|
Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement") is entered
into as of this 11 th day of December, 2006 (the "Effective Date"), by and between
West Marine, Inc. and West Marine Products, Inc .
(collectively, the "Company"), with offices at 500 Westridge Drive,
Watsonville, California 95076, and Thomas Moran (the
"Executive"), with an address at 39 Jones Street, Hingham,
Massachusetts 02043.
1. POSITION, EMPLOYMENT PERIOD AND DUTIES.
(a) Executive shall diligently and conscientiously devote
Executive’s full business time, attention, energy, knowledge,
skill and diligent efforts to the business of the Company and the
discharge of Executive’s duties hereunder. Executive will
abide by all policies and decisions made by the Company, as well as
all applicable federal, state and local laws, regulations or
ordinances. Executive’s duties under this Agreement shall be
to serve as the Chief Financial Officer, with the responsibilities,
rights, authority and duties customarily pertaining to such office
and as may be established from time to time by the Chief Executive
Officer ("CEO") under the direction of the Board of Directors of
the Company (the "Board") or its designees. Executive shall also
act as an officer and/or director and/or manager of such affiliates
of the Company as may be designated by the Company under the
direction of the Board from time to time, commensurate with
Executive’s office, all without further compensation, other
than as provided in this Agreement. As an exempt, salaried
employee, Executive will be expected to work such hours as required
by the nature of Executive’s work assignments. The Company
reserves the right to modify Executive’s position and duties
at any time in its sole and reasonable discretion.
(b) Employment with the Company is not for a specified term and
is at the mutual consent of the Company and Executive. Accordingly,
either the Executive or the Company can terminate the employment
relationship at will, with or without cause and with or without
notice, at any time, subject to the provisions of this Agreement.
This is an integrated agreement with respect to the at will nature
of the employment relationship, and there are not now and may not
be in the future any implied or oral agreements that in any way
modify this at will employment relationship.
(c) The date Executive is to commence employment with the
Company is January 8, 2007 ("Commencement Date"). During the
period of time in which the Executive is employed by Company (the
"Employment Period"), the Executive shall be subject to, and shall
act in accordance with, all reasonable instructions and directions
of the Company that are consistent with Executive’s
position.
2. PLACE OF EMPLOYMENT. Executive’s
performance of services under this Agreement shall be rendered in
Watsonville, California, subject to necessary travel requirements
of Executive’s position and duties hereunder.
3. COMPENSATION, BONUS, BENEFITS AND STOCK
OPTIONS.
(a) Base Salary. The Company shall pay to Executive base
salary compensation at an annual rate of not less than $ 290,000.
On March 8, 2007, the Executive’s base salary will be
increased to $ 300,000 and annually thereafter, the CEO shall
review Executive’s base salary in light of the performance of
Executive and the Company, and may maintain or increase such base
salary by an amount the CEO determines to be appropriate, subject
to the guidelines established by the Board from time to time for
Executive’s position ("Base Salary"). Executive’s Base
Salary shall be paid in accordance with the Company’s payroll
practices in effect from time to time for executive officers,
including all applicable withholdings.
(b) Bonus Plan. If the Company adopts and/or maintains a
bonus program providing for annual bonus awards to its senior
executives, the Executive shall be entitled to participate therein,
at a targeted rate equal to 40% of Executive’s Base Salary,
subject, however, to the achievement of annual performance
objectives and/or other criteria which shall be established and
approved (as may be modified from time to time) by the Board or any
authorized committee thereof for the Executive and the other
members of the Company’s senior executives. The
Executive’s bonus amount, if any, for each fiscal year of the
Employment Period shall be determined after the close of such
fiscal year at the usual time for such determinations, and paid to
Executive at the time such bonuses are paid in accordance with the
Company’s practices in effect from time to time for senior
executives, subject to applicable withholdings, and further subject
to the provisions of Section 5(f) below.
