EXECUTIVE EMPLOYMENT AGREEMENT STRASBAUGH AND RICHARD H. NANCE
Exhibit
10.5
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AND
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TABLE
OF CONTENTS
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Page
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1.
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General
Duties of Employer and Executive
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1
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2.
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Compensation
and Benefits
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2
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3.
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Preservation
of Business; Fiduciary Responsibility
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3
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4.
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Term
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3
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5.
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Termination
Other Than by Expiration of the Term
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3
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6.
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Effect
of Termination
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4
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7.
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Covenants
of Confidentiality, Nondisclosure and Noncompetition
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7
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8.
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Inventions
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8
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9.
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No
Violation
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9
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10.
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Return
of Employer’s Property
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9
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11.
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Injunctive
Relief
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9
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12.
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Dispute
Resolution
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9
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13.
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Miscellaneous
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10
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APPENDIX I
- Certain Definitions
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THIS
EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”),
is
made and entered into as of May 24, 2007 (the “Effective
Date”)
by and
between ▇▇▇▇▇▇▇▇▇▇, a California corporation (“Employer”),
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (“Executive”).
RECITALS
Employer
desires that the Executive enter into an employment relationship with Employer
in order to provide the necessary leadership and senior management skills that
are important to the success of Employer. Employer believes that obtaining
the
Executive’s services as an employee of Employer and the benefits of his business
experience are of material importance to Employer and Employer’s
stockholders.
NOW,
THEREFORE, in consideration of Executive’s employment by Employer and the mutual
promises and covenants contained herein, the receipt and sufficiency of which
is
hereby acknowledged, Employer and Executive intend by this Agreement to specify
the terms and conditions of Executive’s employment relationship with
Employer.
1. General
Duties of Employer and Executive.
1.1 Employer
agrees to employ Executive and Executive agrees to accept employment by Employer
and to serve Employer in an executive capacity upon the terms and conditions
set
forth herein. Employer hereby employs Executive as the Executive Vice President
and Chief Financial Officer of Employer as of the Effective Date, reporting
to
the Board of Directors of Employer (the “Board”).
Executive’s duties and responsibilities shall be those normally assumed by the
Executive Vice President and Chief Financial Officer of a publicly-owned company
similarly situated to Employer, as well as such other or additional duties,
as
may from time-to-time be assigned to Executive by the Board. Such other or
additional duties shall be consistent with the senior executive functions
referenced above. Executive shall be provided with an office and the
administrative support reasonably necessary to fulfill the responsibilities
assumed by Executive under this Agreement.
1.2 While
employed hereunder, Executive shall use his best efforts to obey the lawful
directions of the Board. Executive shall also use his best efforts to promote
the interests of Employer and to maintain and to promote the reputation of
Employer. While employed hereunder, Executive shall devote his full business
time, efforts, skills and attention to the affairs of Employer and faithfully
perform his duties and responsibilities hereunder.
1.3 While
this Agreement is in effect, Executive may from time to time engage in any
activities that do not compete directly with Employer, provided that such
activities do not interfere with his performance of his duties. Executive shall
be permitted to (i) invest his personal assets as a passive investor in such
form or manner as Executive may choose in his discretion, (ii) participate
in
various charitable efforts, and (iii) serve as a member of the Board of
Directors of other corporations which are not competitors of
Employer.
2. Compensation
and Benefits.
2.1 As
compensation for his services to Employer, Employer shall pay to Executive
an
annual base salary of $200,000 during the first 12-month period that this
Agreement is in effect, payable in equal semimonthly payments or in accordance
with the Employer’s regular payroll policy for salaried employees (the
“Salary”).
Thereafter, or earlier from time to time in the discretion of the Compensation
Committee of the Board, but not less frequently than annually, the Compensation
Committee shall perform a review of the Executive’s Salary based on Executive’s
performance of his duties and the Employer’s other compensation policies. The
Compensation Committee may, in its sole discretion, increase (but not decrease)
the Salary following such review.
2.2 In
addition, Executive shall be entitled to receive a cash bonus not to exceed
thirty-five percent (35%) of his base salary to be paid based upon performance
criteria to be established by the Board of Directors of Employer on an annual
basis (“Incentive
Bonus”).
