This
Employment Agreement (“ Agreement ”) is made and
entered into as of the 4 th
day of August,
2008, between DEI HOLDINGS, INC., a Florida corporation (the
“ Company ”), and KEVIN P. DUFFY (the “
Executive ”).
A. The
Company is engaged in the business of designing and marketing
consumer branded vehicle security and convenience systems,
marketing and selling certain SIRIUS-branded satellite radio
receivers and accessories, and supplying home audio and mobile
audio and video products (collectively, and as may be modified by
the Company from time to time, the “ Business
”).
B. The
Company desires to continue to employ the Executive and the
Executive desires to continue to be employed by the Company, upon
the terms and conditions set forth in this Agreement.
NOW
THEREFORE, in consideration of (i) the Executive’s
employment with the Company, (ii) the compensation paid to the
Executive and the benefits provided to the Executive in connection
with such employment, (iii) the Executive’s use of the
equipment, supplies, facilities and other resources of the Company,
and (iv) the opportunity provided to the Executive by the
Company to acquire or use information relating to or based on the
Business and to work and develop in the field for which the
Executive is employed, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE
I
INTERPRETATION OF THIS AGREEMENT
1.1.
Defined Terms . As used herein, the following terms when
used in this Agreement have the meanings set forth
below:
1.1.1.
“ Affiliate ” has the meaning set forth in
Rule 12b-2 of the regulations promulgated under the Securities
Exchange Act of 1934, as amended.
1.1.2.
“ Base Salary ” shall have the meaning given to
it under Section 2.2 of this Agreement.
1.1.3.
“ Board ” means the Board of Directors of the
Company.
1.1.4.
“ Cause ” means (i) the failure by the
Executive to perform the Executive’s duties with the Company,
as determined by the Board (other than any such failure resulting
from the Executive’s incapacity due to physical or mental
illness), which failure to perform is not cured within 60 days
after a written demand for substantial performance is delivered to
the Executive by the Board, (ii) the Executive’s
conviction of a felony involving deceit, fraud or moral turpitude
or with respect to which public knowledge thereof could result in a
Material Adverse Effect or materially affect the Executive’s
ability to perform his duties, (iii) the engaging by the
Executive in conduct which the Board determines is injurious to the
Company, monetarily or otherwise, or which could result in a
Material Adverse Effect, (iv) the commission by the Executive
of an act or acts involving fraud, embezzlement, misappropriation,
theft, breach of fiduciary duty or dishonesty against the property
or personnel of the Company or any of its Affiliates, (v) the
breach by the Executive of any of the terms of this Agreement,
which breach is not cured within 15 days after written demand to
cure such breach is delivered to the Executive by the
Board.
1.1.5.
“ Change of Control ” means (i) any Person
(other than the Company or any trustee or other fiduciary holding
securities under an employee benefit plan of the Company) is or
becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934,
as
amended), directly or
indirectly, of securities of the Company representing more than 50%
of the combined voting power of the Company’s then
outstanding securities eligible to vote, (ii) the merger or
consolidation of the Company with any other corporation or other
business entity, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity) more than 50% of the combined voting power
of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation;
provided, however, that a merger or consolidation effected
to implement a recapitalization of the Company (or similar
transaction) in which no Person acquires more than 50% of the
combined voting power of the Company’s then outstanding
securities shall not constitute a Change of Control, or
(iii) the sale or disposition by the Company of all or
substantially all of its assets.
1.1.6.
“ Company ” shall have the meaning given to it
in the first sentence of this Agreement.
1.1.7.
“ Company Information ” means Confidential
Information and Trade Secrets.
1.1.8.
“ Confidential Information ” means confidential
data and confidential information relating to the business of the
Company (which does not rise to the status of a Trade Secret under
applicable law) which is or has been disclosed to the Executive or
of which the Executive became aware as a consequence of or through
his employment with the Company and which has value to the Company
and is not generally known to the competitors of the Company.
Confidential Information does not include any data or information
that (i) has been voluntarily disclosed to the general public
by the Company (other than by any act or omission of the Executive
without the approval of the Board or the Company’s Chief
Executive Officer), (ii) otherwise enters the public domain
through lawful means, or (iii) was known to the Executive
prior to his employment by the Company.
1.1.9.
“ Disability ” means the Executive’s
inability to perform his normal duties as a result of incapacity
due to physical or mental illness, for any 90 consecutive calendar
day period or any 60 business days (whether or not consecutive)
during any 365 calendar day period.
1.1.10.
" Employment Period ” shall have the meaning
given to it in Section 2.1 hereof.
1.1.11.
“ Executive ” shall have the meaning given to it
in the first sentence of this Agreement.
1.1.12.
“ Good Reason ” shall mean (a) the
assignment to the Executive of duties inconsistent with the
Executive’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as
contemplated by Section 2.3 of this Agreement, excluding for
this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive; or
(b) the Company’s requiring the Executive to be based at
any office or location more than 50 miles from Vista, California,
except for travel reasonably required in the performance of the
Executive’s responsibilities.
1.1.13.
“ Material Adverse Effect ” shall mean a
material adverse effect on the business, assets, properties,
results of operations, financial condition or prospects of the
Company or any of its Affiliates.
1.1.14.
“ Non-Solicitation Period ” shall mean a period
of time equal to (i) the Severance Period, if the Executive is
terminated without Cause, or (ii) a period of 12 months
after the Termination Date if the Executive resigns or if the
Employment Period terminates for any reason other than termination
by the Company without Cause.
