EXHIBIT 10.3
AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETITION AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETITION AGREEMENT (this
"Agreement"), dated as of September 24, 2007, is between CSAV, INC., a
Massachusetts corporation (the "Employer"), and XXXX XXXXXX (the "Employee").
WHEREAS, the Employer and the Employee are parties to that certain
Employment and Non-Competition Agreement, dated as of August 31, 2006 (as
amended, supplemented or otherwise modified from time to time to the date
hereof, the "Existing Employment Agreement"); and
WHEREAS, the Employer and the Employee desire to amend and restate the
terms of the Existing Employment Agreement pursuant to the terms of this
Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
SECTION 1. EMPLOYMENT. The Employer hereby employs the Employee, and the
Employee hereby accepts employment, upon the terms and subject to the conditions
hereinafter set forth.
SECTION 2. DUTIES. The Employee shall be employed as the Treasurer and
Chief Financial Officer of the Employer and shall be an Executive Officer of the
Employer reporting to the Chief Executive Officer (the "CEO"). In such
capacities, the Employee shall have the responsibilities and duties customary
for the applicable positions and such other responsibilities and duties as are
assigned by the Board of Directors (the "Board") of the Employer or the CEO,
which are consistent with the Employee's positions. At all times during the
performance of this Agreement, the Employee will adhere to the rules and
regulations (the "Policies") that have been or may hereafter be established by
the Board for the conduct of its employees or for the position or positions held
by the Employee. The Employee agrees to devote his full working time and best
efforts to the performance of his duties to the Employer. The foregoing shall
not be deemed to prohibit the Employee from participating in charitable or
professional organizations as long as such activities do not materially
interfere with the performance of the Employee's duties to the Employer or
otherwise violate the terms of this Agreement (including, without limitation
Sections 7 and 9 below).
SECTION 3. TERM. The initial term of employment of the Employee hereunder
commenced on September 18, 2006 (the "Commencement Date") and shall continue
until the third anniversary of the Commencement Date (the "Initial Term"),
unless earlier terminated pursuant to Section 6, and shall be renewed
automatically for additional one (1) year terms thereafter unless terminated by
either party by written notice to the other given at least thirty (30) days
prior to the expiration of the then current term.
SECTION 4. COMPENSATION AND BENEFITS. Until the termination of the
Employee's employment hereunder (except as expressly provided below), in
consideration for the services of the Employee hereunder (and in addition to any
amounts that may become payable pursuant to Section 6 below), the Employer shall
compensate the Employee as follows:
(a) BASE SALARY. The Employer shall pay the Employee, in accordance
with the Employer's then current payroll practices, a base salary (the
"Base Salary"). The Base Salary will be paid at an annual rate of $200,000.
The Base Salary shall be reviewed by the Board at the end of each fiscal
year of the Employer. Upon such review, the Board, in its sole discretion,
may increase the Base Salary.
(b) BONUS. The Employee shall be entitled to receive an annual
performance based bonus in cash (a "Bonus") of up to 50% of Base Salary
with respect to each fiscal year of the Employer, beginning with the fiscal
year ending December 31, 2007, based on satisfaction of performance
criteria to be set by the Board for such fiscal year. The performance based
Bonus for any fiscal year, if earned for such fiscal year, shall be payable
to the Employee on or prior to the 30th day following the issuance of the
Employer's audited financial statements for such fiscal year (but no later
than May 31 of the following year). The Board will use reasonable efforts
to establish performance criteria for such Bonuses within ninety (90) days
after the beginning of each fiscal year during the Term, but the failure to
establish such criteria within such period shall not constitute a breach by
the Employer of this Agreement or otherwise constitute "Good Reason" (as
defined below).
(c) VACATION. The Employee shall be entitled to four (4) weeks
vacation each calendar year. The Employee shall be entitled to additional
vacation time based on the Employee's length of service with the Employer.
Any increase in the amount of the Employee's vacation time that is based on
the Employee's length of service with the Employer shall be on a basis
consistent with the Employer's standard policy governing length of service
and vacation. Any vacation shall be taken at the reasonable and mutual
convenience of the Employer and the Employee. Accrued vacation that has not
been used as of the end of any calendar year may be carried forward for use
in the next calendar year in accordance with the then current policies of
the Employer.
(d) INSURANCE; OTHER BENEFITS. The Employee shall be entitled to
receive any group accident, disability, life and health insurance and other
employee benefits (including pension and welfare benefit plans) provided by
the Employer under group accident, disability, life and health insurance
plans and other employee benefit plans maintained by the Employer for its
full-time, salaried executive officers as such benefits may be modified
from time to time by the Board.