2.3 Upon
Executive’s furnishing to Employer customary and reasonable documentary support
(such as receipts or paid bills) evidencing costs and expenses incurred by
him
in the performance of his services and duties hereunder (including, without
limitation, for gifts, travel and entertainment and cellular telephone expenses)
and containing sufficient information to establish the amount, date, place
and
essential character of the expenditure, Executive shall be reimbursed for such
costs and expenses in accordance with Employer’s normal expense reimbursement
policy.
2.4 As
long
as this Agreement is in effect, Executive shall be entitled to participate
in
the medical (including hospitalization), dental, life and disability insurance
plans, to the extent offered by Employer, and in amounts consistent with the
Employer’s policy, for other senior executive officers of Employer, with
premiums for all such insurance for Executive to be paid in accordance with
Employer’s policy.
2.5 Executive
shall have the right to participate in any additional compensation, benefit,
pension, stock option, stock purchase, 401(k) or other plan or arrangement
of
Employer now or hereafter existing for the benefit of other senior executive
officers of Employer. Executive’s participation in Employer’s stock option plan
shall be developed in relative proportion to Executive’s position with
Employer.
2.6 Executive
shall be entitled to vacation (but in no event less than three (3) weeks per
year), holiday and other paid or unpaid leaves of absence consistent with
Employer’s normal policies for other senior executive officers of Employer or as
otherwise approved by the Board. Executive shall be entitled to accrue vacation
time for one year. If he does not take the accrued vacation during the next
year, he shall be paid for the unused vacation at his Salary rate then in
effect.
2.7 On
the
Effective Date, Executive shall be issued options to purchase an aggregate
of
266,000 shares of Employer’s common stock pursuant to an Employer’s 2007 Share
Incentive Plan. The options will vest as follows: (i) options to purchase
88,666 shares shall vest on the first anniversary of the Effective Date;
(ii) options to purchase 88,666 shares will vest on the second anniversary
of the Effective Date; and (iii) 88,668 shares will vest on the third
anniversary of the Effective Date.
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3. Preservation
of Business; Fiduciary Responsibility.
Executive shall use his best efforts to preserve the business and organization
of Employer and to preserve the business relations of Employer. So long as
the
Executive is employed by Employer, Executive shall observe and fulfill proper
standards of fiduciary responsibility attendant upon his service and
office.
4. Term.
The
term of this Agreement shall commence on the Effective Date and shall end on
the
third (3rd)
anniversary of the Effective Date; provided,
however,
that
this Agreement shall automatically renew for successive one (1) year periods
unless, at least 90 days prior to the expiration of the initial term or any
renewal term, either party gives written notice to the other of his or its
intention not to renew.
5. Termination
Other Than by Expiration of the Term.
Employer or Executive may terminate Executive’s employment under this Agreement
at any time, but only on the following terms:
5.1 Either
Executive or Employer may terminate this Agreement in accordance with
Section 4.
5.2 Employer
may terminate Executive’s employment under this Agreement at any time for “Due
Cause” (as defined in Appendix I
attached
hereto and incorporated herein by this reference) upon the good faith
determination by the Board that Due Cause exists for the termination of the
employment relationship.
5.3 If
Executive is incapacitated by accident, sickness or otherwise so as to render
Executive mentally or physically incapable of performing the services required
under Section 1
of this
Agreement for a period of 180 consecutive days, and the incapacity is confirmed
by the written opinion of two practicing medical doctors licensed by and in
good
standing in the State of California (one selected by Employer and one by
Executive), upon the expiration of that period or at any time reasonably
thereafter, Employer may terminate Executive’s employment under this Agreement
upon giving Executive or his legal representative written notice at least 30
days prior to the termination date, subject to the provisions of Section 6.2.
Executive agrees, after written notice by the Board, to submit to examinations
by the practicing medical doctors. If the medical doctors do not agree as to
whether Executive is disabled, they shall promptly select a mutually acceptable
third practicing medical doctor to further evaluate Executive, whose conclusion
shall be rendered, in writing, within ten days of his or her selection. The
conclusion of the third practicing medical doctor shall be final and binding
on
Employer and Executive.
5.4 This
Agreement shall terminate immediately upon Executive’s death, subject to the
provisions of Section 6.2.
