AMENDMENT NUMBER 1 TO EMPLOYMENT AGREEMENT
Exhibit 10.19
AMENDMENT NUMBER 1 TO
THIS AMENDMENT NUMBER 1 TO EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into this 23rd day of December 2008 , by and between ▇▇▇.▇▇▇▇▇▇▇▇ Corporation, a Delaware corporation (the “Corporation” or “MSC”) and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual (“▇▇▇▇▇▇”). By amendment, this Agreement amends and restates in its entirety the Employment Agreement between MSC and ▇▇▇▇▇▇ dated November 27, 2006 (the “Prior Employment Agreement”), and the Prior Employment Agreement remains in force on its original terms except where modified through this Amendment Number 1.
RECITALS
THE PARTIES ENTER THIS AGREEMENT on the basis of the following facts, understandings and intentions:
| ▇. | ▇▇▇▇▇▇’▇ currently serves as MSC’s CEO and Chairman of the Board; |
| B. | MSC desires to continue to employ ▇▇▇▇▇▇ to carry out the duties and responsibilities described below, all on the terms and conditions hereinafter set forth in this new Employment Agreement. |
| ▇. | ▇▇▇▇▇▇ desires to accept such employment with MSC on such terms and conditions. |
NOW, THEREFORE, in consideration of the above recitals incorporated herein and the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the parties agree as follows:
1. Retention and Duties.
1.1 Retention. MSC hereby hires, engages and employs ▇▇▇▇▇▇ for the Term (as defined in Section 2) on the terms and conditions expressly set forth in this Agreement. ▇▇▇▇▇▇ hereby accepts and agrees to such hiring, engagement and employment, on the terms and conditions expressly set forth in this Agreement.
1.2 Duties. During the Term, ▇▇▇▇▇▇ shall serve as MSC’s Chief Executive Officer (“CEO”) unless and until it is otherwise determined by MSC’s Board of Directors (the “Board”) that he shall serve in another senior executive capacity. In addition, throughout the Term, MSC shall nominate and use its reasonable best efforts to elect and maintain ▇▇▇▇▇▇ as the Chairman of the Board (“Chairman”). During ▇▇▇▇▇▇’▇ service as CEO, ▇▇▇▇▇▇ shall be principally responsible for the general supervision, direction and control of MSC’s business and officers, in each case subject to the Board’s directives. While serving as CEO, ▇▇▇▇▇▇ shall have the general powers and duties of management usually vested in the offices of general manager and CEO of a corporation of the size and nature of MSC and such other powers and duties as the
Board may assign from time to time, provided that such other duties are not inconsistent with his position as CEO. In no event, however, shall his duties as Chairman be deemed inconsistent with his position as CEO for such purposes. For such period of time that ▇▇▇▇▇▇ does not serve as CEO, ▇▇▇▇▇▇’▇ duties shall be (as may be determined from time to time by the Board) consistent with ▇▇▇▇▇▇’▇ position as a senior executive officer. ▇▇▇▇▇▇ shall also be subject to the corporate policies of MSC as they are in effect from time to time throughout the Term (including, without limitation, MSC’s ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ethics policies, as they may change from time to time). During the Term, ▇▇▇▇▇▇ shall report solely to the Board.
1.3 No Other Employment; Minimum Time Commitment. During the Term, ▇▇▇▇▇▇ shall both (x) devote substantially all his business time, energy and skill to the performance of ▇▇▇▇▇▇’▇ duties for MSC, and (y) hold no other employment. Nothing herein shall preclude ▇▇▇▇▇▇ from (i) continuing to serve on the boards of directors of companies or entities listed on Schedule 1 annexed hereto, (ii) serving on such other boards of directors of other business entities as the Board approves in writing, (iii) engaging in a reasonable level of charitable activities and community affairs, including serving on boards of directors or the equivalent and (iv) managing his personal investments and affairs, provided that the activities set forth in this Section 1.3 do not materially interfere with the effective discharge of his duties and responsibilities to MSC. MSC hereby agrees that ▇▇▇▇▇▇’▇ service on the boards of directors of the entities listed on Schedule 1 and the other entities approved by the Governance and Nominating Committee of the Board shall not be deemed to be a violation of the non-competition and non-solicitation provisions of Section 7, 10 and 11 given the current scope and business activities of those entities. However, MSC shall have the right to require ▇▇▇▇▇▇ to resign from any board or similar body which he may then serve if the Governance and Nominating Committee of the Board reasonably determines in writing that ▇▇▇▇▇▇’▇ service on such board or body materially interferes with the effective discharge of ▇▇▇▇▇▇’▇ duties and responsibilities to MSC or that any business related to such service is then in material competition with any business of any entity within the Company Group (as such term is defined in Section 7).
1.4 No Breach of Contract. ▇▇▇▇▇▇ hereby represents to MSC that to the best of ▇▇▇▇▇▇’▇ knowledge: (i) the execution and delivery of this Agreement by ▇▇▇▇▇▇ and MSC and the performance by ▇▇▇▇▇▇ of his duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any other agreement or policy to which ▇▇▇▇▇▇ is a party or otherwise bound; (ii) that ▇▇▇▇▇▇ has no information (including, without limitation, confidential information and trade secrets) relating to any other person or entity which would prevent, or be violated by, ▇▇▇▇▇▇ entering into this Agreement or carrying out his duties hereunder; (iii) that ▇▇▇▇▇▇ is not bound by any confidentiality, trade secret or similar agreement (other than this Agreement and the Inventions Agreement referred to in Section 9) with any other person or entity.
1.5 Location. ▇▇▇▇▇▇ acknowledges that MSC’s principal executive offices are currently located in Santa Ana, California. ▇▇▇▇▇▇’▇ principal place of employment shall be MSC’s principal executive offices. ▇▇▇▇▇▇ agrees that he will be regularly present at MSC’s principal executive offices. ▇▇▇▇▇▇ acknowledges that he may be required to travel from time to time in the course of performing his duties for MSC.
2. Term. The “Term” shall commence on February 10, 2007 (the “Effective Date”) and continue until ▇▇▇▇▇▇’▇ employment (x) is terminated by MSC, or (y) is terminated by ▇▇▇▇▇▇, in each case, for any reason or no reason. For purposes of this Agreement, the last day of ▇▇▇▇▇▇’▇ employment shall be referred to as the “Termination Date.”
3. Compensation.
3.1 Base Salary. As of the Effective Date, ▇▇▇▇▇▇’▇ base salary for the Term (the “Base Salary”) shall be at a rate of Five Hundred and Seventy Five Thousand Dollars ($575,000) per annum and shall be paid in accordance with MSC’s regular payroll practices in effect from time to time, but not less frequently than in monthly installments. MSC shall review ▇▇▇▇▇▇’▇ Base Salary for increase on an annual basis and shall not reduce such Base Salary, except as part of an across the board salary reduction (determined on a percentage basis) applicable to all of MSC’s senior executives, or to the extent that ▇▇▇▇▇▇ agrees to a salary reduction.
3.2 Incentive Bonus. During the Term, ▇▇▇▇▇▇ shall be eligible to participate in MSC’s annual incentive plan and to receive annually an incentive bonus (“Incentive Bonus”) in an amount to be determined by the Compensation Committee of the Board (“Committee”) in its sole discretion. Except as provided in Section 5.3, ▇▇▇▇▇▇ must be employed with MSC through the end of a particular fiscal year to be eligible to receive an Incentive Bonus for that fiscal year, with such bonus to be paid not later than two and one-half months after the end of that fiscal year. At or near the beginning of each applicable fiscal year, the Committee, after consultation with ▇▇▇▇▇▇, shall in its sole discretion establish performance objectives (“Performance Objectives”) for that year, the satisfaction of which (or lack thereof) will be utilized by the Committee in determining ▇▇▇▇▇▇’▇ Incentive Bonus for that year. As of the Effective Date, ▇▇▇▇▇▇’▇ target Incentive Bonus amount for any particular fiscal year, assuming the achievement of the applicable Performance Objectives for that year, shall equal one hundred and twenty percent (120%) of ▇▇▇▇▇▇’▇ Base Salary for that year (“Target Bonus”). In no event shall ▇▇▇▇▇▇ be entitled to an Incentive Bonus greater than two hundred percent (200%) of ▇▇▇▇▇▇’▇ Target Bonus in any year.
3.3 Equity Awards.
(a) One Time Sign-On Award.
(1) Option Grant. On the Effective Date, (the “Grant Date”) MSC will ▇▇▇▇▇ ▇▇▇▇▇▇ a nonqualified stock option (the “Option”) to purchase One Hundred and Fifty Thousand (150,000) shares of Common Stock, $0.01 par value, of MSC (“Common Stock”) at a price per share equal to the closing price of a share of Common Stock as reported on the composite tape for securities listed on the NASDAQ Stock Market for the Grant Date. The Option will have a term of ten (10) years, (subject to earlier termination) and shall vest in its entirety on the 4th anniversary of the Grant Date. The Option shall be granted under MSC’s 2006 Performance Incentive Plan, as amended (the “Plan”) and shall be subject to the terms and conditions of the Plan and a stock option agreement in substantially the form attached hereto as Exhibit A; provided, however, that the Committee (or Board) may, in its sole discretion, determine to grant all or a portion of the Option outside of the scope of the Plan, in which case the Option (to
the extent not granted under the Plan) shall contain substantively the same terms and conditions as had the Option been granted under the Plan evidenced by such form of option agreement.
(2) Cash Award. MSC will pay ▇▇▇▇▇▇ the sum of One Hundred Thousand Dollars ($100,000) as a cash signing bonus within 10 business days of the Signing Date (as defined in the Prior Employment Agreement).
(b) Restricted Stock Unit Grant. On the Effective Date, MSC shall ▇▇▇▇▇ ▇▇▇▇▇▇ 50,000 restricted stock units (the “RSU Award”), representing the right to receive 50,000 shares of Common Stock at a future date. The RSU Award shall vest in four equal annual installments on each of the first four anniversaries of the Grant Date, and shall have other terms and conditions consistent with the form of Restricted Stock Unit Agreement attached hereto as Exhibit B.
(c) Performance Stock Unit Grant. On the Effective Date, MSC shall grant to ▇▇▇▇▇▇ a performance stock unit award (“PSU Award”) of 150,000 Units. The PSU Award shall be subject to the terms and conditions of the form of PSU Award Agreement in substantially the form attached hereto as Exhibit C, and shall vest in accordance with the following:
| Cumulative 2-Year Operating Profit (01/07 through 12/08) |
Number PSUs to Vest | |
| $ or more |
150,000 | |
| $ up to $ |
75,000 | |
| Less than $ |
0% |
Vesting shall be determined after the issuance of audited financial statements for the cumulative 24 month period ending with the 2008 fiscal operating periods. Vesting, if any, shall occur no later than ten (10) business days after the date of issuance of such statements, provided that performance criteria has been satisfied. Any PSUs which do not vest because performance criteria was not satisfied shall be forfeited.
(d) Annual Equity Award Grants. Beginning on October 1, 2007, ▇▇▇▇▇▇ shall be eligible to participate in additional MSC equity award and incentive plans, including but not limited to the Plan, and to receive annually such awards in such amounts as may be determined by the Compensation Committee of the Board (“Committee”) in its sole discretion.
3.4 Section 280G Gross-Up. ▇▇▇▇▇▇ shall be covered by the tax gross-up provisions set forth in Exhibit D hereto, incorporated herein by this reference.
4. Benefits.
4.1 Retirement, Welfare and Fringe Benefits. During the Term, ▇▇▇▇▇▇ shall be entitled to participate in all employee health and welfare benefit plans and programs, including but not limited to health insurance (“Welfare Benefits”), pension plans, and fringe benefit plans and programs, made available by MSC to its senior executives generally, in accordance with the
eligibility and participation provisions of such plans and as such plans or programs may be in effect from time to time.
4.2 Reimbursement of Business Expenses. ▇▇▇▇▇▇ is authorized to incur reasonable expenses in carrying out ▇▇▇▇▇▇’▇ duties for MSC under this Agreement and reimbursement for all reasonable business expenses ▇▇▇▇▇▇ incurs during the Term in connection with carrying out ▇▇▇▇▇▇’▇ duties for MSC, subject to MSC’s expense reimbursement policies in effect from time to time.
4.3 Vacation and Other Leave. During the Term, ▇▇▇▇▇▇ shall accrue and be entitled to take four (4) weeks of paid vacation per year in accordance with MSC’s vacation policies in effect from time to time, including MSC’s policies regarding vacation accruals (including, without limitation, limits on the amount of vacation that may be accrued and untaken before future accruals cease). ▇▇▇▇▇▇ shall also be entitled to all other holiday and leave pay generally available to other executives of MSC.
4.4 Automobile Allowance. MSC shall provide ▇▇▇▇▇▇ with One Thousand Six Hundred Eighty Five Dollars ($1,685) per month during the Term to be used for the purchase, lease, insurance and maintenance of an automobile for ▇▇▇▇▇▇’▇ use.
4.5 Legal Fees. MSC shall reimburse ▇▇▇▇▇▇ for up to Ten Thousand Dollars ($10,000) of ▇▇▇▇▇▇’▇ reasonable legal fees and other expenses relating to the negotiation and preparation of the Prior Employment Agreement and related agreements.
5. Termination.
5.1 Termination by MSC. MSC may terminate ▇▇▇▇▇▇’▇ employment and this Agreement at any time: (i) with Cause (as defined in Section 5.5), (ii) without Cause, (iii) in the event of ▇▇▇▇▇▇’▇ death, or (iv) in the event that the Board determines in good faith that ▇▇▇▇▇▇ has a Disability (as defined in Section 5.5).
5.2 Termination by ▇▇▇▇▇▇. ▇▇▇▇▇▇ may terminate his employment and this Agreement at any time on no less than sixty (60) days prior written notice to MSC; provided, however, that (i) if the termination is for Good Reason, ▇▇▇▇▇▇ may provide immediate written notice if MSC fails to, or cannot, reasonably cure the event that constitutes Good Reason, and (ii) in the case of ▇▇▇▇▇▇’▇ good faith determination that he has a Disability, ▇▇▇▇▇▇ shall provide thirty (30) days prior written notice (except that such determination shall not be conclusive as to whether ▇▇▇▇▇▇ actually has a Disability and, if it is determined that ▇▇▇▇▇▇ does not actually have a Disability, he shall be deemed to have terminated employment without a Disability and without Good Reason).