1.1.15.
“ Notice of Termination ” shall have the meaning
given to it in Section 2.1 hereof.
2
1.1.16.
“ Person ” means an individual, a partnership, a
corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity (or any department, agency or
political subdivision thereof).
1.1.17.
“ Significant Competitor ” has the meaning given
to it in Section 3.6 hereof.
1.1.18.
“ Significant Customer ” has the meaning given
to it in Section 3.6 hereof.
1.1.19.
“ Subsidiary ” when used with respect to any
Person means any other Person, whether incorporated or
unincorporated, of which (i) more than 50% of the securities
or other ownership interests or (ii) securities or other
interests having by their terms ordinary voting power to elect more
than 50% of the board of directors or others performing similar
functions with respect to such corporation or other organization,
is directly owned or controlled by such Person or by any one or
more of its Affiliates.
1.1.20.
“ Termination Date ” shall have the meaning
given to it in Section 2.1 hereof.
1.1.21.
“ Trade Secrets ” means information of the
Company including, but not limited to, technical or nontechnical
data, formulas, patterns, compilations, programs, financial data,
financial plans, product or service plans, business plans or lists
of actual or potential customers or suppliers that (i) derives
economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other
persons who can obtain economic value from its disclosure or use,
and (ii) is the subject of efforts that are reasonable under
the circumstances to maintain its secrecy.
1.1.22.
“ Welfare Plan Benefits ” shall have the meaning
given to it in Section 2.4 hereof.
1.2.
Interpretation . The words “ herein ,”
“ hereof ,” “ hereunder ” and
other words of similar import refer to this Agreement as a whole,
as the same from time to time may be amended or supplemented and
not any particular section, paragraph, subparagraph or clause
contained in this Agreement. Wherever from the context it appears
appropriate, each term stated in either the singular or plural
shall include the singular and the plural, and pronouns stated in
masculine, feminine or neuter gender shall include the masculine,
feminine and the neuter.
2.1.
Duration . The Company agrees to continue to employ the
Executive and the Executive agrees to be so employed until the
first to occur of (i) August 4, 2011, (ii) the date
specified in a Notice of Termination given by the Executive in
connection with his voluntary resignation other than for Good
Reason (which shall not be less than 60 days from the date
such Notice of Termination is given), (iii) the date specified
in a Notice of Termination stating that the Board has determined
that the Executive’s employment be terminated for Cause,
(iv) the date specified in a Notice of Termination given by
the Company stating that the Board has determined that the
Executive’s employment with the Company is no longer in the
best interest of the Company (in which event, the Executive will be
entitled to severance pay as described in Section 2.4 below)
(termination pursuant to this clause (iv) is sometimes
referred to in this Agreement as “ termination without
Cause ”), (v) the date specified in a Notice of
Termination given by the Executive in connection with his
resignation for Good Reason, (vi) the date of the
Executive’s death, or (vii) the date specified in a
Notice of Termination given by the Company or the Executive in
connection with a termination of the Executive’s employment
by reason of his Disability. For purposes of this Agreement, the
term “ Employment Period ” shall mean such
period of employment and the term “ Termination Date
” shall mean the date on which the Employment Period
terminates. Any purported termination of the Executive’s
employment by the Company or by the Executive shall be communicated
by written Notice of Termination to the other party hereto in
accordance with Section 4.1 below, which notice shall indicate
the specific termination provision in this Section 2.1 relied
upon (a “ Notice of Termination ”).
2.2.
Salary and Benefits . During the Employment Period, the
Company will pay the Executive a base salary at the rate of
$325,000 per annum or at such higher rate as the Board designates
in its sole
3
discretion from time to
time (“ Base Salary ”), payable in installments
consistent with the Company’s normal payroll schedule,
subject to applicable withholding and other taxes. The Base Salary
shall also be reviewed, at least annually, for additional merit
increases and may, by action and in the discretion of the Board, be
increased at any time and from time to time. During the Employment
Period, the Executive shall also be entitled to participate in the
following programs and receive the following benefits:
2.2.1.
the Executive will be entitled to participate in all medical and
hospitalization, group life insurance, retirement and any and all
other fringe benefit plans as are from time to time provided by the
Company to its executives, subject to the provisions of such plans,
including, without limitation, eligibility criteria and
contribution requirements, as the same may be in effect from time
to time;
2.2.2.
the Executive will be entitled to a maximum of four weeks vacation
each year with salary, which shall be governed by the
Company’s vacation policy generally applicable to the
Company’s employees; provided, however, that in no
event may a vacation be taken at a time when to do so could, in the
reasonable judgment of the Chairman of the Board or the
Company’s Chief Executive Officer, materially adversely
affect the business of the Company;
2.2.3.
the Executive will be entitled to reimbursement for reasonable
business expenses incurred by the Executive (subject to submission
of appropriate substantiation by the Executive);
2.2.4.
the Executive will be entitled to reimbursement (subject to
submission of appropriate substantiation by the Executive) for
reasonable expenses incurred in attending trade association
meetings and shows for the Executive where such attendance is
appropriate for a particular meeting or show; and
2.2.5.
the Company will, promptly after the end of each calendar year
during the Employment Term, make a payment of $5,000 in deferred
salary to the deferred compensation plan previously established for
Executive’s benefit.
2.3.
Services . During the Employment Period, the Executive will
serve as the Executive Vice President and Ch
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