5.5 Subject
to the provisions of Section 6.3,
Employer may terminate Executive’s employment under this Agreement at any time
for any reason whatsoever, even without Due Cause, by giving a written notice
of
termination to Executive, in which case the employment relationship shall
terminate immediately upon the giving of the notice. If Employer terminates
the
employment of Executive other than (i) pursuant to Section 4,
(ii)
pursuant to Section 5.2
for Due
Cause, (iii) due to incapacity pursuant to Section 5.3
or due
to Executive’s death pursuant to Section 5.4,
or (iv)
Executive’s resignation (other than for Good Reason) or retirement, then the
action by Employer, unless consented to in writing by Executive, shall be deemed
to be a constructive termination by Employer of Executive’s employment (a
“Constructive
Termination”),
and,
in that event, Executive shall be entitled to receive the compensation set
forth
in Section 6.3.
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5.6 Executive
may terminate this Agreement at any time for “Good Reason” (as defined in
Appendix I
attached
hereto and incorporated herein by this reference) within 30 days after Executive
learns of the event or condition constituting “Good Reason” and, in that event,
shall be entitled to receive the compensation set forth in Section 6.3.
5.7 Executive
may terminate this Agreement at any time for any reason whatsoever, even without
Good Reason, upon giving Employer written notice at least 30 days prior to
the
termination date, and, in that event, Executive shall be entitled to receive
the
compensation set forth in Section 6.1.
6. Effect
of Termination.
6.1 If
the
employment relationship is terminated (a) by Employer or Executive upon 90
days’
written notice pursuant to Section 4,
(b) by
Employer for Due Cause pursuant to Section 5.2,
or (c)
by Executive pursuant to Section
5.7
or by
Executive breaching this Agreement by refusing to continue his employment and
failing to give the requisite 90 days’ written notice, all compensation and
benefits shall cease as of the date of termination, other than: (i) those
benefits that are provided by retirement and benefit plans and programs
specifically adopted and approved by Employer for Executive that are earned
and
vested by the date of termination; (ii) Executive’s pro rata annual Salary (as
in effect as of the date of termination, payable in the manner as prescribed
in
the first sentence of Section 2.1)
through
the date of termination; (iii) any restricted stock awards which have vested
as
of the date of termination pursuant to the terms of the agreement granting
the
awards; and (iv) accrued vacation as required by California law.
6.2 If
Executive’s employment relationship is terminated due to Executive’s incapacity
pursuant to Section 5.3
or due
to Executive’s death pursuant to Section 5.4,
Executive or Executive’s estate or legal representative, will be entitled to (i)
those benefits that are provided by retirement and benefits plans and programs
specifically adopted and approved by Employer for Executive that are earned
and
vested at the date of termination, a prorated Incentive Bonus for the fiscal
year in which incapacity or death occurs, and, even though no longer employed
by
Employer, Executive shall continue to receive the annual Salary compensation
(as
in effect as of the date of termination, payable in the manner as prescribed
in
the first sentence of Section 2.1)
for six
(6) months following the date of termination, offset, however, by any payments
received by Executive as a result of any disability insurance maintained by
Employer for Executive’s benefit.
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6.3 In
the
event of a termination of this Agreement by Executive for Good Reason or by
Employer pursuant to Section
5.5,
then
Employer shall:
(a) pay
to
Executive on the date of termination his Salary in effect as of the date of
termination through the end of the month during which the termination occurs
plus credit for any vacation earned but not taken;
(b) pay
to
Executive, as severance pay, six (6) months of Executive’s Salary in effect as
of the date of termination, with such amount payable in equal semimonthly
payments in accordance with the Employer’s regular payroll policy (including
standard payroll deductions and withholdings) for salaried employees, it being
understood that each payment made pursuant to this Section
6.3(b)
is
intended to be a separate payment (as defined in Treasury Regulations Section
1.409A-2(b)(2) from any other payments made pursuant to this Section 6.3(b)
for
purposes of the “short-term deferral rule” under Treasury Regulations Section
1.409-A-1(b)(4);
(c) pay
to
Executive the prorated Incentive Bonus for the fiscal year during which
termination occurs; and
(d) maintain,
at Employer’s expense, in full force and effect, for Executive’s continued
benefit, all medical and life insurance to which Executive was entitled
immediately prior to the date of termination (or at the election of Executive
in
the event of a Change in Control, immediately prior to the date of the Change
in
Control) until the earliest of (i) 12 months or (ii) the date or dates that
Executive’s continued participation in Employer’s medical and/or life insurance
plans, as applicable, is not possible under the terms of the plans (the earliest
of (i) and (ii) is referred to herein as the “Benefits
Date”).