5.3 Benefits Upon Termination.
(a) By MSC for Cause, or Quit by ▇▇▇▇▇▇. If ▇▇▇▇▇▇’▇ employment is terminated during the Term by MSC for Cause or by ▇▇▇▇▇▇ without Good Reason (other than death or Disability), ▇▇▇▇▇▇ shall receive his Accrued Obligations (as defined in Section 5.5).
(b) By MSC without Cause, or By ▇▇▇▇▇▇ for Good Reason. If, during the Term, ▇▇▇▇▇▇’▇ employment is terminated by MSC without Cause or by ▇▇▇▇▇▇ for Good Reason (other than in connection with a Change in Control Event) (each term as defined in Section 5.5 below) (and, in each case, other than due to either (i) ▇▇▇▇▇▇’▇ death, or (ii) his Disability), MSC shall, subject to the following provisions of this Section 5.3, pay ▇▇▇▇▇▇, in addition to the Accrued Obligations, the following severance benefits (“Severance Benefits”), subject to tax withholding and other authorized deductions:
| (i) | 1 times ▇▇▇▇▇▇’▇ Base Salary at the annual rate then in effect, payable in equal monthly installments over a 12-month period, subject to Section 29(b) below and ▇▇▇▇▇▇’▇ ongoing compliance with Section 7, with the first such installment to be paid in the month following the month in which ▇▇▇▇▇▇’▇ Separation from Service occurs; |
| (ii) | continuation of ▇▇▇▇▇▇’▇ health and welfare benefits under MSC’s plans, policies and programs (“Welfare Benefits”) for the lesser of a period of 12 months following the Termination Date or until substantially similar coverage is received from a subsequent employer; |
| (iii) | with respect to ▇▇▇▇▇▇’▇ outstanding equity grants received from MSC prior to the Effective Date, (A) all unvested stock options shall immediately vest and (B) all restrictions with respect to restricted stock shall be removed and such stock shall be freely tradable; and |
| (iv) | with respect to ▇▇▇▇▇▇’▇ outstanding equity grants received on or after the Effective Date, all such awards not then vested, including without limitation any stock option, RSU Award or PSU Award, shall be forfeited in their entirety. |
(c) Death, Disability. If, during the Term, ▇▇▇▇▇▇’▇ employment is terminated as a result of ▇▇▇▇▇▇’▇ death or his Disability, then MSC shall pay ▇▇▇▇▇▇ the Accrued Obligations and, in the case of Disability, provide for continuation of ▇▇▇▇▇▇’▇ Welfare Benefits for the lesser of a period of 12 months following the Termination Date or until substantially similar coverage is received from a subsequent employer.
(d) By MSC Without Cause or by ▇▇▇▇▇▇ for Good Reason in CIC Context. If, during the Term, ▇▇▇▇▇▇’▇ employment is terminated by MSC without Cause or by ▇▇▇▇▇▇ for Good Reason within 24 months of the occurrence of a Change in Control Event, MSC shall pay ▇▇▇▇▇▇ (in addition to the Accrued Obligations) the following Severance Benefits, subject to tax withholding and other authorized deductions:
| (i) | 2.5 times the sum of (A) ▇▇▇▇▇▇’▇ Base Salary at the annual rate then in effect, plus (B) the Target Bonus, such |
| payment to be made in a lump sum, subject to Section 29(b), in the month following the month in which ▇▇▇▇▇▇’▇ Separation from Service occurs; |
| (ii) | (A) a fraction, the numerator of which is the number of days in the fiscal year that elapsed prior to the date of ▇▇▇▇▇▇’▇ termination and the denominator of which is 365, multiplied by (B) ▇▇▇▇▇▇’▇ Target Bonus level in effect immediately preceding such termination, such payment to be made in a lump sum, subject to Section 29(b), in the month following the month in which ▇▇▇▇▇▇’▇ Separation from Service occurs; |
| (iii) | continuation of ▇▇▇▇▇▇’▇ Welfare Benefits for the lesser of a period of 30 months following the Termination Date or until substantially similar coverage is received from a subsequent employer; and |
| (iv) | with respect to ▇▇▇▇▇▇’▇ outstanding equity grants received from MSC (irrespective of whether such award was received before or after the Effective Date), (A) all unvested stock options shall immediately vest and (B) all restrictions with respect to restricted stock shall be removed and such stock shall be freely tradable, and (C) any RSU Award and the PSU Award shall be deemed to be 100% vested. |
(e) Additional Conditions Precedent. Any obligation of MSC pursuant to Section 5.3(b), (c) or (d) to pay a Severance Benefit in the circumstances described therein is further subject to the following two conditions precedent: (i) such Severance Benefit shall be paid only if, during the Term and prior to the date of such payment, ▇▇▇▇▇▇ has remained in material compliance with the provisions of Sections 7 through 12 (or, having not been in material compliance, subsequently cures such noncompliance as provided below), and (ii) ▇▇▇▇▇▇’▇ execution and delivery of the release described in Section 5.4 (and such release has become irrevocable as provided therein); provided that, if ▇▇▇▇▇▇ provides the release described in Section 5.4, in no event shall ▇▇▇▇▇▇ be entitled to benefits pursuant to Section 5.3(b), (c) or (d), as applicable, of less than $5,000 (or the amount of such benefits, if less than $5,000), which amount the parties agree is good and adequate consideration, in and of itself, for ▇▇▇▇▇▇’▇ release contemplated by Section 5.4. For purposes of the preceding sentence, if ▇▇▇▇▇▇ is not in material compliance with one or more provisions of Sections 7 though 12, and a cure is reasonably possible in the circumstances, ▇▇▇▇▇▇ will not be deemed to have breached such provision(s) unless MSC gives ▇▇▇▇▇▇ written notice and a reasonable opportunity (in no case shall more than a 10-day cure period be required) to cure such breach and such breach is not reasonably cured within such time period.
The foregoing provisions of this Section 5.3 shall not affect: (i) ▇▇▇▇▇▇’▇ receipt of benefits otherwise due terminated employees under group insurance coverage consistent with
the terms of the applicable Corporation welfare benefit plan; (ii) ▇▇▇▇▇▇’▇ rights under the Consolidated Omnibus Budget Reconciliation Act to continue participation in medical, dental, hospitalization and life insurance coverage; (iii) ▇▇▇▇▇▇’▇ receipt of benefits otherwise due in accordance with the terms of MSC’s 401(k) plan (if any); or (iv) any rights that ▇▇▇▇▇▇ may have under and with respect to a stock option, restricted stock or other equity-based award, to the extent that such award was granted before the Termination Date and to the extent expressly provided in the written agreement evidencing such award.
5.4 Release; Exclusive Remedy.
(a) This Section 5.4 shall apply notwithstanding anything else contained in this Agreement or any stock option, restricted stock, performance award, or other equity-based award agreement to the contrary. As a condition precedent to any Corporation obligation to ▇▇▇▇▇▇ to pay a Severance Benefit pursuant to Section 5.3(b), (c) or (d) or any obligation to accelerate vesting of any equity-based award in connection with the termination of ▇▇▇▇▇▇’▇ employment, ▇▇▇▇▇▇ shall, upon or within twenty-one (21) days following his last day of employment with MSC, provide MSC with a valid, executed, written release substantially in the form attached hereto as Exhibit E (the “Release”), and such Release shall have not been revoked by ▇▇▇▇▇▇ pursuant to any revocation rights afforded by applicable law. MSC shall have no obligation to make any payment to ▇▇▇▇▇▇ pursuant to Section 5.3(b), (c) or (d) (or otherwise accelerate the vesting of any equity-based award in the circumstances as otherwise contemplated by the applicable award agreement) unless and until the Release contemplated by this Section 5.4 becomes irrevocable by ▇▇▇▇▇▇ in accordance with all applicable laws, rules and regulations.
(b) ▇▇▇▇▇▇ agrees that the payments contemplated by Section 5.3 (and any applicable acceleration of vesting of an equity-based award in accordance with the terms of such award in connection with the termination of ▇▇▇▇▇▇’▇ employment) shall, if such payments are actually made and such accelerated vesting is actually effected, constitute the exclusive and sole remedy for any termination of his employment and ▇▇▇▇▇▇ covenants not to assert or pursue any other remedies, at law or in equity, with respect to any termination of employment, except as allowed under the release contemplated by Section 5.4(a). MSC and ▇▇▇▇▇▇ acknowledge and agree that there is no duty of ▇▇▇▇▇▇ to mitigate damages under this Agreement and any compensation and benefits which ▇▇▇▇▇▇ is entitled to hereunder shall not be offset by any compensation or other amounts received by ▇▇▇▇▇▇ from third parties or by the claims that MSC may have against ▇▇▇▇▇▇. All amounts paid to ▇▇▇▇▇▇ pursuant to Section 5.3 shall be paid without regard to whether ▇▇▇▇▇▇ has taken or takes actions to mitigate damages.
5.5 Certain Defined Terms.
(a) As used herein, “Accrued Obligations” means:
| (i) | any Base Salary that had accrued but had not been paid (including accrued and unpaid vacation time) on or before the Termination Date; and |
| (ii) | any Incentive Bonus payable pursuant to Section 3.2 with respect to a fiscal year (if ▇▇▇▇▇▇ was employed by MSC |
| on the last day of that fiscal year) to the extent that such Incentive Bonus had previously been earned but not paid to ▇▇▇▇▇▇; and |
| (iii) | any reimbursement due to ▇▇▇▇▇▇ pursuant to Section 4.2 for expenses incurred by ▇▇▇▇▇▇ on or before the Termination Date. |
(b) As used herein, “Cause” shall mean the reasonable and good faith written determination by two-thirds of the Board (excluding ▇▇▇▇▇▇, if he is then a member of the Board, from both the numerator and the denominator of such fraction for purposes of such determination) that, during the Term, any of the following events or contingencies exists or has occurred:
| (i) | ▇▇▇▇▇▇ is convicted of, or pleads guilty or nolo contendre to, a felony within the meaning of such term by United States federal or state law (other than traffic related offenses or as a result of vicarious liability); |
| (ii) | ▇▇▇▇▇▇ willfully commits an act of material fraud, embezzlement or theft against MSC or one of its affiliates or willfully commits a material violation of state or federal securities laws involving MSC or one of its affiliates; |
| (iii) | ▇▇▇▇▇▇ willfully and repeatedly fails to perform his material fiduciary and other duties to MSC after having received written notice from MSC of such claimed failure; |
| (iv) | ▇▇▇▇▇▇ willfully engages in gross misconduct in carrying out his duties hereunder resulting in material economic harm to MSC; |
| (v) | the execution and delivery of this Agreement by ▇▇▇▇▇▇ and MSC and the performance by ▇▇▇▇▇▇ of ▇▇▇▇▇▇’▇ duties hereunder constitutes a breach by ▇▇▇▇▇▇ of, or otherwise contravenes, the terms of any other agreement or policy to which ▇▇▇▇▇▇ is a party or otherwise bound which materially interferes with ▇▇▇▇▇▇’▇ ability to effectively perform his duties and responsibilities to MSC hereunder; |
| (vi) | ▇▇▇▇▇▇ has information (including, without limitation, confidential information and trade secrets) relating to any other person or entity which ▇▇▇▇▇▇ is not legally and contractually free to disclose to MSC which materially interferes with ▇▇▇▇▇▇’▇ ability to effectively perform his duties and responsibilities to MSC hereunder; |
| (vii) | ▇▇▇▇▇▇ is bound by any confidentiality, trade secret or similar agreement (other than this Agreement and the Inventions Agreement referred to in Section 9) with any other person or entity which materially interferes with ▇▇▇▇▇▇’▇ ability to effectively perform his duties and responsibilities to MSC hereunder; or |
| (viii) | any intentional wrongful act or omission by ▇▇▇▇▇▇ has occurred that results in the restatement of the Company’s financial statements due to a violation of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002. |
For purposes of a termination for Cause, no act or failure to act, on ▇▇▇▇▇▇’▇ part shall be considered “willful” unless done, or omitted to be done, by ▇▇▇▇▇▇ not in good faith and without reasonable belief that ▇▇▇▇▇▇’▇ action or omission was in, or not opposed to, the best interests of MSC.
Anything to the contrary notwithstanding, ▇▇▇▇▇▇ shall not be terminated for Cause under paragraph 5.5(b)(ii), (iii), (iv), (v), (vi) or (vii) unless he is given written notice setting forth the basis for termination and he is given fifteen (15) days to cure such neglect or conduct and, if he fails to cure such neglect or conduct, ▇▇▇▇▇▇ is given the opportunity to be heard before the Board and the Board shall have made the written determination set forth at the beginning of this Section 5.5(b).
(c) As used herein, “Disability” shall mean a physical or mental impairment which renders ▇▇▇▇▇▇ unable to perform the essential functions of his employment with MSC, even with reasonable accommodation that does not impose an undue hardship on MSC, for more than 180 days in any 12-month period, unless a longer period is required by federal or state law, in which case that longer period would apply. The determination of whether or not a Disability exists for purposes of this Agreement shall be based upon the findings of a medical doctor reasonably acceptable to both parties. If the two parties cannot agree on a medical doctor, each party shall select a medical doctor and the two medical doctors shall select a third who shall be the approved doctor for this purpose. Neither MSC nor ▇▇▇▇▇▇ shall terminate his employment for Disability unless the party terminating ▇▇▇▇▇▇’▇ employment has given written notice to the other party as provided herein.
(d) As used herein, “Good Reason” shall mean the occurrence of one or more of the following without ▇▇▇▇▇▇’▇ written consent:
| (i) | a material breach of this Agreement by MSC (including, without limitation, any breach by MSC of Section 3.1); |
| (ii) | a material diminution in ▇▇▇▇▇▇’▇ duties (when such duties are viewed in the aggregate) from the level contemplated by Section 1.2 (including, without limitation, any change in title or position other than as contemplated by Section 1.2); provided that it shall not constitute Good |
| Reason hereunder solely because ▇▇▇▇▇▇ is no longer serving as Chairman, provided that he reports directly to the Board; |
| (iii) | the assignment by MSC of duties to ▇▇▇▇▇▇ that are materially inconsistent with his position as CEO or as an executive Chairman, as applicable; |
| (iv) | the failure of MSC to maintain Directors’ and Officers’ Liability Insurance on terms not materially less favorable to ▇▇▇▇▇▇ than the terms of the policy presently in effect; provided that in no event shall Good Reason exist if MSC has in place Directors’ and Officers’ Liability Insurance coverage at a cost on an annualized basis that is not less than two hundred percent (200%) of the annualized cost of the policy in effect on the Effective Date; or |
| (v) | Within 24 months of the occurrence of a Change in Control Event, any reduction in ▇▇▇▇▇▇’▇ Base Salary, Target Bonus opportunity, or aggregate benefits levels; |
provided, however, that none of the foregoing events shall constitute Good Reason unless ▇▇▇▇▇▇ shall have notified MSC in writing describing the events which constitute Good Reason and MSC shall have failed to reasonably cure such event within a reasonable period, not to exceed fifteen (15) days, after MSC’s actual receipt of such written notice.
