Exhibit 10.2a
November 24, 2008
Jim McGinty
18305 E. San Jose Ave.
City of Industry, CA 91748
RE: EMPLOYMENT
TERMS
Dear Jim:
This amended and restated employment
letter agreement (the “Agreement”) with Hot Topic, Inc.
(the “Company”) shall replace and supersede that
certain letter agreement between you and the Company dated
January 23, 2003 and that certain letter agreement between you
and the Company dated August 14, 2000 (the “Prior
Agreements”). The Prior Agreements are amended and restated
in their entirety as set forth herein in order to, among other
things, clarify the application of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”)
to the benefits that may be provided to you pursuant to the terms
of this Agreement.
You are expected to perform various
duties consistent with the position of Chief Financial Officer. You
report to the Company’s Chief Executive Officer
(“CEO”), unless otherwise assigned by the Company. You
will work at our facility located in the City of
Industry.
Your base salary is $400,000 per
year, less payroll deductions and all required withholdings, which
are subject to annual review. You are paid semi-monthly and you are
eligible for the following Company benefits: medical insurance,
vacation, sick leave, holidays, long-term disability, 401k plan,
Employee Stock Purchase Plan and Deferred Compensation Plan.
Details about these benefit plans are available for your review.
The Company may modify benefits from time to time, as it deems
necessary.
In addition to your base salary, you
are eligible to earn an annual performance bonus
(“Bonus”) pursuant to the Company’s Executive
Incentive Bonus Plan, as approved by the Board of Directors. Your
target Bonus under the Plan is fifty percent of your base salary
based upon achievement of the goals set forth in the Plan. Assuming
continuous employment, the Bonus will be awarded in the first
quarter of the Company’s fiscal year. You must be employed on
the date the Bonus is awarded to be eligible for the Bonus. The
Bonus will not be pro-rated in the event your employment is
terminated with or without Cause (as defined below) prior to the
date on which the Bonus is awarded.
The Company will pay for you to have
a Company leased automobile of your choice, provided that the value
of the automobile does not exceed $60,000. The Company will also
reimburse you for expenses including gas, insurance and maintenance
for the automobile in accordance with the Company’s expense
reimbursement policy.
1
In addition to any equity awards you
have previously received, during the term of this Agreement, you
shall be eligible to receive additional equity awards under the
Company’s 2006 Equity Incentive Plan and various equity
incentive and bonus programs that may be approved from time to time
by the Board or its Compensation Committee in either’s sole
discretion. If you have questions regarding the tax implications of
your equity awards or any part of your compensation package, please
consult with your own tax advisor.
The Company may terminate your
employment at any time and for any or no reason, with or without
Cause (as defined herein) or advance notice, by giving written
notice of such termination. Similarly, you may terminate your
employment with the Company at any time at your election, in your
sole discretion, for any or no reason upon two weeks notice to the
Company during which time you shall provide reasonable transition
assistance to the Company. The Company reserves the right to ask
you to expedite your resignation date and to leave prior to the end
of the two weeks notice period. The at-will nature of your
employment relationship may not be modified except by a written
agreement with the CEO of the Company.
If the Company terminates your
employment without Cause and not due to your death or Disability
(as defined herein), then you shall be entitled to receive the
severance benefits described in this Section, subject to your
satisfaction of the conditions set forth herein. Subject to your
delivery to the Company of an executed release and waiver of claims
in the form attached hereto as Exhibit A or such other form as the
Company may require (the “Release”), within the time
period set forth therein, but in no event later than forty-five
days following your termination, and permitting such Release to
become effective in accordance with its terms, you will receive the
following severance benefits:
Continued payment of your base
salary that is in effect at the time of your termination, subject
to standard payroll deductions and withholdings, for six
(6) months. Such payments shall be made according to the
normal payroll practice of the Company for a period of six
(6) months commencing with the first payroll period following
the effective date of the Release (the “Severance
Period”); and
Assuming you timely and accurately
elect to continue your medical dental and vision group health
insurance benefits under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”), commencing with
the effective date of the Release the Company shall pay the same
percentage of the COBRA premiums for you and your qualified
beneficiaries as it paid for you and your qualified beneficiaries
at the time of your termination of employment until the earliest of
(i) the end of the Severance Period or (ii) the
expiration of your continuation coverage under COBRA and any
applicable state COBRA-like statute that provides mandated
continuation coverage. For purposes of this provision, references
to COBRA premiums shall not include any amounts payable under a
Code Section 125 health care reimbursement plan.
2
If you voluntarily resign or your employment is
terminated for Cause or due to your death or Disability (as defined
herein), all compensation and benefits will cease immediately and
you will receive no additional payments from the Company other than
your accrued base salary and accrued and unused vacation benefits
earned through the date of your termination.
For purposes of this Agreement,
“Cause” shall mean (i) willful misconduct by you,
including, but not limited to, dishonesty which materially and
adversely reflects upon your ability to perform your duties for the
Company, (ii) your conviction of, or the entry of a pleading
of guilty or nolo contendere by you to, any crime involving moral
turpitude or any felony, (iii) fraud, embezzlement or theft
against the Company, (iv) a material breach by you of any
material provision of any employment contract, assignment of
inventions, confidentiality and/or nondisclosure agreement between
you and the Company, or (v) your willful and habitual failure
to attend to your duties as assigned by the CEO of the Company,
after written notice to you and no less than a 90 day period to
cure such failure provided such failure to perform is subject to
cure with the passage of time.
For purposes of this Agreement,
“Disability” shall mean your inability to perform your
duties under this Agreement, even with reasonable accommodation,
because you have become permanently disabled within the meaning of
any policy of disability income insurance covering employees of the
Company then in force. In the event the Company has no policy of
disability income insurance covering employees of the Company in
force when you become disabled, the term “Disability”
shall mean your inability to perform your duties under this
Agreement, whether with or without reasonable accommodation, by
reason of any incapacity, physical or mental, which the Board,
based upon medical advice or an opinion provided by a licensed
physician acceptable to the Board, determines to have incapacitated
you from satisfactorily performing all of your usual services for
the Company, with or without reasonable accommodation, for a
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