If
Employer’s medical and/or life insurance plans do not allow Executive’s
continued participation in the plan or plans, then Employer will pay to
Executive, in monthly installments, from the date on which Executive’s
participation in the medical and/or life insurance, as applicable, is prohibited
until the date that is 12 months after the date of termination, the monthly
premium or premiums which had been payable by Employer with respect to Executive
for the discontinued medical and/or life insurance, as applicable.
6.4 If
the
Company determines that any of the severance benefit payments fail to satisfy
the distribution requirement of Section 409A(a)(2)(A) of the Code as a result
of
Section 409A(a)(2)(B)(i) of the Code, the payment of such benefit shall be
accelerated to the minimum extent necessary so that the benefit is not subject
to the provisions of Section 409A(a)(1) of the Code. (It is the intention of
the
preceding sentence to apply the short-term deferral provisions of Section 409A
of the Code, and the regulations and other guidance thereunder, to the severance
benefit payments, and the payment schedule as revised after the application
of
the preceding sentence shall be referred to as the “Revised
Payment Schedule.”)
However, if there is no Revised Payment Schedule that would avoid the
application of Section 409A(a)(1) of the Code, the payment of such benefits
shall not be paid pursuant to a Revised Payment Schedule and instead shall
be
delayed to the minimum extent necessary so that such benefits are not subject
to
the provisions of Section 409A(a)(1) of the Revenue Code. The Board may attach
conditions to or adjust the amounts paid pursuant to this Section 6.4
to
preserve, as closely as possible, the economic consequences that would have
applied in the absence of this Section 6.4;
provided,
however,
that no
such condition or adjustment shall result in the payments being subject to
Section 409A(a)(1) of the Code.
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6.5 Anything
in this Agreement to the contrary notwithstanding, if the Auditors (as defined
in Appendix I
attached
hereto and incorporated herein by this reference) determine that any payment
or
distribution by Employer to or for the benefit of Executive, whether paid or
payable (or distributed or distributable) pursuant to the terms of this
Agreement or otherwise (a “Payment”),
would
be nondeductible by Employer for federal income tax purposes because of the
application of Section 280G of the Code (as defined in Appendix I
attached
hereto and incorporated herein by this reference), or because of the application
of any federal or state income tax law enacted after the date hereof which
restricts or limits the deductibility of compensation paid to an Executive
(a
“Subsequent
Law”),
then
the aggregate present value of the amounts payable or distributable to or for
the benefit of Executive pursuant to this Agreement (the “Payments”)
shall
be reduced (but not below zero) to the Reduced Amount. For purposes of this
Section 6.5,
the
“Reduced
Amount”
shall
be an amount which maximizes the aggregate amount of Payments without causing
any Payment to be nondeductible by Employer because of the application of
Subsequent Law, or which maximizes the aggregate present value of Payments
without causing any Payment to be nondeductible by Employer because of the
application of Section 280G of the Code. For purposes of this Section 6.5,
present
value shall be determined in accordance with Section 280G(d)(4) of the Code
and Income Tax Regulations promulgated thereunder.
6.6 If
the
Auditors determine that any Payment would be nondeductible by Employer because
of the application of Section 280G of the Code, or because of the
application of Subsequent Law, then Employer shall promptly give notice to
that
effect and a copy of the detailed calculation thereof and of the Reduced Amount,
and Executive may then elect, in his sole discretion, which and how much of
the
Payments shall be eliminated or reduced (as long as after the election the
aggregate present value of the Payments equals the Reduced Amount) and shall
advise Employer in writing of his election within 20 days of his receipt of
notice. If no election is made by Executive within such 20 day period, then
Employer may elect which and how much of the Payments shall be eliminated or
reduced (as long as after the election the aggregate present value of Executive
Payments equals the Reduced Amount) and shall notify Executive promptly of
the
election. All determinations made by the Auditors under this Section 6.6
and
Section 6.5
shall be
binding upon Employer and Executive and shall be made within 60 days of
Executive’s termination of employment. As promptly as practicable following the
determination and the elections hereunder, Employer shall pay to or distribute
to or for the benefit of Executive the amounts then due to him under this
Agreement, as modified by Section 6.5
and this
Section 6.6,
and
shall promptly pay to or distribute for the benefit of Executive in the future
the amounts that become due to him under this Agreement.