(e) As used herein, “Change in Control Event” and “CIC” means any of the following:
| (i) | Approval by MSC’s stockholders of the dissolution or liquidation of MSC; |
| (ii) | Approval by MSC’s stockholders of an agreement to merge or consolidate, or otherwise reorganize, with or into one or more entities that are not Subsidiaries or other affiliates, as a result of which less than 50% of the outstanding voting securities of the surviving or resulting entity immediately after the reorganization are, or will be, owned, directly or indirectly, by MSC’s stockholders immediately before such reorganization (assuming for purposes of such determination that there is no change in the record ownership of MSC’s securities from the record date for such approval until such reorganization and that such record owners hold no securities of the other parties to such reorganization, but including in such determination any |
| securities of the other parties to such reorganization held by MSC’s affiliates); |
| (iii) | Approval by MSC’s stockholders of the sale ,lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of MSC’s business and/or assets to a person or entity that is not a Subsidiary; |
| (iv) | Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act but excluding any person described in and satisfying the conditions of Rule 13d-1(b)(1) thereunder) becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing more than 35% of the combined voting power of the Corporation’s then outstanding securities entitled to then vote generally in the election of directors of the Corporation; or |
| (v) | During any period not longer than twelve consecutive months, a majority of the members of the Board is replaced by Board members whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. |
For purposes of this subsection, “Subsidiary” means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned, directly or indirectly, by MSC.
(f) As used herein, a “Separation from Service” occurs when ▇▇▇▇▇▇ dies, retires, or otherwise has a termination of employment with MSC that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder.
6. Means and Effect of Termination. Any termination of ▇▇▇▇▇▇’▇ employment under this Agreement shall be communicated by written notice of termination from the terminating party to the other party. The notice of termination shall indicate the specific provision(s) of this Agreement relied upon in effecting the termination.
7. Non-Competition. ▇▇▇▇▇▇ acknowledges and recognizes the highly competitive nature of MSC’s businesses, the amount of sensitive and confidential information involved in the discharge of ▇▇▇▇▇▇’▇ position with MSC, and the harm to MSC that would result if such knowledge or expertise was disclosed or made available to a competitor. Based on that understanding, ▇▇▇▇▇▇ hereby expressly agrees as follows:
7.1 As a result of the particular nature of ▇▇▇▇▇▇’▇ relationship with MSC, in the capacities identified earlier in this Agreement, during the Term and for the longer of (a) 12
months thereafter or (b) any period that ▇▇▇▇▇▇ is receiving payments pursuant to Section 5.3 (including any period such payments are delayed pursuant to Section 29(b) hereof (for purposes of complying with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)), ▇▇▇▇▇▇ hereby agrees that he will not, directly or indirectly, (i) engage in any business for ▇▇▇▇▇▇’▇ own account or derive any material economic benefit from any business that competes with the business of MSC or any of its affiliates (MSC and its affiliates are referred to, collectively, as the “Company Group”), (ii) enter the employ of, or render any services to, any person engaged in any business that competes with the business of any entity within the Company Group, (iii) acquire a financial interest in any person engaged in any business that competes with the business of any entity within the Company Group, directly or indirectly, as an individual, partner, member, shareholder, officer, director, principal, agent, trustee or consultant, or (iv) other than in the performance of his duties hereunder, interfere with business relationships (whether formed before or after the Effective Date) between MSC, any of its respective affiliates or subsidiaries, and any customers, suppliers, officers, employees, partners, members or investors of any entity within the Company Group for the purpose of competing, or allowing a third party to compete, with the business of any entity of the Company Group. For purposes of this Agreement, businesses in competition with the Company Group shall include, without limitation, businesses in which any entity within the Company Group actively participates and any businesses which any entity within the Company Group has specific plans to actively participate in the future if ▇▇▇▇▇▇ is aware of such plans, whether or not such entity has commenced such operations.
7.2 Notwithstanding anything to the contrary in this Agreement, ▇▇▇▇▇▇ may, directly or indirectly, own, solely as an investment, (x) securities of any person which are publicly traded on a national or regional stock exchange or on an over-the-counter market if ▇▇▇▇▇▇ (i) is not a controlling person of, or a member of a group which controls, such person, and (ii) does not, directly or indirectly, beneficially own two percent (2%) or more of any class of securities of such person or (y) which is a mutual fund or similar investment vehicle.
8. Confidentiality. As a material part of the consideration for MSC’s commitment to the terms of this Agreement, ▇▇▇▇▇▇ hereby agrees that ▇▇▇▇▇▇ will not at any time (whether during or after ▇▇▇▇▇▇’▇ employment with MSC), other in the course of ▇▇▇▇▇▇’▇ duties hereunder, knowingly disclose, disclose in a fashion that ▇▇▇▇▇▇ reasonably should know the consequences of such disclosure, or use for ▇▇▇▇▇▇’▇ own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise, any trade secrets, or other confidential data or information relating to customers, development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, financing methods, or plans of any entity within the Company Group; provided, however, that the foregoing shall not apply to information which is generally known to the industry or the public, other than as a result of ▇▇▇▇▇▇’▇ breach of this covenant. ▇▇▇▇▇▇ further agrees that ▇▇▇▇▇▇ will not retain or use for his account, at any time, any trade names, trademark or other proprietary business designation used or owned in connection with the business of any entity within the Company Group. Notwithstanding the foregoing, the provisions of this Section 8 shall not apply when (i) disclosure is required by law or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with apparent jurisdiction to order ▇▇▇▇▇▇ to disclose or make available such information, provided, however that ▇▇▇▇▇▇ shall promptly notify MSC in writing upon
receiving a request for such information, or (ii) with respect to any other litigation, arbitration or mediation involving this Agreement, including but not limited to enforcement of this Agreement.
9. Inventions and Developments. The Inventions Agreement attached hereto as Exhibit F executed by ▇▇▇▇▇▇ on or about February 10, 2005 remains in effect.
10. Anti-solicitation. ▇▇▇▇▇▇ promises and agrees that during the Term and for a period of one (1) year thereafter, ▇▇▇▇▇▇ will not, directly or indirectly, individually or as a consultant to, or as an employee, officer, stockholder, director or other owner or participant in any business, influence or attempt to influence customers, vendors, suppliers, joint venturers, associates, consultants, agents, or partners of any entity within the Company Group, either directly or indirectly, to divert their business away from the Company Group, to any individual, partnership, firm, corporation or other entity then in competition with the business of any entity within the Company Group, and he will not otherwise materially interfere with any business relationship of any entity within the Company Group; provided, however, that following the Term, the participation in, or ownership of, a competitive business shall not, in and of itself, be deemed to be material interference under this Section 10.
11. Soliciting Employees. ▇▇▇▇▇▇ promises and agrees that during the Term and for a period of one (1) year thereafter, ▇▇▇▇▇▇ will not, directly or indirectly, individually or as a consultant to, or as an employee, officer, stockholder, director or other owner of or participant in any business, solicit (or assist in soliciting) any person who is then, or at any time within six (6) months prior thereto was, an employee of an entity within the Company Group who earned annually $25,000 or more as an employee of such entity during the last six (6) months of his or her own employment to work for (as an employee, consultant or otherwise) any business, individual, partnership, firm, corporation, or other entity whether or not engaged in competitive business with any entity in the Company Group.
12. Return of Property. ▇▇▇▇▇▇ agrees to truthfully and faithfully account for and deliver to MSC all property belonging to MSC, any other entity in the Company Group, or any of their respective affiliates, which ▇▇▇▇▇▇ may receive from or on account of MSC, any other entity in the Company Group, or any of their respective affiliates, and upon the termination of the Term, or MSC’s demand, ▇▇▇▇▇▇ shall immediately deliver to MSC all such property belonging to MSC, any other entity in the Company Group, or any of their respective affiliates. Anything to the contrary notwithstanding, nothing in this Section 12 shall prevent ▇▇▇▇▇▇ from retaining a personal home computer and papers and other materials of a personal nature, including personal diaries, calendars and personal rolodexes, personal information relating to his compensation or relating to the reimbursement of expenses, personal information that he reasonably believes are needed for tax purposes and copies of MSC’s compensatory plans, programs and agreements relating to his compensation as an employee.
13. Withholding Taxes. Notwithstanding anything else herein to the contrary, MSC may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to this Agreement such federal, state and local income, employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation.
14. Assignment. This Agreement is personal in its nature and neither of the parties hereto shall, without the other’s consent, assign or transfer this Agreement or any rights or obligations hereunder; provided, however, that in the event of a merger, consolidation, or transfer or sale of all or substantially all of the assets of MSC with or to any other individual(s) or entity, this Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of MSC hereunder, provided that the obligations hereunder are assumed, either by law or contract, by such transferee or successor.
15. Number and Gender. Where the context requires, the singular shall include the plural, the plural shall include the singular, and any gender shall include all other genders.
16. Section Headings. The section headings of, and titles of paragraphs and subparagraphs contained in, this Agreement are for the purpose of convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation thereof.
17. Governing Law. This Agreement, and all questions relating to its validity, interpretation, performance and enforcement, as well as the legal relations hereby created between the parties hereto, shall be governed by and construed under, and interpreted and enforced in accordance with, the laws of the State of California, notwithstanding any California or other conflict of law provision to the contrary.
18. Severability. If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.
19. Entire Agreement. This Agreement embodies the entire agreement of the parties hereto respecting the matters within its scope. This Agreement supersedes all prior and contemporaneous agreements of the parties hereto that directly or indirectly bears upon the subject matter hereof (including, without limitation, the Prior Employment Agreement which has been amended and restated herein), other than for any currently existing awards or agreement relating to stock options, restricted stock, restricted stock units, performance units or any other incentive awards to ▇▇▇▇▇▇. Any prior negotiations, correspondence, agreements, proposals or understandings relating to the subject matter hereof shall be deemed to have been merged into this Agreement, and to the extent inconsistent herewith, such negotiations, correspondence, agreements, proposals, or understandings shall be deemed to be of no force or effect. There are no representations, warranties, or agreements, whether express or implied, or oral or written, with respect to the subject matter hereof, except as expressly set forth herein.
20. Modifications. This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.
21. Waiver. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
22. Resolution of Disputes. Any controversy arising out of or relating to ▇▇▇▇▇▇’▇ employment (whether or not before or after the expiration of the Term), any termination of ▇▇▇▇▇▇’▇ employment, this Agreement, the Inventions Agreement referred to herein, any equity-based award agreements referred to herein, the enforcement or interpretation of any such agreement, or because of an alleged breach, default, or misrepresentation in connection with any of the provisions of such an agreement, including (without limitation) any state or federal statutory claims, shall be submitted to final and binding arbitration, to be held in Orange County, California before a sole neutral arbitrator; provided, however, that provisional injunctive relief may, but need not, be sought in a court of law while arbitration proceedings are pending, and any provisional injunctive relief granted by such court shall remain effective until the matter is finally determined by the arbitrator. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. Judgment on the award may be entered in any court having jurisdiction.
The parties acknowledge and agree that they are hereby waiving any rights to trial by jury in any action, proceeding or counterclaim brought by either of the parties against the other in connection with any matter whatsoever arising out of or in any way connected with any of the matters referenced in the first sentence of the first paragraph of this Section 22.
The parties agree that the Corporation shall be responsible for payment of the forum costs of any arbitration hereunder, including the Arbitrator’s fee The parties further agree that in any proceeding with respect to such matters, each party shall bear its own attorney’s fees and costs other than forum costs associated with the arbitration which in any event shall be paid by MSC.
Without limiting the remedies available to the parties and notwithstanding the foregoing provisions of this Section 22, ▇▇▇▇▇▇ and MSC acknowledge that any breach of any of the covenants or provisions contained in Sections 7 through 12 could result in irreparable injury to either of the parties hereto for which there might be no adequate remedy at law, and that, in the event of such a breach or threat thereof, the non-breaching party shall be entitled to obtain a temporary restraining order and/or a preliminary injunction and a permanent injunction restraining the other party hereto from engaging in any activities prohibited by any covenant or provision in Sections 7 through 12 or such other equitable relief as may be required to enforce specifically any of the covenants or provisions of Sections 7 through 12.
23. Notices.
(a) All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and made if (i) delivered by hand, (ii) otherwise delivered against receipt therefor, or (iii) sent by registered or certified mail, postage prepaid, return receipt requested. Any notice shall be duly addressed to the parties as follows:
| (i) | if to MSC: |
▇▇▇.▇▇▇▇▇▇▇▇ Corporation
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Board of Directors
| (ii) | if to ▇▇▇▇▇▇: |
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
(b) Any party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section 23 for the giving of notice. Any communication shall be effective when delivered by hand, when otherwise delivered against receipt therefor, or five (5) business days after being mailed in accordance with the foregoing.
24. Legal Counsel; Mutual Drafting. Each party recognizes that this is a legally binding contract and acknowledges and agrees that they have had the opportunity to consult with legal counsel of their choice. Each party has cooperated in the drafting, negotiation and preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against either party on the basis of that party being the drafter of such language. ▇▇▇▇▇▇ agrees and acknowledges that he has read and understands this Agreement, is entering into it freely and voluntarily, and has been advised to seek counsel prior to entering into this Agreement and has had ample opportunity to do so.
25. Provisions that Survive Termination. The terms of this Agreement to the extent necessary to carry out the intentions of the parties underlying their respective rights and obligations shall survive any termination of the Term. For this purpose, the parties intend that the following provisions of this Agreement shall survive any termination of the Term (without limiting the generality of the preceding sentence as to any other provision that may also be necessary to carry out the intentions of the parties): Sections 3.7, 5.3, 5.4, 5.5 and 7 through 28.
26. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.
