Employment Agreement - Sharper Image Corp. and Richard Thalheimer
EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of
October 21, 2002 by and between Sharper Image Corporation (the "Company") and
Richard Thalheimer (the "Executive").
WHEREAS the Company desires to continue to employ the Executive and the
Executive desires to accept continued employment with the Company on the terms
and conditions set forth below;
NOW, THEREFORE, in consideration of the above premises and the
respective covenants and agreements of the parties herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to continue to employ the
Executive, and the Executive hereby agrees to continue to serve the Company, on
the terms and conditions set forth herein.
2. Effective Date. The employment of the Executive by the Company
pursuant to this Agreement as provided in Section 1 will commence on October 21,
2002 (the "Effective Date") and continue until the Executive's employment is
terminated as provided in Section 6 (the "Term").
3. Position and Duties. The Executive shall serve as and hold the title
of Chief Executive Officer of the Company, and shall have such responsibilities,
duties and authority as are generally associated with such office and as may
from time to time be assigned to the Executive by the Board of Directors of the
Company that are consistent with such responsibilities, duties and authority.
The Executive shall devote substantially all of his working time and efforts to
the business and affairs of the Company and its subsidiaries and affiliates;
provided, however, and without prejudice to the foregoing, that nothing shall
preclude the Executive from: (i) serving on the board of directors of other
corporations or (ii) engaging in charitable and community affairs and managing
his personal affairs and investments. The Executive shall report to the Board of
Directors of the Company. Notwithstanding anything in this Section 3 to the
contrary, the Executive shall not be required to perform any duties or
responsibilities that would result in a violation of, or noncompliance with, any
law, regulation, regulatory pronouncement or any other regulatory requirement
applicable to the Company or the conduct of the Company's business or to the
Executive in his capacity as Chief Executive of the Company.
4. Place of Performance. In connection with the Executive's employment
by the Company, the Executive shall be based at the principal executive offices
of the Company in San Francisco, California (unless mutually agreed to by the
parties hereto), except for required travel on the Company's business.
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5. Compensation and Related Matters.
(a) Salary. During the Term, the Company shall pay to the
Executive an annual base salary to be paid pursuant to the Company's
normal payroll practices. Such base salary shall be at the initial
annual rate of $850,000 as of the Effective Date and shall be reviewed
annually as of April during the remaining term of the Agreement.
(b) Bonus. For each calendar year during the Term, the
Executive shall be eligible to participate in the Company's Executive
Bonus Plan or any successor plan or program adopted by the Company.
(c) Deferred Compensation Program. For each calendar year
during the Term, the Executive shall be eligible to participate in the
Company's Deferred Compensation Program or any successor plan or
program adopted by the Company.
(d) Expenses. The Executive shall be entitled to receive
prompt reimbursement for all reasonable and customary expenses incurred
by the Executive in performing services hereunder, provided that such
expenses are incurred and accounted for in accordance with the policies
and procedures established by the Company.
(e) Benefits and Perquisites. The Executive shall be entitled
to receive the benefits and perquisites listed in Exhibit A hereto
substantially to the same extent the Executive received such benefits
and perquisites immediately before the Effective Date; provided that if
the Board of Directors determines in good faith that it is no longer
possible for the Company to provide any such benefit or perquisite
without substantial adverse consequences to the Company or without
violating an applicable law, the Executive shall be entitled to a
comparable benefit or perquisite or the cash value thereof.
(f) Other Benefits. The Executive shall be entitled to
participate in the pension and welfare plans and arrangements provided
by the Company to senior executives of the Company from time to time
and, additionally, the Executive shall be entitled to the benefits
pursuant to a supplemental executive retirement plan as set forth in
Exhibit C (the "SERP"). However, the Executive shall not be entitled to
participate in any program providing severance benefits unless the
Executive's participation is expressly provided for therein, in which
case any severance benefits provided under such program will be reduced
by the amount of severance benefits, if any, actually provided
hereunder.
(g) Vacation. The Executive shall be entitled to four (4)
weeks of vacation each calendar year, which will be administered
pursuant to the Company's vacation policy.
