Exhibit 10.2

 

THIRD AMENDMENT TO

EXECUTIVE TERMINATION COMPENSATION AGREEMENT

 

This is a third amendment (“Third Amendment”), effective as of the 10th day of
June 2005, to that certain Executive Termination Compensation Agreement, entered
into on or about August 24, 1999, as amended by a first amendment dated as of
August 25, 2003 (the “First Amendment”) and by a second amendment dated as of
January 12, 2005 (collectively, the “Agreement”), between West Marine, Inc., a
Delaware corporation (the “Company”), with an address at 500 Westridge Drive,
Watsonville, California 95076, and Richard Everett (“Executive”), whose address
is P.O. Box 308, Soquel, California 95073.

 

WHEREAS, The Company and its Board of Directors (the “Board”) recognize that
Executive’s contributions as the President and Chief Operating Officer to the
growth and success of the Company have been substantial; and that Executive and
the Company, with approval of the Board, desire to amend certain provisions of
the Agreement to provide additional benefits for Executive following the
termination of Executive’s employment without Cause (as such term is defined in
the Agreement); which termination without Cause the Company, the Board and
Executive have agreed became effective June 10, 2005 (the “Termination Date”).

 

NOW, THEREFORE, in consideration of the foregoing premises and mutual covenants
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and Executive
agree as follows:

 

1. The foregoing recitals are incorporated herein.

 

2. This Third Amendment will be effective as of the date first written above
(“Effective Date”).

 

3. All capitalized terms used but not defined herein shall have the same meaning
ascribed to such terms as in the Agreement.

 

4. The First Amendment is hereby rendered null and void and superseded by this
Third Amendment.

 

5. Section 2(b) of the Agreement is amended by replacing that section of the
Agreement with the following:

 

“(b) Without Cause. In the event that Executive’s employment is terminated
without Cause, then the Company shall: (i) continue to pay Executive, at the
rate of Executive’s base salary at the time of his termination, less applicable
deductions and withholdings, on the Company’s regularly scheduled pay days, for
a period of eighteen (18) months from the Termination Date (the “Severance
Period”); (ii) pay Executive a pro rata 2005 bonus, less applicable deductions
and withholdings (on the same schedule as the payment of 2005 bonuses to the
Company executives remaining employed by the Company), calculated by multiplying
the amount of the bonus Executive would have earned under the

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terms of the Company’s bonus program for executives times a fraction, the
numerator of which is the number of days in calendar year 2005 through the end
of the Transition Period and the denominator of which is 365; and (iii) during
the Severance Period, provide Executive (and his surviving spouse, if
applicable) with health insurance benefits (e.g. medical, dental, optical, and
mental health) and will provide Executive life insurance benefits, each of which
shall be significantly comparable to those provided to other Company executives
who remain actively employed at that time, with the same portion of the premiums
for such insurance coverage paid for by the Company as the Company pays for
Company executives actively employed at the time and the remainder of such
premiums deducted from the payments to Executive described in Section 2(b)(i)
above. The foregoing pay and benefits shall not be reduced by or affected by the
compensation the Executive receives during the Transition Period or from other
employment.”

 

6. Section 2(f) of the Agreement is amended by replacing that section of the
Agreement with the following:

 

“If Executive’s employment terminates pursuant to Section 2(b) hereof, the
Company will retain Executive’s services as a consultant during the three month
period of time following the Termination Date, unless either Executive or the
Company’s Chief Executive Officer, by written notice to the other, terminates
such period prior to the expiration of three months (such period for which
Executive actually works is the “Transition Period”). The Transition Period may
be extended beyond three months upon the mutual agreement of the Parties. For
Executive’s services during the Transition Period, the Company will pay
Executive a monthly fee, at a rate determined by dividing his annual salary
immediately prior to the Termination Date by twelve (12). Following the
Transition Period, the Company may choose to retain Executive’s services as a
consultant from time to time, at any time through the period ending five (5)
years after the Termination Date (the “Consulting Period”), provided that
Executive shall not be required to provide consulting services in excess of ten
(10) hours in any calendar month. For any such consulting services provided by
Executive during the Consulting Period, the Company will pay Executive an hourly
rate determined by dividing his annual salary immediately prior to the
Termination Date by fifty-two (52) weeks and dividing that number by forty (40)
hours. By way of example, if Executive’s annual salary is $250,000 immediately
prior to the Termination Date then the hourly consulting rate shall be $120
((250,000/52)/40). All payments made to Executive for consulting services during
the Transition Period and during the Consulting Period shall be paid to
Executive in addition to, and not reduced by, any severance, bonus, insurance
premium or other payments to be made to, or on behalf of, Executive under the
terms of this Agreement or any compensation the Executive receives from other
employment. During the period from the end of the Severance Period through the
end of the Consulting Period, the Company will provide Executive (and his
surviving spouse, if applicable) with health insurance benefits (e.g. medical,
dental, optical, and

 

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mental health) and will provide Executive with life insurance benefits, each of
which will be significantly comparable to those provided to other Company
executives who remain actively employed at that time, with the same portion of
the premiums for such insurance coverage paid for by the Company as the Company
pays for Company executives actively employed at the time and the remainder of
such premiums to be paid for by Executive.”

