Spectrum Group International, Inc. EMPLOYMENT AGREEMENT As Amended and Restated as of May 13, 2010
Exhibit 10.1
EMPLOYMENT AGREEMENT
As Amended and Restated as of May 13, 2010
As Amended and Restated as of May 13, 2010
This Employment Agreement (this “Agreement”) is an amendment and restatement as of May 13,
2010 of that Employment Agreement dated December 28, 2007, and is between SPECTRUM GROUP
INTERNATIONAL, INC., a Delaware corporation (the “Company”), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual
(“▇▇. ▇▇▇▇▇▇▇”).
WHEREAS, the Company, Spectrum Numismatics, Inc., a wholly-owned subsidiary of the Company,
and ▇▇. ▇▇▇▇▇▇▇ are parties to an Employment Agreement, dated as of December 28, 2007, as amended
by an amendment dated as of August 11, 2008 and effective as of March 5, 2008, and an amendment
dated as of December 22, 2009 and effective as of July 1, 2009 (as so amended but without giving
effect to this amendment and restatement, the “Existing Agreement”);
WHEREAS, the Existing Agreement will expire June 30, 2010.
WHEREAS, the parties desire to amend the Existing Agreement in certain respects;
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth,
the Existing Agreement is hereby amended and restated in its entirety, and the Company and ▇▇.
▇▇▇▇▇▇▇ therefore agree as follows:
1. Employment; Term. The Company hereby employs ▇▇. ▇▇▇▇▇▇▇, and ▇▇. ▇▇▇▇▇▇▇ hereby accepts
employment with the Company, in accordance with and subject to the terms and conditions set forth
in this Agreement. The term of ▇▇. ▇▇▇▇▇▇▇’ employment under this Agreement (the “Term”) commences
on the date of this Agreement and, unless earlier terminated in accordance with Section 4, will
terminate on June 30, 2013.
2. Duties.
(a) During the Term, ▇▇. ▇▇▇▇▇▇▇ shall serve as the President and Chief Executive Officer of
the Company, as Chief Executive Officer of the Company’s Coin Division and as Chief Executive
Officer of the Company’s Trading Division. ▇▇. ▇▇▇▇▇▇▇ will have such duties and responsibilities
as are customary for ▇▇. ▇▇▇▇▇▇▇’ positions and any other duties or responsibilities he may be
reasonably assigned by the Board of Directors.
(b) During the Term, ▇▇. ▇▇▇▇▇▇▇ shall devote his full business time and best efforts to the
business and affairs of the Company. ▇▇. ▇▇▇▇▇▇▇ understands and acknowledges that ▇▇. ▇▇▇▇▇▇▇’
duties will require business travel from time to time.
(c) During the Term, the Company agrees to nominate ▇▇. ▇▇▇▇▇▇▇ to serve as a member of the
Company’s Board of Directors, and ▇▇. ▇▇▇▇▇▇▇ agrees to serve in such capacity for no additional
compensation other than as provided hereunder. In the event that ▇▇. ▇▇▇▇▇▇▇ is serving as a
member of the Company’s Board of Directors at the time of the termination of his employment for any
reason, then ▇▇. ▇▇▇▇▇▇▇ agrees to resign as a member of the Board of Directors, and from any other
positions he may then hold with the Company or any
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of its subsidiaries, at the time of such termination and execute such documents and take such other
action, if any, as may be requested by the Company to give effect to any such resignation.
3. Compensation.
(a) Commencing July 1, 2010 and thereafter during the Term, the Company shall pay ▇▇. ▇▇▇▇▇▇▇
a salary of $525,000 per annum (that salary, the “Base Salary”). Payment of the Base Salary will be
in accordance with the Company’s standard payroll practices and subject to all legally required or
customary withholdings. Base Salary payable during periods before July 1, 2010 shall be governed
by the terms of the Existing Agreement.
(b) ▇▇. ▇▇▇▇▇▇▇ shall be eligible to receive an annual bonus (the “Performance Bonus”) for
each of the fiscal years of 2011 or thereafter during the Term. The Performance Bonus, if any, will
be based on the extent to which performance goals established by the Company for each of such years
have been met, as more fully set forth on Exhibit A hereto. Each Performance Bonus, if any, shall
be paid within 30 days following the issuance of financial statements for the fiscal year in
respect of which such bonus is payable, provided that in no event shall the Performance Bonus be
paid later than January 2 of the year following the end of such fiscal year. Except as provided in
Section 5, ▇▇. ▇▇▇▇▇▇▇ must be employed by the Company on the last day of the fiscal year to be
eligible for the Performance Bonus. The amount of any bonus payable for fiscal 2010 or earlier
periods shall be governed by the terms of the Existing Agreement.
(c) At July 1, 2010, the Company shall grant to ▇▇. ▇▇▇▇▇▇▇ 60,000 restricted stock units (the
“RSUs”) settleable by issuance of shares of the Company’s common stock, to vest 100% on June 30,
2013, with the RSUs to be settleable 50% at _June 30, 2013 and 50% at September 30, 2013. The RSUs
shall be granted pursuant to the form of award agreement attached as Exhibit B to this Agreement.
(d) Upon submission by ▇▇. ▇▇▇▇▇▇▇ of vouchers in accordance with the Company’s standard
procedures, the Company shall reasonably promptly reimburse ▇▇. ▇▇▇▇▇▇▇ for all reasonable and
necessary travel, business entertainment and other business expenses incurred by ▇▇. ▇▇▇▇▇▇▇ in
connection with the performance of his duties under this Agreement.