(e) WITHHOLDING. All amounts payable by the Employer to the Employee
hereunder (including, but not limited to, the Base Salary) shall be reduced
prior to the delivery of such payment to the Employee by an amount
sufficient to satisfy any applicable federal, state, local or other
withholding tax requirements.
SECTION 5. EXPENSES. The Employer shall reimburse the Employee for all
reasonable expenses of types authorized by the Employer and incurred by the
Employee in the performance of his duties hereunder. The Employee shall comply
with such budget limitations and approval and reporting requirements with
respect to expenses as the Employer may establish from time to time.
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SECTION 6. TERMINATION. The Employee's employment hereunder shall commence
on the Commencement Date and continue until the expiration of the Initial Term,
and any extension of such term pursuant to Section 3 above, except that the
employment of the Employee hereunder shall earlier terminate:
(a) DEATH. Upon the death of the Employee during the term of his
employment hereunder.
(b) DISABILITY. Subject to applicable law, including the Americans
with Disabilities Act of 1990, as amended, at the option of the Employer,
in the event of the Employee's Disability (as defined below), upon thirty
(30) days' written notice from the Employer. For purposes hereof, the
Employee shall be deemed to have a "Disability" if the Employee is unable
(as reasonably determined in good faith by the Board), on account of a
physical or mental illness, injury or disease or combination thereof, to
perform his duties and obligations under this Agreement for a period of
more than 90 consecutive days or for a total of 120 days (in either case
excluding vacation days) within any 12 month period.
(c) FOR CAUSE. For "Cause" immediately upon written notice by the
Employer to the Employee. For purposes of this Agreement, a termination
shall be for Cause if the Board shall reasonably determine that any one or
more of the following has occurred:
(i) the Employee shall have committed an act of fraud,
embezzlement, misappropriation or breach of fiduciary duty against the
Employer or any of CSAV Holding Corp. ("Holdings") or any of its
subsidiaries (collectively, the "Companies"), including, but not
limited to, the offer, payment, solicitation or acceptance of any
unlawful bribe or kickback with respect to the business of any of the
Companies; or
(ii) the Employee shall have been convicted by a court of
competent jurisdiction of, or pleaded guilty or nolo contendere to,
any felony; or
(iii) the Employee shall have committed a material breach of any
of the covenants, terms and provisions of Sections 7, 8 or 9 hereof;
or
(iv) the Employee shall have breached in any material respects
any one or more of the provisions of this Agreement (excluding
Sections 7, 8 and 9 hereof), including, without limitation, any
failure to comply with the Policies, or any one or more of the
provisions of the Stockholder Agreement dated as of August 29, 2003,
as amended, among Holdings and its stockholders, and, in each case,
such breach shall have continued for a period of fifteen (15) days
after written notice to the Employee specifying such breach in
reasonable detail; or
(v) the Employee shall have refused, after explicit written
notice, to obey any lawful resolution of or direction by the Board or
the CEO which is consistent with his duties hereunder; or
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(vi) the Employee shall be chronically absent from work
(excluding vacation, illnesses or leaves of absence approved by the
Board or the CEO) and such absence continues following written notice
to the Employee.
(d) RESIGNATION OR TERMINATION WITHOUT CAUSE. At any time, upon
written notice by either the Employer or the Employee to the other party
hereto.
(e) GOOD REASON. At the option of the Employee for "Good Reason" upon
written notice to the Employer within twenty (20) days after the occurrence
of the event giving rise to the Employee's claim that a "Good Reason" event
shall have occurred. For purposes of this Agreement, "Good Reason" shall
mean
(i) a breach by the Employer of any material provision of this
Agreement that shall have continued for a period of fifteen (15) days
after written notice to the Employer specifying such breach in
reasonable detail and is continuing after the expiration of such
period and as of the date of termination, whichever is later;
(ii) the assignment by the Employer to the Employee of any duties
inconsistent in any material respect with the Employee's position or
duties or responsibilities that reflect a material diminution in the
status of the Employee's position or duties (including the failure by
the Employer to maintain the Employee in the position of Chief
Financial Officer of the Employer), as contemplated by this Agreement,
which shall have continued for a period of fifteen (15) days after
written notice to the Employer specifying such breach in reasonable
detail and is continuing after the expiration of such period and as of
the date of termination, whichever is later;
(iii) any change in the reporting relationship, as described in
Section 2 hereof, such that the Employee no longer reports directly to
the Chief Executive Officer and the President, which change shall have
continued for a period of fifteen (15) days after written notice to
the Employer specifying such breach in reasonable detail and is
continuing after the expiration of such period and as of the date of
termination, whichever is later; or
(iv) relocation of the Employee's principal place of work to a
location more than sixty (60) miles from the address of the Employer
as of the date hereof, without the Employee's prior consent.