 

7. Section 3 of the Agreement is amended by substituting for the language in the
first clause of the third sentence of that Section (“Notwithstanding any
language to the contrary in any stock option or other agreement, vesting of all
outstanding options will terminate upon termination of Executive’s employment”)
the following:

 

“If Executive’s employment terminates pursuant to 2(b) hereof, any stock options
granted to Executive prior to the Termination Date shall continue to vest, as if
Executive’s employment had not been terminated, under the terms of the Plan and
any related stock option or other agreements as may be applicable.”

 

8. Section 8(b) of the Agreement is amended by adding the phrase “except for the
release agreement attached hereto as Exhibit A, which shall remain in full force
and effect” to the end of the first sentence of Section 8(b).

 

9. The Agreement is amended by adding a new Section 8(g), immediately following
Section 8(f), to read as follows:

 

“(g) Release Agreement. Executive shall not be entitled to any termination
compensation, pro rata bonus, insurance premium payments or any other payments
or benefits under this Agreement, unless and until Executive has signed a
release agreement in substantially the form attached hereto as Exhibit A and
such release agreement has become effective.”

 

10. Except as modified hereby, the Agreement remains unmodified and in full
force and effect. In the event of any conflict between the terms of the
Agreement and this Third Amendment, the terms of this Third Amendment will
govern.

 

11. This Third Amendment may be executed in counterparts, each of which, when so
executed, shall be deemed to be an original, and such counterparts together
shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties have executed this Third Amendment, effective as
of the Effective Date.

 

COMPANY:   EXECUTIVE West Marine, Inc.         By:  

/s/ Peter Harris

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  By:  

/s/ Richard Everett

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    Peter Harris       Richard Everett     Chief Executive Officer            
June 17, 2005       June 16, 2005

 

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EXHIBIT A TO THIRD AMENDMENT TO EXECUTIVE TERMINATION

COMPENSATION AGREEMENT

BETWEEN WEST MARINE, INC. AND RICHARD EVERETT

 

RELEASE AGREEMENT

 

This Release Agreement (the “Agreement”), is entered into by Richard Everett
(the “Executive”) and West Marine, Inc. (the “Company”), hereafter collectively,
the “Parties” and shall become effective upon its signature by both Parties and
the expiration of the seven (7) day revocation period referred to in Paragraph 8
hereof without revocation by the Employee during such period.

 

1. Consideration. The Parties entered into an Executive Termination Compensation
Agreement on or about August 24, 1999, (such agreement, as amended through the
date hereof, is hereafter referred to as the “Termination Compensation
Agreement”). Under the terms of the third amendment to the Termination
Compensation Agreement, the Parties agreed that the Executive would not be
entitled to any termination compensation, pro rata bonus, or any other payments,
rights or benefits under the Termination Compensation Agreement, unless and
until the Executive has entered into a release agreement in a form substantially
similar to this Agreement and the agreement has become effective. Wishing to
obtain the rights and benefits that may be afforded to the Executive under the
Termination Compensation Agreement, in connection with his June 10, 2005
termination of employment without Cause, the Executive has chosen to enter into
this Agreement. The Parties agree that Executive has been terminated without
Cause as that term is defined in Section 2(b) of the Termination Compensation
Agreement.

 

2. Payment of salary. The Parties acknowledge and agree that, all payments to be
made to the Executive under the terms of the Termination Compensation Agreement
shall be paid to the Executive by the Company in addition to the payment of any
salary earned but unpaid, and any vacation accrued but unpaid, prior to the date
of the termination of the Executive’s employment with the Company.

 

3. General release. The Executive on behalf of his heirs, family members,
estate, executors, administrators, assigns, employers, agents, representatives,
insurers, attorneys, predecessors, and successors hereby forever releases and
fully discharges the Company and the Company’s predecessors, successors,
assigns, parent companies, subsidiaries, affiliates and other related entities,
along with its and their current, former and future stockholders, investors,
principals, partners, members, employees, employers, directors, officers,
parents, subsidiaries, affiliates, agents, assigns, representatives, insurers,
attorneys, predecessors, successors, and the like, and its and their heirs,
estates, executors, administrators, assigns, agents, representatives, insurers,
attorneys, and the like (collectively, the “Releasees”) from any and all claims,
actions, judgments, obligations, damages, demands, debts, liabilities, and
causes of action relating to any matters of any kind, whether presently known or
unknown, suspected or unsuspected, that he now owns or holds as of the date the
Executive signs this Agreement including, without limitation:

 

(a) any and all claims relating to or arising from the Executive’s employment
with the Company, and the termination of that employment, including but not
limited to any and all claims for wrongful termination, sexual harassment,
breach of contract, breach of the covenant of good faith and fair dealing,
breach of fiduciary duty, promissory

 

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estoppel, negligence, misrepresentation, interference with contract or
prospective economic advantage, unfair business practices, defamation, invasion
of privacy, personal injury, assault, battery, infliction of emotional distress,
termination in violation of public policy, false imprisonment, and conversion;

 

(b) any and all claims for violation of any California, federal or other state,
local or other equal employment opportunity laws or regulations, or federal,
state or local labor laws, including but not limited to, the California Fair
Employment and Housing Act, the Equal Pay Act of 1963, California Labor Code
Sections 201 et seq., 970 et seq., and 1197.5; Title VII of the Civil Rights Act
of 1964, the Civil Rights Act of 1866, the Age Discrimination in Employment Act
of 1967, the Americans with Disabilities Act, the Employee Retirement Income
Security Act of 1974, the Worker Adjustment and Retraining Notification Act, the
Older Workers Benefit Protection Act, the California Labor Code, and the Fair
Labor Standards Act;

 

(c) any and all claims for violation of the federal or any state constitution;

 

(d) any and all claims for loss, costs, damages or expenses arising out of any
dispute over the tax treatment of any of the proceeds received by the Executive
as a result of this Agreement or the Termination Compensation Agreement; and

 

(e) any and all claims for attorneys’ fees and costs.

 

The Executive agrees that the release set forth in this paragraph shall be and
remain in effect in all respects as a complete general release as to the matters
released. This release does not extend to any obligations incurred under this
Agreement or to any earned but unpaid “wages,” as defined in Section 200 of the
Labor Code of the State of California.

 

4. Waiver of Civil Code Section 1542. The Executive represents that he is not
aware of any claim by him against any of the Releasees other than the claims
that are released by this Agreement. The Executive waives any and all rights and
benefits conferred by the provisions of Section 1542 of the Civil Code of the
State of California and any similar law of any state or territory of the United
States or other jurisdiction. This section provides as follows:

 

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his/her favor at the time of executing the release, which if
known by him/her must have materially affected his/her settlement with the
debtor.”

 

The Executive acknowledges that the release provided for in Paragraph 3 above
shall apply to all unknown and/or unanticipated claims as well as those known
and/or anticipated. The Executive understands and acknowledges that even if he
should eventually suffer additional damages arising out of the matters herein
released, he will not be able to make any claims for those damages.

 

5. No admissions. The fact of this Agreement, the Termination Compensation
Agreement and the payments and benefits to be provided to Executive thereunder
are not an admission and do not infer any wrongdoing or liability on the part of
the Company.

 

6. No prior claims or assignment; indemnity. The Executive represents and
warrants that he has not filed any complaints or charges or lawsuits against the
Company or

 

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any other Releasee with any governmental agency or court. The Executive further
represents and warrants that he has not heretofore assigned or transferred, or
purported to assign or transfer, to any person or entity any claim or other
matter herein released. In the event that he shall have assigned or transferred,
or purported to assign or transfer, any claim or the matter herein released, he
shall indemnify the Company and hold it harmless from and against any loss,
cost, claim or expense including but not limited to all costs related to the
defense of any action including reasonable attorneys’ fees based upon, arising
out of or incurred as a result of any such claim, assignment or transfer.

 

7. Acknowledgment of waiver of claims under ADEA. The Executive acknowledges
that he is waiving and releasing any rights he may have under the Age
Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and
release is knowing and voluntary. The Executive and the Company agree that this
waiver and release does not apply to any rights or claims that may arise under
ADEA after the date on which the Executive signs this Agreement. The Executive
acknowledges that the consideration given for this waiver and release Agreement
is in addition to anything of value to which the Executive was already entitled.
The Executive further acknowledges that he has been advised by this writing that
(a) he should consult with an attorney prior to executing this Agreement; (b) he
has twenty-one (21) days within which to consider this Agreement before signing
it; (c) he has seven (7) days following the date he signs this Agreement to
revoke the Agreement, by providing written notice of revocation to the Company’s
General Counsel, by midnight on the seventh day following the date on which he
signs this Agreement; and (d) this Agreement shall not be effective or
enforceable, and the Executive shall not be entitled to any termination
compensation, pro rata 2005 bonus, insurance premium payments or any other
rights or benefits under the terms of the Termination Compensation Agreement,
until the revocation period has expired without the Executive’s revocation of
this Agreement.

 

8. Non-disparagement. The Executive agrees that he will not disparage the
Company or its employees, officers or directors in their personal or business
reputations.