1
(c) Option Grant. As additional
consideration for the services to be rendered by Executive under
this Agreement, the Company will grant to Executive, from the
Company’s 2006 Omnibus Equity Incentive Plan, as amended from
time to time (the "Plan"), stock options to purchase 50,000 shares
of the Company’s common stock, subject to approval by the
Board at its next regularly scheduled Board meeting, and further
subject to the terms and conditions applicable to stock options
granted under the Plan (or any successor plan) and to stock option
agreement related to such grant. The stock options will be granted
on the next regularly scheduled meeting of the Board at an exercise
price per share equal to 100% of the fair market value per share on
such grant date. The stock options will have a term of 5 years and
will vest at 25% per year over a four-year period if and until
all shares are vested.
(d) Benefits. Executive shall be eligible to participate
in all employee benefit programs of the Company offered from time
to time during the Employment Period by the Company to employees or
senior executive officers of Executive’s rank, at the
Company’s cost, subject to any portion of the costs required
to be contributed by Executive, to the extent that Executive
qualifies under the eligibility provisions of the applicable plan
or plans, in each case consistent with the Company’s
then-current practice as approved by the Board from time to
time.
(e) Paid Time Off. Executive shall be entitled to paid
time off ("PTO") of up to 4 weeks per calendar year, with such
number of weeks being pro-rated for the remainder of the 2006
calendar year. Executive may roll-over unused PTO time from one
calendar year to another, subject to the Company’s policy in
effect from time to time relative to PTO accrual, roll-over and
advance payout.
(f) Business Expenses. The Company shall promptly
reimburse Executive for Executive’s reasonable and necessary
expenditures for travel, entertainment and similar items made in
furtherance of Executive’s duties under this Agreement
consistent with the policies of the Company as applied to all
executive officers. Executive shall document and substantiate such
expenditures as required by the policies of the Company as applied
to all executive officers, including an itemized list of all
expenses incurred, the business purposes for which such expenses
were incurred, and such receipts as Executive reasonably has been
able to obtain.
(g) Relocation Expenses. With respect to the
Executive’s relocation to the Northern California area, the
Company will provide the following benefits or reimbursements of
expenses:
i. If required, the Company will provide the Executive with or
reimburse the Executive for temporary living quarters in the
Northern, California area for a reasonable period of time, not to
exceed 3 months after the Commencement Date, and for a reasonable
cost, not to exceed $ 2,300 per month;
ii. If required, the Company will provide round-trip coach class
airline tickets, purchased through the Company’s travel
service, for up to six (6) trips for the Executive’s
spouse during the Executive’s first three (3) months of
employment in connection with finding suitable housing;
iii. The Company will reimburse the Executive for reasonable,
customary closing costs including, but not limited to: inspection
fees, title charges, processing fees, and escrow fees paid by
Executive for the sale of Executive’s current residence and
the purchase of a new residence in Northern California, provided
that Company’s reimbursement of closing costs related to such
sale and/or purchase, in the aggregate, does not exceed $40,000;
and
iv. The Company will reimburse the Executive for all reasonable,
standard costs approved by the Company in advance in connection
with moving the Executive’s home furnishings and personal
belongings, which approval shall not be unreasonably withheld.
(h) Modification of Benefits Plan. Nothing contained in this
Agreement shall be construed to require the Company or the Board to
establish any benefit plans or to prevent the modification or
termination thereof once established, and no such action or failure
thereof shall affect this Agreement. Executive recognizes that the
Company has the right, in its sole discretion, to amend, modify or
terminate any benefit plans without creating any rights in
Executive.
4. INSURANCE & INDEMNIFICATION . The
Company, at its expense, shall provide the Executive with coverage
under the Company’s directors’ and officers’
liability insurance policy at the same level provided the other
directors and officers of the Company ("D&O Insurance"). The
Company shall indemnify the Executive as set forth in the form of
Indemnification Agreement attached hereto as Exhibit "A" and
incorporated herein by this reference.
2
5. TERMINATION OF EMPLOYMENT.
(a) Death. The Executive’s employment hereunder shall
terminate upon Executive’s death.
(b) Disability. The Company shall be entitled to terminate the
Executive’s employment hereunder for "Disability" if, as a
result of the Executive’s incapacity due to physical or
mental illness or injury, the Executive shall have been unable to
perform Executive’s duties hereunder for a period of ninety
(90) consecutive days, and within thirty (30) days after
Notice of Termination (as defined in Section 6 below) for
Disability is given following such 90-day period the Executive
shall not have returned to the performance of Executive’s
duties on a full-time basis.