(e) During the Term, ▇▇. ▇▇▇▇▇▇▇ is entitled to participate in any and all medical insurance,
group health, disability insurance and other benefit plans that are made generally available by the
Company to employees of the Company (either directly or through a wholly-owned subsidiary) ,
provided that the medical, group health and disability insurance benefits provided by the Company
to ▇▇. ▇▇▇▇▇▇▇ shall be substantially as favorable to ▇▇. ▇▇▇▇▇▇▇ as those generally provided by
the Company to its senior executives. Additionally, ▇▇. ▇▇▇▇▇▇▇ is entitled to receive four weeks
paid vacation a year and paid holidays made available pursuant to the Company’s policy to all
senior executives of the Company. The Company may, in its sole discretion, at any time amend or
terminate any such benefit plans or programs, upon not less than 30 days’ prior written notice to
▇▇▇▇▇▇▇.
(f) Upon submission of vouchers in accordance with the Company’s ‘standard procedures, the
Company shall reasonably promptly directly pay or reimburse ▇▇. ▇▇▇▇▇▇▇ for his reasonable motor
vehicle costs and related expenses, such as insurance, repairs, maintenance, and gas, up to $750.00
per month, during the Term.
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(g) The Company shall indemnify ▇▇. ▇▇▇▇▇▇▇, to the fullest extent permitted by the Company’s
by-laws and applicable law, for any and all liabilities to which he may be subject as a result of,
in connection with or arising out of his employment by the Company hereunder, as well as the costs
and expenses (including reasonable attorneys’ fees) of any legal action brought or threatened to be
brought against him or the Company or any of its affiliates as a result of, in connection with or
arising out of such employment. ▇▇. ▇▇▇▇▇▇▇ shall be entitled to the full protection of any
insurance policies which the Company may elect to maintain generally for the benefit of its
directors and officers. The Company shall advance funds to ▇▇. ▇▇▇▇▇▇▇ in payment of his legal fees
to the fullest extent permitted by law. In the event of any inconsistency or ambiguity between this
provision and the Company’s by-laws, the by-laws shall prevail.
(h) Within 10 business days following the execution of this Agreement, the Company shall pay
to ▇▇. ▇▇▇▇▇▇▇ a one-time signing bonus in the amount of $175,000 in consideration of his execution
of the amendment and restatement of this Employment Agreement.
(i) Compensation paid or payable under this Agreement, including any Performance Bonus paid
or payable under Section 3(b), shall be subject to recoupment by the Company in accordance with the
terms of any policy relating to recoupment (or clawback) approved by the Board of Directors and in
effect at the time of payment of such compensation.
4. Termination. ▇▇. ▇▇▇▇▇▇▇’ employment hereunder may be terminated prior to the expiration of
the Term under the circumstances set forth in this Section 4. Upon any termination of ▇▇. ▇▇▇▇▇▇▇’
employment, the Term shall immediately end, although this Agreement shall remain in effect and
shall govern the rights and obligations of the parties hereto.
(a) ▇▇. ▇▇▇▇▇▇▇’ employment hereunder will terminate upon ▇▇. ▇▇▇▇▇▇▇’ death.
(b) Except as otherwise required by law, the Company may terminate ▇▇. ▇▇▇▇▇▇▇’ employment
hereunder at any time after ▇▇. ▇▇▇▇▇▇▇ becomes Totally Disabled. For purposes of this Agreement,
▇▇. ▇▇▇▇▇▇▇ will be “Totally Disabled” as of the earlier of (1) the date ▇▇. ▇▇▇▇▇▇▇ becomes
entitled to receive disability benefits under the Company’s long-term disability plan and (2) ▇▇.
▇▇▇▇▇▇▇’ inability to perform the duties and responsibilities contemplated under this Agreement for
a period of more than 180 consecutive days due to physical or mental incapacity or impairment.
(c) The Company may terminate ▇▇. ▇▇▇▇▇▇▇’ employment hereunder for Cause at any time after
providing written notice to ▇▇. ▇▇▇▇▇▇▇. For purposes of this Agreement, the term “Cause” shall
mean any of the following:
| (1) | ▇▇. ▇▇▇▇▇▇▇’ neglect or failure or refusal to perform his duties under this Agreement (other than as a result of total or partial incapacity or disability due to physical or mental illness); | ||
| (2) | any intentional act by or omission of ▇▇. ▇▇▇▇▇▇▇ that materially injures the reputation or business of the Company or any of its affiliates, or his own reputation; |
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| (3) | ▇▇. ▇▇▇▇▇▇▇’ conviction (including conviction on a nolo contendere plea) of a felony or any crime involving, in the good faith judgment of the Company, fraud, dishonesty or moral turpitude; | ||
| (4) | the breach of an obligation set forth in Section 6; | ||
| (5) | any other material breach of this Agreement; or | ||
| (6) | any material violation of the Company’s Code of Ethics, as may be amended from time to time (the “Code of Ethics”). |
In the cases of “neglect or failure” to perform his duties under this Agreement, as set forth in
4(c)(1) above, a material breach as set forth in 4(c)(5) above, or a material violation of the Code
of Ethics as set forth in 4(c)(6) above, a termination by the Company with Cause shall be effective
only if, within 30 days following delivery of a written notice by the Company to ▇▇. ▇▇▇▇▇▇▇ that
the Company is terminating his employment with Cause, which specifies in reasonable detail the
basis therefor, ▇▇. ▇▇▇▇▇▇▇ has failed to cure the circumstances giving rise to Cause.
(d) The Company may terminate ▇▇. ▇▇▇▇▇▇▇’ employment hereunder for any reason, upon 30
days’ prior written notice.