(f) RIGHTS AND REMEDIES ON TERMINATION.
(i) If the Employee's employment is terminated pursuant to
Section 6(a), Section 6(b) or Section 6(c), by the Employee pursuant
to Section 6(d) or pursuant to Section 3 in connection with the
expiration of the Initial Term or any subsequent term hereunder then
the Employee (or his estate, as applicable) shall be entitled to
receive (A) his Base Salary through the date of termination or
expiration, (B) any Bonus that is earned for a complete fiscal year,
but not yet paid, as of the date of termination (such Bonus to be paid
not later than as required by Section 4(b) above) and (C)
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payment for accrued but unused vacation time (in accordance with the
Employer's then current policies) (collectively, the "Accrued
Obligations").
(ii) If the Employee's employment hereunder is terminated by the
Employer pursuant to Section 6(d) or by the Employee pursuant to
Section 6(e), then, in addition to the Accrued Obligations, the
Employee shall be entitled to continue to receive payment, in
accordance with the Employer's then current payroll practices, of the
Employee's Base Salary in effect at the time of such termination (the
"Termination Date"), for a six month period following such
termination, in the event that the Employee receives an Additional
Bonus pursuant to Section 6(f)(iii) below or a nine (9) month period
following such termination, in the event that the Employee does not
receive an Additional Bonus pursuant to Section 6(f)(iii) below
("Severance"); provided, however, that (A) the Employee's right to
receive the foregoing payment is expressly conditioned upon receipt by
the Employer within 30 days following the Termination Date of a
written release executed by the Employee, in form and substance
satisfactory to the Employer, of any and all claims or causes of
action of any nature relating directly or indirectly to such
Employee's employment or termination of employment by the Employer and
(B) in the event that the Employee breaches any of the covenants,
terms or provisions of Section 7, 8 or 9 hereof, without limiting any
other rights that the Employer may have, the Employer's obligation to
make payments under this Section 6(f)(ii) shall immediately terminate.
If the Employee elects to continue health insurance coverage under
COBRA, the Employer shall pay the costs of such coverage for as long
as the Employee is entitled to receive severance payments during the
Severance Period pursuant to the immediately preceding sentence (or,
if earlier, until the date that the Employee accepts employment with
another employer); provided, however, that in such event the Employee
shall make contributions at the same rate at which contributions were
made for such coverage from the Employee's Base Salary immediately
prior to the termination of the Employee's employment and such
contributions shall be deducted by the Employer from the Employee's
severance payments.
(iii) If (A) a Disposition Event (as defined below) occurs at any
time prior to August 29, 2007 and (B) the Employee's employment
hereunder is terminated by the Employer pursuant to Section 6(d) or by
the Employee pursuant to Section 6(e) within one (1) year after such
Disposition Event, then, in addition to any other amounts payable
hereunder, the Employee shall be entitled to the Additional Bonus (as
defined below) provided that the Employee has complied with subparts
(A) and (B) of Section 6(f)(ii) above. The Additional Bonus, if any,
shall be paid not later than the fifth day after the termination of
employment. The "Additional Bonus" shall be an amount equal to
$400,000 less an amount equal to the fair market value (as determined
in good faith by the Board) of any consideration received by the
Employee in connection with the Disposition Event for the sale or
exchange of any capital stock of Holdings held by the Employee (net of
any exercise price actually paid by the Employee for such capital
stock) or the cancellation or purchase of any stock options granted by
Holdings to the Employee. "Disposition Event" shall have the meaning
set forth in the Stock
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Option Agreement, dated September 18, 2006, between Holdings and the
Employee.
(iv) Except as otherwise set forth in this Section 6(f) or in
Section 4, the Employee shall not be entitled to any severance, bonus
or other compensation after termination other than payment of any
expense reimbursements under Section 5 hereof for expenses incurred in
the performance of his duties prior to termination or benefits or
compensation to which the Employee is entitled pursuant to applicable
law (e.g. COBRA).