6.7 If
the
Auditors determine that Payments have been made by Employer which should not
have been made (“Overpayments”)
or
that additional Payments which will not have been made by Employer could be
due
(“Underpayments”),
consistent in each case with the calculation of the Reduced Amount pursuant
to
Section 6.5,
then
the following actions are to be taken: If the Auditors, based upon the assertion
of a deficiency by the Internal Revenue Service against Employer or Executive
which the Auditors believe has a high probability of success, determine that
an
Overpayment has been made, the Overpayment shall be treated for all purposes
as
a loan to Executive which he shall repay to Employer, together with interest
at
the applicable federal rate provided for in Section 7872(f)(2)(A) of the
Code. If the Auditors, based upon controlling precedent, determine that an
Underpayment has occurred, the Underpayment shall promptly be paid by Employer
to or for the benefit of Executive, together with interest at the applicable
federal rate provided for in Section 7872(f)(2)(A) of the
Code.
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6.8 Executive
shall not be required to mitigate damages or the amount of any payment provided
for under this Agreement by seeking other employment or otherwise, nor shall
the
amount of any payment provided for under this Agreement be reduced by any
compensation earned by Executive as the result of employment by another Employer
after the date of termination, or otherwise.
6.9 Except
as
expressly provided herein, the provisions of this Agreement, and any payment
or
benefit provided for hereunder, shall not reduce any amounts otherwise payable,
or in any way diminish Executive’s existing rights, or rights which would accrue
solely as a result of the passage of time, under any Employer benefit plan,
employment agreement or other contract, plan or arrangement.
6.10 Except
as
may be required pursuant to Section 6.5,
the
amount of any payment provided under this Agreement shall not be reduced by
reason of any present value calculation.
6.11 Upon
termination of this Agreement, compensation and benefits shall be paid to the
Executive as set forth in the applicable subsection of this Section 6
and
restricted stock awards granted to Executive, if any, shall be governed by
the
provisions of all restricted stock award agreements between Employer and
Executive. In the event of a termination of this Agreement by Executive for
Good
Reason, all other rights and benefits Executive may have under the employee
and/or executive benefit plans and arrangements of Employer generally shall
be
determined in accordance with the terms and conditions of those plans and
arrangements.
7. Covenants
of Confidentiality, Nondisclosure and Noncompetition.
7.1 During
the term of this Agreement, Employer will provide to Executive certain
confidential and proprietary information owned by Employer as more fully
described below. Executive acknowledges that he occupies or will occupy a
position of trust and confidence with Employer, and that Employer would be
irreparably damaged if Executive were to breach the covenants set forth in
this
Section 7.1.
Accordingly, Executive agrees that he will not, without the prior written
consent of Employer, at any time during the term of this Agreement or any time
thereafter, except as may be required by competent legal authority or as
required by Employer to be disclosed in the course of performing Executive’s
duties under this Agreement for Employer, use or disclose to any person, firm
or
other legal entity, any confidential records, secrets or information obtained
by
Executive during his employment hereunder related to Employer or any parent,
subsidiary or affiliated person or entity (collectively, “Confidential
Information”).
Confidential Information shall include, without limitation, information about
Employer’s Inventions (as defined in Section 8.1),
customer lists and product pricing, data, know-how, formulae, processes, ideas,
past, current and planned product development, market studies, computer software
and programs, database and network technologies, strategic planning and risk
management. Executive acknowledges and agrees that all Confidential Information
of Employer and/or its affiliates will be received in confidence and as a
fiduciary of Employer. Executive will exercise utmost diligence to protect
and
guard the Confidential Information.
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7.2 Executive
agrees that he will not, without the express written consent of the Board,
take
with him upon the termination of this Agreement, any document or paper, or
any
photocopy or reproduction or duplication thereof, relating to any Confidential
Information.