27. Corporation’s Representations. MSC represents and warrants that (i) the execution, delivery and performance of this Agreement by MSC has been fully and validly authorized by all necessary corporate action, (ii) the officer signing this Agreement on behalf of MSC is duly authorized to do so, (iii) the execution, delivery and performance of this Agreement does not violate any applicable law, regulation, order, judgment or decree or any agreement, plan or corporate governance document to which MSC is a party or by which it is bound and (iv) upon
execution and delivery of this agreement by the parties hereto, it shall be a valid and binding obligation of MSC enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
28. Indemnification.
(a) MSC agrees that (i) if ▇▇▇▇▇▇ is made a party, or is threatened to be made a party, to any threatened or actual action, suit or proceeding whether civil, criminal, administrative, investigative, appellate or other (a “Proceeding”) by reason of the fact that he is or was a director, officer or employee of MSC or is or was serving at the request of MSC as a director, officer, member, employee, agent, manager, consultant or representative of another person or (ii) if any claim, demand, request, investigation, controversy, threat, discovery request or request for testimony or information (a “Claim”) is made, or threatened to be made, that arises out of or relates to ▇▇▇▇▇▇’▇ service in any of the foregoing capacities, whether arising before or after the Effective Date, then ▇▇▇▇▇▇ shall promptly be indemnified and held harmless by MSC to the fullest extent legally permitted or authorized by MSC’s certificate of incorporation, bylaws or Board resolutions or, if greater, by the laws of the State of Delaware, against any and all costs, expenses, liabilities and losses (including, without limitation, attorney’s fees, judgments, interest, expenses of investigating, defending or obtaining indemnity with respect to any Proceeding or Claim, penalties, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) incurred or suffered by ▇▇▇▇▇▇ in connection therewith, and such indemnification shall continue as to ▇▇▇▇▇▇ even if he has ceased to be a director, officer or employee of MSC or a director, officer, member, employee, agent, manager, consultant or representative of such other person and shall inure to the benefit of ▇▇▇▇▇▇’▇ heirs, executors and administrators. To the extent permitted by law, MSC shall advance to ▇▇▇▇▇▇ all costs and expenses incurred by him in connection with any such Proceeding or Claim within thirty (30) days after receiving written notice requesting such an advance. Such notice shall include, to the extent required by applicable law, an undertaking by ▇▇▇▇▇▇ to repay the amount advanced if he is ultimately determined not to be entitled to indemnification against such costs and expenses.
(b) Neither the failure of MSC (including its Board, independent legal counsel or stockholders) to have made a determination in connection with any request for indemnification or advancement under Section 28(a) that indemnification of ▇▇▇▇▇▇ is proper because he has satisfied any applicable standard of conduct, nor a determination by MSC (including its Board, independent legal counsel or stockholders) that ▇▇▇▇▇▇ has not met any applicable standard of conduct, shall create a presumption that ▇▇▇▇▇▇ has not met an applicable standard of conduct.
(c) During the Term and for a period of three (3) years thereafter, MSC shall keep in place a directors and officers’ liability insurance policy (or policies) providing comprehensive coverage to ▇▇▇▇▇▇ to the extent that MSC provides such coverage for any other present or former senior executive or director of MSC. Such policy shall be on terms not materially less favorable to ▇▇▇▇▇▇ than the terms of the policy then in effect on the Effective Date; provided that in no event shall MSC be obligated to provide such level of coverage to the extent that the annualized cost of the coverage would exceed two hundred percent (200%) of the annualized cost of the coverage in effect on the Effective Date.
29. Section 409A.
(a) It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) (“Code Section 409A”) so as not to subject ▇▇▇▇▇▇ to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to ▇▇▇▇▇▇.
(b) Notwithstanding any provision of this Agreement to the contrary, if ▇▇▇▇▇▇ is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of ▇▇▇▇▇▇’▇ Separation from Service, ▇▇▇▇▇▇ shall not be entitled to any payment or benefit pursuant to Section 5.3 until the earlier of (i) the date which is six (6) months after ▇▇▇▇▇▇’▇ Separation from Service for any reason other than death, or (ii) the date of ▇▇▇▇▇▇’▇ death. Any amounts otherwise payable to ▇▇▇▇▇▇ upon or in the six (6) month period following ▇▇▇▇▇▇’▇ Separation from Service that are not so paid by reason of this Section 29(b) shall be paid (without interest) as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after ▇▇▇▇▇▇’▇ Separation from Service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of ▇▇▇▇▇▇’▇ death). The provisions of this Section 29(b) shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Code Section 409A.
(c) To the extent that any benefits or reimbursements pursuant to Sections 4.2, 4.4, 4.5, 5.3(b)(iii), 5.3(c)(ii) or 5.3(d)(iv) are taxable to ▇▇▇▇▇▇, any reimbursement payment due to ▇▇▇▇▇▇ pursuant to any such provision shall be paid to ▇▇▇▇▇▇ on or before the last day of ▇▇▇▇▇▇’▇ taxable year following the taxable year in which the related expense was incurred. The benefits and reimbursements pursuant to such provisions are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that ▇▇▇▇▇▇ receives in one taxable year shall not affect the amount of such benefits or reimbursements that ▇▇▇▇▇▇ receives in any other taxable year.
[Remainder of Page Intentionally Blank]
IN WITNESS WHEREOF, MSC and ▇▇▇▇▇▇ have executed this Agreement as of the date first set forth above.
| ▇▇▇.▇▇▇▇▇▇▇▇ CORPORATION | ||
| /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ | ||
| By: | ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ | |
| Title: | Executive Vice President, Business Administration, Legal Affairs and Secretary | |
| /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual | ||
SCHEDULE 1
LIST OF CURRENT DIRECTORSHIPS
TechSolve, Inc.
Pavilion Technologies
▇▇▇▇▇▇▇ College, Board of Trustees
Exhibit A
PERFORMANCE MEASURES
| Cumulative 2-Year Operating_ Profit (0I/07 through 12/08) |
Number PSUs to Vest | |
| $ or more |
150,000 | |
| $ up to $ |
75,000 | |
| Less than $ |
0% |
Vesting shall be determined after the issuance of audited financial statements for the cumulative 24 month period ending with the 2008 fiscal operating periods. Vesting, if any, shall occur no later than ten (10) business days after the date of issuance of such statements, provided that performance criteria has been satisfied. Any PSUs which do not vest because performance criteria was not satisfied shall be forfeited.
1
EXHIBIT A – FORM OF NONQUALIFIED STOCK OPTION AGREEMENT
[Attached hereto.]
EXHIBIT A
▇▇▇.▇▇▇▇▇▇▇▇ CORPORATION
2006 PERFORMANCE INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (this “Option Agreement”) dated February 12, 2007 by and between ▇▇▇.▇▇▇▇▇▇▇▇ CORPORATION, a Delaware corporation (the “Corporation”), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the “Grantee”) evidences the nonqualified stock option (the “Option”) granted by the Corporation to the Grantee as to the number of shares of the Corporation’s Common Stock first set forth below.
| Number of Shares of Common Stock:1 | 150,000 | Award Date: |
|
|||||
| Exercise Price per Share: 1 | $ | Expiration Date: 1,2 |
|
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Vesting 1,2 The Option shall become vested as to 100% of the total number of shares of Common Stock subject to the Option on the fourth anniversary of the Award Date.
The Option is granted under the ▇▇▇.▇▇▇▇▇▇▇▇ Corporation 2006 Performance Incentive Plan (the “Plan”) and subject to the Terms and Conditions of Nonqualified Stock Option (the “Terms”) attached to this Option Agreement (incorporated herein by this reference) and to the Plan. The Option has been granted to the Grantee in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Grantee. Capitalized terms are defined in the Plan if not defined herein. The parties agree to the terms of the Option set forth herein. The Grantee acknowledges receipt of a copy of the Terms, the Plan and the Prospectus for the Plan.
| “GRANTEE” | ▇▇▇.▇▇▇▇▇▇▇▇ CORPORATION | |||||
| a Delaware corporation | ||||||
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| Signature | By: |
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| Print Name: |
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| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ |
Title: |
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| Print Name | ||||||
CONSENT OF SPOUSE
In consideration of the Corporation’s execution of this Option Agreement, the undersigned spouse of the Grantee agrees to be bound by all of the terms and provisions hereof and of the Plan.
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| Signature of Spouse | Date |
| 1 |
Subject to adjustment under Section 7.1 of the Plan. |
| 2 |
Subject to early termination under Section 4 of the Terms and Section 7.4 of the Plan. |
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTION
| 1. | Vesting; Limits on Exercise; Incentive Stock Option Status. |
The Option shall vest and become exercisable in percentage installments of the aggregate number of shares subject to the Option as set forth on the cover page of this Option Agreement. The Option may be exercised only to the extent the Option is vested and exercisable.
| • | Cumulative Exercisability. To the extent that the Option is vested and exercisable, the Grantee has the right to exercise the Option (to the extent not previously exercised), and such right shall continue, until the expiration or earlier termination of the Option. |
| • | No Fractional Shares. Fractional share interests shall be disregarded, but may be cumulated. |
| • |
Minimum Exercise. No fewer than 1001 shares of Common Stock may be purchased at any one time, unless the number purchased is the total number at the time exercisable under the Option. |
| • | Nonqualified Stock Option. The Option is a nonqualified stock option and is not, and shall not be, an incentive stock option within the meaning of Section 422 of the Code. |
| 2. | Continuance of Employment/Service Required; No Employment/Service Commitment. |
The vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the Option and the rights and benefits under this Option Agreement. Employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 4 below or under the Plan.
Nothing contained in this Option Agreement or the Plan constitutes a continued employment or service commitment by the Corporation or any of its Subsidiaries, affects the Grantee’s status, if he or she is an employee, as an employee at will who is subject to termination without cause, confers upon the Grantee any right to remain employed by or in service to the Corporation or any Subsidiary, interferes in any way with the right of the Corporation or any Subsidiary at any time to terminate such employment or service, or affects the right of the Corporation or any Subsidiary to increase or decrease the Grantee’s other compensation.
| 3. | Method of Exercise of Option. |
The Option shall be exercisable by delivery to the CFO of the Corporation (or such other person as the Administrator may require pursuant to such administrative exercise procedures as the Administrator may implement from time to time) of a written notice stating the number of shares of Common Stock to be purchased pursuant to the Option or by the completion of such other administrative exercise procedures as the Administrator may require from time to time.
With respect to the foregoing, the Option shall be exercisable by:
| • | payment in full for the Exercise Price of the shares to be purchased in cash, check or by electronic funds transfer to the Corporation, or (subject to compliance with all applicable laws, rules, regulations and listing requirements and further subject to such rules as the Administrator may adopt as to any non-cash payment) in shares of Common Stock already owned by the Grantee, valued at their fair market value on the exercise date, provided, however, that any shares initially acquired upon exercise of a stock option or otherwise from the Corporation must have been owned by the Grantee for at least six (6) months before the date of such exercise; |
| • | any written statements or agreements required pursuant to Section 8.1 of the Plan; and |
| • | satisfaction of the tax withholding provisions of Section 8.5 of the Plan. |
The Administrator also may, but is not required to, authorize a non-cash payment alternative by notice and third party payment in such manner as may be authorized by the Administrator.
| 4. | Early Termination of Option. |
4.1 Possible Termination of Option upon Change in Control. The Option is subject to termination in connection with a Change in Control Event or certain similar reorganization events as provided in Section 7.4 of the Plan.
4.2 Termination of Option upon a Termination of Grantee’s Employment or Services. Subject to earlier termination on the Expiration Date of the Option or pursuant to Section 4.1 above or Section 5.3 of Grantee’s Employment Agreement dated herewith (the “Employment Agreement”), if the Grantee ceases to be employed by or ceases to provide services to the Corporation or a Subsidiary, the following rules shall apply (the last day that the Grantee is employed by or provides services to the Corporation or a Subsidiary is referred to as the Grantee’s “Severance Date”):
| • | other than as expressly provided below in this Section 4.2, (a) the Grantee will have until the date that is 3 months after his or her Severance Date to exercise the Option (or portion thereof) to the extent that it was vested on the Severance Date, (b) the Option, to the extent not vested on the Severance Date, shall terminate on the Severance Date, and (c) the Option, to the extent exercisable for the 3-month period following the Severance Date and not exercised during such period, shall terminate at the close of business on the last day of the 3-month period; |
| • | if the termination of the Grantee’s employment or services is the result of the Grantee’s death or Total Disability (as defined below), (a) the Grantee (or his beneficiary or personal representative, as the case may be) will have until the date that is 12 months after the Grantee’s Severance Date to exercise the Option, (b) the Option, to the extent not vested on the Severance Date, shall terminate on the Severance Date, and (c) the Option, to the extent exercisable for the 12-month period |
| following the Severance Date and not exercised during such period, shall terminate at the close of business on the last day of the 12-month period; |
| • | if the Grantee’s employment or services are terminated by the Corporation without Cause (as defined in Section 5.5 of the Employment Agreement) or by Grantee for Good Reason (as defined in Section 5.5 of the Employment Agreement) within 24 months of the occurrence of a Change in Control (as defined in Section 5.5 of the Employment Agreement) then the vesting of the Option will accelerate in accordance with the terms of Section 5.3 of the Employment Agreement. |
For purposes of the Option, “Total Disability” is as defined in Section 5.5 of the Employment Agreement.
In all events the Option is subject to earlier termination on the Expiration Date of the Option or as contemplated by Section 4.1. The Administrator shall be the sole judge of whether the Grantee continues to render employment or services for purposes of this Option Agreement.
| 5. | Non-Transferability. |
The Option and any other rights of the Grantee under this Option Agreement or the Plan are nontransferable and exercisable only by the Grantee, except as set forth in Section 5.7 of the Plan.
| 6. | Notices. |
Any notice to be given under the terms of this Option Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Grantee at the address last reflected on the Corporation’s payroll records, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall be delivered in person or shall be enclosed in a properly sealed envelope addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government. Any such notice shall be given only when received, but if the Grantee is no longer employed by the Corporation or a Subsidiary, shall be deemed to have been duly given five business days after the date mailed in accordance with the foregoing provisions of this Section 6.
| 7. | Plan. |
The Option and all rights of the Grantee under this Option Agreement are subject to the terms and conditions of the Plan, incorporated herein by this reference. The Grantee agrees to be bound by the terms of the Plan and this Option Agreement (including these Terms). The Grantee acknowledges having read and understanding the Plan, the Prospectus for the Plan, and this Option Agreement. Unless otherwise expressly provided in other sections of this Option Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not and shall not be deemed to create any rights in the Grantee unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.
| 8. | Entire Agreement. |
This Option Agreement (including these Terms), the Plan and the Employment Agreement together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. In the event of a conflict between the terms of the Plan, the Option Agreement and the Employment Agreement, the Plan shall be controlling and the Employment Agreement shall govern over any conflict with this Option Agreement. The Plan and this Option Agreement may be amended pursuant to Section 8.6 of the Plan. Such amendment must be in writing and signed by the Corporation. The Corporation may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.
| 9. | Governing Law. |
This Option Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.
| 10. | Effect of this Agreement. |
Subject to the Corporation’s right to terminate the Option pursuant to Section 7.4 of the Plan, this Option Agreement shall be assumed by, be binding upon and inure to the benefit of any successor or successors to the Corporation.
| 11. | Counterparts. |
This Option Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
| 12. | Section Headings. |
The section headings of this Option Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.