SECTION 7. INVENTIONS; ASSIGNMENT. All rights to discoveries, inventions,
improvements and innovations (including all data and records pertaining thereto)
related to the business of any of the Companies, whether or not patentable,
copyrightable, registrable as a trademark, or reduced to writing, that the
Employee may discover, invent or originate during the term of his employment
hereunder, either alone or with others and whether or not during working hours
or by the use of the facilities of any of the Companies ("Inventions"), shall be
the exclusive property of the Companies. The Employee shall promptly disclose
all Inventions to the Employer, shall execute at the request of the Employer any
assignments or other documents the Employer may deem necessary to protect or
perfect the rights of the Companies therein, and shall assist the Companies, at
the Companies' expense, in obtaining, defending and enforcing the Companies'
rights therein. The Employee hereby appoints the Employer and each of the other
Companies, individually, as his attorney-in-fact to execute on his behalf any
assignments or other documents deemed necessary by the Employer or any of the
other Companies to protect or perfect their rights to any Inventions.
SECTION 8. CONFIDENTIAL INFORMATION. The Employee recognizes and
acknowledges that certain assets of the Companies, including, without
limitation, information regarding customers, pricing policies, methods of
operation, proprietary production processes, proprietary computer programs,
sales, products, profits, costs, markets, key personnel, formulae, product
applications, technical processes, and trade secrets (hereinafter called
"Confidential Information") are valuable, special, and unique assets of the
Companies and their affiliates. The Employee shall not, during or after his term
of employment, disclose any or any part of the Confidential Information to any
person, firm, corporation, association, or any other entity for any reason or
purpose whatsoever, directly or indirectly, except as may be required pursuant
to his employment hereunder; provided, that Confidential Information shall in no
event include (a) Confidential Information which was generally available to the
public at the time of disclosure by the Employee or (b) Confidential Information
which becomes publicly available other than as a consequence of the breach by
the Employee of his confidentiality obligations hereunder. In the event of the
termination of his employment, whether voluntary or involuntary and whether by
the Employer or the Employee, the Employee shall deliver to the Employer all
documents and data pertaining to the Confidential Information and shall not take
with him any documents or data of any kind or any reproductions (in whole or in
part) or extracts of any items relating to the Confidential Information. Nothing
contained within this Section 8 shall prohibit the Employee from disclosing
Confidential Information, and such disclosure shall not be deemed to be a breach
of this Agreement, if such disclosure is required by law, governmental process
or valid legal process. In the event that the Employee is legally compelled to
disclose any of the Confidential Information, he shall provide the Employer with
prompt written notice so that the Employer, at
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its sole cost and expense, may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this Agreement. In the
event that such protective order or other remedy is not obtained, or that
Employer waives compliance with the provisions of this Agreement, Employee shall
furnish only that portion of the Confidential Information that he is advised by
counsel is legally required to be disclosed.
SECTION 9. NON-COMPETITION. During the term of the Employee's employment
hereunder and for the Designated Period (as defined below) after termination of
the Employee's employment hereunder, the Employee will not (a) anywhere in the
world, engage, directly or indirectly, alone or as a shareholder (other than as
a holder of less than two percent (2%) of the common stock of any publicly
traded corporation), partner, officer, director, employee, consultant or
advisor, or otherwise in any way participate in or become associated with, any
other business organization that is engaged or becomes engaged in any business
that is the same or substantially identical business of any of the Companies, or
is directly competitive with, any business activity that any of the Companies is
conducting at the time of the Employee's termination or has notified the
Employee that it proposes to conduct and for which any of the Companies have,
prior to the time of such termination, expended substantial resources (the
"Designated Industry"), (b) divert to any competitor of any of the Companies any
customer of any of the Companies, or (c) solicit any employee of any of the
Companies to leave its employ for alternative employment, or hire or offer
employment to any person to whom the Employee actually knows any of the
Companies has offered employment. For purposes hereof, the term "Designated
Period" shall mean two (2) years. The Employee acknowledges that the provisions
of this Section 9 are essential to protect the business and goodwill of the
Companies. The Employee will continue to be bound by the provisions of this
Section 9 until their expiration and shall not be entitled to any compensation
from the Employer with respect thereto except as provided above. If at any time
the provisions of this Section 9 shall be determined to be invalid or
unenforceable by reason of being vague or unreasonable as to area, duration or
scope of activity, this Section 9 shall be considered divisible and shall become
and be immediately amended to only such area, duration and scope of activity as
shall be determined to be reasonable and enforceable by the court or other body
having jurisdiction over the matter; and the Employee agrees that this Section 9
as so amended shall be valid and binding as though any invalid or unenforceable
provision had not been included herein. The Employee hereby acknowledges that he
has agreed to be bound by the provisions of this Section 9 in consideration for
the compensation, severance and other benefits to be provided by the Employer to
the Employee pursuant to the terms of this Agreement.