(e) ▇▇. ▇▇▇▇▇▇▇ may terminate his employment hereunder for Good Reason at any time after
providing written notice to the Company. ▇▇. ▇▇▇▇▇▇▇ also may terminate his employment hereunder
without Good Reason, upon 90 days written notice to the Company. For the purposes of this
Agreement, “Good Reason” means any of the following occurring during the Term (unless consented to
by ▇▇. ▇▇▇▇▇▇▇ in writing):
| (1) | The Company decreases or fails to pay ▇▇. ▇▇▇▇▇▇▇’ Base Salary or Performance Bonus or the benefits provided in Section 3; | ||
| (2) | ▇▇. ▇▇▇▇▇▇▇ no longer holds the offices as both President and Chief Executive Officer of the Company, or no longer is a member of the Board of Directors, or his functions and/or duties under Section 2(a) are materially diminished; and | ||
| (3) | ▇▇. ▇▇▇▇▇▇▇’ job site is relocated to a location which is more than thirty (30) miles from the current location, unless the parties mutually agree to relocate more than thirty (30) miles from the current location. |
A termination by ▇▇. ▇▇▇▇▇▇▇ with Good Reason shall be effective only if, within 30 days following
delivery of a written notice by ▇▇. ▇▇▇▇▇▇▇ to the Company that ▇▇. ▇▇▇▇▇▇▇ is terminating his
employment with Good Reason, which specifies in reasonable detail the basis therefor, the Company
has failed to cure the circumstances giving rise to Good Reason. In addition, a termination by ▇▇.
▇▇▇▇▇▇▇ shall be effective only if the Company receives notice of such termination not later than
90 days after the event constituting Good Reason occurs.
5. Compensation Following Termination Prior to the End of the Term. In the event that ▇▇.
▇▇▇▇▇▇▇’ employment hereunder is terminated prior to the expiration of the Term, ▇▇. ▇▇▇▇▇▇▇ will
be entitled only to the following compensation and benefits upon such termination (together with
such other provisions that may be set forth in the restricted stock agreement):
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(a) In the event that ▇▇. ▇▇▇▇▇▇▇’ employment hereunder is terminated prior to the expiration
of the Term by reason of ▇▇. ▇▇▇▇▇▇▇’ death or Total Disability, pursuant to Section 4(a) or 4(b),
the Company shall pay the following amounts to ▇▇. ▇▇▇▇▇▇▇ (or ▇▇. ▇▇▇▇▇▇▇’ estate, as the case may
be), to be paid as soon as practicable following the date of such termination, but in no event
prior to the time such payment would not be subject to tax under Code Section 409A:
| (1) | any accrued but unpaid Base Salary for services rendered to the date of termination; | ||
| (2) | the Performance Bonus, if any, not yet paid for any fiscal year ending prior to the date of termination of ▇▇. ▇▇▇▇▇▇▇’ employment, payable as and when such Performance Bonus would have been paid had ▇▇. ▇▇▇▇▇▇▇’ employment continued; | ||
| (3) | any incurred but unreimbursed expenses required to be reimbursed pursuant to Section 3(d) or 3(f); | ||
| (4) | any vacation accrued and unused to the date of termination; | ||
| (5) | payment of a pro rata (based on the number of days during the year of termination that ▇▇. ▇▇▇▇▇▇▇ was employed) portion of the Performance Bonus, if any, for the fiscal year in which ▇▇. ▇▇▇▇▇▇▇’ employment terminated (payable as and when such bonus would have been paid had ▇▇. ▇▇▇▇▇▇▇’ employment continued).; and | ||
| (6) | payment of a lump sum severance payment equal to the greater of $1,200,000 or 75% of “Annualized Pay.” For this purpose, “Annualized Pay” is calculated as one-third of the sum of the salary payments during the 36 months preceding termination plus Performance Bonuses paid for the preceding three completed fiscal years (treating any Performance Bonus payable under clause (2) above as paid). The severance payment shall be reduced by the amount of any proceeds paid to ▇▇. ▇▇▇▇▇▇▇ or his estate, as the case may be, from any disability or life insurance policy maintained by the Company for the benefit of ▇▇. ▇▇▇▇▇▇▇. |
In addition, for a period of six (6) months, beginning on the date of termination of ▇▇.
▇▇▇▇▇▇▇’ employment by reason of death or Total Disability, the Company will, at its expense,
provide medical and group health insurance benefits to ▇▇. ▇▇▇▇▇▇▇ and his dependents (or just his
dependents, as the case may be), which benefits shall be substantially as favorable to ▇▇. ▇▇▇▇▇▇▇
or his dependents as those provided to him and his dependents immediately preceding the termination
of his employment, provided that ▇▇. ▇▇▇▇▇▇▇ co-payments or other obligations to pay for such
benefits shall be substantially the same as applied at the time of his termination of employment.