7.3 For
purposes of this Section 7,
“Employer”
shall
include any of ▇▇▇▇▇▇▇▇▇▇’▇ direct or indirect subsidiaries.
8. Inventions.
8.1 Any
and
all inventions, product, discoveries, improvements, processes, formulae,
manufacturing methods or techniques, designs or styles, software applications
or
programs (collectively, “Inventions”)
made,
developed or created by Executive, alone or in conjunction with others, during
regular hours of work or otherwise, during the term of Executive’s employment
with Employer and for a period of two years thereafter that may be directly
or
indirectly related to the business of, or tests being carried out by, Employer,
or any of its subsidiaries, shall be promptly disclosed by Executive to Employer
and shall be Employer’s exclusive property. The following provisions of the
California Labor Code shall supplement this Section 8.1:
SECTION 2870
OF THE CALIFORNIA LABOR CODE
Application
of Provisions Providing that Employee Shall Assign or Offer to Assign Rights
in
Invention to Employer.
(a) Any
provision in an employment agreement which provides that an employee shall
assign, or offer to assign, any of his or her rights in an invention to his
or
her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using employer’s equipment, supplies,
facilities, or trade secret information except for those inventions that
either:
(1) Relate
at
the time of conception or reduction to practice of the invention to employer’s
business, or actual or demonstrably anticipated research or development of
employer, or
(2) Result
from any work performed by the employee for employer.
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(b) To
the
extent a provision in an employment agreement purports to require an employee
to
assign an invention otherwise excluded from being required to be assigned under
subdivision (a), the provision is against the public policy of this state and
is
unenforceable.
8.2 Executive
will, upon Employer’s request and without additional compensation, execute any
documents necessary or advisable in the opinion of Employer’s legal counsel to
direct the issuance of patents to Employer with respect to Inventions that
are
to be Employer’s exclusive property under this Section 8
or to
vest in Employer title to the Inventions; the expense of securing any patent,
however, shall be borne by Employer.
8.3 Executive
will hold for Employer’s sole benefit any Invention that is to be Employer’s
exclusive property under this Section 8
for
which no patent is issued.
9.
No
Violation.
Executive represents that he is not bound by any Agreement with any former
employer or other party that would be violated by Executive’s employment by
Employer.
10. Return
of Employer’s Property.
Upon
the termination of this Agreement or whenever requested by Employer, Executive
shall immediately deliver to Employer all property in his possession or under
his control belonging to Employer, in good condition, ordinary wear and tear
excepted.
11. Injunctive
Relief.
Executive acknowledges that the breach, or threatened breach, by Executive
of
the provisions of this Agreement shall cause irreparable harm to Employer,
which
harm cannot be fully redressed by the payment of damages to Employer.
Accordingly, Employer shall be entitled, in addition to any other right or
remedy it may have at law or in equity, to seek an injunction or restraining
Executive from any violation or threatened violation of this
Agreement.
12. Dispute
Resolution.
Subject
to Section 11,
all
claims, disputes and other matters in controversy (“dispute”)
arising, directly or indirectly out of or related to this Agreement, or the
breach thereof, whether contractual or noncontractual, and whether during the
term or after the termination of this Agreement, shall be resolved exclusively
according to the procedures set forth in this Section 12,
and not
through resort to any judicial proceedings.
12.1 Neither
party shall commence an arbitration proceeding pursuant to the provisions of
Section 12.2
unless
that party first gives a written notice (a “Dispute
Notice”)
to the
other party setting forth the nature of the dispute. The parties shall attempt
in good faith to resolve the dispute by mediation under the American Arbitration
Association Commercial Mediation Rules in effect on the date of the Dispute
Notice. If the parties cannot agree on the selection of a mediator within 20
days after delivery of the Dispute Notice, the mediator will be selected by
the
American Arbitration Association. If the dispute has not been resolved by
mediation within 60 days after delivery of the Dispute Notice, then the dispute
shall be determined by arbitration in accordance with the provisions
below.
