EMPLOYMENT AGREEMENT
Exhibit 10.70
AGREEMENT made and entered into in Littleton, Massachusetts, by and between Dover Saddlery,
Inc. (the “Company”), a Delaware corporation with its principal place of business at Littleton,
Massachusetts, and Xxxxxxx X. Xxxxxxx (the “Executive”), effective as of the 1st day of
September, 2010.
WHEREAS, the operations of the Company are a complex matter requiring direction and leadership
in a variety of arenas;
WHEREAS, the Executive possesses the experience and expertise to provide the direction and
leadership required by the Company and its Affiliates from his business experience prior to joining
the Company and his years of service to the Company; and
WHEREAS, subject to the terms and conditions hereinafter set forth, the Company therefore
wishes to establish the terms of the continued employment of the Executive as its Vice President
and Chief Operating Officer, and the Executive agrees to so establish such terms of his employment;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms,
provisions and conditions set forth in this Agreement, the parties hereby agree:
1. Employment. Subject to the terms and conditions set forth in this Agreement, the
Company hereby offers and the Executive hereby accepts employment on the terms set forth in this
Agreement.
2. Term. Subject to earlier termination as hereafter provided, this Agreement shall
have an initial twenty-four month term; the original term hereof shall end on August 31, 2012.
Unless terminated pursuant to another provision of this Agreement, this Agreement shall thereafter
have a rolling twelve-month term, but may at any time be terminated by either party by giving not
less than twelve months written notice of the termination date. The term of this Agreement, as
from time to time extended or renewed, is hereafter referred to as “the term of this Agreement” or
“the term hereof.”
3. Capacity and Performance.
(a) During the term hereof, the Executive shall serve the Company as its Vice President and
Chief Operating Officer. In addition, and without further compensation, the Executive shall serve
as a director of the Company, if so elected by the stockholders of the Company, and shall serve as
a director of one or more of the Company’s Affiliates if so elected from time to time.
(b) During the term hereof, the Executive shall be employed by the Company on a full-time
basis and shall have all powers and duties consistent with the position of Vice President and Chief
Operating Officer, subject to the direction of the President.
(c) During the term hereof, the Executive shall devote his full business time and his best
efforts, business judgment, skill and knowledge exclusively to the advancement of the business and
interests of the Company and its Affiliates and to the discharge of his duties and responsibilities
hereunder; provided, however, that this provision shall not prevent the Executive from managing his
personal investments and engaging in civic and charitable activities outside of normal business
hours.
(d) Except for required travel on the Company’s business to an extent substantially consistent
with his present business travel obligations and except for attendance at meetings of the Board of
Directors of the Company and/or its Affiliates, the Executive shall not be required to work on a
regular basis at any location outside of the Commonwealth of Massachusetts.
4. Compensation and Benefits. As compensation for all services performed by the
Executive under and during the term hereof and subject to performance of the Executive’s duties and
of the obligations of the Executive to the Company and its Affiliates pursuant to this Agreement.
(a) Base Salary. During the term hereof, the Company shall pay the Executive a salary
at the rate of Two Hundred Twenty Thousand Dollars ($220,000.00) per annum, payable in accordance
with the payroll practices of the Company for its executives. Such base salary is hereafter
referred to as the “Base Salary.” The Base Salary will be increased on January 1 of each year to
follow year-to-year increases in the Consumer Price Index for All Urban Consumers (“CPI-U”) as
reported in the immediately preceding December reports.
(b) Incentive and Bonus Compensation. The Executive shall continue to participate in
the Company’s current performance bonus program as described in Exhibit A attached hereto.
Further, if any other incentive or bonus compensation programs are made available to executives of
the Company, generally, the Executive shall be entitled during the term hereof to participate in
such program in accordance with the terms thereof, as such terms may be modified or amended by the
Company from time to time; provided, however, that nothing contained herein shall obligate the
Company to adopt or continue such additional incentive or bonus compensation programs. Any
compensation paid to the Executive under such an incentive or bonus compensation program shall be
in addition to the Base Salary.