(h) Insurance. The Executive shall be entitled to estate
planning insurance coverage in accordance with the Company's key person
coverage policy, as consolidated, with Prudential, and the Split Dollar
Agreement originally entered into by the Executive and the Company in
May, 1995, as amended (the "Split Dollar Agreement"). To the extent
that the Company is prohibited by law from providing such benefits, the
Executive, or his estate, shall be entitled to the economic equivalent
of such benefits.
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(i) Board Membership and Additional Positions. To the extent
mutually agreed upon by the parties hereto, the Executive agrees to
serve without additional compensation as a director and as Chairman of
the Board of Directors of the Company or any of its affiliated entities
and/or in one or more executive positions of any of the Company's
affiliated entities, if elected or appointed thereto, provided that the
Executive is indemnified in accordance with Section 13.
6. Termination. The Executive's employment hereunder may be terminated
under the following circumstances:
(a) Death. The Executive's employment hereunder shall be
terminated upon his death.
(b) Disability. The Executive's employment may be terminated
by the Company if, as a result of the Executive's incapacity due to
physical or mental disability ("Disability"), the Executive shall have
failed to perform his duties hereunder on a full-time basis for six (6)
consecutive months and, within thirty (30) days after written Notice of
Termination is given in accordance with Section 12 (which may occur
only after the end of such six (6) month period), the Executive shall
not have returned to the performance of his duties hereunder on a
full-time basis.
(c) Cause or Without Cause. The Company may terminate the
Executive's employment hereunder for Cause or without Cause. For
purposes of this Agreement, the Company shall have "Cause" to terminate
the Executive's employment hereunder upon:
(i) the Executive's continued willful failure (other
than any such failure resulting from his incapacity due to
physical or mental disability) substantially to perform his
material duties and obligations, which failure is not remedied
within thirty (30) days after receipt by the Executive of
written notice of such failure from the Board of Directors of
the Company; provided that a change in the quality of
Executive's work on its own shall not constitute Cause; or
(ii) the Executive's willful misconduct against the
Company that could reasonably be expected to impair materially
the financial condition or business reputation of the Company
(or any of its affiliates) or a material act of fraud against
the Company; or
(iii) the Executive's conviction, or plea of guilty
or nolo contendere or a similar plea to, a felony or a
violation of any statute, rule or regulation required to be
reported to any governmental or regulatory agency.
No act or failure to act on the Executive's part shall be deemed
willful unless done or omitted to be done by the Executive not in good
faith and without reasonable belief that the Executive's action or
omission was in the best interests of the Company.
(d) Termination by the Executive. The Executive may terminate
his employment hereunder for Good Reason (as defined below) or
voluntarily in the absence
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of Good Reason. For purposes of this Agreement, "Good Reason" shall,
unless, where applicable, expressly consented to by the Executive in
writing, mean:
(i) the Executive no longer serving as Chief
Executive Officer of the Company or, unless necessary to
comply with any applicable law or any corporate governance
requirement of any stock exchange or other regulatory body to
which the Company is subject, Chairman of the Board of
Directors or any material reduction in the nature or status of
the Executive's responsibilities or office from those in
effect under the Agreement, or the assignment to the Executive
of any responsibilities adversely inconsistent with those in
effect under the Agreement;
(ii) a reduction in the Executive's rate of annual
base salary or bonus opportunity, except for a reduction of no
more than 20% that applies to senior officers of the Company
generally and does not occur in anticipation of or within
twenty-four months following a Change in Control (as defined
below);
(iii) the failure by the Company to continue to
provide the Executive with benefits materially equivalent to
those to be received by the Executive pursuant to this
Agreement;
(iv) any reason during the period beginning three
months following a Change in Control (as defined below) of the
Company and ending twelve months following a Change in Control
(as defined below) of the Company; or
(v) the failure of the Company to obtain the
assumption of this Agreement pursuant to Section 11(a) hereof.
(e) Any termination of the Executive's employment by the
Company or by the Executive (other than termination pursuant to
subsection (a) hereof) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 12
below. For purposes of the Agreement, a "Notice of Termination" shall
indicate the specific termination provision in the Agreement and shall
set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment
hereunder.
