EXHIBIT 10.62
EMPLOYMENT
AGREEMENT
THIS
EMPLOYMENT AGREEMENT (the
“ Agreement ”) is made effective February
16, 2009 (the “ Effective Date ”) by and
among between U.S. Auto Parts Network, Inc., a Delaware corporation
(the “ Company ”), and Ted Sanders, an
individual (the “ Executive
”).
WHEREAS,
the
parties hereto desire to enter into a written agreement to document
the terms of Executive’s employment with the
Company.
1.
Duties and Responsibilities .
A. Executive
shall serve as the Company’s Chief Financial Officer,
reporting directly to the Company’s Chief Executive
Officer. Executive shall have the duties and powers at
the Company that are customary for an individual holding such
position.
B. Executive
agrees to use his best efforts to advance the business and welfare
of the Company, to render his services under this Agreement
faithfully, diligently and to the best of his ability.
C. Executive
shall be based at the Company’s office located at Carson,
California, or at such other offices of the Company located within
30 miles of such offices.
2.
Employment Period . Following the
Effective Date, Executive’s employment with the Company shall
be governed by the provisions of this Agreement for the period
commencing as of the date hereof and continuing until the earlier
of (i) Executive’s termination of employment with the Company
for any reason, or (ii) the fifth anniversary of the Effective Date
(the “ Employment Period
”). Provided that Executive’s employment has
not been or is not being terminated for any reason, Executive and
the Company agree to negotiate in good faith prior to the end of
the Employment Period to enter into a new Employment Agreement to
take effect after the Employment Period.
A.
Annual Salary . Executive’s initial
base salary shall be $300,000 per year (the “ Annual
Salary ”), which shall be payable in accordance with
the Company’s standard payroll schedule (but in no event less
frequent than on a monthly basis), and may be increased from time
to time at the discretion of the Compensation Committee of the
Company’s Board of Directors (the “ Compensation
Committee ”). The Compensation Committee
shall review Executive’s Annual Salary at least annually and
may increase the Annual Salary from time to time at its sole
discretion. Any increased Annual Salary shall thereupon
be the “Annual Salary” for the purposes
hereof. Executive’s Annual Salary shall not be
decreased without his prior written consent at any time during the
Employment Period.
(1)
Signing and Retention Bonus. The Company
shall pay to Executive a bonus of $25,000, which shall be payable
in a lump sum as soon as reasonably practicable following the
Effective Date. In the event that Executive’s
employment is terminated for Cause (as defined below) or if
Executive resigns from the Company without Good Reason (as defined
below) prior to the first anniversary of the Effective Date,
Executive agrees to reimburse the Company for such bonus; provided
however, that the amount of the reimbursed bonus to the Company
shall be reduced by $2,083 (1/12 th
of the
total bonus) for each complete month of Executive’s
employment with the Company, calculated from the Effective
Date. Executive hereby agrees that the Company may
deduct such bonus reimbursement from any or all payments due to
Executive from the Company, including from his last paycheck (to
the extent legally permissible), and Executive agrees to provide
the Company with any further written authorization of the deduction
as may be reasonably requested by the Company to authorize,
facilitate or substantiate such deduction.
(2)
Annual Target Bonus . Executive shall also
be entitled to receive an annual target incentive bonus of up to
50% of the Executive’s current salary, which target for the
first calendar year shall be $150,000, pro-rated based upon the
Executive’s length of employment during such
year. The annual bonus shall be based upon the Company
achieving its revenue and EBITDA goals, Executive meeting the
annual goals determined by the Compensation Committee, and
Executive being employed in good standing by Company at the time of
the bonus payment. The amount of the annual target bonus
payable to Executive in any given year shall be determined by the
Compensation Committee. The annual bonus shall be paid
no later than the end of February following the year for which such
bonus is being paid.
C.
Applicable Withholdings . The Company
shall deduct and withhold from the compensation payable to
Executive hereunder any and all applicable federal, state and local
income and employment withholding taxes and any other amounts
required to be deducted or withheld by the Company under applicable
statutes, regulations, ordinances or orders governing or requiring
the withholding or deduction of amounts otherwise payable as
compensation or wages to employees.
A.