EXHIBIT B – FORM OF STOCK UNIT AWARD AGREEMENT
[Attached hereto.]
EXHIBIT B
▇▇▇.▇▇▇▇▇▇▇▇ CORPORATION
2006 PERFORMANCE INCENTIVE PLAN
STOCK UNIT AWARD AGREEMENT
THIS STOCK UNIT AWARD AGREEMENT (this “Agreement”) is dated as of by and between ▇▇▇.▇▇▇▇▇▇▇▇ Corporation, a Delaware corporation (the “Corporation”), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the “Participant”).
W I T N E S S E T H
WHEREAS, pursuant to the ▇▇▇.▇▇▇▇▇▇▇▇ Corporation 2006 Performance Incentive Plan (the “Plan”), the Corporation has granted to the Participant effective as of the date hereof (the “Award Date”), a credit of stock units under the Plan (the “Stock Unit Award” or “Award”), upon the terms and conditions set forth herein and in the Plan.
NOW THEREFORE, in consideration of services rendered and to be rendered by the Participant, and the mutual promises made herein and the mutual benefits to be derived therefrom, the parties agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meaning assigned to such terms in the Plan.
2. Grant. Subject to the terms of this Agreement, the Corporation hereby grants to the Participant a Stock Unit Award with respect to an aggregate of 50,000 stock units (subject to adjustment as provided in Section 7.1 of the Plan) (the “Stock Units”). As used herein, the term “stock unit” shall mean a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Corporation’s Common Stock (subject to adjustment as provided in Section 7.1 of the Plan) solely for purposes of the Plan and this Agreement. The Stock Units shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Stock Units vest pursuant to Section 3. The Stock Units shall not be treated as property or as a trust fund of any kind.
3. Vesting. Subject to Section 8 and Section 9 below, the Award shall vest and become nonforfeitable with respect to one-fourth of the total number of Stock Units (subject to adjustment under Section 7.1 of the Plan) on each of the first, second, third and fourth anniversaries of the Award Date.
4. Continuance of Employment. The vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the Award and the rights and benefits under this Agreement. Employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 8(a) below or under the Plan.
Nothing contained in this Agreement or the Plan constitutes an employment or service commitment by the Corporation, affects the Participant’s status as an employee at will who is
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subject to termination without cause, confers upon the Participant any right to remain employed by or in service to the Corporation or any Subsidiary, interferes in any way with the right of the Corporation or any Subsidiary at any time to terminate such employment or services, or affects the right of the Corporation or any Subsidiary to increase or decrease the Participant’s other compensation or benefits. Nothing in this paragraph, however, is intended to adversely affect any independent contractual right of the Participant without his consent thereto.
5. Dividend and Voting Rights.
(a) Limitations on Rights Associated with Units. The Participant shall have no rights as a stockholder of the Corporation, no dividend rights (except as expressly provided in Section 5(b) with respect to Dividend Equivalent Rights) and no voting rights, with respect to the Stock Units and any shares of Common Stock underlying or issuable in respect of such Stock Units until such shares of Common Stock are actually issued to and held of record by the Participant. No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the stock certificate.
(b) Dividend Equivalent Rights Distributions. In the event that the Corporation pays an ordinary cash dividend on its Common Stock and the related dividend payment record date occurs at any time after the Award Date and before all of the Stock Units subject to the Award have either been paid pursuant to Section 7 or terminated pursuant to Section 8(a), the Corporation shall credit the Participant as of such record date with an additional number of Stock Units equal to (i) the per-share cash dividend paid by the Corporation on its Common Stock with respect to such record date, multiplied by (ii) the total number of outstanding and unpaid Stock Units (including any dividend equivalents previously credited hereunder) (with such total number adjusted pursuant to Section 7.1 of the Plan and/or Section 9 hereof) subject to the Award as of such record date, divided by (iii) the fair market value of a share of Common Stock (as determined under the Plan) on such record date. Any Stock Units credited pursuant to the foregoing provisions of this Section 5(b) shall be subject to the same vesting, payment and other terms, conditions and restrictions as the original Stock Units to which they relate. No crediting of Stock Units shall be made pursuant to this Section 5(b) with respect to any Stock Units which, as of such record date, have either been paid pursuant to Section 7 or terminated pursuant to Section 8(a).
6. Restrictions on Transfer. Neither the Stock Unit Award, nor any interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Corporation, or (b) transfers by will or the laws of descent and distribution.
7. Timing and Manner of Payment of Stock Units. On or as soon as administratively practical following each vesting of the applicable portion of the total Award pursuant to Section 3, Section 8 or Section 9, the Corporation shall deliver to the Participant a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion) equal to the number of Stock Units subject to this Award that vest on the applicable vesting date, unless such Stock Units terminate prior to the given vesting date pursuant to Section 8(a). The Corporation’s
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obligation to deliver shares of Common Stock or otherwise make payment with respect to vested Stock Units is subject to the condition precedent that the Participant or other person entitled under the Plan to receive any shares with respect to the vested Stock Units deliver to the Corporation any representations or other documents or assurances required pursuant to Section 8.1 of the Plan. The Participant shall have no further rights with respect to any Stock Units that are paid or that terminate pursuant to Section 8(a).
8. Effect of Termination of Employment or Change in Control Event.
(a) Termination of Employment. Subject to Section 8(b) below, the Participant’s Stock Units shall terminate to the extent such units have not become vested prior to the first date the Participant is no longer employed by the Corporation or one of its Subsidiaries, regardless of the reason for the termination of the Participant’s employment with the Corporation or a Subsidiary, whether with or without cause, voluntarily or involuntarily. If any unvested Stock Units are terminated hereunder, such Stock Units shall automatically terminate and be cancelled as of the applicable termination date without payment of any consideration by the Corporation and without any other action by the Participant, or the Participant’s beneficiary or personal representative, as the case may be.
(b) Change in Control Event. If Participant’s employment or services are terminated by the Corporation without Cause (as defined in Section 5.5 of Participant’s Employment Agreement of even date herewith (the “Employment Agreement”)), or by Participant for Good Reason (as defined in Section 5.5 of the Employment Agreement) within 24 months of the occurrence of a Change in Control (as defined in Section 5.5 of the Employment Agreement) then the vesting of the award shall accelerate in accordance with the terms of Section 5.3 of the Employment Agreement.
9. Adjustments Upon Specified Events. The Administrator may accelerate payment and vesting of the Stock Units in such circumstances as it, in its sole discretion, may determine. In addition, upon the occurrence of certain events relating to the Corporation’s stock contemplated by Section 7.1 of the Plan (including, without limitation, an extraordinary cash dividend on such stock), the Administrator shall make adjustments in accordance with such section in the number of Stock Units then outstanding and the number and kind of securities that may be issued in respect of the Award. No such adjustment shall be made with respect to any ordinary cash dividend for which dividend equivalents are credited pursuant to Section 5(b).
10. Tax Withholding. Subject to Section 8.1 of the Plan, upon any distribution of shares of Common Stock in respect of the Stock Units, the Corporation shall automatically reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of whole shares, valued at their then fair market value (with the “fair market value” of such shares determined in accordance with the applicable provisions of the Plan), to satisfy any withholding obligations of the Corporation or its Subsidiaries with respect to such distribution of shares at the minimum applicable withholding rates. In the event that the Corporation cannot legally satisfy such withholding obligations by such reduction of shares, or in the event of a cash payment or any other withholding event in respect of the Stock Units, the Corporation (or a Subsidiary) shall be entitled to require a cash payment by or on behalf of the Participant and/or to deduct from other
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compensation payable to the Participant any sums required by federal, state or local tax law to be withheld with respect to such distribution or payment.
11. Notices. Any notice to be given under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Participant at the Participant’s last address reflected on the Corporation’s records, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall be given only when received, but if the Participant is no longer an employee of the Corporation, shall be deemed to have been duly given by the Corporation when enclosed in a properly sealed envelope addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government.
12. Plan. The Award and all rights of the Participant under this Agreement are subject to the terms and conditions of the provisions of the Plan, incorporated herein by reference. The Participant agrees to be bound by the terms of the Plan and this Agreement. The Participant acknowledges having read and understanding the Plan, the Prospectus for the Plan, and this Agreement. Unless otherwise expressly provided in other sections of this Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not (and shall not be deemed to) create any rights in the Participant unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.
13. Entire Agreement. This Agreement, the Plan and the Employment Agreement together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. In the event of a conflict between the terms of the Plan, the Option Agreement and the Employment Agreement, the Plan shall be controlling and the Employment Agreement shall govern over any conflict with this Option Agreement. The Plan and this Agreement may be amended pursuant to Section 8.6 of the Plan. Such amendment must be in writing and signed by the Corporation. The Corporation may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.
14. Limitation on Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Corporation as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Participant shall have only the rights of a general unsecured creditor of the Corporation with respect to amounts credited and benefits payable, if any, with respect to the Stock Units, and rights no greater than the right to receive the Common Stock as a general unsecured creditor with respect to Stock Units, as and when payable hereunder.
15. Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
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16. Section Headings. The section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.
17. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.
18. Construction. It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. The Agreement shall be construed and interpreted consistent with that intent.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed on its behalf by a duly authorized officer and the Participant has hereunto set his or her hand as of the date and year first above written.
| ▇▇▇.▇▇▇▇▇▇▇▇ CORPORATION, | PARTICIPANT | |||||
| a Delaware corporation | ||||||
| By: |
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| Print Name: |
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| Its: |
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||
| Print Name | ||||||
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CONSENT OF SPOUSE
In consideration of the execution of the foregoing Stock Unit Award Agreement by ▇▇▇.▇▇▇▇▇▇▇▇ Corporation, I, , the spouse of the Participant therein named, do hereby join with my spouse in executing the foregoing Stock Unit Award Agreement and do hereby agree to be bound by all of the terms and provisions thereof and of the Plan.
Dated: , 2006
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| Signature of Spouse |
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EXHIBIT C – FORM OF PERFORMANCE STOCK UNIT AWARD AGREEMENT
[Attached hereto.]
EXHIBIT C
▇▇▇.▇▇▇▇▇▇▇▇ CORPORATION
2006 PERFORMANCE INCENTIVE PLAN
PERFORMANCE STOCK UNIT AWARD AGREEMENT
THIS PERFORMANCE STOCK UNIT AWARD AGREEMENT (this “Agreement”) is dated as of by and between ▇▇▇.▇▇▇▇▇▇▇▇ Corporation, a Delaware corporation (the “Corporation”), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the “Participant”).
W I T N E S S E T H
WHEREAS, pursuant to the ▇▇▇.▇▇▇▇▇▇▇▇ Corporation 2006 Performance Incentive Plan (the “Plan”), the Corporation has granted to the Participant effective as of the date hereof (the “Award Date”), a credit of stock units under the Plan (the “PSUs”, “Stock Unit Award” or “Award”), upon the terms and conditions set forth herein and in the Plan.
NOW THEREFORE, in consideration of services rendered and to be rendered by the Participant, and the mutual promises made herein and the mutual benefits to be derived therefrom, the parties agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meaning assigned to such terms in the Plan.
2. Grant. Subject to the terms of this Agreement, the Corporation hereby grants to the Participant a Stock Unit Award with respect to an aggregate of 150,000 stock units (subject to adjustment as provided in Section 7.1 of the Plan) (the “Stock Units”). As used herein, the term “stock unit” shall mean a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Corporation’s Common Stock (subject to adjustment as provided in Section 7.1 of the Plan) solely for purposes of the Plan and this Agreement. The Stock Units shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Stock Units vest pursuant to Section 3. The Stock Units shall not be treated as property or as a trust fund of any kind.
3. Vesting. Subject to Section 8 and Section 9 below, the total number of Stock Units subject to the Award (subject to adjustment under Section 7.1 of the Plan) shall be eligible to vest and become nonforfeitable based on the Corporation’s performance during the 24 month period ending with the 2008 fiscal operating period (“Performance Period”). The Stock Units shall vest if and to the extent that the performance measures set forth on Exhibit A attached hereto and incorporated herein by reference are satisfied with respect to the Performance Period; provided, however, that any vesting of the Stock Units with respect to the Performance Period shall be contingent upon the Participant’s continued employment by the Corporation and its Subsidiaries through the Determination Date (as defined below) that follows such Performance Period. The vesting of the Stock Units shall be determined by the Compensation Committee of the Board of Directors of the Corporation (the “Committee”) within ten (10) business days following the issuance of audited financial statements for the Performance Period. (The date on which the Committee makes such determination is referred to herein as the “Determination
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Date.”) Any Stock Units that are eligible to vest with respect to the Performance Period and do not vest as of the Determination Date shall automatically terminate and be cancelled as of such Determination Date without payment of any consideration by the Corporation and without any other action by the Participant. Any such terminated Stock Units shall not thereafter be considered outstanding Stock Units for purposes of the Award, including (without limitation) for purposes of crediting dividend equivalents pursuant to Section 5(b) or acceleration of vesting pursuant to Section 8(b) or Section 9.
4. Continuance of Employment. The vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the Award and the rights and benefits under this Agreement. Employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 8(a) below or under the Plan.
Nothing contained in this Agreement or the Plan constitutes an employment or service commitment by the Corporation, affects the Participant’s status as an employee at will who is subject to termination without cause, confers upon the Participant any right to remain employed by or in service to the Corporation or any Subsidiary, interferes in any way with the right of the Corporation or any Subsidiary at any time to terminate such employment or services, or affects the right of the Corporation or any Subsidiary to increase or decrease the Participant’s other compensation or benefits. Nothing in this paragraph, however, is intended to adversely affect any independent contractual right of the Participant without his consent thereto.
5. Dividend and Voting Rights.
(a) Limitations on Rights Associated with Units. The Participant shall have no rights as a stockholder of the Corporation, no dividend rights (except as expressly provided in Section 5(b) with respect to Dividend Equivalent Rights) and no voting rights, with respect to the Stock Units and any shares of Common Stock underlying or issuable in respect of such Stock Units until such shares of Common Stock are actually issued to and held of record by the Participant. No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the stock certificate.