(c) Vacations. During the term hereof, the Executive shall be entitled to four (4)
weeks of paid vacation annually, to be taken at such times and intervals as shall be determined by
the Executive, subject to the reasonable business needs of the Company.
(d) Retirement Plans. During the term hereof, the Employee shall be entitled to
participate in and enjoy the benefit of the Company’s 401-K Plan, and any other retirement or
similar plans, programs or arrangements available to Executive Management from time to time. For
purposes of the Agreement, “Executive Management” means the Employee and the other two most highly
paid non-shareholder executive officers of the Company from time to time.
(e) Health, Welfare and Fringe Benefit Plans, Etc. During the term hereof, the
Employee shall at no cost to him be entitled to participate in and enjoy the benefit of all of the
health, medical, dental, cafeteria, reimbursement, accident, travel, insurance, sick leave, other
leaves of absence, holidays and other similar welfare, fringe-benefit or employment-related plans,
programs, arrangements, policies or prerequisites available to Executive Management from time to
time. Participation shall be subject to the terms of the applicable plan documents and the
discretion of the Board or any administrative or other committee provided for in or contemplated by
such plan. The Company may alter, modify, add to or delete its employee benefit plans as they
apply to Executive Management at such times and in such manner as the Company determines to be
appropriate, without recourse by the Executive.
(f) Additional Benefits. In addition to the other compensation and benefits described
in this Section, the Company shall pay or reimburse the Executive for disability and life insurance
at an annual cost of an amount not to exceed Fifteen Thousand Dollars ($15,000.00).
(g) Business Expenses. The Company shall pay or reimburse the Executive for all
reasonable business expenses incurred or paid by the Executive in the performance of his duties and
responsibilities hereunder, subject to any restrictions on such expenses set by the Board and to
such reasonable substantiation and documentation as may be specified by the Company from time to
time.
5. Termination of Employment and Severance Benefits. Notwithstanding the provisions
of Section 2 hereof, the Executive’s employment hereunder shall terminate prior to the expiration
of the term hereof under the following circumstances:
(a) Retirement or Death. In the event of the Executive’s retirement or death during
the term hereof, the Executive’s employment hereunder shall immediately and automatically
terminate. In the event of the Executive’s death during the term hereof, the Company shall pay to
the Executive’s designated beneficiary or, if no beneficiary has been designated by the Executive,
to his estate, any earned and unpaid Base Salary and any incentive or bonus compensation that is
earned but unpaid, pro rated through the date of his death.
(b) Disability.
(i) The Company may terminate the Executive’s employment hereunder, upon notice to the
Executive, in the event that the Executive becomes disabled during his employment hereunder through
any illness, injury, accident or condition of either a physical or psychological nature and, as a
result, is unable to perform substantially all of his duties and responsibilities hereunder for a
period of twelve consecutive months, subject to any applicable provisions of the Americans with
Disabilities Act.
(ii) The Board may designate another employee to act in the Executive’s place during any
period of the Executive’s disability. Notwithstanding any such designation, the Executive shall
continue to receive the Base Salary and other benefits in accordance with Section 4 to the extent
provided by the then-current terms of the applicable benefit plans, until the termination of his
employment.
(iii) If any question shall arise as to whether during any period the Executive is disabled
through any illness, injury, accident or condition of either a physical or psychological nature so
as to be unable to perform substantially all of his duties and responsibilities hereunder, the
Executive may, and at the request of the Company shall, submit to a medical examination by a
physician selected by the mutual agreement of the Company and the Executive or his duly appointed
guardian, if any, to determine whether the Executive is so disabled and such determination shall
for the purposes of this Agreement be conclusive of the issue. In the event that the Company and
the Executive are unable to agree upon the selection of the physician to conduct such medical
examination, the Company and the Executive shall each select a physician and the two physicians
shall select a third physician, and the three physicians so selected shall conduct the medical
examination; the determination of the two physicians who agree on whether the Executive is disabled
shall for the purposes of this Agreement be conclusive of the issue. If the question of the
Executive’s disability shall arise and the Executive shall fail to submit to such medical
examination, the Company’s determination of the issue shall be binding on the Executive.