"Date of Termination" shall mean (i) if the Executive's employment is
terminated by his death, the date of his death, (ii) if the Executive's
employment is terminated pursuant to subsection (b) above, thirty (30) days
after Notice of Termination is given (provided that the Executive shall not have
returned to the performance of his duties on a full-time basis during such
thirty (30) day period or (iii) if the Executive's employment is terminated
pursuant to subsections (c) or (d), the date specified in the Notice of
Termination; except that (A) if the Executive's employment is terminated
pursuant to subsection (c) above for Cause, the date specified in the Notice of
Termination, which date shall be no earlier than three (3) days following the
Notice of Termination and (B) if Executive terminates his employment in
connection with a Change in Control pursuant to subsection (d)(v), the
termination shall be
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deemed to have occurred effective immediately prior to the Change in Control.
Notwithstanding the above, in the event of the Executive's termination pursuant
to subsection (c) above for Cause, the Company shall have the right to prohibit
the Executive's presence at the Company's facilities immediately upon, or at any
time following, the Notice of Termination.
7. Consequences of Termination.
(a) Death. Upon the Executive's termination as a result of his
death, the Executive or his estate shall be entitled to the following
benefits:
(i) The Company shall pay the Executive in a lump sum
as soon as practicable, but in any event no later than three
(3) days following the Date of Termination, his then current
base salary through the Date of Termination and any awarded,
but unpaid, bonus for the prior calendar year.
(ii) The Executive's beneficiaries, heirs,
distributees, devisees and legatees, as applicable, shall be
entitled to receive the benefits payable to them pursuant to
the Split Dollar Agreement described in Section 5(h) or the
economic equivalent thereof.
(iii) If any dependents of the Executive at the time
of his death are participating in any Company-sponsored group
health plans (including dental plans, but excluding life and
disability), the Company will continue the coverage of the
dependents thereunder (under the terms applicable to senior
executives) and will pay the premiums for any such plans in
which such dependents participated immediately prior to the
Executive's death for a period of ten (10) years following the
Date of Termination; provided that if the Company is unable,
at any point, to provide any such coverage, the Company will
pay such dependents a lump sum cash payment, which after
payment of all applicable taxes thereon, will equal the
present value of the cost of such coverage for that portion of
the ten (10) year period for which such coverage could not be
provided.
(iv) Any and all options ("Options") to purchase
shares of common stock of the Company granted after the
Effective Date and held by the Executive at or on the Date of
Termination shall fully vest and become exercisable by the
Executive's heirs, distributees, devisees and legatees, as
applicable and shall remain exercisable until the date the
Options would otherwise expire in accordance with their terms.
(b) Disability. During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to physical
or mental illness ("Disability Period"), the Executive shall continue
to receive his full base salary and remain eligible for a bonus
pursuant to Section 5(b), until his employment is terminated pursuant
to Section 6(b), provided that payments so made to the Executive during
the Disability Period shall be reduced by the sum of the amounts, if
any, payable to the Executive at or prior to the time of any payment
under disability benefit plans of the Company or under the state or
Social Security disability insurance programs. Upon the Executive's
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termination as a result of Disability, Executive shall be entitled to
the benefits set forth in Section 7(d)(i) through (iv) below.
(c) Termination by the Company for Cause or by Executive
Without Good Reason. If the Executive's employment shall be terminated
by the Company for Cause or by the Executive without Good Reason, the
Company shall (i) pay the Executive in a lump sum as soon as
practicable, but in any event no later than three (3) days following
the Date of Termination, his then current base salary through the Date
of Termination and any awarded, but unpaid, bonus for the prior fiscal
year, (ii) provide the Executive his vested and accrued SERP Benefits
(as defined in Exhibit C), and (iii) the Company shall have no further
obligations to the Executive under this Agreement.
(d) Termination by the Company Without Cause or by the
Executive With Good Reason. If the Company shall terminate the
Executive's employment other than for Cause or the Executive shall
terminate employment for Good Reason, and the Executive is in
compliance with the Confidentiality Agreement (as defined in Section
10), the Executive shall be entitled to the following benefits:
(i) The Company shall pay the Executive, as soon as
practicable, but within three (3) days following the Date of
Termination, his then current base salary through the Date of
Termination and any awarded, but unpaid, bonus for the prior
fiscal year and a pro rata bonus for the fiscal year of
termination.