(b) Dividend Equivalent Rights Distributions. In the event that the Corporation pays an ordinary cash dividend on its Common Stock and the related dividend payment record date occurs at any time after the Award Date and before all of the Stock Units subject to the Award have either been paid pursuant to Section 7 or terminated pursuant to Section 3 or Section 8(a), the Corporation shall credit the Participant as of such record date with an additional number of Stock Units equal to (i) the per-share cash dividend paid by the Corporation on its Common Stock with respect to such record date, multiplied by (ii) the total number of outstanding and unpaid Stock Units (including any dividend equivalents previously credited hereunder) (with such total number adjusted pursuant to Section 7.1 of the Plan and/or Section 9 hereof) subject to the Award as of such record date, divided by (iii) the fair market value of a share of Common Stock (as determined under the Plan) on such record date. Any Stock Units credited pursuant to the foregoing provisions of this Section 5(b) shall be subject to
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the same vesting, payment and other terms, conditions and restrictions as the original Stock Units to which they relate. No crediting of Stock Units shall be made pursuant to this Section 5(b) with respect to any Stock Units which, as of such record date, have either been paid pursuant to Section 7 or terminated pursuant to Section 3 or Section 8(a).
6. Restrictions on Transfer. Neither the Stock Unit Award, nor any interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Corporation, or (b) transfers by will or the laws of descent and distribution.
7. Timing and Manner of Payment of Stock Units. On or as soon as administratively practical following the vesting of the applicable portion of the total Award pursuant to Section 3, Section 8 or Section 9, the Corporation shall deliver to the Participant a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion) equal to the number of Stock Units subject to this Award that vest on the vesting date, unless such Stock Units terminate prior to the given vesting date pursuant to Section 8(a). The Corporation’s obligation to deliver shares of Common Stock or otherwise make payment with respect to vested Stock Units is subject to the condition precedent that the Participant or other person entitled under the Plan to receive any shares with respect to the vested Stock Units deliver to the Corporation any representations or other documents or assurances required pursuant to Section 8.1 of the Plan. The Participant shall have no further rights with respect to any Stock Units that are paid or that terminate pursuant to Section 3 or Section 8(a).
8. Effect of Termination of Employment or Change in Control Event.
(a) Termination of Employment. Subject to Section 8(b) below, the Participant’s Stock Units shall terminate to the extent such units have not become vested prior to the first date the Participant is no longer employed by the Corporation or one of its Subsidiaries, regardless of the reason for the termination of the Participant’s employment with the Corporation or a Subsidiary, whether with or without cause, voluntarily or involuntarily. If any unvested Stock Units are terminated hereunder, such Stock Units shall automatically terminate and be cancelled as of the applicable termination date without payment of any consideration by the Corporation and without any other action by the Participant, or the Participant’s beneficiary or personal representative, as the case may be.
(b) Change in Control Event. If Participant’s employment or services are terminated by the Corporation without Cause (as defined in Section 5.5 of Participant’s Employment Agreement of even date herewith (the “Employment Agreement”), or by Participant for Good Reason (as defined in Section 5.5 of the Employment Agreement) within 24 months of the occurrence of a Change in Control (as defined in Section 5.5 of the Employment Agreement) then the vesting of the award shall accelerate in accordance with the terms of Section 5.3 of the Employment Agreement.
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9. Adjustments Upon Specified Events. The Administrator may accelerate payment and vesting of the Stock Units in such circumstances as it, in its sole discretion, may determine. In addition, upon the occurrence of certain events relating to the Corporation’s stock contemplated by Section 7.1 of the Plan (including, without limitation, an extraordinary cash dividend on such stock), the Administrator shall make adjustments in accordance with such section in the number of Stock Units then outstanding and the number and kind of securities that may be issued in respect of the Award. No such adjustment shall be made with respect to any ordinary cash dividend for which dividend equivalents are credited pursuant to Section 5(b). Furthermore, the Administrator shall adjust the performance measures set forth on Exhibit A hereto to the extent (if any) it determines that the adjustment is necessary or advisable to preserve the intended incentives and benefits to reflect (1) any material change in corporate capitalization, any material corporate transaction (such as a reorganization, combination, separation, merger, acquisition, or any combination of the foregoing), or any complete or partial liquidation of the Corporation, (2) any change in accounting policies or practices, (3) the effects of any special charges to the Corporation’s earnings, or (4) any other similar special circumstances.
10. Tax Withholding. Subject to Section 8.1 of the Plan, upon any distribution of shares of Common Stock in respect of the Stock Units, the Corporation shall automatically reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of whole shares, valued at their then fair market value (with the “fair market value” of such shares determined in accordance with the applicable provisions of the Plan), to satisfy any withholding obligations of the Corporation or its Subsidiaries with respect to such distribution of shares at the minimum applicable withholding rates. In the event that the Corporation cannot legally satisfy such withholding obligations by such reduction of shares, or in the event of a cash payment or any other withholding event in respect of the Stock Units, the Corporation (or a Subsidiary) shall be entitled to require a cash payment by or on behalf of the Participant and/or to deduct from other compensation payable to the Participant any sums required by federal, state or local tax law to be withheld with respect to such distribution or payment.
11. Notices. Any notice to be given under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Participant at the Participant’s last address reflected on the Corporation’s records, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall be given only when received, but if the Participant is no longer an employee of the Corporation, shall be deemed to have been duly given by the Corporation when enclosed in a properly sealed envelope addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government.
12. Plan. The Award and all rights of the Participant under this Agreement are subject to the terms and conditions of the provisions of the Plan, incorporated herein by reference. The Participant agrees to be bound by the terms of the Plan and this Agreement. The Participant acknowledges having read and understanding the Plan, the Prospectus for the Plan, and this Agreement. Unless otherwise expressly provided in other sections of this Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not (and shall not be deemed to) create any rights in the Participant unless such rights are expressly set forth
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herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.
13. Entire Agreement. This Agreement, the Plan and the Employment Agreement together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. In the event of a conflict between the terms of the Plan, the Option Agreement and the Employment Agreement, the Plan shall be controlling and the Employment Agreement shall govern over any conflict with this Option Agreement. The Plan and this Agreement may be amended pursuant to Section 8.6 of the Plan. Such amendment must be in writing and signed by the Corporation. The Corporation may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.
14. Limitation on Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Corporation as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Participant shall have only the rights of a general unsecured creditor of the Corporation with respect to amounts credited and benefits payable, if any, with respect to the Stock Units, and rights no greater than the right to receive the Common Stock as a general unsecured creditor with respect to Stock Units, as and when payable hereunder.
15. Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
16. Section Headings. The section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.
17. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.
18. Construction. It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. The Agreement shall be construed and interpreted consistent with that intent.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed on its behalf by a duly authorized officer and the Participant has hereunto set his or her hand as of the date and year first above written.
| ▇▇▇.▇▇▇▇▇▇▇▇ CORPORATION, | PARTICIPANT | |||||
| a Delaware corporation | ||||||
| By: |
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| Signature | ||||||
| Print Name: |
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| Its: |
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||
| Print Name | ||||||
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CONSENT OF SPOUSE
In consideration of the execution of the foregoing Stock Unit Award Agreement by ▇▇▇.▇▇▇▇▇▇▇▇ Corporation, I, , the spouse of the Participant therein named, do hereby join with my spouse in executing the foregoing Stock Unit Award Agreement and do hereby agree to be bound by all of the terms and provisions thereof and of the Plan.
Dated: , 2006
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| Signature of Spouse |
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| Print Name |
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EXHIBIT D – TAX GROSS-UP PROVISIONS
1.1 Gross-Up Payment. In the event it is determined (pursuant to Section 1.2) or finally determined (as defined in Section 1.3(c)) that any payment, distribution, transfer, or benefit by MSC, or a direct or indirect subsidiary or affiliate of MSC, to or for the benefit of ▇▇▇▇▇▇ or ▇▇▇▇▇▇’▇ dependents, heirs or beneficiaries (whether such payment, distribution, transfer, benefit or other event occurs pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Exhibit D) (each a “Payment” and collectively the “Payments”) is subject to the excise tax imposed by Section 4999 of the Code, and any successor provision or any comparable provision of state or local income tax law (collectively, “Section 4999”), or any interest, penalty or addition to tax is incurred by ▇▇▇▇▇▇ with respect to such excise tax (such excise tax, together with any such interest, penalty, and addition to tax, hereinafter collectively referred to as the “Excise Tax”), then, within 10 days after such determination or final determination, as the case may be (and in all cases not later than the end of ▇▇▇▇▇▇’▇ taxable year next following the year in which ▇▇▇▇▇▇ remits the related taxes), MSC shall pay to ▇▇▇▇▇▇ (or to the applicable taxing authority on ▇▇▇▇▇▇’▇ behalf) an additional cash payment (hereinafter referred to as the “Gross-Up Payment”) equal to an amount such that after payment by ▇▇▇▇▇▇ of all taxes, interest, penalties, additions to tax and costs imposed or incurred with respect to the Gross-Up Payment (including, without limitation, any income and excise taxes imposed upon the Gross-Up Payment), ▇▇▇▇▇▇ retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon such Payment or Payments. This provision is intended to put ▇▇▇▇▇▇ in the same position as ▇▇▇▇▇▇ would have been had no Excise Tax been imposed upon or incurred as a result of any Payment.
1.2 Determination of Gross-Up.
(a) Except as provided in Section 1.3, the determination that a Payment is subject to an Excise Tax shall be made in writing by the principal certified public accounting firm then retained by MSC to audit its annual financial statements (the “Accounting Firm”). Such determination shall include the amount of the Gross-Up Payment and detailed computations thereof, including any assumptions used in such computations. Any determination by the Accounting Firm will be binding on MSC and ▇▇▇▇▇▇.
(b) For purposes of determining the amount of the Gross-Up Payment, ▇▇▇▇▇▇ shall be deemed to pay Federal income taxes at the highest marginal rate of Federal individual income taxation in the calendar year in which the Gross-Up Payment is to be made. Such highest marginal rate shall take into account the loss of itemized deductions by ▇▇▇▇▇▇ and shall also include ▇▇▇▇▇▇’▇ share of the hospital insurance portion of FICA and state and local income taxes at the highest marginal rate of individual income taxation in the state and locality of ▇▇▇▇▇▇’▇ residence on the date that the Payment is made, net of the maximum reduction in Federal income taxes that could be obtained from the deduction of such state and local taxes.
1.3 Notification.
(a) ▇▇▇▇▇▇ shall notify MSC in writing of any claim by the Internal Revenue Service (or any successor thereof) or any state or local taxing authority (individually or collectively, the “Taxing Authority”) that, if successful, would require the payment by MSC of a Gross-Up Payment. Such notification shall be given as soon as practicable but no later than 30 days after ▇▇▇▇▇▇ receives written notice of such claim and shall apprise MSC of the nature of such claim and the date on which such claim is requested to be paid; provided, however, that failure by ▇▇▇▇▇▇ to give such notice within such 30-day period shall not result in a waiver or forfeiture of any of ▇▇▇▇▇▇’▇ rights under this Exhibit D except to the extent of actual damages suffered by MSC as a result of such failure. ▇▇▇▇▇▇ shall not pay such claim prior to the expiration of the 15-day period following the date on which ▇▇▇▇▇▇ gives such notice to MSC (or such shorter period ending on the date that any payment of taxes, interest, penalties or additions to tax with respect to such claim is due). If MSC notifies ▇▇▇▇▇▇ in writing prior to the expiration of such 15-day period (regardless of whether such claim was earlier paid as contemplated by the preceding parenthetical) that it desires to contest such claim, ▇▇▇▇▇▇ shall:
(1) give MSC any information reasonably requested by MSC relating to such claim;
(2) take such action in connection with contesting such claim as MSC shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney selected by MSC;
(3) cooperate with MSC in good faith in order effectively to contest such claim; and
(4) permit MSC to participate in any proceedings relating to such claim;
provided, however, that MSC shall bear and pay directly all attorneys fees, costs and expenses (including additional interest, penalties and additions to tax) incurred in connection with such contest and shall indemnify and hold ▇▇▇▇▇▇ harmless, on an after-tax basis, for all taxes (including, without limitation, income and excise taxes), interest, penalties and additions to tax imposed in relation to such claim and in relation to the payment of such costs and expenses or indemnification.
(b) Without limitation on the foregoing provisions of this Section 1.3, and to the extent its actions do not unreasonably interfere with or prejudice ▇▇▇▇▇▇’▇ disputes with the Taxing Authority as to other issues, MSC shall control all proceedings taken in connection with such contest and, in its reasonable discretion, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the Taxing Authority in respect of such claim and may, at its or in their sole option, either direct ▇▇▇▇▇▇ to pay the tax, interest or penalties claimed and ▇▇▇ for a refund or contest the claim in any permissible manner, and ▇▇▇▇▇▇ agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as MSC shall determine; provided, however, that if MSC directs ▇▇▇▇▇▇ to pay such claim and ▇▇▇ for a refund, MSC shall advance an amount equal to such payment to ▇▇▇▇▇▇, on an interest-free basis, and shall indemnify and hold ▇▇▇▇▇▇ harmless, on an after-tax basis, from all taxes (including, without limitation, income and excise taxes), interest, penalties and additions to tax imposed with respect
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to such advance or with respect to any imputed income with respect to such advance, as any such amounts are incurred; and, further, provided, that any extension of the statute of limitations relating to payment of taxes, interest, penalties or additions to tax for the taxable year of ▇▇▇▇▇▇ with respect to which such contested amount is claimed to be due is limited solely to such contested amount; and, provided, further, that any settlement of any claim shall be reasonably acceptable to ▇▇▇▇▇▇, and MSC’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder, and ▇▇▇▇▇▇ shall be entitled to settle or contest, as the case may be, any other issue.
(c) If, after receipt by ▇▇▇▇▇▇ of an amount advanced by MSC pursuant to Section 1.3(a), ▇▇▇▇▇▇ receives any refund with respect to such claim, ▇▇▇▇▇▇ shall (subject to MSC’s compliance with the requirements of this Exhibit D) promptly pay to MSC an amount equal to such refund (together with any interest paid or credited thereof after taxes applicable thereto), net of any taxes (including, without limitation, any income or excise taxes), interest, penalties or additions to tax and any other costs incurred by ▇▇▇▇▇▇ in connection with such advance, after giving effect to such repayment. If, after the receipt by ▇▇▇▇▇▇ of an amount advanced by MSC pursuant to Section 1.3(a), it is finally determined that ▇▇▇▇▇▇ is not entitled to any refund with respect to such claim, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall be treated as a Gross-Up Payment and shall offset, to the extent thereof, the amount of any Gross-Up Payment otherwise required to be paid.
