AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment
Agreement (“ Agreement ”) is made and entered
into as of the 1st day of January, 2007, between DIRECTED
ELECTRONICS, INC., a Florida corporation (the “
Company ”), and JAMES E. MINARIK (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 and the Executive
are parties to that certain Amended and Restated Employment
Agreement, dated as of January 1, 2004, as heretofore amended
(the “ Prior Agreement ”).
C. 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 (ii) otherwise enters
the public domain through lawful means.
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.
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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.
EMPLOYMENT
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) January 1, 2010, (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 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 $550,000 per annum or at such higher
rate as the Board designates in its sole discretion from time to
time (“ Base Salary ”), payable in installments
consistent with the Company’s
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normal payroll schedule, subject to applicable withholding and
other taxes. Base Salary for each calendar year after calendar 2006
shall be increased by $25,000 over the previous calendar year so
long as the Company achieves EBITDAM equal to or greater than the
Company’s EBITDAM for the prior calendar year (i.e.,
(i) 2008 Base Salary shall be $575,000 if 2007 EBITDAM is at
least equal to 2006 EBITDAM, and (ii) 2009 Base Salary shall
be increased by $25,000 from 2008 Base Salary if 2008 EBITDAM is at
least equal to 2007 EBITDAM). 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; 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, 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;
2.2.5.
the Executive will be entitled to reimbursement (subject to
submission of appropriate substantiation by the Executive) for the
cost of annual membership dues to one country club, subject to
applicable withholding and other taxes (to the extent such payments
are not reimbursable business expenses), provided ,
however , that the Executive will not be entitled to
reimbursement of annual dues pursuant to thi
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