(b) In the event that ▇▇. ▇▇▇▇▇▇▇’ employment hereunder is terminated prior to the expiration
of the Term by the Company for Cause pursuant to Section 4(c) or by ▇▇. ▇▇▇▇▇▇▇ without Good Reason
pursuant to Section 4(e), the Company shall pay the following amounts to ▇▇. ▇▇▇▇▇▇▇, to be paid as
soon as practicable following the date of such termination,
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but in no event prior to the time such payment would not be subject to tax under Section 409A of
the Code;
| (1) | any accrued but unpaid Base Salary for services rendered to the date of termination; | ||
| (2) | the Performance Bonus, if any, not yet paid for any fiscal year ending prior to the date of termination of ▇▇. ▇▇▇▇▇▇▇’ employment, payable as and when such Performance Bonus would have been paid had ▇▇. ▇▇▇▇▇▇▇’ employment continued; | ||
| (3) | any incurred but unreimbursed expenses required to be reimbursed pursuant to Section 3(d) or 3(f); and | ||
| (4) | any vacation accrued and unused to the date of termination. |
(c) In the event that ▇▇. ▇▇▇▇▇▇▇’ employment hereunder is terminated prior to the expiration
of the Term by the Company without Cause pursuant to Section 4(d), or by ▇▇. ▇▇▇▇▇▇▇ with Good
Reason pursuant to Section 4(e), the Company shall pay the following amounts to ▇▇. ▇▇▇▇▇▇▇, to be
paid as soon as practicable following the date of such termination, but in no event prior to the
time such payment would not be subject to tax under Section 409A of the Code:
| (1) | any accrued but unpaid Base Salary for services rendered to the date of termination; | ||
| (2) | the Performance Bonus, if any, not yet paid for any fiscal year ending prior to the date of termination of ▇▇. ▇▇▇▇▇▇▇’ employment, payable as and when such Performance Bonus would have been paid had ▇▇. ▇▇▇▇▇▇▇’ employment continued; | ||
| (3) | any incurred but unreimbursed expenses required to be reimbursed pursuant to Section 3(d) or 3(f); | ||
| (4) | any vacation accrued and unused to the date of termination; | ||
| (5) | payment of a pro rata (based on the number of days during the year of termination that ▇▇. ▇▇▇▇▇▇▇ was employed) portion of the Performance Bonus, if any, for the fiscal year in which ▇▇. ▇▇▇▇▇▇▇’ employment terminated (payable as and when such bonus would have been paid had ▇▇. ▇▇▇▇▇▇▇’ employment continued); and | ||
| (6) | payment of a lump sum severance payment equal to the greater of $1,200,000 or 75% of “Annualized Pay.” |
(d) The benefits to which ▇▇. ▇▇▇▇▇▇▇ may be entitled upon termination pursuant to the plans,
policies and arrangements referred to in Section 3(e) will be determined and paid in accordance
with the terms of those plans, policies and arrangements.
(e) Except as may be provided under this Agreement, under the terms of any incentive
compensation, employee benefit, or fringe benefit plan applicable to ▇▇. ▇▇▇▇▇▇▇ at the
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time of termination of ▇▇. ▇▇▇▇▇▇▇’ employment prior to the end of the Term, ▇▇. ▇▇▇▇▇▇▇ will not
be entitled to receive any other compensation, or to participate in any other plan, arrangement or
benefit, with respect to any future period after the termination of his employment.
(f) This Agreement is subject to the Company’s “Special Rules for Compliance with Code
Section 409A Applicable to Employment Agreements,” effective as of December 31, 2008. In the case
of payments or events on or before June 30, 2010, or Performance Bonus earned in fiscal 2010, the
provisions of Section 5(f) of the Existing Agreement shall apply.
(g) Effect of Code Sections 4999 and 280G on Payments.
| (1) | In the event that ▇▇. ▇▇▇▇▇▇▇ becomes entitled to any benefits or payments in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) under this Agreement, or any other plan, arrangement, or agreement with the Company or a subsidiary (the “Payments”), and such Payments will be subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Code (or any similar tax that may hereafter be imposed) in connection with a change in control, then, subject to reasonable notification to ▇▇. ▇▇▇▇▇▇▇ and, if he so requests, discussions with his advisors, the Payments under this Agreement shall be reduced (but not below zero) to the Reduced Amount (as defined below), if reducing the Payments under this Agreement will provide ▇▇. ▇▇▇▇▇▇▇ with a greater net after-tax amount than would be the case if no such reduction were made. The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of the Payments without causing any Payment to be subject to the Excise Tax, determined in accordance with Section 280G(d)(4) of the Code. Only amounts payable under this Agreement shall be reduced pursuant to this Section 5(g). Payments payable in cash and having the lowest denominated value relative to the valuation of such Payments as “parachute payments” shall be reduced first. | ||
| (2) | In determining the potential impact of the Excise Tax, the Company may rely on any advice it deems appropriate including, but not limited to, the advice of its independent accounting firm, legal advisors and compensation consultants. For purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax, the Company may take into account any relevant guidance under the Code and the regulations promulgated thereunder, including, but not limited to, the following: |
| (A) | The amount of the Payments which shall be treated as subject to the Excise Tax shall be equal to the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code, as determined by the Company’s independent accounting firm or other advisor; | ||
| (B) | The value of any non-cash benefits or any deferred or accumulated payment or benefit shall be determined by the Company’s independent accounting firm or other advisors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code; and |
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| (C) | The value of any non-competition covenants contained in this Agreement or other agreement between ▇▇. ▇▇▇▇▇▇▇ and the Company or an affiliate shall be taken into account to reduce “parachute payments” to the maximum extent allowable under Section 280G of the Code. |
For purposes of the determinations under this Section 5(g), ▇▇. ▇▇▇▇▇▇▇ shall be deemed to pay
federal income taxes at the highest marginal rate of federal income taxation in the calendar year
in which the applicable payment is to be made, and state and local income taxes at the highest
marginal rate of taxation in the state and locality of Mr. Robert’s residence, net of the maximum
reduction in federal income taxes which could be obtained from deduction of such state and local
taxes (unless it is impracticable for ▇▇. ▇▇▇▇▇▇▇ to itemize his deductions).
6. Exclusive Employment; Nonsolicitation; Nondisclosure of Proprietary Information; Surrender
of Records; Inventions and Patents; Code of Ethics; Other Commitments.
(a) No Conflict; No Other Employment. During the period of ▇▇. ▇▇▇▇▇▇▇’ employment with the
Company, ▇▇. ▇▇▇▇▇▇▇ shall not: (i) engage in any activity which conflicts or interferes with or
derogates from the performance of ▇▇. ▇▇▇▇▇▇▇’ duties hereunder nor shall ▇▇. ▇▇▇▇▇▇▇ engage in any
other business activity, whether or not such business activity is pursued for gain or profit and
including service as a director of any other company, except as approved in advance in writing by
the Company (which approval shall not be unreasonably withheld); provided, however, that ▇▇.
▇▇▇▇▇▇▇ shall be entitled to manage his personal investments and otherwise attend to personal
affairs, including charitable, social and political activities, in a manner that does not
unreasonably interfere with his responsibilities hereunder, or (ii) engage in any other employment,
whether as an employee or consultant or in any other capacity, and whether or not compensated
therefor. The Company acknowledges and agrees that ▇▇. ▇▇▇▇▇▇▇ has engaged and intends to continue
to engage in certain other business transactions, subject to the approval of the Audit Committee of
the Company’s Board of Directors as appropriate.
(b) Non-solicitation. In consideration of the payment by the Company to ▇▇. ▇▇▇▇▇▇▇ of amounts
that may hereafter be paid to ▇▇. ▇▇▇▇▇▇▇ pursuant to this Agreement (including, without
limitation, pursuant to Sections 3 and 5 hereof) and other obligations undertaken by the Company
hereunder, ▇▇. ▇▇▇▇▇▇▇ agrees that during his employment with the Company and for a period of one
year following the date of termination of his employment, ▇▇. ▇▇▇▇▇▇▇ shall not, directly or
indirectly, (i) solicit, encourage or recruit, or attempt to solicit, encourage or recruit any of
the employees, agents, consultants or representatives of the Company or any of its affiliates to
terminate his, her, or its relationship with the Company or such affiliate; or (ii) solicit,
encourage or recruit, or attempt to solicit, encourage or recruit, any of the employees, agents,
consultants or representatives of the Company or any of its affiliates to become employees, agents,
representatives or consultants of any other person or entity.
(c) Proprietary Information. ▇▇. ▇▇▇▇▇▇▇ acknowledges that during the course of his employment
with the Company he will necessarily have access to and make use of proprietary information and
confidential records of the Company and its affiliates. ▇▇. ▇▇▇▇▇▇▇ covenants that he shall not
during the Term or at any time thereafter, directly or indirectly, use for his own purpose or for
the benefit of any person or entity other than the Company, nor otherwise disclose, any proprietary
information to any individual or entity, unless such disclosure has been authorized in writing by
the Company or is otherwise required by law. ▇▇. ▇▇▇▇▇▇▇ acknowledges and understands that the term
“proprietary information” includes, but is not limited to: (a) the
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software products, programs, applications, and processes utilized by the Company or any of its
affiliates; (b) the name and/or address of any customer or vendor of the Company or any of its
affiliates or any information concerning the transactions or relations of any customer or vendor of
the Company or any of its affiliates with the Company or such affiliate or any of its or their
partners, principals, directors, officers or agents; (c) any information concerning any product,
technology, or procedure employed by the Company or any of its affiliates but not generally known
to its or their customers, vendors or competitors, or under development by or being tested by the
Company or any of its affiliates but not at the time offered generally to customers or vendors; (d)
any information relating to the computer software, computer systems, pricing or marketing methods,
sales margins, cost of goods, cost of material, capital structure, operating results, borrowing
arrangements or business plans of the Company or any of its affiliates; (e) any information which
is generally regarded as confidential or proprietary in any line of business engaged in by the
Company or any of its affiliates; (f) any business plans, budgets, advertising or marketing plans;
(g) any information contained in any of the written or oral policies and procedures or manuals of
the Company or any of its affiliates; (h) any information belonging to customers or vendors of the
Company or any of its affiliates or any other person or entity which the Company or any of its
affiliates has agreed to hold in confidence; (i) any inventions, innovations or improvements
covered by this Agreement; and (j) all written, graphic and other material relating to any of the
foregoing. ▇▇. ▇▇▇▇▇▇▇ acknowledges and understands that information that is not novel or
copyrighted or patented may nonetheless be proprietary information. The term “proprietary
information” shall not include information generally available to and known by the public or
information that is or becomes available to ▇▇. ▇▇▇▇▇▇▇ on a non-confidential basis from a source
other than the Company, any of its affiliates, or the directors, officers, employees, partners,
principals or agents of the Company or any of its affiliates (other than as a result of a breach of
any obligation of confidentiality).
(d) Confidentiality and Surrender of Records. ▇▇. ▇▇▇▇▇▇▇ shall not during the Term or at any
time thereafter (irrespective of the circumstances under which ▇▇. ▇▇▇▇▇▇▇’ employment by the
Company terminates), except as required by law, directly or indirectly publish, make known or in
any fashion disclose any confidential records to, or permit any inspection or copying of
confidential records by, any individual or entity other than in the course of such individual’s or
entity’s employment or retention by the Company. Upon termination of employment for any reason or
upon request by the Company, ▇▇. ▇▇▇▇▇▇▇ shall deliver promptly to the Company (without retaining
any copies) all property and records of the Company or any of its affiliates, including, without
limitation, all confidential records. For purposes hereof, “confidential records” means all
correspondence, reports, memoranda, files, manuals, books, lists, financial, operating or marketing
records, magnetic tape, or electronic or other media or equipment of any kind which may be in ▇▇.
▇▇▇▇▇▇▇’ possession or under his control or accessible to him which contain any proprietary
information. All property and records of the Company and any of its affiliates (including, without
limitation, all confidential records) shall be and remain the sole property of the Company or such
affiliate during the Term and thereafter.
(e) Inventions and Patents. All inventions, innovations or improvements (including policies,
procedures, products, improvements, software, ideas and discoveries, whether patent, copyright,
trademark, service ▇▇▇▇, or otherwise) conceived or made by ▇▇. ▇▇▇▇▇▇▇, either alone or jointly
with others, in the course of his employment by the Company, belong to the Company. ▇▇. ▇▇▇▇▇▇▇
will promptly disclose in writing such inventions, innovations or improvements to the Company and
perform all actions reasonably requested by the Company to establish and confirm such ownership by
the Company, including, but not limited to, cooperating with and assisting the Company in obtaining
patents, copyrights, trademarks, or service marks for the Company in the United States and in
foreign countries.
49
(f) Enforcement. ▇▇. ▇▇▇▇▇▇▇ acknowledges and agrees that, by virtue of his position, his
services and access to and use of confidential records and proprietary information, any violation
by him of any of the undertakings contained in this Section 6 would cause the Company and/or its
affiliates immediate, substantial and irreparable injury for which it or they have no adequate
remedy at law. Accordingly, ▇▇. ▇▇▇▇▇▇▇ acknowledges that the Company may seek an injunction or
other equitable relief by a court of competent jurisdiction restraining any violation or threatened
violation of any undertaking contained in this Section 6, and consents to the entry thereof. ▇▇.
▇▇▇▇▇▇▇ waives posting by the Company or its affiliates of any bond otherwise necessary to secure
such injunction or other equitable relief. Rights and remedies provided for in this Section 6 are
cumulative and shall be in addition to rights and remedies otherwise available to the parties
hereunder or under any other agreement or applicable law.
(g) Code of Ethics. Nothing in this Section 6 is intended to limit, modify or reduce ▇▇.
▇▇▇▇▇▇▇’ obligations under the Company’s Code of Ethics. ▇▇. ▇▇▇▇▇▇▇’ obligations under this
Section 6 are in addition to, and not in lieu of, ▇▇. ▇▇▇▇▇▇▇’ obligations under the Code of
Ethics. To the extent there is any inconsistency between this Section 6 and the Code of Ethics
which would permit ▇▇. ▇▇▇▇▇▇▇ to take any action or engage in any activity pursuant to this
Section 6 which he would be barred from taking or engaging in under the Code of Ethics, the Code of
Ethics shall control.
(h) Cooperation With Regard to Litigation. ▇▇. ▇▇▇▇▇▇▇ agrees to cooperate with the
Company, during the Term and thereafter (including following ▇▇. ▇▇▇▇▇▇▇’▇ termination of
employment for any reason), by making himself reasonably available to testify on behalf of the
Company or any subsidiary or affiliate of the Company, in any action, suit or proceeding, whether
civil, criminal, administrative or investigative, and to assist the Company, or any subsidiary or
affiliate of the Company, in any such action suit, or proceeding, by providing information and
meeting and consulting with the Board or its representatives or counsel, or representatives or
counsel to the Company, or any subsidiary or affiliate of the Company, as reasonably requested.
The Company agrees to reimburse ▇▇. ▇▇▇▇▇▇▇, on an after-tax basis each calendar quarter, for all
expenses actually incurred in connection with his provision of testimony or assistance in
accordance with the provisions of Section 6(h) of this Agreement (including reasonable attorneys’
fees) but not later than the last day of the calendar year in which the expense was incurred (or,
in the case of an expense incurred in the final quarter of a calendar year, the next following
February 15).
(i) Non-Disparagement. ▇▇. ▇▇▇▇▇▇▇ shall not, at any time during the Term and
thereafter, make statements or representations, or otherwise communicate, directly or indirectly,
in writing, orally or otherwise, or take any action which may, directly or indirectly, disparage
the Company or any of its subsidiaries or affiliates or their respective officers, directors,
employees, advisors, businesses or reputations. Notwithstanding the foregoing, nothing in this
Agreement shall preclude ▇▇. ▇▇▇▇▇▇▇ from making truthful statements that are required by
applicable law, regulation or legal process.
(j) Release of Employment Claims. ▇▇. ▇▇▇▇▇▇▇ agrees, as a condition to receipt of
any termination payments and benefits provided for in Section 5 of this Agreement (other than
compensation accrued and payable at the date of termination without regard to termination) that he
will execute a general release agreement, in substantially the form set forth in Exhibit C to this
Agreement, releasing any and all claims arising out of ▇▇. ▇▇▇▇▇▇▇’▇ employment other than
enforcement of this Agreement and other than with respect to vested rights or rights provided for
under any equity plan, any compensation plan or any benefit plan or
50
arrangement of the Company or rights to indemnification under any agreement, law, Company
organizational document or policy or otherwise. The Company will provide ▇▇. ▇▇▇▇▇▇▇ with a copy
of such release simultaneously with delivery of the notice of termination, but not later than 21
days before (45 days before if ▇▇. ▇▇▇▇▇▇▇’▇ termination is part of an exit incentive or other
employment termination program offered to a group or class of employees) ▇▇. ▇▇▇▇▇▇▇’▇ termination
of employment. ▇▇. ▇▇▇▇▇▇▇ shall deliver the executed release to the Company eight days before the
date applicable under Section 5 of this Agreement for the payment of the termination payments and
benefits payable under Section 5 of this Agreement.