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12.2 Any
dispute that is not settled by mediation as provided in Section 12.1
shall be
resolved by arbitration before a single arbitrator appointed by the American
Arbitration Association or its successor in San Luis Obispo, California. The
determination of the arbitrator shall be final and absolute. The arbitrator
shall be governed by the duly promulgated rules and regulations of the American
Arbitration Association or its successor then in effect, and the pertinent
provisions of the laws of the State of California relating to arbitration.
The
decision of the arbitrator may be entered as a final judgment in any court
of
the State of California or elsewhere. The prevailing party in any such
arbitration shall also be entitled to recover reasonable attorneys’,
accountants’ and experts’ fees and costs of suit in addition to any other relief
awarded the prevailing party.
13. Miscellaneous.
13.1 If
any
provisions contained in this Agreement is for any reason held to be totally
invalid or unenforceable, such provision will be fully severable, and in lieu
of
such invalid or unenforceable provision there will be added automatically as
part of this Agreement a provision as similar in terms as may be valid and
enforceable.
13.2 All
notices and other communications required or permitted hereunder or necessary
or
convenience in connection herewith shall be in writing and shall be deemed
to
have been given when mailed by registered mail or certified mail, return receipt
requested or hand delivered, as follows (provided that notice of change of
address shall be deemed given only when received):
If
to
Employer: ▇▇▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇
▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Compensation Committee
If
to
Executive: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or
to
such other names or addresses as Employer or Executive, as the case may be,
shall designate by notice to the other party hereto in the manner specified
in
this Section 13.2.
13.3 This
Agreement shall be binding upon and inure to the benefit of Employer, its
successors, legal representatives and assigns, and Executive, his heirs,
executors, administrators, representatives, legatees and permitted assigns.
Executive agrees that his rights and obligations hereunder are personal to
him
and may not be assigned without the express written consent of Employer. If
Executive should die while any amounts are due to him pursuant to this
Agreement, all such amounts shall be paid to Executive’s devisee, legatee or
other designee, or if there be no such designee, to Executive’s estate. Employer
will require any successor or assign (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of Employer, by Agreement in form and substance satisfactory
to
Executive and his legal counsel, expressly, absolutely and unconditionally
to
assume and agree to perform this Agreement in the same manner and to the same
extent that Employer would be required to perform each of them if no such
succession or assignment had taken place. Any failure of Employer to obtain
such
Agreement prior to the effectiveness of any such succession or assignment shall
be a material breach of this Agreement and shall entitle Executive to terminate
Executive’s employment for Good Reason. As used in this Agreement, “Employer”
means
▇▇▇▇▇▇▇▇▇▇ and any successor or assign to its business and/or assets which
executes and delivers the Agreement provided for in this Section or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. If at any time during the term of this Agreement Executive
is
employed by any company a majority of the voting securities of which is then
owned by Employer, “Employer”
as
used
in this Agreement shall in addition include that subsidiary company. In that
event, Employer agrees that it shall pay or shall cause the subsidiary company
to pay any amounts owed to Executive pursuant to this Agreement.
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13.4 Except
as
expressly provided in this Section, this Agreement replaces and merges all
previous agreements and discussions relating to the same or similar subject
matters between Executive and Employer with respect to the subject matter of
this Agreement. This Agreement may not be modified in any respect by any verbal
statement, representation or agreement made by any employee, officer, or
representative of Employer or by any written agreement unless signed by an
officer of Employer who is expressly authorized by Employer to execute that
document.
13.5 The
laws
of the State of California will govern the interpretation, validity and effect
of this Agreement without regard to principles of conflicts of law, the place
of
execution or the place for performance thereof. Employer and Executive agree
that the state and federal courts situated in San ▇▇▇▇ Obispo County, California
shall have personal jurisdiction over Employer and Executive to hear all
disputes arising under this Agreement. This Agreement is to be at least
partially performed in San ▇▇▇▇ Obispo County, California and, as such, Employer
and Executive agree that venue shall be proper with the state or federal courts
in San ▇▇▇▇ Obispo County, California to hear such disputes.
13.6 Executive
and Employer shall execute and deliver any and all additional instruments and
agreements that may be necessary or proper to carry out the purposes of this
Agreement.
13.7 The
descriptive headings of the several sections of this Agreement are inserted
for
convenience only and do not constitute a party of this Agreement.
13.8 This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same Agreement.
13.9 Executive
acknowledges that Executive has had the opportunity to read this Agreement
and
discuss it with advisors and legal counsel, if Executive has so chosen.
Executive also acknowledges the importance of this Agreement and that Employer
is relying on this Agreement in entering into an employment relationship with
Executive.
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The
undersigned, intending to be legally bound, have executed this Agreement on
the
date first written above.
|
EMPLOYER:
|
▇▇▇▇▇▇▇▇▇▇
|
| By: /s/▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |
| ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President and Chief Executive Officer | |
|
EXECUTIVE:
|
/s/
▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇
|
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
|
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APPENDIX I
Additional
Definitions
For
purposes of this Agreement, the following additional capitalized terms shall
have the respective definitions set forth below:
Auditors.
The
term “Auditors”
means
Employer’s independent registered public accounting firm.
Benefit
Plan.
The
term “Benefit
Plan”
means
any benefit plan or arrangement (including, without limitation, Employer’s
profit sharing or stock incentive plans, if any, and medical, disability and
life insurance plans) in which Executive is participating (or any other plans
providing Executive with substantially similar benefits).
Change
in Control.
A
“Change
in Control”
of
Employer shall be deemed to have occurred if, in a single transaction or series
of related transactions: (i) any person (as such term is used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934 (“Exchange Act”)), or persons
acting as a group, other than a trustee or fiduciary holding securities under
an
employment benefit program, is or becomes a “beneficial owner” (as defined in
Rule 13-3 under the Exchange Act), directly or indirectly of securities of
Employer representing 51% or more of the combined voting power of Employer,
(ii)
there is a merger, consolidation or other business combination transaction
of
Employer with or into another corporation, entity or person, other than a
transaction in which the holders of at least a majority of the shares of voting
capital stock of Employer outstanding immediately prior to such transaction
continue to hold (either by such shares remaining outstanding or by their being
converted into shares of voting capital stock of the surviving entity) a
majority of the total voting power represented by the shares of voting capital
stock of Employer (or the surviving entity) outstanding immediately after such
transaction, or (iii) all or substantially all of Employer’s assets are
sold.
Code.
The
term “Code”
means
the Internal Revenue Code of 1986, as amended.
Due
Cause.
The
term “Due
Cause”
means
any of the following events:
(a) any
intentional misapplication by Executive of Employer’s funds or other material
assets, or any other act of dishonesty injurious to Employer committed by
Executive; or
(b) Executive’s
conviction of (i) a felony or (ii) a crime involving moral turpitude;
or
(c) Executive’s
use or possession of any controlled substance or chronic abuse of alcoholic
beverages, which use or possession the Board reasonably determines renders
Executive unfit to serve in his capacity as a senior executive of Employer;
or
(d) Executive’s
breach, nonperformance or nonobservance of any of the terms of this Agreement,
including but not limited to Executive’s failure to adequately perform his
duties or comply with the reasonable directions of the Board. Notwithstanding
anything in the foregoing subsections (c) or (d) to the contrary, Employer
shall
not terminate Executive unless the Board first provides Executive with a written
memorandum describing in detail how his performance hereunder is not
satisfactory and Executive is given a reasonable period of time (not less than
30 days) to remedy the unsatisfactory performance related by the Board to
Executive in that memorandum. A determination of whether Executive has
satisfactorily remedied the unsatisfactory performance shall be promptly made
by
a majority of the disinterested directors of the Board (or the entire Board,
but
not including Executive, if there are no disinterested directors) at the end
of
the period provided to Executive for remedy, and their determination shall
be
final.
Good
Reason.
The
term “Good
Reason”
as
used
in this Agreement shall mean any of the following which occur without
Executive’s express written consent:
(a) a
general
assignment by Employer for the benefit of creditors or filing by Employer of
a
voluntary bankruptcy petition or the filing against Employer of any involuntary
bankruptcy which remains undismissed for thirty days or more or if a trustee,
receiver or liquidator is appointed;
(b) any
material changes in Executive’s titles, duties or responsibilities;
or
(c) Executive
is not paid the compensation and benefits required under this
Agreement;
provided,
however,
that
any of the foregoing actions shall not be considered to be Good Reason if the
action is undertaken by Employer as a termination for Due Cause.
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