(ii) The Company shall pay the Executive, as soon as
practicable, but within thirty (30) days following the Date of
Termination, (A) an amount equal to three times the
Executive's highest annual rate of base salary payable to
Executive in the thirty-six months preceding the Date of
Termination, but not less than the current amount then paid,
plus (B) an amount equal to three times the average bonus paid
to the Executive for any three fiscal years immediately
preceding the Date of Termination, but not less than
Executive's target bonus for the year in which the Date of
Termination occurs; provided that the current minimum total
payment under this Section 7(d)(ii) shall be five million
dollars ($5,000,000), which minimum total payment shall be
increased during the term of this Agreement to reflect
increases in the Urban Consumer Price Index for San Francisco,
California; provided further that if the Executive's
employment terminates at or after his 71st birthday other than
following a Change in Control, the payment under this Section
7(d)(ii) shall be reduced by 10% for each year by which his
age exceeds 71 at the Date of Termination.
(iii) The Executive shall fully vest in any and all
Options granted after the Effective Date which are outstanding
and held by him on the Date of Termination and shall be
entitled to exercise such Options until the date the Options
would otherwise expire in accordance with their terms absent
the Executive's termination.
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(iv) The Executive shall receive his vested benefits
pursuant to the SERP or otherwise. For purposes of determining
the accrual amount of the SERP Benefits (as defined in Exhibit
C) upon early retirement, the Executive will be given credit
for service with the Company as if the Date of Termination
occurred on his 70th birthday.
(v) For a period of three (3) years from the Date of
Termination, the Executive shall continue to be provided with
the full-time support of an administrative assistant,
substantially similar to the support which is being provided
on the Date of Termination, and shall be entitled to full use
of and access to the office he is occupying on the Date of
Termination or, if the Board of Directors determines that it
is no longer in the best interests of the Company to continue
the Executive's continued use of such office or, at the
Executive's choice, an office substantially similar to such
office at a location selected by the Executive so long as the
choice of location shall not substantially increase the cost,
and all expenses related to such administrative assistant and
office use by the Executive shall be paid by the Company.
8. Change in Control.
(a) Definition. For purposes of this Agreement, a "Change in
Control" shall mean:
(i) the acquisition, directly or indirectly, by any
person or related group of persons (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") of beneficial ownership
(as defined in Rule 13d-3 of the Exchange Act, except that a
person shall be deemed to be the "beneficial owner" of all
shares that any such person has the right to acquire pursuant
to any agreement or arrangement or upon exercise of conversion
rights, warrants, options or otherwise, without regard to the
sixty day period referred to in such Rule) of securities that
results in such person or related group of persons
beneficially owning securities representing 50% or more of the
combined voting power of the Company's then outstanding
securities), but excluding (A) acquisitions by the Executive
or any employee benefit plan maintained by the Company, (B)
any acquisition resulting primarily from a decision initiated
by the Executive without the consent of the Board of Directors
to sell his interest in the Company to the acquiror and (C)
any acquisition by a corporation pursuant to a transaction
that satisfies each of the conditions of clauses (A), (B) and
(C) of Section 8(a)(ii) hereof;
(ii) a merger, consolidation or similar transaction
to which the Company is a party or the sale, transfer or other
disposition of all or substantially all of the Company's
assets, unless (A) securities representing at least 50% of the
combined voting power of the then outstanding securities of
the surviving entity or the entity acquiring the Company's
assets, as the case may be, or a parent thereof, are
immediately thereafter beneficially owned, directly or
indirectly and in substantially the same proportions, by
persons who beneficially owned the
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Company's outstanding voting securities immediately before the
transaction, (B) the directors of the Company immediately
before the transaction constitute, upon the closing of the
transaction, at least a majority of the board of directors of
the surviving entity or the entity acquiring the Company's
assets, as the case may be, or the ultimate parent thereof
(for this purpose, treating any change in board of director
composition that is anticipated or pursuant to an
understanding or agreement in connection with the transaction
as deemed to have occurred at the time of the transaction) and
(C) no person or group of related persons (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act) other
than the Executive acquires securities representing 30% or
more of the combined voting power of the then outstanding
securities of the surviving entity or the entity acquiring the
Company's assets, or a parent thereof, as the case may be; and
(iii) a change in the composition of the Board of
Directors of the Company over a period of thirty-six months or
less such that the majority of the Board of Directors ceases
by reason of one or more contested elections for Board of
Directors membership, to be comprised of individuals who
either (A) have been members of the Board of Directors since
the beginning of such period or (B) have been elected or
nominated for election during such period by at least a
majority of the members who were described in clause (A) or
who were previously so elected or approved and who were still
in office at the time the Board of Directors approved such
election or nomination.