Initial Grants . As of the close of
business on the date of the Executive’s first day of
employment with the Company, the Company’s Compensation
Committee shall grant Executive non-statutory stock
options. The first stock option shall be an option to
purchase up to 400,000 shares of the Company’s common stock
and shall vest over four years; 25% of the shares shall vest on the
first anniversary of the grant date and the balance shall vest in
36 equal monthly installments thereafter. The second
stock option shall be a performance option to purchase up to
100,000 shares of the Company’s common stock that will vest
based solely upon the average closing sales price of the
Company’s common stock on the grant date as reported by
Nasdaq or the primary exchange on which the Company’s common
stock is then listed or quoted (the “Exchange”) during
any consecutive three calendar months. If during the
Employment Period, the average of the Monthly Average Price (as
defined below) of the Company’s common stock over any
consecutive three months reaches $5 per share, the shares shall
vest as of the last day of such period. The
“Monthly Average Price” shall be calculated by adding
the closing sales price reported by the Exchange for each Trading
Day in a given month and dividing such sum by the total number of
Trading Days in such month. For the purposes of this
Agreement, a “Trading Day” shall mean any day on which
the Company’s common stock is listed or quoted and traded on
the Exchange. For example, if there are 20 Trading Days
in each month and the Monthly Average Price was $4.75 in January,
$5.50 in February and $5.00 in March, then the shares subject to
this option shall vest on March 31 [(($4.75*20) + ($5.50*20) +
($5.00*20))/60 = $5.08]. In addition, if the average of
the Monthly Average Price of the Company’s common stock
exceeds the unachieved milestones set forth above for either (i)
the two calendar months immediately prior to Executive’s
termination of employment (other than for Cause or due to death or
Disability) or Executive’s resignation for Good Reason, or
(ii) the last completed calendar month immediately prior to such
termination or resignation, then the consecutive three month period
used for determining whether the milestones have been met may
include one or two months following the date of such termination or
resignation, as the case may be, to complete the three month
determination period. For example, assuming the
performance option has not yet vested and assuming there are 20
Trading Days in each month, if the Monthly Average Prices for the
two months prior to such termination or resignation were $4.00 and
$5.50, then the calendar month during which Executive’s
employment ceased may be included in the three month determination
period for the purposes of calculating whether the vesting
requirement has been met, even though Executive was terminated in
the first week of such month.
The
foregoing options will be granted pursuant to the Company’s
2007 New Employee Incentive Plan (the “ Plan
”), and will be subject to the terms and conditions of the
Plan in effect as of the grant date and the related stock
option agreements. The exercise price for both
options shall be equal to the closing sales price of the
Company’s common stock as reported by the Exchange on the
date of grant of the options. The option shall have
provisions to accelerate the vesting in the event either
Executive’s employment is terminated without Cause or
Executive resigns for Good Reason within twelve months following a
Change in Control as defined in the Plan. Both options
shall contain provisions that will restrict the sale of the common
stock issuable upon exercise of such options for 18 months
following the grant date, except to the extent necessary to cover
any current tax liabilities of Executive associated with such
options.
B.
Other Equity Compensation . Executive
shall also be entitled to participate in any other equity incentive
plans of the Company. All such other options or other
equity awards will be made at the discretion of the Company’s
Compensation Committee of the Board of Directors pursuant and
subject to the terms and conditions of the applicable equity
incentive plan, including any provisions for repurchase
thereof. The option exercise price or value of any
equity award granted to Executive will be established by the
Company’s Board of Directors as of the date such interests
are granted but shall not be less than the fair market value of the
class of equity underlying such award.
5.
Expense Reimbursement . In addition to
the compensation specified in Section 3, Executive shall be
entitled to receive reimbursement from the Company for all
reasonable business expenses incurred by Executive in the
performance of Executive’s duties hereunder, provided that
Executive furnishes the Company with vouchers, receipts and other
details of such expenses in the form reasonably required by the
Company to substantiate a deduction for such business expenses
under all applicable rules and regulations of federal and state
taxing authorities.
A.
Group Plans . Executive shall, throughout
the Employment Period, be eligible to participate in all of the
group term life insurance plans, group health plans, accidental
death and dismemberment plans, short-term disability programs,
retirement plans, profit sharing plans or other plans (for which
Executive qualifies) that are available to the executive officers
of the Company. During the Employment Period, the
Company will pay for coverage for Executive and his spouse and
dependents residing in Executive’s household (collectively,
the “ Dependents ”) under the
Company’s health plan, and coverage for Executive under the
Company’s accidental death and dismemberment plan and for
short-term disability. In the event Executive elects not
to participate in the Company’s health plan, the Company
shall reimburse Executive for the cost of alternative health care
coverage of his choosing for Executive and his Dependents in an
amount up to $1,500 per month. Payment for all other
benefit plans will be paid in accordance with the Company’s
policy in effect for similar executive positions.