SECTION 10. GENERAL.
(a) NOTICES. All notices and other communications hereunder shall be
in writing or by written telecommunication, and shall be deemed to have
been duly given if delivered personally or if mailed by certified mail,
return receipt requested, postage prepaid or sent by written
telecommunication or telecopy, to the relevant address set forth below, or
to such other address as the recipient of such notice or communication
shall have specified to the other party hereto in accordance with this
Section 10(a):
If to the Employer, to:
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c/x Xxxxxxxx Xxxxxxxxx & Xxxx, LLC
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
With copies to:
CSAV, Inc.
0000 Xxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxx 00000
Attention: CEO
Fax: 000.000.0000
Xxxxxxx XxXxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
If to the Employee, to:
Xxxx Xxxxxx
With a copy to:
Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx-Xxxxxxx, Colt & Mosle LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
(b) SECTION 409A. This Agreement is intended to comply with the
requirements of Section 409A of the Internal Revenue Code of 1986, as
amended, and regulations promulgated thereunder (together, "Section 409A"),
and shall, to the extent practicable, be construed in accordance therewith.
If any amount payable pursuant to Section 6(f) of this Agreement
constitutes a "deferral of compensation" subject to Section 409A and if, at
the date of the Employee's "separation from service," as such term is
defined in Section 409A, from the Employer (his "Separation from Service"),
the Employee is a "specified employee", within the meaning of Section 409A,
of the Employer as determined by the Employer from time to time, then each
such payment that would otherwise be payable to the Employee within the six
(6) month period following the Employee's Separation from Service shall be
delayed and paid to the Employee without interest on the first business
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day of the seventh month following the Employee's Separation from Service.
For the avoidance of doubt, for purposes of Section 6(f) and this Section
10(b), any amount which would not be considered a "deferral of
compensation" within the meaning of Section 409A by reason of Treas. Reg.
Sections 1.409A-1(b)(4) or 1.409A-1(b)(9) shall not be considered a
deferral of compensation for which payment shall be delayed in accordance
with the preceding sentence. For purposes of this Agreement, each payment
to which the Employee may be entitled pursuant to Section 6(f), including
each of the payments of Severance upon each payroll period, shall be
considered a separate payment within the meaning of Treas. Reg. Section
1.409A-2(b)(2). Notwithstanding the foregoing, to the extent that this
Agreement or any payment or benefit hereunder shall be deemed not to comply
with Section 409A, then neither the Employer, nor any of its principals,
employees, designees or agents, shall be liable to the Employee or to any
other person to the extent such failure to comply results from any actions,
decisions or determinations made in good faith.
(c) EQUITABLE REMEDIES. Each of the parties hereto acknowledges and
agrees that upon any breach by the Employee of his obligations under
Sections 7, 8 and 9 hereof, the Employer will have no adequate remedy at
law, and accordingly will be entitled to specific performance and other
appropriate injunctive and equitable relief.
(d) SEVERABILITY. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions hereof
shall not in any way be affected or impaired.
(e) WAIVERS. No delay or omission by either party hereto in exercising
any right, power or privilege hereunder shall impair such right, power or
privilege, nor shall any single or partial exercise of any such right,
power or privilege preclude any further exercise thereof or the exercise of
any other right, power or privilege.
(f) COUNTERPARTS. This Agreement may be executed in multiple
counterparts (including by telecopier), each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
(g) ASSIGNS. This Agreement shall be binding upon and inure to the
benefit of the heirs and successors of each of the parties hereto,
including any entity which acquires substantially all of the assets or
stock of the Employer.
(h) ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties, supersedes all prior agreements and understandings relating
to the subject matter hereof, and shall not be amended except by a written
instrument hereafter signed by each of the parties hereto.
(i) GOVERNING LAW. This Agreement and the performance hereof shall be
construed and governed in accordance with the laws of the State of
Minnesota.
(j) AMENDMENT AND RESTATEMENT. The Existing Employment Agreement shall
continue in force and effect only as amended and restated herein.
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IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed as of the date and year
first above written.
CSAV, INC.
By: /s/ Xxxxx Xxxx
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Title: Xxxxx Xxxx
Name: President
/s/ Xxxx Xxxxxx
----------------------------------------
Xxxx Xxxxxx
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