(b) Effect of Parachute Tax. If any compensation or benefit
payable to or for the benefit of the Executive hereunder, together with
any other compensation payable to the Executive, causes the Executive
to incur an excise tax under Section 4999 of the Internal Revenue Code
of 1986, as amended, or a successor provision dealing with parachute
payments, the Company shall make an additional cash payment to the
Executive in an amount that, after reduction of all taxes thereon
(including any additional excise taxes resulting from or attributable
to the additional payment), is sufficient to reimburse the Executive
for the amount of the original excise tax. Determinations under this
Section 8(b) shall be made by a tax counsel or other tax advisor who is
selected by the Executive and is acceptable to the Company. Should the
actual excise tax determined upon an IRS audit and agreed to by the
Executive or upon a final judicial determination differ from that
previously determined hereunder, appropriate adjustments shall be made
under this Section 8(b). The Company shall have the right to monitor
and participate in any audit or litigation concerning the amount of
such excise tax and to approve any settlement thereof; provided that if
the Executive recommends a settlement of which the Company disapproves,
the Company shall be responsible for any further costs incurred in such
audit or litigation as a result of not settling the matter.
(c) Effect of Change in Control on SERP. Upon the
effectiveness of a Change in Control, (i) the SERP Benefits will become
fully accrued so that Executive is entitled to the SERP Benefits as if
he served with the Company until age 70 regardless of the date of his
termination of employment following a Change in Control and (ii) the
Company will fund a grantor trust in support of the SERP as set forth
in Exhibit C.
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9. Mitigation. The Executive shall not be required to mitigate amounts
payable pursuant to this Agreement by seeking other employment or otherwise, and
no payments or benefits shall be subject to mitigation.
10. Confidentiality.
The Executive shall remain bound by a Confidentiality Agreement (the
"Confidentiality Agreement"), between the Executive and the Company
substantially in the form attached as Exhibit B hereto.
11. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, to
expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as defined herein and any successor to
its business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 11 or which otherwise becomes
bound by all of the terms and provisions of this Agreement by operation
of law.
(b) This Agreement and all rights of the Executive hereunder
shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees, and for
purposes of Section 7, any of Executive's dependents to the extent such
dependent is a beneficiary hereunder. If the Executive should die, all
amounts due following the Executive's death, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to
the Executive's devisee, legatee, or other designee or, if there is no
such designee, to the Executive's estate.
12. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Richard Thalheimer
c/o Sharper Image Corporation
650 Davis Street
San Francisco, CA 94111
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PERSONAL AND CONFIDENTIAL
If to the Company:
Sharper Image Corporation
650 Davis Street
San Francisco, CA 94111
Attn: Chief Financial Officer
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
13. Indemnification. During the Executive's employment and thereafter
for the period during which the Executive may be subject to potential liability
for any claim, action or proceeding (whether civil or criminal) as a result of
the Executive's service as an officer or director of the Company or in any
capacity at the request of the Company, the Company agrees (1) to indemnify and
hold the Executive harmless to the fullest extent permitted by law, including
advancing of expenses as appropriate, and (2) to continue to cover the Executive
under its directors and officers insurance at the same level then maintained by
the Company for its officers and directors.
14. Interpretation.
(a) When a reference is made in the Agreement to a section,
such reference shall be to a section of this Agreement unless otherwise
clearly indicated to the contrary.
(b) Whenever the words "include," "includes" or "including"
are used in this Agreement they shall be deemed to be followed by the
words "without limitation."
(c) The words "hereof," "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole and not to any particular provision of the
Agreement, and section, paragraph, and exhibit references are to the
sections, paragraphs, and exhibits of the Agreement unless otherwise
specified.