7. Notices. Every notice or other communication required or contemplated by this Agreement
must be in writing and sent by one of the following methods: (1) personal delivery, in which case
delivery is deemed to occur the day of delivery; (2) certified or registered mail, postage prepaid,
return receipt requested, in which case delivery is deemed to occur the day it is officially
recorded by the U.S. Postal Service as delivered to the intended recipient; or (3) next-day
delivery to a U.S. address by recognized overnight delivery service such as Federal Express, in
which case delivery is deemed to occur one business day after being sent. In each case, a notice or
other communication sent to a party must be directed to the address for that party set forth below,
or to another address designated by that party by written notice:
If to the Company, to:
18▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇ttention: General Counsel
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇ttention: General Counsel
If to ▇▇. ▇▇▇▇▇▇▇, to:
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇
18▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
18▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
8. Assignability; Binding Effect. This Agreement is a personal contract calling for the
provision of unique services by ▇▇. ▇▇▇▇▇▇▇, and ▇▇. ▇▇▇▇▇▇▇’ rights and obligations hereunder may
not be sold, transferred, assigned, pledged or hypothecated. The rights and obligations of the
Company under this Agreement bind and run in favor of the successors and assigns of the Company.
9. Complete Understanding. This Agreement constitutes the complete understanding between the
parties with respect to the employment of ▇▇. ▇▇▇▇▇▇▇ by the Company and supersedes all prior
agreements and understandings, both written and oral, between the parties (or between ▇▇. ▇▇▇▇▇▇▇
and Spectrum Numismatics, Inc.) with respect to the subject matter of this Agreement.
10. Amendments; Waivers. This Agreement may not be amended except by an instrument in writing
signed on behalf of the Company and ▇▇. ▇▇▇▇▇▇▇. No waiver by any party of any breach under this
Agreement will be deemed to extend to any prior or subsequent breach or affect in any way any
rights arising by virtue of any prior or subsequent such occurrence. Waiver by either party of any
breach by the other party will not operate as a waiver of any other
51
breach, whether similar to or different from the breach waived. No delay on the part of the Company
or ▇▇. ▇▇▇▇▇▇▇ in the exercise of any of their respective rights or remedies will operate as a
waiver of that right.
11. Severability. If any provision of this Agreement or its application to any person or
circumstances is determined by any court of competent jurisdiction to be unenforceable to any
extent, that unenforceable provision will be deemed eliminated to the extent necessary to permit
the remaining provisions to be enforced, and the remainder of this Agreement, or the application of
the unenforceable provision to other persons or circumstances, will not be affected thereby. If any
provision of this Agreement, or any part thereof, is held to be unenforceable because of the scope
or duration of or the area covered by that provision, the court making that determination shall
reduce the scope, duration of or area covered by that provision or otherwise amend the provision to
the minimum extent necessary to make that provision enforceable to the fullest extent permitted by
law.
12. Survivability. The provisions of this Agreement that by their terms call for performance
subsequent to termination of ▇▇. ▇▇▇▇▇▇▇’ employment hereunder, or of this Agreement, will survive
such termination. Without limiting the generality of the foregoing, the provisions of Sections
3(g), 5 and 6 shall survive any termination of this Agreement in accordance with their terms.
13. Governing Law. This Agreement is governed by the laws of the State of California, without
giving effect to principles of conflict of laws.
14. Jurisdiction; Service of Process. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement must be brought against any of
the parties in the courts of the State of California, County of Orange, or, if it has or can
acquire jurisdiction, in the United States District Court for the Southern District of California,
and each of the parties consents to the jurisdiction of those courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to venue laid therein.
Process in any such action or proceeding may be served by sending or delivering a copy of the
process to the party to be served at the address and in the manner provided for the giving of
notices in Section 13. Nothing in this Section 20, however, affects the right of any party to serve
legal process in any other manner permitted by law. Each party hereto waives trial by jury.
15. Mitigation. In no event shall ▇▇. ▇▇▇▇▇▇▇ be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to him under any of the provisions of
this Agreement, and such amounts shall not be reduced whether or not ▇▇. ▇▇▇▇▇▇▇ obtains other
employment.
The undersigned hereby execute this Agreement on the date stated in the introductory clause.
| SPECTRUM GROUP INTERNATIONAL, INC. |
||||
| By: | /s/ ▇▇▇▇▇ \▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Title: Executive Vice President
and General Counsel |
||||
52
| /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||||
53
EXHIBIT A
Performance Bonus for Chief Executive Officer
This Exhibit to the Employment Agreement, as amended and restated as of May 13, 2010 (the
“Employment Agreement”), between Spectrum Group International, Inc. (the “Company”) and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, sets forth the terms of the opportunity of ▇▇. ▇▇▇▇▇▇▇ to earn the “Performance Bonus”
authorized in Section 3(b) of the Employment Agreement. This Performance Bonus remains subject to
the terms of Section 3(b) and other applicable terms of the Employment Agreement. Capitalized
terms herein have the meanings as defined in the Employment Agreement.
In each of fiscal years 2011, 2012 and 2013, ▇▇. ▇▇▇▇▇▇▇ will have the opportunity to earn a
Performance Bonus as follows:
If Pre-Tax Profits (as defined below) are at least $5 million, then the Performance Bonus
shall equal the following:
| s | 12% of Pre-Tax Profits up to $8 million of Pre-Tax Profits; plus | ||
| s | 15% of Pre-Tax Profits in excess of $8 million, up to $10 million of Pre-Tax Profits; plus | ||
| s | 18% of Pre-Tax Profits in excess of $10 million of Pre-Tax Profits. |
If Pre-Tax Profits are less than $5 million, then the Performance Bonus shall be an amount
determined in the discretion of the Compensation Committee, provided, however, that if the
Committee will have taken the steps necessary to otherwise qualify the Performance Bonus as
“performance-based compensation” under Internal Revenue Code Section 162(m) prior to
payment of the Performance Bonus, then this amount of Performance Bonus payable in the
discretion of the Committee shall be payable only if Pre-Tax Profits are positive and the
maximum of this discretionary amount payable shall be $600,000.
Pre-Tax Profits means the Company’s net income (as determined under Generally Accepted
Accounting Principles or GAAP) for the given fiscal year, adjusted as follows:
| s | The positive or negative effects of income taxes (in accordance with GAAP) shall be eliminated from net income in determining Pre-Tax Profits. | ||
| s | The positive or negative effects of foreign currency exchange shall be eliminated from net income in determining Pre-Tax Profits. |
54
| s | Expenses incurred in connection with litigation relating to Afinsa and its affiliates and litigation relating to Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, including in connection with any settlement, shall be eliminated from net income in determining Pre-Tax Profits. | ||
| s | Except for the above items, no adjustment shall be made to Pre-Tax Income; thus, for clarity, other extraordinary expenses and bonus compensation accruals shall remain included in net income and minority interests shall remain excluded from net income in determining Pre-Tax Profits. |
Adjustments shall be determined by the Committee, in good faith, in consultation with ▇▇.
▇▇▇▇▇▇▇, provided that if the Performance Bonus is intended to qualify as
“performance-based compensation” under Code Section 162(m), a standard for identifying
litigation expenses to be taken into account in the adjustment shall be established no
later than 90 days after the beginning of the fiscal year.
Pre-Tax Profits shall be determined by the Committee in good faith, which shall certify in
writing (to the extent required to meet the applicable requirements of Code Section 162(m))
as to the level of Pre-Tax Profits achieved and the corresponding amount of Performance
Bonus earned.
55
EXHIBIT B
[Form of Restricted Stock Unit Agreement]
56
EXHIBIT C
RELEASE
We advise you to consult an attorney before you sign this Release. You have until the date
which is seven (7) days after the Release is signed and returned to Spectrum Group International,
Inc. to change your mind and revoke your Release. Your Release shall not become effective or
enforceable until after that date.
In consideration for the benefits provided under your Employment Agreement with Spectrum Group
International, Inc. as amended and restated effective May ___, 2010 (the “Employment Agreement”),
and more specifically enumerated in Attachment 1 hereto, by your signature below, you, for yourself
and on behalf of your heirs, executors, agents, representatives, successors and assigns, hereby
release and forever discharge the Company, its past and present parent corporations, subsidiaries,
divisions, subdivisions, affiliates and related companies (collectively, the “Company”) and the
Company’s past, present and future agents, directors, officers, employees, representatives,
successors and assigns (hereinafter “those associated with the Company”) with respect to any and
all claims, demands, actions and liabilities, whether in law or equity, which you may have against
the Company or those associated with the Company of whatever kind, including but not limited to
those arising out of your employment with the Company or the termination of that employment. You
agree that this release covers, but is not limited to, claims arising under the Age Discrimination
in Employment Act of 1967, 29 U.S.C. § 621 et seq., Title VII of the Civil Rights Act of 1964, 42
U.S.C. § 2000e et seq., the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the
Fair Labor Standards Act, 29 U.S.C. § 201 et seq., the Employee Retirement Income Security Act of
1974, 29 U.S.C. § 1001 et seq., the Connecticut Fair Employment Practices Act, C.G.S. § 46a-51 et
seq., and any other local, state or federal law, regulation or order dealing with discrimination in
employment on the basis of sex, race, color, national origin, veteran status, marital status,
religion, disability, handicap, or age. You also agree that this release includes claims based on
wrongful termination of employment, breach of contract (express or implied), tort, or claims
otherwise related to your employment or termination of employment with the Company and any claim
for attorneys’ fees, expenses or costs of litigation.
This Release covers all claims based on any facts or events, whether known or unknown by you,
that occurred on or before the date of this Release. Except to enforce this Release, you agree that
you will never commence, prosecute, or cause to be commenced or prosecuted any lawsuit or
proceeding of any kind against the Company or those associated with the Company in any forum and
agree to withdraw with prejudice all complaints or charges, if any, that you have filed against the
Company or those associated with the Company.
Anything in this Release to the contrary notwithstanding, this Release does not include a
release of (i) your rights under the Employment Agreement or your right to enforce the Employment
Agreement; (ii) any rights you may have to indemnification or insurance under any agreement, law,
Company organizational document or policy or otherwise; (iii) any rights you may have to equity
compensation or other compensation or benefits under the Company’s equity, compensation or benefit
plans; or (iv) your right to enforce this Release.
By signing this Release, you further agree as follows:
You have read this Release carefully and fully understand its terms;
57
You have had at least twenty-one (21) days to consider the terms of the Release;
You have seven (7) days from the date you sign this Release to revoke it by written
notification to the Company. After this seven (7) day period, this Release is final and binding and
may not be revoked;
You have been advised to seek legal counsel and have had an opportunity to do so;
You would not otherwise be entitled to the benefits provided under your Employment Agreement
had you not agreed to execute this Release; and
Your agreement to the terms set forth above is voluntary.
Name: |
||
Signature:
|
Date: | |
Received by:
|
Date: |
Attachment: Attachment 1 — Schedule of Termination Payments and Benefits
58