, the cost of any accommodation
for the Executive (or any relocation expenses) will be reviewed by the
Company, taking account of the then current circumstances.
8. Holidays and holiday pay
8.1 In addition to the normal Bank and public holidays the Executive shall be
entitled to 25 working days' paid holiday during each calendar year to be
taken at such time or times as may be agreed with the Group Chief
Executive. The Executive may not without the consent of the Board carry
forward any unused part of his holiday entitlement to a subsequent calendar
year.
8.2 For the calendar year during which the Executive's employment hereunder
commences or terminates he shall be entitled to such proportion of his
annual holiday entitlement as the period of his employment in each such
year bears to one calendar year. Upon termination of his employment for
whatever reason he shall if appropriate either be entitled to salary in
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lieu of any outstanding holiday entitlement or be required to pay to the
Company any salary received in respect of holiday taken in excess of his
proportionate holiday entitlement.
9. Sickness/incapacity
9.1 If the Executive shall be prevented by illness, accident or other
incapacity from properly performing his duties hereunder he shall report
this fact forthwith to the Personnel department and if he is so prevented
for more than seven consecutive days he shall if required by the Company
provide an appropriate doctor's certificate.
9.2 If the Executive shall be absent from his duties hereunder owing to
illness, accident or other incapacity duly certified in accordance with the
provisions of clause 9.1 he shall be paid his full remuneration for the
first six months of such absence and thereafter subject to the provisions
of clause 14 such remuneration as the Board shall in its discretion allow
PROVIDED THAT there shall be deducted from such remuneration any Statutory
Sick Pay or any social security or other benefits payable to the Executive
including any sums recoverable from a third party.
10. Confidential information
The Executive shall not during his employment hereunder (save in the proper
course thereof) or at any time after its termination for any reason
whatsoever disclose to any person whatsoever or otherwise make use of any
confidential or secret information which he has or may have acquired in the
course of his employment concerning the business, affairs, finance,
customers or trade connections of the Company or any Associated Company or
any of its or their suppliers, agents, distributors or customers and shall
use his best endeavours to prevent the unauthorised publication or
disclosure of any such confidential or secret information.
11. Inventions
Subject to the Patents Act 1977 and the Copyright, Designs and Patents Act
1988 any invention, design or copyright work made by the Executive during
the course of his employment by the Company whether or not in the course of
his duties and whether for the Company or any Associated Company shall be
the exclusive property of the Company and the Executive undertakes at the
expense of the Company to execute any formal and additional assignment
required by the Company to vest or confirm the vesting in it or its nominee
of all rights in any such invention, design or copyright work.
12. Restrictive covenants
12.1 Since the Executive will in the course of his employment hereunder have
dealings with customers and obtain knowledge of trade secrets and other
confidential information in regard to the business of the Company and its
Associated Companies, the Executive hereby agrees and undertakes with the
Company for itself and as trustee for its Associated Companies that
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he shall not without the prior written consent of the Board (such consent
to be withheld only so far as may be reasonably necessary to protect the
legitimate interests of the Company or any Associated Company):
(a) for a period of 12 months after the termination of his employment
hereunder be engaged or interested (whether as a director,
shareholder, principal, consultant, agent, partner or employee) in any
business concern (of whatever kind) which shall in the United Kingdom
and Eire be in competition with the Company or with any Associated
Company in the manufacture, exporting, importing, sale, supply,
marketing or distribution of bicycles, bicycle parts or accessories of
a kind with which the Executive was concerned to a material extent
during the period of one year prior to the termination of his
employment with the Company PROVIDED ALWAYS that nothing in this
clause 12.1(a) shall restrain the Executive from engaging or being
interested as aforesaid in any such business concern in so far as his
duties or work relate principally to goods of a kind with which the
Executive was not concerned during the period of one year prior to the
termination of his employment hereunder;
(b) for a period of 12 months after the termination of his employment
hereunder either on his own behalf or on behalf of any other person,
firm or company in respect of any goods of a kind sold or supplied by
the Company and/or any Associated Company in respect of the sale or
supply of which the Executive may have been engaged during his
employment with the Company or any Associated Company:
(i) canvass, solicit or approach or cause to be canvassed,
solicited or approached for orders; or
(ii) directly or indirectly deal with
any person, firm or company who at the date of the termination of this
Agreement or within one year prior to such date is or was a customer
of the Company or any Associated Company or was in the habit of
dealing under contract with the Company or any Associated Company and
with whom or which the Executive had contact during the said period;
and
(c) for a period of 12 months after the termination of his employment
hereunder either on his own behalf or on behalf of any other person,
firm or company:
(i) directly or indirectly solicit or entice or endeavour to
solicit or entice away from the Company or from any Associated
Company any employee of executive or managerial status engaged
in its or their business and with whom the Executive had
dealings at any time during the last year of his employment
hereunder; and
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(ii) interfere or seek to interfere with the continuance of supplies
to the Company and/or any Associated Company (or the terms
relating to such supplies) from any suppliers who have been
supplying goods, materials or services to the Company and/or
any Associated Company at any time during the last year of his
employment hereunder.