(d) The plural of any defined term shall have a meaning
correlative to such defined term. Where a word or phrase is defined
herein, each of its other grammatical forms shall have a corresponding
meaning.
(e) A reference to any party to the Agreement or any other
agreement or document shall include such party's successors and
permitted assigns.
(f) A reference to any legislation or to any provision of any
legislation shall include any modification, amendment or re-enactment
thereof, any legislative provision substituted therefor and all rules,
regulations and statutory instruments issued under or pursuant to such
legislation.
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15. Miscellaneous. No provision of this Agreement may be amended,
modified, waived or discharged unless such amendment, waiver, modification or
discharge is agreed to in writing and signed by the Executive and such officer
of the Company as may be expressly designated by the Board of Directors of the
Company. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party that are not set forth expressly in the Agreement. The Agreement shall be
binding on all successors to the Company.
16. Severability. In the event that any one or more of the provisions
of this Agreement shall become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not be affected thereby. If Section 7 of this Agreement (or any
portion thereof) is determined to be invalid or unenforceable in any material
respect, then upon the Company's breach of any material obligation under such
Section 7, the Executive shall immediately be released by the Company from any
obligations under this Agreement.
17. Attorney's Fees. The Company shall reimburse the Executive for all
reasonable attorney's fees and other expenses incurred by the Executive in
connection with the negotiation of this Agreement. If a good faith dispute
arises between the Executive and the Company regarding any payment or benefit
under this Agreement or regarding any other provision of this Agreement, the
Company shall reimburse the Executive for all reasonable attorney's fees and
other expenses incurred by the Executive in resolving or otherwise dealing with
such good faith dispute.
18. Arbitration. Any dispute between the parties to this Agreement
arising from or relating to the terms of this Agreement or the employment of the
Executive by the Company shall be submitted to arbitration in San Francisco,
California under the auspices of the American Arbitration Association.
19. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of California without regard to
the principles of conflicts of laws.
20. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original but both of which together will
constitute one and the same instrument. This Agreement shall become effective
when each party hereto shall have received a counterpart hereof signed by the
other party hereto.
21. Survivorship. The respective rights and obligations of the parties
to this Agreement, including, without limitation, the rights of the Executive
and the Company under Section 13 hereof and obligations of the Executive under
Section 10, shall survive the termination of this Agreement or the Executive's
employment hereunder for any reason to the extent necessary to achieve the
intended preservation of such rights and obligations.
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22. Representation. The Company represents and warrants that it is
fully authorized and empowered to enter into this Agreement and that the
performance of its obligations hereunder shall not violate any agreement between
the Company and any other person, firm or organization.
23. Entire Agreement. This Agreement and all agreements referenced
herein set forth the entire agreement of the parties hereto in respect of the
subject matter contained herein and supersede all prior agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of any party hereto;
and any prior agreement of the parties hereto in respect of the subject matter
contained herein is hereby terminated and cancelled.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
SHARPER IMAGE CORPORATION
By: ______________________________________
Name:
Title:
______________________________________
Richard Thalheimer
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EXHIBIT A
Benefits and Perquisites
Company Car
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EXHIBIT B
The Sharper Image
Confidentiality Agreement
The purpose of this Agreement is to protect Sharper Image Corporation's
confidential information to maintain a competitive advantage and avoid having
confidential information disclosed. Because our business environment is so
competitive, The Sharper Image Corporation (referred to as the Company) expects
Associates (our term for employees) to read and comply with our confidentiality
policy.
This Agreement is entered into between Sharper Image Corporation and
the undersigned Associate. Associate understands that signing this agreement is
a condition of Associate's employment. Associate agrees as follows:
a) Associate acknowledges and agrees that information concerning the
work conducted by the Company may constitute confidential information, trade
secrets or copyrightable or patentable works or expressions, including, but not
limited to, design information or concepts, private label products, advertising
concepts, matters which are subject to trademark protection, manufacturing
information or concepts, marketing information, price and cost information,
customer information, contacts, and all personnel information. Associate further
acknowledges that such information will be entrusted to him/her by the Company
and that Associate will take all steps necessary to protect the confidentiality
of such information.