(c) By the Company for Cause. The Company may terminate the Executive’s employment
hereunder for cause at any time upon notice to the Executive setting forth in reasonable detail the
nature of such cause. The following, as determined by the Board in its reasonable judgment, shall
constitute cause for termination:
(i) The Executive’s falsification of the accounts of the Company, embezzlement of funds of the
Company or other fraud with respect to the Company or any of its Affiliates; or
(ii) Conviction of, or a plea of nolo contendre to, a felony; or
(iii) Conduct engaged in by the Executive the continuation of which is not in the best
interests of the Company and which is or if continued would be materially harmful to the business,
interests of reputation of the Company or any of its Affiliates and as to which the Board of
Directors has given the Executive notice in person at a duly called and scheduled meeting of the
Board of Directors and at a minimum a thirty (30) day opportunity to cure.
Upon the giving of notice of termination of the Executive’s employment hereunder for cause, the
Company shall have no further obligation or liability to the Executive, other than the payment of
Base Salary earned and unpaid at the date of termination, and the contribution by the Company to
the cost of the Executive’s participation (subject to any required employee contribution by the
Executive under the terms of the applicable plans) in the Company’s group medical and dental
insurance plans as the same are in effect from time to time for so long as the Executive is
entitled to continue such participation under applicable law and plan terms.
(d) By the Company other than for Cause. The Company may terminate the Executive’s
employment hereunder other than for cause at any time after the initial term upon notice to the
Executive. In the event of such termination, then until the conclusion of a period equal to twelve
(12) months from the date such termination is effective, the Company shall continue to pay the
Executive the Base Salary at the rate in effect on the date of termination. If the date of
termination is on or after July 1st of any year, then the Executive shall also be
entitled to receive a prorated portion of his annual incentive compensation, provided that at the
time of termination the Company is meeting or exceeding the goals previously established under the
annual incentive plan.
(e) By the Executive for Good Reason. The Executive may terminate his employment
hereunder for Good Reason, upon notice to the Company setting forth in reasonable detail the nature
of such Good Reason. The following shall constitute (“Good Reason” for termination by the
Executive:
(i) Failure of the Company to continue the Executive in the position of Vice President and
Chief Operating Officer;
(ii) Breach by the Company of Section 3(d) hereof or material diminution in the nature or
scope of the Executive’s responsibilities, duties or authority; or
(iii) Any other material breach of this Agreement by the Company and, if such breach may be
cured, the Company’s failure to do so within ten (10) days after written notice thereof.
In the event of termination in accordance with this Section 5(e), then until the conclusion of a
period equal to twelve (12) months from the date such termination is effective, the Company shall
continue to pay the Executive the Base Salary at the rate in effect on the date of termination. If
the date of termination is on or after July 1st of any year, then the Executive shall
also be entitled to receive a prorated portion of his annual incentive compensation, provided that
at the time of termination the Company is meeting or exceeding the goals previously established
under the annual incentive plan.
(f) By the Executive Other than for Good Reason. The Executive may terminate his
employment hereunder at any time upon thirty (30) days’ notice to the Company. In the event of
termination of employment by the Executive pursuant to this Section 5(f), the Board may elect to
waive the period of notice, or any portion thereof, and, if the Board so elects, the Company will
pay the Executive his Base Salary for the notice period (or for any remaining portion of the
period), and the Company shall contribute to the cost of the Executive’s participation (subject to
any required employee contribution by the Executive under the terms of the applicable plans) in the
Company’s group medical and dental insurance plans as the same are in effect from time to time for
so long as the Executive is entitled to continue such participation under applicable law and plan
terms. Except as may be necessary or appropriate in connection with successor employment, the
Executive will keep confidential the termination of his employment pursuant to this Section 5(f)
until the earlier of the Company’s announcement thereof or the expiration of a period of forty-five
(45) days from the Executive’s notice hereunder.
(g) Upon a Change of Control.