Whilst each of the restrictions in clauses 12.1(a), 12.1(b) and 12.1(c) are
considered by the parties to be reasonable in all the circumstances as at
the date hereof it is hereby agreed and declared that if any one or more of
such restrictions shall be judged to be void as going beyond what is
reasonable in all the circumstances for the protection of the interests of
the Company and/or any Associated Company but would be valid if words were
deleted therefrom the said restrictions shall be deemed to apply with such
modifications as may be necessary to make them valid and effective and any
such modification shall not thereby affect the validity of any other
restriction contained herein.
13. Payment on Termination
13.1 Either party may terminate this Agreement in accordance with clause 1.1.
13.2 If the Company terminates this Agreement on or after 4 January 2001
(otherwise than by giving notice under clause 1.1 or pursuant to clause
14), the Company will:
(a) pay to the Executive within 21 days after the termination of this
Agreement a single lump sum (less all tax and other deductions
required by law) equal to the aggregate of:
(i) the Executive's basic annual salary at the date of termination;
(ii) the annual premium payable by the Company to provide the
benefits in clause 4.2 above;
(iii) the annual value to the Executive of the Company car provided
to him under clause 6 above calculated by the Company in
accordance with the Automobile Association's tables current at
the date of termination.
(b) make a payment to the schemes referred to in clause 4.1 for the
benefit of the Executive of an amount (subject to Inland Revenue
limits) such that on retirement the Executive will be entitled to the
same benefits to which he would have been entitled had he remained an
employee of the Company for a further year.
13.3 If the Company terminates this Agreement before 4 January 2001 (other than
by giving notice under clause 1.1 or pursuant to clause 14), the Company
shall make a payment of half the amount referred to in clause 13.2(a),
together with payment to the schemes referred to in clause 4.1 for the
benefit of the Executive of an amount (subject to Inland Revenue limits)
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such that on retirement the Executive will be entitled to the same benefits
to which he would have been entitled had he remained an employee of the
Company for a further six months.
13.4 The payments made under this clause will be in full and final settlement of
all and any claims which the Executive has or may have against the Company
in respect of the Executive's employment hereunder or the termination
thereof.
14. Termination on the happening of certain events
The Company without prejudice to any remedy which it may have against the
Executive for the breach or non-performance of any of the provisions of
this Agreement may forthwith terminate this Agreement without notice or
payment in lieu of notice if the Executive shall:
(a) become bankrupt or become the subject of an interim order under the
Insolvency Act 1986 or make any arrangement or composition with his
creditors; or
(b) become a patient as defined in the Mental Health Act 1983; or
(c) be convicted of any criminal offence (other than an offence under road
traffic legislation in the United Kingdom or elsewhere for which a
penalty other than imprisonment for three months or more is imposed);
or
(d) commit any act of dishonesty whether relating to the Company, any
Associated Company, other employees or otherwise; or
(e) be prevented by illness or otherwise from performing his duties
hereunder for a consecutive period of six calendar months or for an
aggregate period of six calendar months in any period of 12 calendar
months; or
(f) be guilty of any serious misconduct, any conduct tending to bring the
Company or himself into disrepute, or any material breach or non-
observance of any of the provisions of this Agreement or shall
neglect, fail or refuse to carry out duties properly assigned to him
hereunder.