(d) For purposes of this Exhibit D, whether the Excise Tax is applicable to a Payment shall be deemed to be “finally determined” upon the earliest of: (1) the expiration of the 15-day period referred to in Section 1.3(a) if MSC has not notified ▇▇▇▇▇▇ that it intends to contest the underlying claim, (2) the expiration of any period following which no right of appeal exists, (3) the date upon which a closing agreement or similar agreement with respect to the claim is executed by ▇▇▇▇▇▇ and the Taxing Authority (which agreement may be executed only in compliance with this section), or (4) the receipt by ▇▇▇▇▇▇ of notice from MSC that it no longer seeks to pursue a contest (which shall be deemed received if MSC does not, within 15 days following receipt of a written inquiry from ▇▇▇▇▇▇, affirmatively indicate in writing to ▇▇▇▇▇▇ that MSC intends to continue to pursue such contest).
(e) Any reimbursement of expenses pursuant to this Section 1.3 incurred due to a tax audit or litigation addressing the existence or amount of the tax liability shall be made promptly after ▇▇▇▇▇▇ incurs the expenses and in all cases not later than the end of ▇▇▇▇▇▇’▇ taxable year following ▇▇▇▇▇▇’▇ taxable year in which the related taxes are remitted to the taxing authority, or where as a result of such audit or litigation, no taxes are remitted, the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation. In addition, with respect to the reimbursement of any expenses pursuant to this Section 1.3 which are not incurred due to a tax audit or litigation addressing the existence or amount of tax liability, such expenses shall be paid to ▇▇▇▇▇▇ promptly after ▇▇▇▇▇▇ incurs the expenses and in all cases not later than the end of ▇▇▇▇▇▇’▇ taxable year following the taxable year in which ▇▇▇▇▇▇ incurs such expenses, and the amount of expenses eligible for reimbursement during ▇▇▇▇▇▇’▇ taxable year may not affect the amount of expenses eligible for reimbursement in any other taxable year.
1.4 Underpayment and Overpayment. It is possible that no Gross-Up Payment will initially be made but that a Gross-Up Payment should have been made, or that a Gross-Up
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Payment will initially be made in an amount that is less than what should have been made (either of such events is referred to as an “Underpayment”). It is also possible that a Gross-Up Payment will initially be made in an amount that is greater than what should have been made (an “Overpayment”). The determination of any Underpayment or Overpayment shall be made by the Accounting Firm in accordance with Section 1.2. In the event of an Underpayment, the amount of any such Underpayment shall be paid to ▇▇▇▇▇▇ as an additional Gross-Up Payment. In the event of an Overpayment, ▇▇▇▇▇▇ shall promptly pay to MSC the amount of such Overpayment together with interest on such amount at the applicable Federal rate provided for in Section 1274(d) of the Code for the period commencing on the date of the Overpayment to the date of such payment by ▇▇▇▇▇▇ to MSC. ▇▇▇▇▇▇ shall make such payment to MSC as soon as administratively practicable after MSC notifies ▇▇▇▇▇▇ of (a) the Accounting Firm’s determination that an Overpayment was made and (b) the amount to be repaid.
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EXHIBIT E
FORM OF RELEASE
EMPLOYMENT SEPARATION AND GENERAL RELEASE AGREEMENT
This Employment Separation and General Release Agreement (this “Separation Agreement”), is entered into this day of , by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual (“▇▇▇▇▇▇”), and ▇▇▇.▇▇▇▇▇▇▇▇ Corporation, a Delaware corporation (“MSC”).
WHEREAS, ▇▇▇▇▇▇ has been employed as the Chief Executive Officer and/or Chairman of MSC since February 9, 2005, and has entered into a new agreement on [ , 2008] regarding his ongoing employment in such capacity (“Employment Agreement”); and
WHEREAS, ▇▇▇▇▇▇ and MSC have mutually agree to terminate ▇▇▇▇▇▇’▇ employment relationship with MSC upon the terms set forth
NOW, THEREFORE, in consideration of the covenants undertaken and the releases contained in this Separation Agreement, ▇▇▇▇▇▇ and MSC agree as follows:
I. Termination. ▇▇▇▇▇▇’▇ position as an officer, director, employee, member, manager and in any other capacity with MSC and each of its affiliates is hereby terminated effective, 20 (“Separation Date”), and all benefits and perquisites of employment will cease as of the Separation Date. The Employment Agreement shall terminate as of the Separation Date, provided, however, that notwithstanding anything to the contrary in this Agreement, Sections 3.4, 5.3, 5.4, 5.5, and 7 through 28 of the Employment Agreement shall continue to apply in accordance with their terms. All payments due to ▇▇▇▇▇▇ from MSC shall be determined under the applicable provisions of the Employment Agreement and this Agreement. ▇▇▇▇▇▇ acknowledges and agrees that, upon receipt of all payments due to him on or before the Separation Date, he will have received all amounts owed for his regular and usual salary (including, but not limited to, any severance, overtime, bonus, commissions, or other wages), usual benefits and accrued but unused vacation through the Separation Date and that all payments due to ▇▇▇▇▇▇ from MSC after the Separation Date shall be determined under this Separation Agreement.
II. Severance Benefit. MSC shall pay as severance pay to ▇▇▇▇▇▇ the amount of dollars ($ ), less standard withholding and authorized deductions (the “Severance Benefit”), as determined under Section 5.3 of the Employment Agreement. Such severance shall be paid at the times provided in and subject to the terms and conditions of Section 5.3 of the Employment Agreement; provided, however, that if it is determined by the parties or in the opinion of counsel reasonably acceptable to ▇▇▇▇▇▇ and MSC, such determination to be made or opinion provided to MSC no later than thirty (30) days after the Separation Date, that the Severance Benefit is or reasonably may be treated as deferred compensation within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), except in the case of ▇▇▇▇▇▇’▇ death, the payment of such Severance Benefit shall be delayed (without interest) to a date no earlier than, and shall be paid as soon as administratively practicable after (and in all events no more
than thirty (30) days after), the date that is six months after ▇▇▇▇▇▇’▇ “separation from service,” as that term is defined in Section 409A. Such Severance Benefit is for and in lieu of any other payments or benefits (and, except as specifically provided herein, none shall accrue) for periods after the Separation Date, except with respect to his continuing rights in certain equity awards made pursuant to the Option Agreement, the Restricted Stock Unit Award Agreement and the PSU Award Agreement (as such terms are defined in the Employment Agreement) as acknowledged in Section VII.D hereof. ▇▇▇▇▇▇ specifically acknowledges and agrees that he is entitled to receive no severance pay or other benefits pursuant to any severance plan or policy of MSC or any of its affiliates.
III. Release. ▇▇▇▇▇▇ on behalf of himself, his descendants, dependents, heirs, executors, administrators, assigns, and successors, and each of them, hereby covenants not to ▇▇▇ and fully releases and discharges MSC and each of its parents, subsidiaries and affiliates, past and present (together, the “Company Group”), as well as its and their trustees, directors, officers, members, managers, partners, agents, attorneys, insurers, employees, stockholders, representatives, assigns, and successors, past and present, and each of them, hereinafter together and collectively referred to as the “Releasees,” with respect to and from any and all claims, wages, demands, rights, liens, agreements, contracts, covenants, actions, suits, causes of action, obligations, debts, costs, expenses, attorneys’ fees, damages, judgments, orders and liabilities of whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which he now owns or holds or he has at any time heretofore owned or held or may in the future hold as against any of said Releasees, arising out of or in any way related to his service as an officer, director, employee, member or manager of any member of the Company Group, his separation from his position as an officer, director, employee, manager and/or member, as applicable, of any member of the Company Group, or any other transactions, occurrences, acts or omissions or any loss, damage or injury whatever, known or unknown, suspected or unsuspected, resulting from any act or omission by or on the part of said Releasees, or any of them, committed or omitted prior to the date of this Separation Agreement related to ▇▇▇▇▇▇’▇ employment or service with any member of the Company Group, including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Family and Medical Leave Act of 1993, the California Fair Employment and Housing Act, the California Family Rights Act, or any claim for severance pay, bonus, sick leave, holiday pay, vacation pay, life insurance, health or medical insurance or any other fringe benefit, workers’ compensation or disability; provided that such release shall not apply to (1) any obligation created by or arising out of this Separation Agreement for which receipt or satisfaction has not been acknowledged, (2) any right to indemnification that ▇▇▇▇▇▇ may have pursuant to MSC’s Bylaws, its certificate of incorporation or under the Employment Agreement with respect to any loss, damages or expenses (including but not limited to attorneys’ fees) that ▇▇▇▇▇▇ may in the future incur with respect to his service as an employee, officer or director of MSC or any of its subsidiaries or affiliates, (3) with respect to any rights that ▇▇▇▇▇▇ may have to insurance coverage for such losses, damages or expenses under any MSC directors and officers liability insurance policy, (4) any right under a written equity-based award agreement entered into by and between MSC and ▇▇▇▇▇▇ before the Separation Date to the extent that such right continues after the Separation Date in accordance with the terms of the award, (5) the right of ▇▇▇▇▇▇ to obtain contribution as permitted by law in the event of an entry of judgment against ▇▇▇▇▇▇ as a result of any act or failure to act for which ▇▇▇▇▇▇ and MSC are jointly liable, (6) any rights to
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continued medical coverage that ▇▇▇▇▇▇ may have under COBRA, (7) any rights to payment of benefits that ▇▇▇▇▇▇ may have under a retirement plan sponsored or maintained by MSC that is intended to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended, and (8) any deferred compensation or supplemental retirement benefits that ▇▇▇▇▇▇ may be entitled to under a nonqualified deferred compensation or supplemental retirement plan of MSC.
IV. 1542 Waiver. It is the intention of ▇▇▇▇▇▇ in executing this instrument that the same shall be effective as a bar to each and every claim, demand and cause of action hereinabove specified. In furtherance of this intention, ▇▇▇▇▇▇ hereby expressly waives any and all rights and benefits conferred upon him by the provisions of SECTION 1542 OF THE CALIFORNIA CIVIL CODE and expressly consents that this Separation Agreement shall be given full force and effect according to each and all of its express terms and provisions, including those related to unknown and unsuspected claims, demands and causes of action, if any, as well as those relating to any other claims, demands and causes of action hereinabove specified. SECTION 1542 provides:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”
▇▇▇▇▇▇ acknowledges that he may hereafter discover claims or facts in addition to or different from those which ▇▇▇▇▇▇ now knows or believes to exist with respect to the subject matter of this Separation Agreement and which, if known or suspected at the time of executing this Separation Agreement, may have materially affected this settlement. Nevertheless, ▇▇▇▇▇▇ hereby waives any right, claim or cause of action that might arise as a result of such different or additional claims or facts. ▇▇▇▇▇▇ acknowledges that he understands the significance and consequences of such release and such specific waiver of SECTION 1542.
V. ADEA Waiver. ▇▇▇▇▇▇ expressly acknowledges and agrees that by entering into this Agreement, he is waiving any and all rights or claims that he may have arising under the Age Discrimination in Employment Act of 1967, as amended, which have arisen on or before the date of execution of this Separation Agreement. ▇▇▇▇▇▇ further expressly acknowledges and agrees that:
A. In return for this Separation Agreement, he will receive consideration beyond that which he was already entitled to receive before entering into this Separation Agreement;
B. He is hereby advised in writing by this Separation Agreement to consult with an attorney before signing this Separation Agreement;
C. He was given a copy of this Separation Agreement on , 20 and informed that he had twenty-one (21) days within which to consider this Separation Agreement; and
D. He was informed that he had seven (7) days following the date of execution of this Separation Agreement in which to revoke this Separation Agreement.
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VI. No Transferred Claims. ▇▇▇▇▇▇ warrants and represents that he has not heretofore assigned or transferred to any person not a party to this Separation Agreement any released matter or any part or portion thereof and he shall defend, indemnify and hold MSC and each of its affiliates harmless from and against any claim (including the payment of attorneys’ fees and costs actually incurred whether or not litigation is commenced) based on or in connection with or arising out of any such assignment or transfer made, purported or claimed.
VII. Miscellaneous
A. Successors.
This Separation Agreement is personal to ▇▇▇▇▇▇ and shall not, without the prior written consent of MSC, be assignable by ▇▇▇▇▇▇.
This Separation Agreement shall inure to the benefit of and be binding upon MSC and its respective successors and assigns and any such successor or assignee shall be deemed substituted for MSC under the terms of this Separation Agreement for all purposes. As used herein, “successor” and “assignee” shall include any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires the ownership of MSC or to which MSC assigns this Separation Agreement by operation of law or otherwise.
B. Waiver. No waiver of any breach of any term or provision of this Separation Agreement shall be construed to be, nor shall be, a waiver of any other breach of this Separation Agreement. No waiver shall be binding unless in writing and signed by the party waiving the breach.
C. Modification. This Separation Agreement may not be amended or modified other than by a written agreement executed by ▇▇▇▇▇▇ and the Chief Executive Officer of MSC or his designee, or if ▇▇▇▇▇▇ is then Chief Executive Officer, an officer authorized by the Board.
D. Complete Agreement. This Separation Agreement constitutes and contains the entire agreement and final understanding concerning ▇▇▇▇▇▇’▇ relationship with MSC and its affiliates and the other subject matters addressed herein between the parties, and supersedes and replaces all prior negotiations and all agreements proposed or otherwise, whether written or oral, concerning the subject matters. Any representation, promise or agreement not specifically included in this Separation Agreement or the Confidentiality Agreement shall not be binding upon or enforceable against either party. This Separation Agreement constitutes an integrated agreement. Notwithstanding the preceding provisions of this Section VII.D, MSC’s rights under the Employment Agreement (including, without limitation, the confidentiality and no solicitation provisions thereof), the Inventions Agreement by and between ▇▇▇▇▇▇ and MSC and entered into on or about February 10, 2005 (the “Inventions Agreement”), and any written equity-based award agreement entered into by and between MSC and ▇▇▇▇▇▇ before the Separation Date pursuant to which ▇▇▇▇▇▇ has rights that continue after the Separation Date in accordance with the terms of the award are each outside of the scope of the foregoing provisions of this Section VII.D and shall continue in effect in accordance with their terms.
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E. Severability. If any provision of this Separation Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of the Separation Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Separation Agreement are declared to be severable.
