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EXHIBIT 10.8
[LETTERHEAD OF HOLLEY PERFORMANCE PRODUCTS, INC.]
July 19, 2002
Mr. Russell W. Ford
6101 Annadale Drive
Fort Worth, TX 76132
Dear Russ,
On behalf of the over 1,300 employees at Holley, I am pleased to extend the
following job offer to you for the position of Vice President and Chief
Operating Officer (COO) reporting directly to me. In this role, you will have
direct responsibility for each of our manufacturing and distribution operations,
and will provide direct leadership for system-wide supply chain management. You
will be the leader of our lean transformation initiatives and will be directly
responsible for product and process design optimization. You will also be
responsible, in partnership with our CFO, for our asset
utilization/rationalization program.
Key deliverables, which you will be responsible for include:
(1) Providing leadership for our Target 12 Program - A reduction program
that must reduce our manufacturing cost basis by $12 million by
year-end 2003.
(2) Championing our 20-03 Program - A joint effort with our CFO to reduce
the total cash investment in our business by $20 million by year-end
2003.
(3) Improved quality operating system performance as measured by both
internal and external PPM rates and our total warranty expense.
(4) Improved service level performance as measured by dollars shipped
versus dollars ordered within customer defined cycle times. Our target
is a minimum service level of 95%.
(5) Improved Inventory utilization as measured by a combination of
absolute inventory investment reduction (captured in our 20-30
program) and targeted turnover rate improvements.
I believe that we have enormous potential at Holley to grow and improve our
business, and I am confident that you have the correct skill set and leadership
traite that will enable you to make a significant contribution at Holley and
through this contribution, significantly increase our enterprise value. Details
of your employment will be as follows:
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Mr. Ford
July 19, 2002
Page 2
SALARY: Your base salary will be $240,000,00 per year. You will be paid
twice per month on approximately the fifteenth and the thirtieth of each month.
STARTING DATE: August 12, 2002
INCENTIVE COMPENSATION: You will be eligible to participate in Holley's
Senior Management Incentive Compensation program with a target bonus pay out of
50% of your base salary. You will earn an Incentive bonus pay out based on your
performance as measured by our total operating margin improvement and cash flow
generation. For 2002, you will be eligible for a pro-rated incentive
compensation pay out based on targets that you and I will develop and precent to
our Board of Directors Compensation Committee for their approval. Holley will
guarantee a pro-rated pay out for 2002, which based on an August 1, 2002 start
date, will be $50,000.00. Payment will be made after we have submitted audited
year-end financial statements to our Board of Directors and our Compensation
Committee approves this pay out. In general, this will occur in late March each
year. In order to be eligible to receive any earned Incentive Compensation
payment, you must be an active employee in good standing on the date of payment.
VEHICLE: As the Chief Operating Officer, Holley will provide you with a
vehicle and pay all operating, maintenance, and insurance costs. You will be
responsible for recording personal miles and will pay taxes on these miles. You
may select any vehicle up to a monthly total lease cost of $700.00/month. If you
select a vehicle that has a greater lease value than $700.00/month, you will be
responsible for reimbursing the company any amount over this limit.
INCENTIVE STOCK AWARDS: You will be granted incentive stock options
totaling 2.5% of all shares outstanding. These shares will vest based on our
company's performance over the next three years (2000-2005) based on enterprise
value targets agreed upon by our Board of Directors. You will vest at 1/3 per
year for each year we achieve our targeted enterprise value.
I will forward a formal Incentive Stock Option Agreement to you shortly after
your start date.
SEVERANCE PAYMENTS RESULTING FROM A CHANGE OF CONTROL: In the event that
your employment with the Company is involuntarily terminated as a result of a
change of control, or in the event of a change of control you are not offered a
similar position with the Company, the Company shall pay to you a severance
benefit equal to:
(1) Six (6) months salary, to be paid in monthly installments (at your
then effective base salary rate), and
(2) Continuation of any applicable employee benefits for such six month
time period.
For purposes hereof, a "Change of Control" shall mean the acquisition of a
majority or more of the outstanding units of the Company by any person or
"group" (as the term is used in Regulation 13D under the Securities Exchange Act
of 1934) other than the Stockholders of the Company as of August 12, 2002, and
their respective affiliates.
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Mr. Ford
July 19, 2002
Page 3
FRINGE BENEFITS: As a Senior Executive, you will be eligible for our full
range of benefits including:
- 401(k) Retirement Savings Plan
- Retirement Plan For Salaried Employees (which may be frozen or eliminated
in the future)
- Group Medical (Medical, Dental, and Prescription Drugs)
- Cellular telephone
- Laptop computer
VACATION: As a Senior Executive, you will be eligible for three (3) weeks
of paid vacation in 2003, and a prorated paid vacation period of six (6) days
for 2002.
RELOCATION: The following relocation benefits will apply to your move:
1. You will be reimbursed (grossed up for taxes) for the real estate
commission and other normal selling expenses directly associated with selling
your primary residence.
2. You will be reimbursed (grossed up for taxes) for customary home
purchase expenses such as attorney fees, closing costs, as well as other normal
and reasonable fees associated with the purchase of a home within 12 months of
your start date. Holley will not reimburse any real estate commission fees
associated with buying a home.
3. Movement of your household goods will be paid by the Company and
coordinated through the Human Resources Department in order to avoid tax
exposure to you.
4. When you have established a residence in the Bowling Green area (or the
area of your choice), you will be paid a miscellaneous allowance of $35,000 (not
grossed up for taxes). This allowance is to cover the multitude of incidental
items associated with a move such as phone hookups, deposits, car licensing
fees, taxes, etc.
5. You will be reimbursed for the cost of two house hunting trips for you
and your family, plus a reasonable period of temporary living expenses
(including trips home) for yourself, prior to your move to Bowling Green.
Temporary living expenses are limited to a period that will reasonably enable
you to complete your relocation. Generally, that period of time is targeted to
be 30 days following commencement of your employment. We will review your
relocation situation as it progresses to provide for a reasonable period for
payment or temporary living expenses.
With respect to the foregoing relocation benefits, if you fail to report
for employment or it following commencement of employment you voluntarily
terminate employment or your employment is terminated for the commission of acts
of moral turpitude, you agree to reimburse Holley Performance Products for 100%
of such expenses which have been paid to you, or for which Holley is
responsible, if such termination of employment occurs within twelve months
following commencement of employment, and at a rate of 50% thereof if such
termination of employment occurs within twenty-four months following
commencement of employment.
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Mr. Ford
July 19, 2002
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This offer is contingent upon your successful completion of our normal
employment physical examination, which includes a drug and alcohol screening.
This exam should be arranged through your own family physician or through a
local "Urgent Care" type facility. I have included the necessary paperwork for
this examination as an attachment to this document.
We look forward to working with you toward a successful future. Your
acceptance of this offer of employment will be evidenced by your signing and
returning the enclosed copy of this letter. If you have any particular questions
regarding this offer or the enclosed information, please do not hesitate to
contact me at 270/745-9507.
Sincerely,
/s/ Jeffrey G. King
Jeffrey G. King
President and CEO
JGK/dv
Accepted: /s/ Russell W. Ford Date: 7/23/02
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Russell W. Ford