b) During the employment term and all times thereafter, Associate
promises and agrees not to reproduce or disclose to any other person or entity
any trade secrets or confidential information, unless specifically authorized in
writing by the Company to do so. If the Company gives Associate written
authorization to make any such disclosure, Associate shall do so only within the
limits and to the extent of the authorization.
c) During employment and for the one (1) year after termination of
employment, Associate shall not induce or attempt to induce any other Associate
of the Company to discontinue employment with the Company for the purpose of
seeking or commencing employment with any competitor of the Company.
d) Associate also acknowledges that by virtue of his/her employment
with the Company he/she will have access to confidential information, trade
secrets, copyrightable works or expressions, design information or concepts,
manufacturing information or concepts, advertising concepts and other
confidential information and trade secrets of the Company as set forth more
fully above, which are the intangible assets of the Company. Associate agrees
that his/her knowledge of the existence of such information does not give rise
to any rights on Associate's behalf to disclose or utilize these intangible
assets or information.
e) Associate further acknowledges that he/she is entirely responsible
for honoring and not breaching any prior commitments to or agreements with any
prior employers regarding those entities, trade secrets, and proprietary and
confidential information. The Company does not condone and will not tolerate
Associate's breach of any prior trade secret, and proprietary and confidential
information obligations with prior employers. Such violations may result in
disciplinary action including, but not limited to, termination of employment.
<PAGE>
f) Any term or provision of this Agreement that is held to be illegal
or unenforceable by court of law shall be deemed amended to conform to
applicable laws or regulations; provided, that if such term or provision cannot
be so amended without materially altering the intention of the parties, such
term or provision shall be stricken from this Agreement and this Agreement shall
remain in full force and effect in accordance with the remaining terms and
provisions hereof.
g) This Agreement contains the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
understandings, discussions, negotiations and representations, if any, with
respect thereto.
h) This Agreement may be amended only by written amendment executed by
the party against whom enforcement is sought.
Acknowledgement
Associate acknowledges that neither this Agreement nor any other
communication by any management representative is intended to in any way create
a contract of permanent employment. Rather, it is understood that the Company
and Associate each have the right to terminate Associate's employment for any
reason at any time, with or without cause and with or without notice. Associate
understands that any change in this at-will employment relationship between the
Company and Associate must be in writing and signed by the Chief Operating
Officer of the Company.
--------------------------------- ---------------------------
Associate Name (Print) Associate Signature
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Department Date
2.
<PAGE>
EXHIBIT C
Terms of SERP
(1) Normal Retirement Benefits. Upon the termination of the Executive's
employment with the Company due to his retirement at or after age 70, the
Executive shall be entitled to receive the following benefits:
(a) Retirement Pay. An annual payment of $500,000 (or such higher amount
resulting from the annual COLA Adjustment described below) per year
payable for the remainder of the Executive's life, which may be paid
at the election of the Executive in the form of a single life annuity,
a joint and survivor annuity or a lump sum payment payable within 30
days of the Date of Termination calculated on the assumptions set
forth in the next sentence (the "Retirement Pay"). The lump sum value
at retirement will be based on a 6.5% interest rate and the 1994 Group
Annuity Mortality Table for males (the "Actuarial Assumptions"), but
in no case shall be greater than $6 million. In the event that the
Executive elects to receive the annual payments, the amount of such
annual payments shall be increased during each year the Retirement Pay
is payable by an amount which reflects any increase in the cost of
living on the immediately preceding January 1st of each year, using as
a basis for such increase the Consumer Price Index for San Francisco,
California, or in the event that such index is no longer published,
such other index as is determined in good faith to be comparable by
the Board of Directors of the Company (the "COLA Adjustment").
(b) Post Retirement Health Benefits. If the Executive, or any of his
dependents, was participating in any Company-sponsored group health
plan (including dental plans, but excluding life and disability) as of
the Date of Termination and such plans continue in effect for active
employees of the Company, the Company will continue coverage
thereunder (under the terms applicable to senior executives) and will
pay the Executive's share of any premiums thereunder for the remainder
of the Executive's life, provided that for the Executive's dependents,
such coverage will be no less than ten (10) years. If the Company is
unable, at any point, to provide such coverage under any such plans,
the Company will pay the Executive a lump sum cash payment which,
after the payment by the Executive of all applicable taxes thereon,
will equal the present value of the cost of such coverage (based on
the Actuarial Assumptions and a reasonable forecast of increases in
the cost of such coverage) for that portion of the period following
the Date of Termination for which such coverage could not be provided
(the "Post Retirement Health Benefit" and with the Retirement Pay, the
"SERP Benefits").