(i) If a Change of Control occurs and within two years following such Change of Control the
Company terminates the Executive’s employment other than for Cause or the Executive terminates his
employment for Good Reason, then, in lieu of any payments to or on behalf of the Executive under
Section 5(d) or 5(e) hereof, the Company shall pay the Executive, within ten business days of such
termination, in a lump sum and amount equal to his Base Salary for a twelve (12) month period.
(ii) A Change of Control shall be deemed to take place if at some time after the initial
public offering of the Company’s common shares (A) any Person or “group” (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934), in any transaction or series
of related transactions, becomes a beneficial owner (within the meaning of Rule 13d-3 as
promulgated under the Securities Exchange Act of 1934), directly or indirectly, of securities
representing fifty percent (50%) or more of the total number of votes that may be cast for the
election of directors of the Company; (B) any merger or consolidation involving the Company (other
than a merger or consolidation which would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities of the surviving entity) at
least 51% of the combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation); (C) the sale, lease,
conveyance or other disposition of all or substantially all of the Company’s assets as an entirety
or substantially as an entirety to any Person or group (as defined above) acting in concert, other
than in the ordinary course of business; or (D) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition by the Company of
all or substantially all the Company’s assets.
(h) The Company shall promptly reimburse the Executive for the
amount of all reasonable attorneys’ fees and expenses incurred by the Executive in seeking to
obtain or enforce any right or benefit provided the Executive under this Section 5.
(i) Post-Agreement Employment. In the event the Executive remains in the employ of
the Company or any of its Affiliates following termination of this Agreement, by the expiration of
the term hereof or otherwise, then such employment shall be at will.
6. Effect of Termination. The provisions of this Section 6 shall apply to termination
due to the expiration of the term hereof pursuant to Section 5 or otherwise.
(a) The Company may, as a condition of fulfilling its obligations to the Executive under
Section 5, require the Executive to execute and deliver a release to the effect that performance by
the Company under this Agreement shall constitute full settlement of any claim that the Executive
might otherwise assert against the Company, its Affiliates or any of their shareholders, directors,
officers, employees or agents on account of such termination.
(b) Unless otherwise specifically provided herein, benefits shall terminate pursuant to the
terms of the applicable benefit plans based on the date of termination of the Executive’s
employment without regard to any continuation of Base Salary or other payment to the Executive
following such date of termination.
(c) Provisions of this Agreement shall survive any termination if so provided herein or if
necessary or desirable fully to accomplish the purposes of such provision, including without
limitation the obligations of the Executive under Sections 7 and 8 hereof. The obligation of the
Company to make payments to or on behalf of the Executive under Sections 5(d), 5(e) or 5(g) hereof
is expressly conditioned upon the Executive’s continued full performance of his obligations under
Sections 7 and 8 hereof. The Executive recognizes that, except as expressly provided in sections
5(d), 5(e) or 5 (g), no compensation is earned after termination of employment.
7. Confidential Information.
(a) The Executive acknowledges that the Company and its Affiliates
continually develop Confidential Information, that the Executive may develop Confidential
Information for the Company or its Affiliates and that the Executive may learn of Confidential
Information during the course of employment. The Executive will comply with the policies and
procedures of the Company and its Affiliates for protecting Confidential Information and shall
never disclose to any Person (except as required by applicable law or for the proper performance of
his duties and responsibilities to the Company and its Affiliates), or use for his own benefit or
gain, any Confidential Information obtained by the Executive incident to his employment or other
association with the Company or any of its Affiliates. The Executive understands that this
restriction shall continue to apply after his employment terminates, regardless of the reason for
such termination.
(b) All documents, records, tapes and other media of every kind and description relating to
the business, present or otherwise, of the Company or its Affiliates and any copies, in whole or in
part, thereof (the “Documents”), whether or not prepared by the Executive, shall be the sole and
exclusive property of the Company and its Affiliates. The Executive shall safeguard all Documents
and shall surrender to the Company at the time his employment terminates, or at such earlier time
or times as the Board or its designee may specify, all Documents then in the Executive’s possession
or control.