(c) By Company for "Cause." The Company may terminate the
Executive’s employment hereunder immediately for "Cause." For
purposes of this Agreement, the term "Cause" shall mean:
i. Executive’s breach of any of the covenants contained in
Sections 6(a) (confidentiality), 6(b) (exclusive employment and
non-solicitation), 6(c) (works for hire), and 6(d)
(non-disparagement) provisions of this Agreement;
ii. Executive’s conviction by, or entry of a plea of
guilty or nolo contendere in, a court of competent and final
jurisdiction for any crime involving moral turpitude or punishable
by imprisonment in the jurisdiction involved;
iii. Executive’s commission of an act of fraud, whether
prior to or subsequent to the Effective Date hereof upon the
Company;
iv. Executive’s continuing repeated willful failure or
refusal to perform Executive’s duties as required by this
Agreement (including, without limitation, Executive’s
inability to perform Executive’s duties hereunder as a result
of chronic alcoholism or drug addiction and/or as a result of any
failure to comply with any laws, rules or regulations of any
governmental entity with respect to Executive’s employment by
the Company);
v. Executive’s gross negligence, gross insubordination or
material violation of any duty of loyalty to the Company or any
other material misconduct on the part of Executive;
vi. Executive’s intentional commission of any act which
Executive knows (or reasonably should know) is likely to be
materially detrimental to the Company’s business or goodwill;
or
vii. Executive’s breach of any material provision of this
Agreement.
(d) Without Cause; for Good Reason. The Company may terminate
the Executive’s employment hereunder during the Employment
Period without Cause (which termination shall be effective on the
date specified by Company), and the Executive may terminate
Executive’s employment hereunder during the Employment Period
for Good Reason, provided that Executive serves notice on the
Company specifically identifying the conduct that the Executive
believes constitutes Good Reason and gives the Company fifteen
(15) days to cure such conduct. For purposes of this
Agreement, the term "Good Reason" shall mean: (i) a material
diminution of the authority, duties or responsibilities of the
Executive as provided in Section 1 hereof; (ii) a
material diminution in the Executive’s title; or (iii) a
breach of any material provision of this Agreement by the
Company.
(e) Voluntarily. The Executive may voluntarily terminate
Executive’s employment hereunder, provided that the Executive
provides the Company with notice of Executive’s intent to
terminate Executive’s employment at least forty-five
(45) days in advance of the effective date of termination.
(f) Termination Payments.
i. Without Cause or For Good Reason. In the event of the
termination of the Executive’s employment during the
Employment Period by the Company without Cause or by the Executive
for Good Reason, the Company’s obligations to Executive under
this Agreement shall be limited to: (A) the payment of
Executive’s Base Salary through the date of termination to
the extent accrued but not paid by then; (B) the payment of
any unused accrued PTO through the date of termination;
(C) the payment of any reimbursable business expenses
documented and incurred by Executive prior to termination in
accordance with the Company’s policies in effect at such time
and that were not reimbursed by the Company at the time of the
termination; (D) the payment of severance to Executive in an
amount equal to six (6) months of the Executive’s then
current Base Salary ("Severance Period"), payable over the
Severance Period in substantially equal payments on the
Company’s regularly scheduled payroll dates, except if such
termination occurs at any time during the first year of employment,
Executive’s severance payment shall be prorated to an amount
equal to the number of months, or portion thereof, during which
Executive was employed; (E) in addition, if the effective date
of Executive’s termination occurs at any time
3
after the first six (6) months of
the Company’s then current fiscal year, the Executive’s
annual bonus will be prorated for the period of Executive’s
employment during the then current fiscal year (i.e., from the
commencement of such fiscal year up through the effective date of
termination), payable at the time the Company normally pays such
bonuses, provided that Executive will receive no bonus amount if
the effective date of termination occurs at any time on or before
such six (6) month period. Moreover, Executive acknowledges
that, during the Severance Period, Executive will not earn any
bonus amount; (F) Executive hereby waives any other Company
benefits not specifically mentioned herein, except that Executive
will be offered continued health care benefits required to be
offered under Federal or state law [e.g., COBRA]; and (G) in
accordance with the terms of Executive’s equity award
agreement(s), Executive may exercise Executive’s vested
stock options for the period of time specified under such
applicable award agreement(s) after termination of employment
(currently at ninety (90) days) ("Extended Period") and upon
termination of the Extended Period any unexercised vested stock
options or other vested but unexercised equity awards automatically
will be forfeited. Also, upon termination any unvested stock
options or other unvested equity awards automatically will be
forfeited. Executive acknowledges that, during the Severance
Period, Executive will not earn or receive any further equity award
grants. Except for payment under clause (C), the benefits described
herein will be subject to applicable withholding and/or authorized
deductions (including offsets permitted under this Agreement), as
required by Company policy and/or by applicable laws and
regulations and shall be paid at the time expressly set forth
herein in accordance with the Company’s usual practices as
they exist from time to time, subject to applicable law. No other
benefits will accrue to Executive during the Severance Period.