(2) Early Retirement Benefits. If the Executive terminates employment other
than by reason of death before his 70th birthday, the Executive shall be
entitled to:
(a) Retirement Pay commencing at the Executive's 70th birthday in the
amount equal to the amount determined in Section (1)(a) above
multiplied by a fraction, the numerator of which is the number of days
of the Executive's employment beginning on the date the Executive
first commenced employment with the Company (the "Employment
<PAGE>
Commencement Date") and ending on and including the Date of
Termination and the denominator of which is the number of days
beginning on and including the Employment Commencement Date and ending
on and including the Executive's 70th birthday. The Executive may
elect to commence Retirement Pay at any time after the Date of
Termination and before the Executive's 70th birthday, in which case,
the amount of annual Retirement Pay shall be reduced to an amount that
has the same present value on early retirement commencement date
(based on the Actuarial Assumptions) as the benefit commencing at his
70th birthday.
(b) The Post Retirement Health Benefit determined in accordance with
Section (1)(b) above, but with the amount of premiums payable by the
Company to be an amount equal to the amount of the total premiums for
such coverage multiplied by a fraction, the numerator of which is the
number of days of the Executive's employment beginning on and
including the Employment Commencement Date and ending on and including
the Date of Termination and the denominator of which is the number of
days beginning on and including the Employment Commencement Date and
ending on and including the Executive's 70th birthday.
(c) For purposes of Section (2)(a) and (b) above, the Executive shall be
deemed to have remained employed until the Executive's 70th birthday
under the circumstances provided in Sections 7(d)(iv) and (8)(c) of
the Agreement.
(3) Calculations. All calculations hereunder shall be rounded to the fourth
decimal place and calculations of present values and adjustments in
benefits shall take into account the timing and form of payments and be
made as appropriate based on the Actuarial Assumptions.
(4) Vested Status, Offsets. The SERP Benefits shall be fully vested and payable
upon any termination of employment other than death and the Retirement Pay
shall not be offset against any severance benefits to which the Executive
is entitled under the Agreement. The Executive's right to receive the Post
Retirement Health Benefit, however, shall be offset and reduced to the
extent that the Executive is entitled to receive Medicare benefits, but
shall only be reduced to the extent that such offset is legally permitted.
(5) Unfunded Promise to Pay. The Executive acknowledges that the Company's
obligations to provide the SERP Benefits is an unfunded, unsecured promise
to pay certain amounts to the Executive in the future. The amounts payable
hereunder shall be paid out of the Company's general assets and shall be
subject to the risk of the Company's creditors. In no event shall the
Executive's rights hereunder be greater than the right of any unsecured
general creditor of the Company.
(6) Funding of Rabbi Trust Upon Change in Control. Notwithstanding the
foregoing provision, the Company shall establish a grantor trust, which
substantially complies with the requirements of Rev. Proc. 92-64 (or its
successor) and in form and substance is satisfactory to the Executive, into
which the Company shall, within 30 days of the effectiveness of a Change in
Control (as defined herein), deposit the then present value (determined in
accordance with Section (3) above) of the unfunded SERP Benefits. The
Company shall
2.
<PAGE>
from time to time make additional deposits to the grantor trust such that
the amount of assets held therein with respect to the SERP Benefits shall
equal the then present value of the unfunded SERP Benefits obligation. The
establishment of the grantor trust and deposit of amounts therein shall not
affect the obligation of the Company to provide the SERP Benefits described
herein and, to the extent not paid by the grantor trust, such amounts shall
be paid by the Company.
(7) Joint and Survivor Annuity. To the extent that the Executive elects to
receive a joint and survivor annuity, the annual amount of such annuity
will be determined so that it has the same value as a single life annuity
or the lump sum payment, using the Actuarial Assumptions.
3.