8. Restricted Activities. In consideration of the foregoing, the Executive agrees
that some restrictions on his activities during and after his employment are necessary to protect
the goodwill, Confidential Information and other legitimate interests of the Company and its
Affiliates.
(a) While the Executive is employed by the Company and until the conclusion of a period equal
to twenty-four (24) months from the date the Executive’s employment terminates, (the
“Non-Competition Period”), the Executive shall not, directly or indirectly, whether as
owner, partner, investor, consultant, agent, employee, co-venturer or otherwise, compete with the
Company or any of its Affiliates within the United States of America or undertake any planning for
any business competitive with the Company or any of its Affiliates. Specifically, but without
limiting the foregoing, the Executive agrees not to engage in any manner in any activity that is
competitive with the business of the Company or any of its Affiliates as conducted during the
Executive’s employment in the retail store, retail catalog or Internet retail sale of equestrian
products.
(b) The Executive agrees that, during his employment with the Company, will not undertake any
outside activity, whether or not competitive with the business of the Company or its Affiliates,
that could
reasonably give rise to a conflict of interest or otherwise interfere with his duties and
obligation to the Company or any of its Affiliates.
(c) The Executive further agrees that while he is employed by the Company and during the
Non-Competition Period, the Executive will not hire or attempt to hire any employee of the Company
or any of its Affiliates, assist in such hiring by any Person, encourage any such employee to
terminate his or her relationship with the Company or any of its Affiliates, or solicit or
encourage any customer or vendor of the Company or any of its Affiliates to terminate its
relationship with them.
(d) The Executive shall specifically not be able to shorten the Non-Competition Period
by waiving his right to receive payments under paragraph 5(d) or 5(e).
9. Notification Requirement. Until the conclusion of the Non-Competition Period, the
Executive shall give notice to the Company of each new business activity he plans to undertake, at
least thirty (30) days prior to beginning any such activity. Such notice shall state the name and
address of the Person for whom such activity is undertaken and the nature of the Executive’s
business relationship(s) and position(s) with such Person. Subject to reasonable confidentiality
requirements of a successor employer, the Executive shall provide the Company with such other
pertinent information concerning such business activity as the Company may reasonably request in
order to determine the Executive’s continued compliance with his obligations under Sections 7 and 8
hereof.
10. Enforcement of Covenants. The Executive acknowledges that he has carefully read
and considered all the terms and conditions of this Agreement, including the restraints imposed
upon him pursuant to Sections 7 and 8 hereof. The Executive agrees that said restraints are
necessary for the reasonable and proper protection of the Company and its Affiliates and that each
of the restraints is reasonable in respect to subject matter, length of time and geographic area.
The Executive further acknowledges that, were he to breach any of the covenants contained in
Sections 7 or 8 hereof, the damage to the Company would be irreparable. The Executive therefore
agrees that the Company, in addition to any other remedies available to it, shall be entitled to
preliminary and permanent injunctive relief against any breach or threatened breach by the
Executive of any of said covenants, without having to post bond. The parties further agree that,
in the event that any provision of Sections 7 or 8 hereof shall be determined by any court of
competent jurisdiction to be unenforceable by reason of its being extended over too great a time,
too large a geographic area or too great a range of activities, such provision shall be deemed to
be modified to permit its enforcement to the maximum extent permitted by law.
11. Definitions. Words or phrases, which are initially capitalized or are within
quotation marks shall have the meanings provided in this Section 11 and as provided elsewhere
herein. For purposes of this Agreement, the following definitions apply:
(a) “Affiliates” means all persons and entities directly or indirectly controlling,
controlled by or under common control with the Company, within the meaning of Rule 405 promulgated
under the Securities Act of 1933, as amended.
(b) “Confidential Information” means any and all information of the Company and its
Affiliates that is not generally known by others with whom they compete or do business, or with
whom they plan to compete or do business and any and all information, publicly known in whole or in
part or not, which, if disclosed by the Company or its Affiliates would assist in competition
against them. Confidential Information includes without limitation non-public information relating
to (i) the development, research, testing, manufacturing, marketing and financial activities of the
Company, (ii) the Manufacturing Processes, (iii) the costs, sources of supply, financial
performance and strategic plans of the Company and its Affiliates, (iv) the identity and special
needs of the customers of the Company and its Affiliates and (v) the people and organizations with
whom the Company and its Affiliates have business relationships and the existence of those
relationships. Confidential Information also includes comparable information that the Company or
any of its Affiliates have received belonging to others or which was received by the Company or any
of its Affiliates with any understanding that it would not be disclosed.
(c) “Manufacturing Processes” means all manufacturing processes planned,
researched, used, licensed or otherwise put into use by the Company or any of its Affiliates,
together with the identity of all subcontractors dealt with during the Executive’s employment.
(d) “Person” means an individual, a corporation, an association, a partnership, an
estate, a trust and any other entity or organization, other than the Company or any of its
Affiliates.
12. Withholding. All payments made by the Company under this Agreement shall be
reduced by any tax or other amounts required to be withheld by the Company under applicable law.
13. Assignment. Neither the Company nor the Executive may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise, without the prior written
consent of the other; provided, however, that the Company may assign its rights and obligations
under this Agreement without the consent of the Executive in the event that the Company shall
hereafter effect a reorganization, consolidate with, or merge into, any other Person or transfer
all or substantially all of its properties or assets to any other Person, subject in such case to
the provisions of Section 5(g) hereof. The Agreement shall inure to the benefit of and be binding
upon the Company and the Executive, their respective successors, executors, administrators, heirs
and permitted assigns. Without limiting the generality of the foregoing, this Agreement shall be
binding upon any successor to the business of the Company as a result of a Change-of-Control
transaction described in Section 5(g)(ii) hereof.
14. Severability. If any portion or provision of this Agreement shall to any extent
be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in circumstances other than those
as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
15. Waiver. No waiver of any provisions hereof shall be effective unless made in
writing and signed by the waiving party. The failure of either party to require the performance of
any term or obligation of this Agreement, or the waiver by either party of any breach of this
Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.
16. Notices. Any and all notices, requests, demands and other communications provided
for by this Agreement shall be in writing and shall be sent by telecopy or sent postage prepaid by
certified mail (return receipt requested) or reputable courier service and shall be deemed given
when so delivered by hand, telex or telecopy, or if mailed, five days after mailing (two business
days in the case of courier service) to the parties as follows: to the Executive at his last known
address on the books of the Company and, in the case of the Company, to its principal place of
business, attention of Chief Executive Officer or to such other address as either party may specify
by notice to the other.
17. Entire Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes all prior communications, agreements and understandings, written or oral,
with respect to the terms and conditions of the Executive’s employment, including the prior
Employment Agreement, dated January 1, 2008.
18. Amendment. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by an expressly authorized representative of the Company.
19. Headings. The headings and captions in this Agreement are for convenience only
and in no way define or describe the scope or content of any provision of this Agreement.
20. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be an original and all of which together shall constitute one and the same instrument.
21. Governing Law. This is a Massachusetts contract and shall be construed and
enforced under and be governed in all respects by the laws of the Commonwealth of Massachusetts,
without regard to the conflict of laws principles thereof.
Signature Page Follows.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Company, by
its duly authorized representative, and by the Executive, as of the date first above written.
| THE EXECUTIVE | DOVER SADDLERY, INC. | |||||||
/s/ Xxxxxxx Xxxxxxx
|
By: | /s/ Xxxxxxx X. Day
|
||||||
| Its President, duly authorized | ||||||||
Exhibit A
Bonus Program
The Executive’s annual bonus will be calculated on the basis of the following table:
EBITDA Goal Achievement |
EBITDA Bonus |
Warehouse Operating Costs Bonus |
||
Below 75% |
No Bonus | 5% (max) | ||
75% of goal |
5% of salary | |||
87.5% of goal |
10% of salary | |||
100% of goal |
15% of salary |
To the extent that the Company’s actual “Earnings Before Payment of Interest Taxes
Depreciation and Amortization” (“EBITDA”) falls between two of the foregoing milestones, the
Executive’s bonus will be prorated based on a straight-line interpolation.