F. Choice of Law. This Separation Agreement shall be deemed to have been executed and delivered within the State of California, and the rights and obligations of the parties hereunder shall be construed and enforced in accordance with, and governed by, the laws of the State of California without regard to principles of conflict of laws.
G. Cooperation in Drafting. Each party has cooperated in the drafting and preparation of this Separation Agreement. Hence, in any construction to be made of this Separation Agreement, the same shall not be construed against any party on the basis that the party was the drafter.
H. Counterparts. This Separation Agreement may be executed in counterparts, and each counterpart, when executed, shall have the efficacy of a signed original. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.
I. Arbitration. Any controversy arising out of or relating to this Separation Agreement, the enforcement or interpretation of this Separation Agreement, or because of an alleged breach, default, or misrepresentation in connection with any of the provisions of this Separation Agreement, including (without limitation) any state or federal statutory claims, shall be submitted to final and binding arbitration, to be held in Orange County, California before a sole neutral arbitrator; provided, however, that provisional injunctive relief may, but need not, be sought in a court of law while arbitration proceedings are pending, and any provisional injunctive relief granted by such court shall remain effective until the matter is finally determined by the arbitrator. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. Judgment on the award may be entered in any court having jurisdiction.
The parties acknowledge and agree that they are hereby waiving any rights to trial by jury in any action, proceeding or counterclaim brought by either of the parties against the other in connection with any matter whatsoever arising out of or in any way connected with any of the matters referenced in the first sentence of the first paragraph of this Section VII.I. The parties agree that MSC shall be responsible for payment of the forum costs of any arbitration hereunder, including the Arbitrator’s fee. The parties further agree that in any proceeding with respect to such matters, each party will bear its own attorney’s fees and costs (other than forum costs associated with the arbitration which in any event shall be paid by MSC).
Without limiting the remedies available to the parties and notwithstanding the foregoing provisions of this Section VII.I, ▇▇▇▇▇▇ and MSC acknowledge that any breach of any of the covenants or provisions contained in this Separation Agreement could result in irreparable injury to either of the parties hereto for which there might be no adequate remedy at law, and that, in the event of such a breach or threat thereof, the non-breaching party shall be entitled to obtain a temporary restraining order and/or a preliminary injunction and a permanent injunction restraining the other party hereto from engaging in any activities prohibited by any covenant or
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provision in this Separation Agreement or such other equitable relief as may be required to enforce specifically any of the covenants or provisions of this Separation Agreement.
J. Advice of Counsel. In entering this Separation Agreement, the parties represent that they have relied upon the advice of their attorneys, who are attorneys of their own choice, and that the terms of this Separation Agreement have been completely read and explained to them by their attorneys, and that those terms are fully understood and voluntarily accepted by them.
K. Supplementary Documents. All parties agree to cooperate fully and to execute any and all supplementary documents and to take all additional actions that may be necessary or appropriate to give full force to the basic terms and intent of this Separation Agreement and which are not inconsistent with its terms.
L. Headings. The section headings contained in this Separation Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Separation Agreement.
M. Taxes. Other than MSC’s obligation to withhold taxes as required by law or regulation, ▇▇▇▇▇▇ shall be solely responsible for any taxes due as a result of the payment of the Severance Benefit and other benefits to be provided to ▇▇▇▇▇▇ pursuant to Section III. ▇▇▇▇▇▇ will defend and indemnify MSC and each of its affiliates from and against any tax liability that any of them may have with respect to any such payment and against any and all losses or liabilities, including defense costs, arising out of ▇▇▇▇▇▇’▇ failure to pay any taxes due with respect to any such payment. Notwithstanding the foregoing, in the event that ▇▇▇▇▇▇ is liable for excise tax under Section 4999 of the Code, MSC shall pay him the amounts required under Section 3.4 of the Employment Agreement.
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I have read the foregoing Separation Agreement and I accept and agree to the provisions it contains and hereby execute it voluntarily with full understanding of its consequences.
EXECUTED this day of 20 , at Orange County, California.
| “▇▇▇▇▇▇” |
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| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ |
EXECUTED this day of 20 , at Orange County, California.
| “MSC” | ||
| ▇▇▇.▇▇▇▇▇▇▇▇ Corporation, a Delaware corporation | ||
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ATTACHMENT A
ENDORSEMENT
I, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, hereby acknowledge that I was given 21 days to consider the foregoing Employment Separation and General Release Agreement and voluntarily chose to sign the Employment Separation and General Release Agreement prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the state of California, that the foregoing is true and correct.
EXECUTED this day of 20 , at Orange County, California.
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EXHIBIT F
▇▇▇.▇▇▇▇▇▇▇▇ CORPORATION
INVENTIONS AGREEMENT
THIS AGREEMENT (“Agreement”) is made by and between ▇▇▇.▇▇▇▇▇▇▇▇ CORPORATION (“Employer” or “Company”), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (“Employee”).
WHEREAS, the Company desires to protect its rights in any inventions developed by Employee in connection with his services at the Company, and
WHEREAS, the Company continues to devote substantial resources to improving the software developed by the Company and creating such inventions.
NOW, THEREFORE, in consideration of the mutual covenants of the parties, it is hereby agreed:
| 1. | DEFINITIONS. |
| (a) | “Company” – The Employer and any corporation or other business enterprise directly or indirectly controlling, controlled by or under control of ▇▇▇.▇▇▇▇▇▇▇▇ Corporation or otherwise related by equity ownership to (whether or not controlling, controlled by or under common control with) ▇▇▇.▇▇▇▇▇▇▇▇ Corporation from time to time, whether before or after the execution of this Agreement. |
| (b) | “Customer” – Customers, clients, licensors, licensees, agents, consultants, suppliers and contractors of the Company. |
| (c) | “Inventions” – All inventions, discoveries, research, ideas, improvements and other developments, including, but not limited to, computer programs and software, relating to the business or any actual or demonstrably anticipated research or development of the Company made or conceived by Employee in whole or in part during any period of employment with the Company, whether alone or with others, and whether or not patentable, registered under patent or copyright or reduced to practice. This Agreement and the definition of “Inventions” shall be construed in accordance with the provisions of Section 2870 of the California Labor Code (the text of which is attached hereto). Therefore, notwithstanding the foregoing, “Inventions” shall not include an invention: |
| (i) | for which no equipment, supplies, facility, resources, trade secrets or confidential information of the Company was used; and |
| (ii) | which was developed entirely on the Employee’s own time; and |
| (iii) | which at the time of conception or reduction to practice does not relate to the business of the Company or to the Company’s actual or demonstrably anticipated research or development; and |
| (iv) | which was not suggested by and did not result from any work performed by the Employee for the Company. |
| (d) | “Rights” – All patents, trademarks, service marks and copyrights, and all other rights pertaining to Confidential Information, Inventions, or both. |
| 2. | CONSIDERATION. This Agreement is entered into in consideration of Employee’s employment or continued employment, as the case may be, and the compensation received by Employee from the Company from time to time. |
| 3. | PURPOSE. The purpose of this Agreement is to protect the Company’s right to certain inventions by Employee, in order to assure the Company’s ability to continue its business and furnish employment to its employees and to preserve and protect the secrets of the Customers and others which are entrusted to the Company. |
| 4. | ASSIGNMENT OF INVENTIONS. |
| (a) | Employee acknowledges and agrees that the Company shall own all rights in and to the results and proceeds of his services under this Agreement, including anything which is, in whole or in part, created, developed and/or produced by him and which is suggested by him or related to his employment under this Agreement, the Confidential Information, and any Inventions. To the fullest extent permitted by law, all work product (including, without limitation, all Customer information, any Inventions and works of authorship) created by Employee during the term of his employment shall belong to the Company and shall, to the fullest extent possible, be considered a work made for hire for the Company. To the extent the Company does not own such work product as a work made for hire, Employee hereby assigns to Company all rights in such work product, including, but not limited to, all patent rights, copyrights, trade secret rights and any other intellectual or industrial property rights of any kind throughout the world. Such assignment by Employee to Company shall include, but not be limited to, all reproduction rights, distribution rights, public display rights, with no limitation on the use of such rights. |
| (b) | Employee shall disclose any Invention promptly in writing to Employee’s immediate supervisor at the Company, with a copy to the President of the Company to enable the Company to determine whether it constitutes an Invention which is subject to the rights granted to the Company by this Agreement regardless of whether Employee believes the Invention to be within the exclusion set forth in Section 1 (d) of this Agreement. The Company shall protect such disclosures to the same extent that it protects its own proprietary information. |
| (c) | Employee agrees to execute all documents reasonably requested by the Company to further evidence the foregoing assignment and to provide all reasonable |
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| assistance to the Company in perfecting or protecting the Company’s rights in such work product. |
| (d) | Employee agrees, upon request by the Company, to assist the Company or its nominee (at Company’s expense) in every reasonable way during and at any time after Employee’s employment to procure a patent or copyright registration for the Invention and defend the Company’s or its nominee’s title to any Inventions in any and all countries, which patents or copyrights shall be and remain the sole and exclusive property of the Company or its nominee. |
| (e) | If the Company is unable, after reasonable effort, to secure Employee’s signature on any document or documents needed to apply for or enforce any Rights, whether because of physical or mental incapacity or for any other reason whatsoever, Employee irrevocably designates and appoints the Company and its duly authorized officers and agents as Employee’s agents and attorneys-in-fact to act for and on Employee’s behalf and stead in the execution and filing of any such documents, applications and in furthering the application for and enforcement of Rights. |
| 5. | PRIOR INVENTIONS. It is understood that all inventions, if any, patented or unpatented, which Employee made prior to employment by the Company or employment by any corporation or business enterprise to which the Company is or becomes a successor are excluded from the scope of this Agreement. The Employee warrants that Employee has inserted in Schedule A attached hereto and made a part hereof a complete list of all prior inventions of Employee, if any, including numbers of all patents and patent applications, and in the case of unpatented inventions, a brief description of all such inventions which are not the property of a previous employer. Employee agrees that an invention(s) listed in Schedule A does not mean the Company waives any rights the Company may have to freely develop the same or similar items itself or rights the Company may have under this Agreement to any invention made or conceived by Employee as defined in this Agreement. Employee agrees that the Company has made no independent evaluation of Employee’s work to date and that the Company is unable to reach any determination as to the scope of Employee’s efforts regarding these inventions or the extent to which Employee may have rights in these inventions which would be enforceable. To the extent Employee feels he or she has rights in the inventions, the Company will rely on Employee to protect those rights in and not disclose to the Company or cause the Company to use information which is in fact proprietary to Employee and to which the Company has no rights under the Agreement. Employee further warrants that, if no items are on the list, Employee has had no such prior inventions. IF NO INVENTIONS, SO INDICATE BY YOUR INITIALS: /s/ WJW |
| 6. | EXTENSION OF OBLIGATIONS AND AGREEMENT TO PREVIOUS AND FUTURE EMPLOYMENT. The Employee understands that the provisions of this Agreement extend also to all previous and future period of Employee’s employment by the Company and all periods of employment with any other corporations or business enterprises to which the Company is or becomes a successor and this Agreement. |
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| 7. | OTHER OBLIGATIONS. Employee hereby acknowledges that the Company from time to time may have agreements with other persons or with the United States Government which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. Employee hereby agrees to be bound by all such obligations and restrictions and to take all actions necessary to discharge the obligations of the Company thereunder, including, if necessary, assignment of Rights to Inventions otherwise excluded under Paragraph l(c) above. |
| 8. | TERMINATION OF EMPLOYMENT. The terms and conditions of this Agreement shall continue to apply to Employee after termination of employment with the Company for whatever reason. |
| 9. | COMPANY’S NOTIFICATION TO NEW EMPLOYER. If Employee leaves the employ of the Company, Employee consents to the Company’s notification to any new employer of Employee’s rights and obligations under this Agreement. |
| 10. | MODIFICATION. This Agreement may only be modified or terminated by an instrument in writing, signed by the Employee and the Company. |
| 11. | NO WAIVER. No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this Agreement shall be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. |
| 12. | REMEDIES. Employee and Company acknowledge and stipulate that the covenants and agreements contained in this Agreement are of a special nature and that any breach, violation or evasion by the Employee of the terms of this Agreement will result in immediate and irreparable injury and harm to the Company, and will cause damage to the Company in amounts difficult to ascertain. Accordingly, the Company shall be entitled to the remedies of injunction and specific performance, or either of such remedies, without posting a bond as well as to all other legal or equitable remedies to which the Company may be entitled, including, without limitation, termination of the employment of Employee. |
| 13. | ENTIRE AGREEMENT. The Employee hereby acknowledges receipt of a signed counterpart of this Agreement and acknowledges that it is Employee’s entire Agreement with the Company with respect to the subject matter hereof, thereby superseding any previous oral or written understandings or agreements with the Company or any officer or representative of the Company. Nothing in this Agreement shall be deemed to the limit the right of the Company to terminate the employment of the Employee, with or without cause. |
| 14. | SEVERABILITY. In the event that any paragraph or provision of this Agreement shall be held to be illegal or unenforceable, such paragraph or provision shall be severed or otherwise modified as may best preserve the intention of the parties hereto, and the Agreement as so modified shall remain in full force and effect. If any provision, or part thereof, is held unenforceable because of the duration thereof or the area covered thereby, |
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the parties agree that the court making such determination shall have the power to reduce the duration and/or area of such provision, and/or delete specific words or phrases and in its modified or reduced form such provision shall then be enforceable.
| 15. | SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon Employee’s heirs, executors, administrators and other legal representatives, and is for the benefit of the Company, its successors and assigns. |
| 16. | GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California without regard to such state’s conflict of laws provisions. |
EMPLOYEE HAS READ ALL OF THIS AGREEMENT AND UNDERSTANDS IT COMPLETELY, AND BY EMPLOYEE’S SIGNATURE BELOW REPRESENTS THAT THIS AGREEMENT IS THE ONLY STATEMENT MADE BY OR ON BEHALF OF THE COMPANY UPON WHICH EMPLOYEE HAS RELIED IN SIGNING THIS AGREEMENT.
| Dated: February 10, 2005 | ||
| Employee: | ||
| /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
| Signature | ||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
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SCHEDULE A
EXISTING INVENTIONS AND IMPROVEMENTS
The following is a list of inventions or improvements relevant to the subject matter of Employment by the Company that have been made or conceived of or first reduced to practice by Employee, alone or jointly with others, before Employment by the Company:
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| Dated: February 10, 2005 | ||
| EMPLOYEE: | ||
| /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
| Signature | ||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |