EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the “
Agreement ”) is made effective
April 3, 2008. (the “ Effective
Date ”) by and among between U.S. Auto Parts
Network, Inc., a Delaware corporation (the “
Company ”), and Aaron Coleman, 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 CIO and Executive Vice
President of Operations, 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
positions.
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.
3.
Cash Compensation .
A.
Annual Salary
. Executive’s initial base
salary shall be $250,000 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.
B.
Bonus .
(1)
Signing and Retention
Bonus. The Company shall pay to
Executive a bonus of $50,000, 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 $4,167 (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 40% of the
Executive’s current salary, which for the first
calendar year shall be an amount up to $100,000 per year, 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, and
Executive meeting the annual goals determined by the
Compensation Committee. 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.
4.
Equity Compensation .
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 you a non-statutory stock option. The stock
option shall be an option to purchase up to 250,000 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 foregoing option will
be granted pursuant to the Company’s 2007 Omnibus
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 agreement. The exercise price for the
option shall be equal to the closing sales price of the
Company’s common stock as reported by the NASDAQ Stock
Market or the primary exchange on which the Company’s
common stock is then listed or quoted (the “
Exchange ”) on the date of
grant of the option. 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. The option shall contain provisions that
will restrict the sale of the common stock issuable upon
exercise of such option for 18 months following the grant
date, except to the extent necessary to cover any current tax
liabilities of Executive associated with such
option.
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.
6.
Fringe Benefits .
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.
B.
Vacation
. Executive shall be entitled to
at least four weeks paid vacation per
year. Vacation shall accrue pursuant to the
Company’s vacation benefit policies.
C .
Auto Allowance.
Executive shall be entitled to an auto allowance for one vehicle
for Executive’s use up to $1,000 per month.
D.
Housing Benefits
. Executive shall be reimbursed for all
out-of-pocket, direct expenses incurred in connection with the
relocation of Executive’s family from Dallas, Texas to
Southern California including moving costs and travel
expenses; provided that Executive furnishes the Company with
vouchers, receipts and other details of such expenses in the
form reasonably required by the Company. The
Company will also reimburse Executive for the actual real
estate commissions paid by Executive on the sale of
Executive’s
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