On the termination of the Executive's employment, the Company shall pay to
the Executive all amounts which are accrued and due to him as at the date
thereof.
15. Obligations upon termination of employment
Upon the termination of his employment hereunder for whatever reason the
Executive shall:
(a) forthwith tender his resignation as a Director of the Company and of
any Associated Company without compensation. To secure his obligation
under this Agreement the Executive irrevocably appoints the Company to
be his attorney in his name and on his behalf to sign any documents
and do any things necessary to give effect thereto, if the Executive
shall fail to sign or do the same himself;
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(b) deliver up to the Company all vehicles, keys, credit cards,
correspondence, documents, specifications, reports, papers and records
(including any computer materials such as discs or tapes) and all
copies thereof and any other property (whether or not similar to the
foregoing or any of them) belonging to the Company or any Associated
Company which may be in his possession or under his control, and
(unless prevented by the owner thereof) any such property belonging to
others which may be in his possession or under his control and which
relates in any way to the business or affairs of the Company or any
Associated Company or any supplier, agent, distributor or customer of
the Company or any Associated Company, and he shall not without
written consent of the Board retain any copies thereof;
(c) if so requested send to the Company Secretary a signed statement
confirming that he has complied with clause 15(b); and
(d) not at any time represent himself still to be connected with the
Company or any Associated Company.
16. Other terms and conditions
16.1 The provisions of the Company's standard terms and conditions of employment
for management and administrative staff shall apply to the Executive's
employment hereunder except so far as inconsistent herewith.
16.2 The following particulars are given in compliance with the requirements of
s 1 Employment Rights Act 1996:
(a) the Executive's normal place of work is the Company's principal UK
office from time to time but he may be required to work at any other
office or location in the UK (or, with his consent, outside the UK) as
may be directed by the Group Chief Executive or the Board from time to
time;
(b) the Executive's continuous employment began on 4 January 2000. No
employment of the Executive with a previous employer counts as part of
the Executive's continuous employment with the Company;
(c) the Executive's hours of work shall be the normal hours of work of the
Company which are from 8.30 am to 5.00 pm Monday to Thursday and 8.30
am to 4.30 pm on Fridays together with such additional hours as may be
necessary for the proper discharge of his duties hereunder to the
satisfaction of the Board;
(d) if the Executive is dissatisfied with any disciplinary decision or if
he has any grievance relating to his employment hereunder he should
refer such disciplinary decision or grievance to the Group Chief
Executive and the reference will be dealt with by the Group Chief
Executive;
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(e) a contracting-out certificate pursuant to the provisions of Pension
Schemes Act 1993 is in force in respect of the Executive's employment
hereunder; and
(f) save as otherwise herein provided there are no terms or conditions of
employment relating to hours of work or to normal working hours or to
entitlement to holiday (including public holidays) or holiday pay or
to incapacity for work due to sickness or injury or to pensions or
pension schemes or to requirements to work abroad and no collective
agreement has any effect upon the Executive's employment hereunder.
17. Definition
In this Agreement an "Associated Company" means any company which for the
time being is:
(b) a holding company (as defined by s 736 Companies Act 1985) of the
Company; or
(c) any subsidiary (as defined by s 736 Companies Act 1985) of any such
holding company or of the Company; or
(d) a company over which the Company has control within the meaning of s
840 Income and Corporation Taxes Act 1988.
18. Applicable law
English law shall apply to this Agreement and the parties submit to the
jurisdiction of the English Courts.
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Schedule I
Letter dated 15 December 1999 from the Company to the Executive is
attached.
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IN WITNESS whereof this deed has been duly executed and delivered the day and
year first before written
Executed as a deed by )
Raleigh Industries Limited )
acting by )
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Director
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Director/Secretary
Signed as a deed by )
Phillip Darnton )
in the presence of: )
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Witness's name and signature
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Witness's address
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