Except as specifically provided herein or otherwise provided by
applicable law, as of the date of termination, the Company’s
obligations to Executive shall terminate and the Company shall have
no further obligation to pay Executive any compensation or any
other amounts. The payments and rights provided in clauses
(D) through (G) hereof are subject to and conditioned
upon the Executive executing the Release Agreement referenced in
Section 6(e) below.
ii. Disability or Death, Termination for Cause and Voluntary
Termination . If the Executive’s employment is terminated
during the Employment Period as a result of the Executive’s
death or disability, Executive’s voluntary termination or the
Company’s termination of the Executive for Cause, the
Company’s obligations to Executive under this Agreement shall
be limited to: (A) the prorated payment of Executive’s
Base Salary through the date of termination to the extent accrued
but not paid by then; (B) the payment of any unused accrued
PTO through the date of termination; and (C) the payment of
any reimbursable business expenses that were documented by
Executive prior to termination in accordance with the
Company’s policies in effect at such time and that were not
reimbursed by the Company at the time of the termination. Such
payments shall be made less applicable withholdings and authorized
deductions within the time period required under applicable law. As
of the date of such termination, the Company’s obligations to
Executive shall terminate and the Company will have no further
obligation to pay Executive or Executive’s estate,
beneficiaries or representatives any compensation or any other
amounts, except as provided in this Agreement or otherwise provided
by law.
(g) Obligations of Executive on Termination .
i. Executive acknowledges and agrees that all property,
including keys, credit cards, books, manuals, records, reports,
notes, contracts, customer lists, Confidential Information (as
defined in this Agreement), copies of any of the foregoing, and any
equipment or assets furnished to Executive by the Company, belong
to the Company and shall be promptly returned to the Company upon
termination of employment.
ii. Upon termination of employment, Executive shall be deemed to
have resigned from all offices and directorships, if any, then held
with the Company.
iii. Executive agrees that following termination of
Executive’s employment, Executive shall not access or use any
of the Company’s computer systems, e-mail, systems, voicemail
systems, intranet system or other system, except as authorized by
the Company.
iv. Executive shall cooperate with the Company, as requested by
the Company, to effect a transition of Executive’s
responsibilities and to ensure that the Company is aware of all
matters being handled by Executive and that such matters are
transferred to another employee designated by Company. In addition,
upon request by the Company, Executive agrees to cooperate to the
extent necessary to protect the interests of the Company or any of
its affiliates or related entities, including without limitation,
in providing any information that Executive has about the
Company’s business and its operations and/or in providing
truthful testimony as a witness or declarant in connection with any
potential future litigation which may arise as to which Executive
may have any relevant information.
4
6. Covenants of
Executive.
(a) Confidential Information .