 

9. Continuing confidentiality obligations. The Executive acknowledges having had
access to trade secrets and proprietary and confidential information of the
Company. The Executive certifies that he has complied with and will continue to
comply with all of the terms of the Employee Agreement Regarding Confidentiality
and Non-Competition, which he signed with the Company. The Executive agrees to
preserve as confidential all trade secret and proprietary and confidential
information pertaining to the Company, as such obligations are described in the
Employee Agreement Regarding Confidentiality and Non-Competition. The Company
acknowledges and confirms that the Executive is not subject to any
non-competition restrictions set forth in Section 5 of the Employee Agreement
Regarding Confidentiality and Non-Competition.

 

10. Return of Company property. The Executive agrees that, in addition to his
obligations under Section 4 (Confidential Information) of the Termination
Compensation Agreement, upon his departure from the Company he will have
returned any documents containing or disclosing the Company’s trade secrets or
proprietary or confidential information, and copies thereof, and all other
materials, equipment or other property belonging to the Company.

 

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11. Costs and Attorneys’ Fees. The Parties shall each bear their own costs,
attorneys’ fees and other fees incurred in connection with this Agreement and
the Termination Compensation Agreement.

 

12. Authority. The Company represents and warrants that the undersigned has the
authority to act on behalf of the Company and to bind the Company and all who
may claim through it to the terms of this Agreement. The Executive represents
and warrants that he has the capacity to act on his own behalf and on behalf of
all who might claim through him to bind him to the terms and conditions of this
Agreement.

 

13. Entire agreement. This Agreement contains the entire agreement between the
Parties pertaining to the subject matter contained in it and supersedes any and
all prior and/or contemporaneous oral or written negotiations, agreements,
representations, and understandings, except for the Termination Compensation
Agreement and any Employee Agreement Regarding Confidentiality and
Non-Competition, each of which shall remain in full force and effect. The
Parties each understand that this Agreement is made without reliance upon any
inducement, statement, promise, or representation other than those contained
within this Agreement.

 

14. Attorneys’ fees. If any legal or equitable action is necessary to enforce
the terms of this Agreement, the prevailing party shall be entitled to a
reasonable sum for attorneys’ fees and costs which are reasonably incurred and
paid in addition to any other relief to which such party may be entitled.

 

15. Governing law. This Agreement shall be construed under and governed by the
laws of the State of California.

 

This Agreement shall be deemed to have been entered into in Santa Cruz County,
California and all questions of validity, interpretation or performance of any
of its terms or of any rights or obligations of the parties to this Agreement
shall be governed by California law. If any legal or equitable action is
necessary to enforce the terms of this Agreement, such action shall be brought
in the State of California.

 

16. Severability. If any provisions of this Agreement or the application thereof
to any person, place or circumstance shall be held by a court of competent
jurisdiction to be invalid, unenforceable, or void, the remainder of this
Agreement and such provision as applied to other persons, places, and
circumstances shall remain in full force and effect, provided, however, that if
the release provided for in Paragraph 3 above (or any part thereof) is found to
be invalid, the Parties shall negotiate a modification to such release to ensure
the maximum enforceability permitted by law.

 

17. Voluntary execution of Agreement. This Agreement is executed voluntarily and
without any duress or undue influence on the part or behalf of the Parties, with
the full intent of releasing all claims. The Parties acknowledge that:

 

(a) They have had a reasonable time within which to consider whether to sign
this Agreement;

 

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(b) They have been represented in the preparation, negotiation, and execution of
this Agreement by legal counsel of their own choice or that they have
voluntarily declined to seek such counsel;

 

(c) They have read and understand the terms and consequences of this Agreement
and of the releases it contains;

 

(d) They are fully aware of the legal and binding effect of this Agreement.

 

18. Counterparts. This Agreement may be executed in counterparts, each of which,
when so executed, shall be deemed to be an original, and such counterparts
together shall constitute one and the same instrument.

 

19. Modifications. The terms and provisions of this Agreement may be modified or
terminated only in a writing signed by both Parties.

 

20. Waivers. Any waiver of any term or provision of this Agreement must be in
writing and signed by the party granting the waiver. The failure of the Company
to insist on Strict adherence to any term of this Agreement on one or more
occasions shall not be considered a waiver and shall not deprive the Company of
the right thereafter to insist on strict adherence to that term or any other
term of this Agreement. Any waiver by the Company of a breach of any provision
of the Agreement shall not operate as, or be construed to be, a waiver of any
other breach of such provision of this Agreement.

 

DATED: June 16, 2005  

/s/ Richard Everett

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    Richard Everett     West Marine, Inc. DATED: June 17, 2005  

/s/ Peter Harris

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    By:   Peter Harris     Its:   Chief Executive Officer

 

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