i. Existence of Confidential Information : The Company
owns and has developed and complied, and will develop and compile,
certain proprietary and confidential information that has great
value to its business (referred to in this Agreement collectively
as "Confidential Information"). Confidential Information includes
information, whether or not designated as confidential or "company
private" by the Company, from any source, which is either disclosed
to, or learned by, Executive during the course of Executive’s
employment with the Company and which has or could have commercial
value in the business in which the Company is engaged or
contemplates engaging, which could be detrimental to the interests
of the Company if disclosed without authorization, which gives the
Company a competitive advantage or the opportunity to obtain a
competitive advantage or which is not generally known to the
public. Examples of confidential information include, without
limitation: Company’s personnel and financial, information,
vendor names and information, product cost information, and
operational and procedural manuals; Company’s proprietary
computer software of any type, whether in source code, object code,
annotations, coding notes, or any other form, in any stage of
research and development, production, or manufacture; information
relating to any of Company’s proprietary rights or
information., information concerning product research and
development, including technical, engineering, or production data,
test data or results, and information concerning Company’s
efforts to acquire, protect, and license proprietary rights;
Company’s price, cost and fee data, pricing and billing
policies, data, forecasts, plans, and strategies for all aspects of
Company operations, marketing, and sales, whether or not in effect;
the names and all other information concerning the Company’s
customers or vendors, including customer and vendor lists, and all
data relating to the type, quantity, specifications, and price of
Company products and/or services received or provided by any
customer or vendor; any and all work product created by Executive
relating to or resulting from the engagement of Executive by
Company including, without limitation, all notes, research, drafts,
and final product; and any and all information concerning Company
trade secrets, research, development, test results, reports,
specifications, business plans or strategies, forecasts, marketing
plans or strategies, unpublished financial information, budgets,
projections and Company agreements.
ii. Protection of Confidential Information : Executive
will not, either during or after employment with the Company,
directly or indirectly, disclose, or otherwise communicate to any
third party, any of the Company’s Confidential Information
without prior written approval of the Company’s Chief
Executive Officer, except as authorized in the normal exercise of
Executive’s assigned job duties for the Company and for the
benefit of the Company. Executive acknowledges that Executive is
aware that the unauthorized disclosure of Confidential Information
of the Company may be highly prejudicial to its interests, an
invasion of privacy and an improper disclosure of trade secrets.
Moreover, if, at any time, Executive becomes aware of any
unauthorized access, use, possession, or knowledge of any
Confidential Information, Executive shall immediately notify the
Company’s General Counsel. Executive also agrees that to the
extent any court or agency seeks to have him disclose Confidential
Information, Executive shall promptly inform the Company and shall
take such reasonable steps as are available to Executive to prevent
disclosure of such Confidential Information until the Company has
been informed of the requested disclosure and the Company has an
opportunity to respond to such court or agency. Nothing provided in
this paragraph shall require Executive to take any action that
would cause Executive to incur personal, financial, or other
risk.
iii. Delivery of Confidential Information : Upon request
or when Executive’s employment with the Company terminates,
Executive will immediately deliver to the Company all copies of any
and all materials and writings received from, created for or
belonging to the Company including, but not limited to, any which
relate to or contain Confidential Information.
(b) Exclusive Employment and Non-Solicitation : During
Executive’s employment with the Company, Executive will not
do anything, directly or indirectly, to compete with the
Company’s present or contemplated business, nor will
Executive plan or organize any competitive business activity
including, without limitation, engaging in any activity or entering
into any agreement that conflicts with the interests of the Company
or Executive’s job duties or obligations to the Company or
providing services for, owning, managing, or operating any business
that is at that time in, competition with the Company. At any time
during or following the termination of Executive’s
employment, Executive shall not engage in unfair competition with
the Company, aid others in any unfair competition with the Company,
in any way breach the confidence that the Company placed in
Executive during Executive’s employment, misappropriate any
Confidential Information as defined in this Agreement, or breach
any of the provisions of this Section of
5
this Agreement. Executive also will not within
two (2) years after Executive’s employment terminates,
directly or indirectly, influence, hire, solicit, divert or attempt
to influence, hire, solicit, divert or encourage to terminate or
alter any relationship with the Company of any employee,
independent contractor, supplier, customer, consultant or any other
person or company without the Company’s express written,
consent.
(c) Works for Hire . All inventions, ideas, processes,
programs, software, procedures, projects, plans and designs
(including improvements), equipment, or products conceived (whether
or not actually conceived during regular business hours),
developed, or made through efforts in whole or in part of Executive
during the course of Executive’s employment with Company and
(ii) related to the business of Company shall be disclosed
promptly to Company and shall be the sole and exclusive property of
Company. Executive shall cooperate with Company and its attorneys
in the preparation of patent, trademark and copyright applications
for the foregoing developments and Executive does hereby assign all
of Executive’s right, title and interest in and to all such
inventions, ideas, processes, programs, software, procedures,
projects, plans, designs, equipment or products to Company. The
decision to file a patent, trademark or copyright protection, or to
maintain such developments as a trade secret, shall be in the sole
discretion of Company and Executive shall be bound by such decision
and shall execute such documents as may be necessary to carry out
the intent of this Section.
(d) Non-Disparagement . Executive agrees that both during
and after Executive’s employment with Company, Executive will
not disparage, denigrate, or criticize the Company or any of its
management personnel or members of the Board, whether or not such
activity has as its purpose or outcome, the interference or
competition with, or the, reduction, interruption, disruption, or
obstruction of, the conduct of Company’s businesses.
(e) Release . Upon termination of employment, and if
Executive elects to receive the benefits outlined in
Section 5(f) above, Executive agrees to execute and deliver to
Company a general release (substantially in the form attached
hereto as Exhibit "B") releasing Company and its officers,
directors, owners, affiliates, successors and assigns, from any and
all actual or potential, suspected or unsuspected, foreseen or
unforeseen, and patent or latent causes of actions, claims and
demands whatsoever, whether in law or in equity, which may exist as
of the date of the release or which may arise after such date as a
result of Executive’s employment or termination of employment
with the Company. Such release also will include a waiver of §
1542 of the California Civil Code, which provides as follows: "A
general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected
his settlement with the debtor," Executive’s agreement to
indemnify, defend, and hold harmless each released person or entity
against any claim, including attorney fees and costs, resulting
from a breach of Executive’s covenants contained in the
release, and a provision that such covenants survive the
termination of Executive’s employment and/or of
Agreement.
(f) Covenants as Essential Elements of this Agreement .
It is understood by and between the parties hereto that the
covenants set forth in Sections 5 (g) and Sections 6
(a)-(e) are essential elements of this Agreement, and are
required for the protection of Company’s legitimate business
interests, and that, but for the agreement of the Executive to
comply with such covenants, the Company would not have entered into
this Agreement, including the Company’s agreement to provide
the severance compensation set forth in Section 5(f).
Accordingly, in addition to all other rights and remedies available
to Company under this Agreement, Executive acknowledges and agrees
that Executive’s failure to comply with any of these
covenants shall entitle Company to immediately terminate any
compensation or benefits otherwise payable in accordance with
Section 5(f). Moreover, such covenants are independent of any
other contractual obligations in this Agreement. The existence of
any claim or cause of action by Executive against Company, whether
based on this Agreement or otherwise created, shall not create a
defense to the enforcement by Company of any such covenants.
(g) Modification by Court . It is agreed by the Company
and Executive that if any portion of this covenants set forth in
this Section 6 are held to be invalid, unreasonable,
arbitrary, or against public policy, then such portion of such
covenants shall be considered divisible (including divisible as to
time and geographical area, as applicable) and a lesser time
period, geographical area or other modification which is determined
to be reasonable, non-arbitrary and not against public policy may
be enforced against the Executive. The Company and the Executive
agree that covenants set forth in this Section 6 are
appropriate and reasonable when considered in light of the nature
and extent of the business conducted by the Company.
6
(h) Survival of Covenants . The covenants
contained in this Section 6 shall survive the termination of
Executive’s employment and this Agreement.
7. Miscellaneous :
(a) Assignment and Transfer : Executive’s rights
and obligations under this Agreement are personal and shall not be
transferable by assignment or otherwise, and any purported
assignment, transfer or delegation thereof shall be void. This
Agreement shall inure to the benefit of, and be enforceable by, any
purchaser of substantially all of Company’s assets, any
successor to Company or any assignee thereof.
(b) No Inconsistent Obligations : Executive is aware of
no obligations, legal or otherwise, inconsistent with the terms of
this Agreement or with Executive’s job duties for the
Company. Executive will not disclose to the Company, or use, or
induce the Company to use, any proprietary information or trade
secrets of others. Executive represents and warrants that Executive
has returned all property and confidential information belonging to
all prior employers.
(c) Construction, and Governing Law : The captions used
in connection with this Agreement are for reference purposes only
and shall not be construed as part of this Agreement. This
Agreement shall be governed by and construed in accordance with the
law
|
