AMENDED AND RESTATED SENIOR EXECUTIVE AGREEMENT
AMENDED AND RESTATED SENIOR
EXECUTIVE AGREEMENT
THIS
AMENDED AND RESTATED AGREEMENT by and between ON ASSIGNMENT, INC., a Delaware
corporation (the
“Company”) and XXXXX X. XXXXXXX (“Executive”) is entered into
on December 11, 2008.
Recitals
A.
The Company and Executive previously entered into an agreement, dated October
27, 2003, pursuant to which Executive is employed as the Chief Executive Officer
and President of the Company, as amended on December 14, 2006 (the “Prior Agreement”).
B.
The Company and Executive wish to amend and restate the Prior Agreement to
implement changes required under Internal Revenue Code (“Code”) Section 409A (together
with the regulations and official interpretations thereof, “Section 409A”)
C. Certain
definitions are set forth in Section 4 of this
Agreement.
Agreement
The
parties hereto agree as follows:
1. Employment. The Company hereby
engages Executive to serve as the Chief Executive Officer and President of the
Company, and Executive agrees to serve the Company, during the Service Term (as
defined in Section
1(f) hereof) in the capacities, and subject to the terms and conditions,
set forth in this Agreement.
(a)
Services. During the
Service Term, Executive, as Chief Executive Officer and President of the
Company, shall have all the duties and responsibilities customarily rendered by
Chief Executive Officers and Presidents of companies of similar size and nature
and as may be reasonably assigned from time to time by the Board (as defined
below). Executive will report directly to the
Board. Executive will devote his best efforts and substantially all
of his business time and attention (except for vacation periods and periods of
illness or other incapacity) to the business of the Company and its
Affiliates. Notwithstanding the foregoing, and provided that such
activities do not interfere with the fulfillment of Executive’s obligations
hereunder, Executive may (A) serve as an officer, director or trustee of
any charitable or non-profit entity; (B) own a passive investment in any private
company and own up to 5% of the outstanding voting securities of any public
company; or (C) with the prior approval of the Board, serve as a director of up
to two other companies so long as such companies do not compete with the Company
and Executive notifies the Board in advance of accepting any such
position. Unless the Company and Executive agree to the contrary,
Executive’s place of employment shall be at the Company’s principal executive
offices in Calabasas, California; provided, however, that Executive
shall be permitted under the terms of this Agreement, upon conditions approved
by the Board, to relocate his principal residence to Texas and to perform his
duties and responsibilities under this Agreement from such location and commute from
time to time to the Company’s principal executive offices so long as such
relocation does not materially interfere with Executive’s satisfactory
performance of his duties and responsibilities under this Agreement and, provided, further, that Executive will
travel to such other locations as may be reasonably necessary in order to
discharge his duties and responsibilities hereunder. Executive shall
have the right to attend all meetings of the Board of Directors of the Company
and will be
nominated for election as a director for each term for which he is eligible to
serve during the Service Term.
(b) Salary, Bonus and
Benefits.
(i) Salary
and Bonus. During the
Service Term, effective from and after August 1, 2006, the Company will pay
Executive a base salary (the “Annual Base Salary”) as the
Board may designate from time to time, at the rate of not less than $635,250 per
annum; provided,
however, that the
Annual Base Salary shall be subject to review annually (beginning in the third
quarter of each fiscal
year of the Company) by
the Board for upward increases thereon. With respect to
calendar year 2006 and thereafter during the Service Period, Executive will be
eligible to receive an annual bonus in an amount of up to 120% of Executive’s
Annual Base Salary for each fiscal year, as determined by the Compensation
Committee of the Board of Directors (the “Compensation Committee”) based
upon the Company’s achievement of budgetary and other objectives set by the
Compensation Committee after review of a financial performance plan that is
prepared by Executive and recommended to the Compensation
Committee. Such annual bonus opportunity shall be comprised of (A) a
60% bonus opportunity applicable to achievement of plan targets that are a
combination of targets for revenue and EBITDA (“Component A”), and (B) an
additional 60% bonus opportunity (thereby making the total bonus opportunity
120% of Executive’s Annual Base Salary) for performance exceeding plan targets
based upon revenue and EBITDA performance (“Component B”). The
performance targets for Component A and Component B may be revised in future
years by the Compensation Committee after consultation with
Executive. Within 90 days of the beginning of each calendar year
during the Service Period, the Compensation Committee will determine, after
consultation with Executive, the targets applicable to Executive based on the
Company’s performance plan. All
performance plan targets will be defined in terms that exclude the effects of
any nonrecurring charges, including without limitation, charges related to
goodwill write-offs, acquisitions, dispositions or changes in accounting
treatment. The annual bonus, if any, shall be due and payable to
Executive, in cash, on or prior to March 15th of the year immediately
following that in which such annual bonus is earned (for the avoidance of doubt,
this deadline is intended to comply with the “short-term deferral” exemption
from the application of Section 409A).
(ii) Benefits. During the Service
Term, Executive shall be entitled to participate in and shall receive all
benefits under pension benefit plans provided by the Company (including without
limitation participation in any Company incentive, savings and retirement plans,
practices, policies and programs) to the extent applicable generally to other
peer executives of the Company. In addition, during the Service Term,
Executive and/or Executive’s family shall be entitled to participate and shall
receive all benefits under welfare plans provided by the Company (including
without limitation medical prescriptions, dental, disability, employee life,
group life, accidental life and travel accident insurance plans and plans) to
the extent and on the same basis applicable generally to other peer executives
of the Company. Executive shall be reimbursed for customary travel and
other expenses, subject to standard and reasonable documentation
requirements. In addition, Executive will receive a stipend of $450 per
month for lease of an automobile and other related expenses during the Service
Term, payable in equal monthly increments during the Service Term.
Executive shall also be eligible to receive four weeks paid vacation per
annum. Any unused vacation time during each fiscal year shall be
“rolled-over” to the following fiscal year to the extent permitted by the
Company’s policies for other senior executives of the Company.
(iii) INTENTIONALLY
OMITTED
|
(iv)
|
INTENTIONALLY
OMITTED
|
(v) Additional Equity
Grants.
(A) Stock Option
Grants.
(1) Initial
Grant. Promptly following the date of the first amendment to this
Agreement on December 14, 2006 (the “Amendment Date”), the Company
granted to Executive, under the Company’s Restated 1987 Stock Option Plan (As
Amended and Restated April 7, 2006) (the “Equity Plan), a
nonqualified stock option (“Stock Option”) to purchase
500,0001 shares of the Company’s common stock (the
“Initial Stock Option”). The
Initial Stock Option was granted to Executive at an exercise price per share
equal to the closing price of the Company’s common stock on the Nasdaq Stock
Market on the date of grant (the “Fair Market Value”) and vests
and becomes exercisable, subject to Executive’s continued employment with the
Company through each such vesting
1 This
number and the number in the following paragraph were calculated based on an
assumed pre-tax gain of $1.5 million after three years of 6% common stock price
appreciation.
date, as
follows: 11% on December 31, 2006, 1.83% on the last day of each month in 2007
(such that 33% has vested as of December 31, 2007), 2.83% on the last day of
each month in 2008 (such that 67% would be vested as of December 31, 2008),
1.83% on the last day of each month in 2009 (such that 89% would be vested as of
December 31, 2009) and 0.92% on the last day of each month in 2010 (such that
100% would be vested as of December 31, 2010). The terms and
conditions of the Initial Stock Option, including the applicable vesting
conditions, have been set forth in a stock option agreement entered into by the
Company and Executive which evidences the grant of the Initial Stock Option and,
except as otherwise expressly provided herein, is consistent with the terms and
conditions contained in stock option agreements provided to other key executives
of the Company (any agreement evidencing a Stock Option grant, a “Stock Option
Agreement”). The Initial Stock Option is, subject to the
provisions of this Section 1(b)(v)(A)(1), Sections 1(b)(v)(F) and (G) and
1(c)(iii)(A) below, governed in all respects by the terms of the Equity Plan and
the applicable Stock Option Agreement.
(2) Subsequent
Grant. On January 2, 2007, the Company granted to Executive,
under the Equity Plan, a nonqualified Stock Option to purchase 188,000 shares of
the Company’s common stock (the “Subsequent Stock Option”). The
Subsequent Stock Option was granted to Executive at an exercise price per share
equal to the Fair Market Value and vests and becomes exercisable, subject to
Executive’s continued employment with the Company through each such vesting
date, as follows: 11% immediately and 1.83% on the last day of each month in
2007 (such that 33% vested as of December 31, 2007), 2.83% on the last day of
each month in 2008 (such that 67% would be vested as of December 31, 2008),
1.83% on the last day of each month in 2009 (such that 89% would be vested as of
December 31, 2009) and 0.92% on the last day of each month in 2010 (such that
100% would be vested as of December 31, 2010). The terms and
conditions of the Subsequent Stock Option, including the applicable vesting
conditions, have been set forth in a stock option agreement entered into by the
Company and Executive which evidences the grant of the Subsequent Stock Option
and, except as otherwise expressly provided herein, is consistent with the terms
and conditions contained in Stock Option Agreements provided to other key
executives of the Company. The Subsequent Stock Option is, subject to
the provisions of this Section 1(b)(v)(A)(2), Sections 1(b)(v)(F) and (G) and
1(c)(iii)(A) below, governed in all respects by the terms of the Equity Plan and
the applicable Stock Option Agreement.
(B) Time-Vesting Restricted
Stock Unit Grants. The grant, vesting and payment of the
restricted stock unit grants described in this Section 1(b)(v)(B) are each
subject to the provisions of Sections 1(b)(v)(F), (G), (I) and (J), Section
1(c)(iii)(A) and Section 1(g) below, as applicable.
(1) Initial Grant. On
January 2, 2007, the Company granted to Executive, under the Equity Plan, a
number of restricted stock units (“RSUs”) covering shares of
Company common stock with a Fair Market Value of $500,000 (the “Initial Time-Vesting RSU
Grant”). The Initial Time-Vesting RSU Grant, except as
otherwise expressly provided herein, has been set forth in a restricted stock
unit agreement between Executive and the Company that is consistent with the
terms and conditions contained in restricted stock unit agreements provided to
other key executives of the Company (any agreement evidencing a grant of RSUs, a
“RSU
Agreement”). The Initial Time-Vesting RSU Grant
shall vest on the third anniversary of the Initial Time-Vesting RSU Grant
date, subject to Executive’s continued employment with the Company through such
vesting date and the other provisions of this Agreement. Shares of
Company common stock shall be delivered in respect of RSUs vesting in accordance
with this Section 1(b)(v)(B)(1) on or as soon as practicable after the third
anniversary of the grant date of such RSUs, but in no event more than fifteen
days after such third anniversary, with the exact payment date to be determined
by the Company in its sole discretion.
(2) Subsequent
Grants. On the first business day of each of 2008 and 2009,
subject, in the case of 2009, to Executive’s continued employment with the
Company through such date, the Company granted or shall grant to Executive, as
applicable, under the Equity Plan, RSUs covering shares of Company common stock
with a with a Fair Market Value of $500,000 (any such grant, a “Subsequent Time-Vesting RSU
Grant”). Each Subsequent Time-Vesting RSU Grant is or shall
be, as applicable, set forth in a RSU Agreement and shall vest, subject to
Executive’s continued employment with the Company through each vesting date and
the other provisions of this
Agreement,
(i) with respect to the 2008 Subsequent Time-Vesting RSU Grant, as to 23/36ths of
the shares subject thereto on December 31, 2009 and as to 1/36th of the
shares subject thereto on each monthly anniversary of the grant date thereafter,
and (ii) with respect to the 2009 Subsequent Time-Vesting RSU Grant, as to 11/36ths of
the shares subject thereto on December 31, 2009 and as to 1/36th of the
shares subject thereto on each monthly anniversary of the grant date thereafter,
in each case, such that the Subsequent Time-Vesting RSU Grant shall have vested
as to all shares subject thereto as of the third anniversary of the applicable
grant date. Shares of Company common stock shall be delivered in
respect of RSUs vesting in accordance with this Section 1(b)(v)(B)(2) on or as
soon as practicable after the third anniversary of the grant date of such RSUs,
but in no event more than fifteen days after such third anniversary, with the
exact payment date to be determined by the Company in its sole
discretion.
(C) TSR Performance-Vesting RSU
Grants. The grant, vesting and payment of the restricted stock
unit grants described in this Section 1(b)(v)(C) are each subject to the
provisions of Sections 1(b)(v)(F), (G), (I) and (J), Section 1(c)(iii)(A) and
Section 1(g) below, as applicable.
(1) Initial Grant. On
January 2, 2007, the Company granted to Executive, under the Equity Plan, RSUs
covering shares of Company common stock with a Fair Market Value of $500,000
(the “Initial TSR
Performance-Vesting RSU Grant”). The Initial TSR
Performance-Vesting RSU Grant is set forth
in a RSU Agreement. Subject to Executive’s continued employment with
the Company through the end of the third calendar year following the date of
grant (December 31, 2009) and the other provisions of this Agreement, on
the last day of the third calendar year following the date of grant (December
31, 2009), a 0-100% percentage of the Initial TSR Performance-Vesting RSU Grant shall vest
based on the Company’s total share return performance compared to that of
certain peer companies for the three years following the date of the grant
(2007, 2008 and 2009), as specified below (the “Initial TSR Performance
Goals”). Shares of Company common stock shall be delivered in
respect of RSUs vesting in accordance with this Section 1(b)(v)(C)(1) on
December 31, 2009.
(2) Subsequent
Grants. On the first business day of each of 2008 and 2009,
subject, in the case of 2009, to Executive’s continued employment with the
Company through such date, the Company granted or shall grant to Executive, as
applicable, under the Equity Plan, RSUs covering shares of Company common stock
with a Fair Market Value of $500,000 (any such grant, a “Subsequent TSR Performance-Vesting
RSU Grant”). Each Subsequent TSR Performance-Vesting RSU Grant is or shall
be, as applicable, set forth in a RSU Agreement. Subject to
Executive’s continued employment with the Company through the end of the third
calendar year following the date of grant (inclusive of the year in which the
grant is made) and the other provisions of this Agreement, on the last day of
such third calendar year following the date of grant, a 0-100% percentage of the
Subsequent TSR Performance-Vesting RSU Grant shall
vest based on the Company’s total share return performance compared to that of
certain peer companies for such three-year period, as specified below (such
performance goals determined with respect to any Subsequent TSR
Performance-Vesting RSU Grant, “Subsequent TSR Performance
Goals” and, together with the Initial TSR Performance Goals, the “TSR Performance
Goals”). Shares of Company common stock shall be delivered in
respect of RSUs vesting in accordance with this Section 1(b)(v)(C)(2) on
December 31, 2010 in respect of the 2008 grant and December 31, 2011 in respect
of the 2009 grant.
(3) TSR Performance
Goals. The TSR Performance Goals shall be based on the
appreciation in the price of the Company’s common stock and dividends (assuming
reinvestment in the stock) compared to certain peer companies agreed to by the
Executive and the Company within the first 90 days of the first year of the
grant and set forth in the minutes of the Compensation Committee. The
price appreciation will be measured as the difference between the average
closing prices of the common stock of the Company and the peer companies on the
first 20 trading days of the first calendar year and the last 20 trading days of
the third calendar year. For purposes of the calculation, the
Company’s common stock price at the beginning of the first year shall be
adjusted such that it would equal the price/EBITDA multiple for the peer
companies.2 The mean (50th
percentile) percentage
return of
the peer companies will be calculated as the arithmetic average of the
percentages of each. The highest return of the peer companies will be
the 100th
percentile and the lowest return of the peer companies shall be the 0th
percentile.3 On such basis compared to the
selected companies, (1) for less than the 42.5th
percentile the vesting percentage shall be 0%, (2) for between the 42.5th
percentile and the mean (50th
percentile) the vesting percentage shall be between 25% and 50% (based on a
sliding scale), (3) for between the mean (50th
percentile) and the 70th
percentile the vesting percentage shall be between 50% and 83.5% (based on a
sliding scale), (4) for between the 70th
percentile and the 80th
percentile the vesting percentage shall be between 83.5% and 100% (based on a
sliding scale) and (5) for above the 80th
percentile the vesting percentage shall be 100%.4
(D) EBITDA Performance-Vesting
Restricted Stock Grants. The grant and vesting of the restricted stock
described in this Section 1(b)(v)(D) are each subject to the provisions of
Sections 1(b)(v)(F), (G), (I) and (J) below, as applicable.
(1) Initial Grant. On
January 2, 2007, the Company granted to Executive, under the Equity Plan, a
number of restricted shares of Company common stock (“Restricted Stock”) with a Fair
Market Value of $500,000 (the “Initial EBITDA Performance-Vesting
Restricted Stock Grant”). The Initial EBITDA
Performance-Vesting Restricted Stock Grant
is subject to restrictions (“Restrictions”) set forth
in an agreement between Executive and the Company consistent with the terms
and conditions contained in restricted stock agreements provided to other key
executives of the Company (any agreement evidencing a grant of Restricted Stock,
a “Restricted Stock
Agreement”). At the end of the third calendar year following
the date of grant (December 31, 2009), a 0-100% percentage of the shares subject
to the Initial EBITDA Performance-Vesting Restricted Stock
Grant specified (or certified) by the Compensation Committee shall vest and
all Restrictions thereon shall lapse, if (and only if) (1) the Company has
attained (with a target of 50%) the annual EBITDA growth goals for the first
year following the date of the grant (2007) (the “Initial EBITDA Performance
Goals”) and (2) Executive remains continuously employed with the Company
through the end of the third calendar year following the date of grant (December
31, 2009).
(2) Subsequent
Grants. On the first business day of 2008 and 2009, subject in
the case of 2009 to Executive’s continued employment with the Company through
such date, the Company granted or shall grant to Executive, as applicable, under
the Equity Plan, a number of shares of Restricted Stock with a Fair Market Value
of $500,000 (any such grant, a “Subsequent EBITDA Performance-Vesting
Restricted Stock Grant”). Each Subsequent EBITDA
Performance-Vesting Restricted Stock Grant
is or shall be, as applicable, set forth in a Restricted Stock
Agreement. As of December 31, 2009, a 0-100% percentage of the shares
subject to the Subsequent EBITDA Performance-Vesting Restricted Stock
Grant specified (or certified) by the Compensation Committee shall vest and
all Restrictions thereon shall lapse, if (and only if) (1) the Company has
attained (with a target of 50%) the annual EBITDA growth goals for the first
year following the date of the grant (such EBITDA growth goals determined with
respect to any Subsequent EBITDA Performance-Vesting Restricted Stock Grant,
“Subsequent EBITDA Performance
Goals” and, together with the Initial EBITDA Performance Goals, the
“EBITDA Performance
Goals” and, together with the TSR Performance Goals, the “Performance Goals”) and (2)
Executive remains continuously employed with the
2 For
example, if the Company’s closing stock price at the beginning of the first year
reflects a multiple of the EBITDA for the twelve months ended September 30, 2006
of 12 and the mean closing stock price of the peer companies reflects a multiple
of 10, the Company’s stock price at the beginning of the first year for purposes
of the calculation would be reduced by 16.67%.
3 For
example, if the total shareholder return for peer companies is 3%, 5% and 7%,
(1) the 0th
percentile shall be 3%, (2) the 35th
percentile shall be 4.4%, (3) the 42.5th
percentile shall be 4.7%, (4) the mean (50th
percentile) shall be 5% (5) the 70th
percentile shall be 5.8%, (6) the 80th
percentile shall be 6.2%, and (7) the 100th
percentile shall be 7%.
4 For
example, if the median total shareholder return for the peer companies for 2007,
2008 and 2009 is 5% and the difference between the adjusted stock price of the
Company’s common stock at the beginning of 2007 and the actual stock price of
the Company’s common stock at the end of 2009 is 5%, 50% of the shares subject
to the Initial TSR Performance-Vesting RSU Grant shall vest on December 31, 2009
subject to the other provisions of this Agreement.
Company
through December 31, 2009.
(3) EBITDA Performance
Goals. The EBITDA Performance Goals shall be adopted by the
Compensation Committee in consultation with Executive no later than 90 days
after the applicable grant date and shall be set such that that there is a
reasonable likelihood of attainment of the target, which would result in 50%
vesting of the Initial EBITDA Performance-Vesting Restricted Stock Grant or
Subsequent EBITDA Performance-Vesting Restricted Stock Grant, as
applicable.
(E) Stock
Bonus. Promptly following the Amendment Date, the Company made
a one-time grant to Executive, under the Equity Plan, of 25,000 fully vested and
unrestricted shares of the Company’s common stock (the “Stock Bonus”).
(F) Certain
Events. Notwithstanding the foregoing and the Executive Change
of Control Agreement between the Company and Executive, dated December 11, 2008
(the “Executive Change of
Control Agreement”), immediately prior to the earliest to occur of a
Corporate Transaction (as defined in the Equity Plan) (and notwithstanding
Section 18.3 of that Equity Plan), or a Change of Control (as defined in the
Executive Change of Control Agreement) (together, “Corporate Events”) occurring
during the Service Period, subject to Section 1(b)(iii)(I) and (J) and Section
1(g) hereof, as applicable:
(1) any
unvested Initial Stock Option and Subsequent Stock Option shall vest fully as
set forth in the Executive Change of Control Agreement;
(2) any
Initial Time-Vesting RSU Grant and Subsequent Time-Vesting RSU Grant shall vest
fully as set forth in the Executive Change of Control
Agreement. Shares in respect of such vested RSUs shall be delivered,
(a) if such Corporate Event constitutes a “change in control event” within the
meaning of Section 409A, on or as soon as practicable after the date on of such
Corporate Event, but in no event more than fifteen days after such Corporate
Event, with the exact payment date to be determined by the Company in its sole
discretion, or (b) if such Corporate Event does not constitute a “change in
control event” within the meaning of Section 409A, then within fifteen days
after (with the exact payment date to be determined by the Company in its sole
discretion) the earliest to occur of Executive’s “separation from service”
(within the meaning of Section 409A(a)(2)(A)(i) of the Code, and Treasury
Regulation Section 1.409A-1(h)) (“Separation from Service”),
death or Disability, the occurrence of a “change in control event” with respect
to Executive within the meaning of Section 409A or the third anniversary of the
applicable grant date;
(3) any
unvested Initial TSR Performance-Vesting RSU Grant and Subsequent TSR
Performance-Vesting RSU Grant shall vest in accordance with the attainment of
the Performance Goals through the date of the Corporate Event (and not pro-rated
for any time elapsed during the period).5 Shares in respect of such vested
RSUs shall be delivered (a) if such Corporate Event constitutes a “change in
control event” within the meaning of Section 409A, on or as soon as practicable
after the date of such Corporate Event, but in no event more than fifteen days
after such Corporate Event, with the exact payment date to be determined by the
Company in its sole discretion, or (b) if such Corporate Event does not
constitute a “change in control event” within the meaning of Section 409A, then
within fifteen days after (with the exact payment date to be determined by the
Company in its sole discretion) the earliest to occur of Executive’s Separation
from Service, death or Disability, the occurrence of a “change in control event”
with respect to Executive within the meaning of Section 409A or the third
anniversary of the applicable grant date; and
(4) any
unvested Initial EBITDA Performance-Vesting Restricted Stock Grant and
Subsequent EBITDA Performance-Vesting Restricted Stock Grant
5 For
example, if such event occurs on June 30, 2008 and the TSR Performance Goals had
been met at the maximum levels through such date, 100% of the Initial TSR
Performance-Vesting RSU Grant and the Subsequent TSR Performance-Vesting RSU
Grant made in 2008 shall vest.
shall
vest (a) for years that have been completed, in accordance with the attainment
of the Performance Goals for such year, and (b) for the year in which such event
occurs, in accordance with the greater of the attainment of the Performance
Goals for the prior year and the attainment of the Performance Goals to date in
such year (and not pro-rated for any time elapsed during the year).6
(G) Forfeiture.
(1) General. Except as
otherwise provided in this Agreement, all shares subject to the Initial Stock
Option, the Subsequent Stock Option, the Initial Time-Vesting RSU Grant, any
Subsequent Time-Vesting RSU Grant, the Initial TSR Performance-Vesting RSU
Grant, any Subsequent TSR Performance-Vesting RSU Grant, the Initial EBITDA
Performance-Vesting Restricted Stock Grant and any Subsequent EBITDA
Performance-Vesting Restricted Stock Grant (together, the “2006 Equity Awards”) that have
not vested and, in the case of any options, become exercisable, or with respect
to which the Restrictions have not lapsed (after taking into consideration any
vesting, exercisability and/or Restriction lapsing that may occur prior to or in
connection with any termination of employment, as provided in this Agreement or
any other agreement with Executive), as applicable, as of the earlier to occur
of Executive’s termination of employment for any reason, a Corporate Event, the
third anniversary of the applicable grant date or, in the case of Subsequent
EBITDA Performance-Vesting Restricted Stock Grants only, December 31, 2009
(after taking into consideration any vesting and lapsing of Restrictions that
may occur in connection with any termination or Corporate Event), shall be
forfeited and canceled upon the earliest such event to occur , without
consideration therefor.
(2) Time-Vesting
RSUs. Notwithstanding Section 1(b)(v)(B) above, on or prior to
December 31, 2009, in the event of Executive’s death, Disability or termination
by the Company without Cause, and after December 31, 2009, in the event
of termination of Executive’s employment for any reason, including
voluntarily by Executive, any unvested Initial Time-Vesting RSU Grant and
Subsequent Time-Vesting RSU Grant shall vest immediately prior to such events,
on a pro-rata basis (based on the number of months Executive worked since the
date of grant) with respect to the shares constituting such
grant. Shares of Company common stock shall be delivered in respect
of RSUs vesting in accordance with this Section 1(b)(v)(G)(2) on or as soon as
practicable after the date of Executive’s Separation from Service or, if
earlier, Executive’s death or Disability, but in no event more than fifteen days
after any such event, subject to Section 1(g) of this Agreement, with the exact
payment date to be determined by the Company in its sole
discretion.
(3) Performance-Vesting
RSUs. Notwithstanding Section 1(b)(v)(C) above, on or prior to
December 31, 2009, in the event of Executive’s death, Disability or termination
by the Company without Cause, and after December 31, 2009, in the event
of termination of Executive’s employment for any reason, including
voluntarily by Executive, any unvested Initial TSR Performance-Vesting RSU Grant
and Subsequent TSR Performance-Vesting RSU Grant shall vest in accordance with
the attainment of the Performance Goals through the date of such event (and
shall be pro-rated for time elapsed during the period).7 Shares in respect of RSUs that vest in
accordance with this Section 1(b)(v)(G)(3) shall be delivered, subject to
Section 1(g) of this Agreement, as soon as practicable after the earliest to
occur of Executive’s Separation from Service, death, Disability or the third
anniversary of the applicable grant date, but in no event more than fifteen days
after such event, with the exact payment date to be determined by the Company in
its sole discretion, and
(4) EBITDA Performance-Vesting
Restricted Stock. Notwithstanding Section 1(b)(v)(D)
above, on or prior to December 31, 2009, in the event of
6 For
example, if such event occurs on June 30, 2008 and the EBITDA Performance Goals
had been met at the maximum levels for 2007 and the first half of 2008, 100% of
the Initial EBITDA Performance-Vesting Restricted Stock Grant and the Subsequent
EBITDA Performance-Vesting Restricted Stock Grant made in 2008 shall
vest.
7 For
example, if such event occurs on June 30, 2008 and the TSR Performance Goals had
been met at the maximum levels through such date, 50% of the Initial TSR
Performance-Vesting RSU Grant and 16.67% of the Subsequent TSR
Performance-Vesting RSU Grant made in 2008 shall vest.
Executive’s
death, Disability or termination by the Company without Cause, any unvested
Initial EBITDA Performance-Vesting Restricted Stock Grant and Subsequent EBITDA
Performance-Vesting Restricted Stock Grant shall vest (I) for years that have
been completed, in accordance with the attainment of the Performance Goals for
such year, and (II) for the year in which such event occurs, in accordance with
the attainment of the Performance Goals to date in such year (and pro-rated for
time elapsed during the year).8
(5) Cause. If the
Company terminates Executive’s employment for Cause, any outstanding 2006 Equity
Awards (other than vested shares of Restricted Stock) shall be forfeited, as of
the commencement of business on the date of such termination, with respect to
all then-unpaid shares subject thereto, whether or not vested at the time of
termination, without consideration therefor.
(H) INTENTIONALLY
OMITTED
(I) Internal Revenue Code
Section 162(m). Notwithstanding anything contained herein to
the contrary, if the Compensation Committee determines in its reasonable
discretion that the Company’s tax deduction that would otherwise arise under
Section 162 of the Code in connection with the vesting and delivery of any
shares of Company common stock in respect of the Initial Time-Vesting RSU Grant,
any Subsequent Time-Vesting RSU Grant, the Initial TSR Performance-Vesting RSU
Grant and/or any Subsequent TSR Performance-Vesting RSU Grant, in any case,
would be materially limited or reduced by the application of Section 162(m) of
the Code, then, to the extent necessary to prevent such limitation or reduction,
the Company may delay the delivery of such shares until the earliest practicable
date in the earlier to occur of (a) the first year in which the Company
reasonably anticipates that the delivery of such shares will not result in such
limitation or reduction, or (b) the year in which Executive’s employment with
the Company terminates, subject to Section 1 (g) of this
Agreement. For the avoidance of doubt, the provisions contained in
this Section 1(b)(v)(I) are intended to comply with the permissible delay of
certain payments described in Treas. Reg. Section
1.409A-2(b)(7)(i).
(J) Employment
Taxes. Notwithstanding anything contained herein to the
contrary, to the extent that any compensation payable hereunder, including
without limitation, under any of the 2006 Equity Awards, constitutes
“nonqualified deferred compensation” within the meaning of Section 409A, the
payment of any such compensation may be accelerated to the greatest extent
permitted under Treasury Regulation 1.409A-3(j)(4)(vi) to pay any taxes imposed
under the Federal Insurance Contribution Act (“FICA”) on such compensation or
under Code Section 3401 or corresponding withholding provisions of applicable
state, local or foreign tax laws as income tax obligations arising in connection
with any such acceleration, including any additional taxes attributable to
pyramiding wages and taxes, provided, that the total of
any such accelerated payment shall not exceed the applicable FICA and income tax
obligations to which such accelerated payments relate.
(c) Termination.
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(i) Events of
Termination. Executive’s employment
with the Company shall cease upon:
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(A)
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Executive’s
death.
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(B)
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Executive’s
voluntary retirement.
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(C) Executive’s
“Disability” means
Executive has become disabled within the meaning of Section 409A.
8 For
example, if such event occurs on June 30, 2008 and the EBITDA Performance Goals
had been met at the maximum levels for 2007 and the first half of 2008, 100% of
the Initial EBITDA Performance-Vesting Restricted Stock Grant and 50% of the
Subsequent EBITDA Performance-Vesting Restricted Stock Grant made in 2008 shall
vest.
(D)
Termination by the Company by the delivery to Executive of a written notice from
the Board or the CEO that Executive has been terminated (“Notice of Termination”) with
or without Cause. “Cause” shall
mean:
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(1)
Executive’s (aa) conviction of a felony; (bb) Executive’s commission of any
other material act or omission involving dishonesty or fraud with respect to the
Company or any of its Affiliates or any of the customers, vendors or suppliers
of the Company or its Subsidiaries; (cc) Executive’s misappropriation of
material funds or assets of the Company for personal use; or (dd) Executive’s
engagement in unlawful harassment or other discrimination with respect to the
employees of the Company or its Subsidiaries;
(2)
Executive’s continued substantial and repeated neglect of his duties, after
written notice thereof from the Board, and such neglect has not been cured
within 30 days after Executive receives notice thereof from the
Board;
(3)
Executive’s gross negligence or willful misconduct in the performance of his
duties hereunder that is materially and demonstrably injurious to the
Company;
(4)
Executive’s engaging in conduct constituting a breach of Sections
2 or 3 hereof
that is not cured in full within 15 days, and is materially and demonstrably
injurious to the Company, after notice of default thereof, from the
Company, as determined by a court of law.
In order
for the termination to be effective: Executive must be notified in writing
(which writing shall specify the cause in reasonable detail) of any termination
of his employment for Cause. Executive will then have the right, within
ten days of receipt of such notice, to file a written request for review by the
Company. In such case, Executive will be given the opportunity to be
heard, personally or by counsel, by the Board and a majority of the Directors
must thereafter confirm that such termination is for Cause. If the
Directors do not provide such confirmation, the termination shall be treated as
other than for Cause. Notwithstanding anything to the contrary contained
in this paragraph, Executive shall have the right after termination has occurred
to appeal any determination by the Board that such termination was for “Cause”
in accordance with the provisions of Section
7(f) hereof.
The
delivery by the Company of notice to Executive that it does not intend to renew
this Agreement as provided in Section
1(f) shall constitute a termination by the Company without
Cause if, at the time of such notice, Executive is willing and able to renew the
Agreement and continue providing services on terms and conditions substantially
similar to those contained in this Agreement, provided, that in no event
shall notice which fulfills the requirements of Section 1(c)(i)(D)(1)
, (2)
, (3)
or (4) above
constitute a termination by the Company without Cause.
(E)
Executive’s voluntary resignation by the delivery to the Company and the Board
of at least 30 days written notice from Executive that Executive has resigned
with or without Good Reason. “Good Reason”
shall mean Executive’s resignation from employment with the Company after the
occurrence of any one of the following:
(1)
the failure of the Company to pay an amount owing to Executive in breach of this
Agreement; or
(2)
without Executive’s consent, a relocation of Executive’s principal work location
from the Calabasas, California metropolitan area that constitutes a
material change in the geographic location at which he must perform services
under this Agreement (within the meaning of Section 409A);
provided, that Executive’s
resignation shall only constitute a resignation for “Good Reason” hereunder
if
(I)
Executive provides the Company with written notice setting forth in reasonable
detail the facts or circumstances constituting Good Reason within thirty days
after Executive becomes reasonably aware of the existence of such facts and
circumstances, (or reasonably aware that there is a controversy between the
Company’s interpretation of any payment obligation or principal work location
requirement of this Agreement and the Executive’s interpretation of same), (II)
the Company has failed to cure such facts or circumstances within thirty days
after receipt of such written notice, and (III) the date of Executive’s
Separation from Service occurs no later than thirty-five days after Executive
gives notice of the event constituting Good Reason.
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The
delivery by Executive of notice to the Company that he does not intend to renew
this Agreement as provided in Section
1(f) shall constitute a resignation by Executive without Good
Reason unless such notice fulfills the requirements of Section 1(c)(i)(E)(1)
or (2) above.
For the
avoidance of doubt, in no event shall Executive’s ceasing to serve as the
President of the Company, whether voluntarily or involuntarily, constitute Good
Reason.
(ii) Date of
Termination. “Date of Termination” means the date on which
Executive experiences a Separation from Service.
(iii) Rights on
Termination.
(A) In
the event that termination is by the Company without Cause (including by
operation of the last paragraph of Section 1(c)(i)(D) above) or by Executive
with Good Reason and Executive experiences a Separation from Service as a result
of such termination, subject to Section 1(g) below:
(1) The
Company will pay Executive (i) an amount equal to 150% of the Annual Base
Salary, payable over a period of eighteen (18) months commencing on the Date of
Termination (the “Severance
Period”) in substantially equal installments in accordance with Company
payroll procedures applicable to senior executives of the Company, as in effect
from time to time (but no less often than monthly), provided, that payment of the
amounts described in this Section 1(c)(iii)(A)(1)(i) shall not commence until
the Company’s first payroll date occurring on or after the 30th day
following the Date of Termination (the “First Payroll Date”) and any
amounts that would otherwise have been paid prior to the First Payroll Date
shall instead be paid on the First Payroll Date, and (ii) a cash amount equal to
the aggregate premiums that the Company would have paid for basic life
insurance, accidental death and dismemberment insurance and long- and short-term
disability insurance, each as in effect on the Date of Termination, had
Executive remained employed by the Company during the Severance Period
(together, “Insurance
Benefits”). In addition, during the Severance Period, subject
to Executive’s proper election to continue healthcare coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company will pay
Executive’s COBRA premiums in respect of COBRA benefits to be provided through
third-party insurance maintained by the Company under the Company’s benefit
plans in a manner that causes such COBRA benefits to be exempt from the
application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5),
provided, that if
during the period of continuation coverage, any plan pursuant to which such
benefits are to be provided ceases to be exempt from the application of Section
409A under Treasury Regulation Section 1.409A-1(a)(5), then an amount equal to
each such remaining premium shall thereafter be paid to Executive as currently
taxable compensation in substantially equal monthly installments over the
remainder of the continuation coverage period; and
(2) Any
unvested Initial Time-Vesting RSU Grant, Subsequent Time-Vesting RSU
Grant, Initial TSR Performance-Vesting RSU Grant, Initial EBITDA
Performance-Vesting Restricted Stock Grant, Subsequent TSR Performance-Vesting
RSU Grant and Subsequent EBITDA Performance-Vesting Restricted Stock Grant shall
vest and be paid as provided elsewhere in this Agreement.
For
purposes of paragraph (e) below, payments of Annual Base Salary, amounts in lieu
of Insurance
Benefits,
COBRA premiums and the accelerated vesting and lapsing of Restrictions with
respect to any 2006 Equity Awards, in each case, as described in this Section
1(c)(iii)(A), are collectively referred to as “Severance Payments.” In addition, the Company
will pay to Executive in a lump-sum the value of any accrued but unused vacation
time. This Section 1(c)(iii)(A) shall not apply
unless Executive has executed and not revoked a release in a form mutually
acceptable to both the Company and Executive that is subject
to paragraph (e) below. In addition, the Company agrees
that concurrently with Executive’s execution of such release, the Company shall
execute a contingent mutual release in a form that is mutually acceptable to
both the Company and Executive that is subject
to paragraph (e) below. Each payment under Section
1(c)(iii)(A) above shall be treated as a separate payment for purposes of
Section 409A.
(B)
If the Company terminates Executive’s employment for Cause, or if Executive
resigns without Good Reason (including by operation of the last paragraph
of Section
1(c)(i)(E)), the Company’s obligations to pay any compensation or
benefits under this Agreement (other than accrued but unused vacation time which
shall be paid to Executive in a lump sum payment) and all vesting under all
equity awards held by Executive will cease effective as of the date of
termination. Executive’s right to receive any other health or other
benefits, if any, will be determined under the provisions of applicable plans,
programs or other coverages.
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(C)
If Executive’s employment terminates because of Executive’s death or
Disability, then Executive or his estate shall be entitled to any
disability income or life insurance payments from any insurance policies (other
than any “key man” life insurance policy) maintained by the Company.
In addition, in the event of such a termination, for a period of six (6) months
commencing on the Date of Termination, Executive or his estate shall be entitled
to payment of an amount equal to 50% of the Annual Base Salary,
payable over six months from Executive’s death or Disability in
approximately equal installments on regular salary payment dates.
Notwithstanding
the foregoing, the Company’s obligation to Executive for Severance Payments
shall cease if Executive is found by a court of law to be in material violation
of the provisions of Sections 2 or
3 hereof.
(d) Mitigation. The Company’s obligation to
continue to provide Executive with the Severance Payments pursuant to Section
1(c)(iii)(A) above and the benefits pursuant to the second
sentence of Section
1(c)(iii)(C) above shall cease if Executive becomes employed
as a senior executive by a third party.
(e) Liquidated
Damages. The
parties acknowledge and agree that damages which will result to Executive for
termination by the Company without Cause shall be extremely difficult or
impossible to establish or prove, and agree that the Severance Payments shall
constitute liquidated damages for any breach of this Agreement by the Company
through the Date of Termination. Executive agrees that, except for such
other payments and benefits to which Executive may be entitled as expressly
provided by the terms of this Agreement or any applicable Benefit Plan, such
liquidated damages shall be in lieu of all other claims that Executive may make
by reason of termination of his employment or any such breach of this Agreement
and that, as a condition to receiving the Severance Payments, Executive will
execute a contingent mutual release of claims in a form reasonably satisfactory
to both the Company and Executive.
(f) Term of
Employment. Unless
Executive’s employment under this Agreement is sooner terminated as a result of
Executive’s termination in accordance with the provisions of Section 1(c) above,
Executive’s employment under this Agreement shall continue through December 31,
2009 (the “Service
Term”); provided,
however, that Executive’s employment under this Agreement, and the
Service Term, shall be automatically renewed for additional one-year periods
commencing on December 31, 2009 and, thereafter, on each successive anniversary
of such date unless either the Company or Executive notify the other party in
writing within ninety (90) days prior to any such anniversary that it or he
desires not to renew Executive’s employment under this Agreement. All
references herein to “Service
Term” shall include any renewals thereof after the third anniversary of
the Amendment Date.
(g) Potential
Six-Month Delay. Notwithstanding anything to the contrary in
this Agreement, no compensation or benefits, including without
limitation any Severance Payments or payments in respect of any 2006
Equity Awards in connection with a Separation from Service, shall be paid to
Executive during the 6-month period following his Separation from Service to the
extent that the Company reasonably determines that Executive is a “specified
employee” at the time of such Separation from Service (within the meaning of
Section 409A) and that paying such amounts at the time or times indicated in
this Agreement would be a prohibited distribution under Section 409A(a)(2)(b)(i)
of the Code. If the payment of any such amounts is delayed as a
result of the previous sentence, then on the first business day following the
end of such 6-month period (or such earlier date upon which such amount can be
paid under Section 409A without being subject to such additional taxes,
including as a result of Executive’s death), the Company shall pay to Executive
a lump-sum amount equal to the cumulative amount that would have otherwise been
payable to Executive during such 6-month period, without interest
thereon.
2. Confidential Information;
Proprietary Information, etc.
(a) Obligation
to Maintain Confidentiality. Executive acknowledges that any Proprietary
Information disclosed or made available to Executive or obtained, observed or
known by Executive as a direct or indirect consequence of his employment with or
performance of services for the Company or any of its Affiliates during the
course of his performance of services for, or employment with, any of the
foregoing Persons (whether or not compensated for such services) and during the
period in which Executive is receiving Severance Payments, are the property of
the Company and its Affiliates. Therefore, Executive agrees that he will
not at any time (whether during or after Executive’s term of employment)
disclose or permit to be disclosed to any Person or, directly or indirectly,
utilize for his own account or permit to be utilized by any Person any
Proprietary Information or Records for any reason whatsoever without the Board’s
consent, unless and to the extent that (except as otherwise provided in the
definition of Proprietary Information) the aforementioned matters become
generally known to and available for use by the public other than as a direct or
indirect result of Executive’s acts or omissions to act. Executive agrees to
deliver to the Company at the termination of his employment, as a condition to
receipt of the next or final payment of compensation, or at any other time the
Company may request in writing (whether during or after Executive’s term of
employment), all Records which he may then possess or have under his control.
Executive further agrees that any property situated on the Company’s or its
Affiliates’ premises and owned by the Company or its Affiliates, including disks
and other storage media, filing cabinets or other work areas, is subject to
inspection by Company or its Affiliates and their personnel at any time with or
without notice. Nothing in this Section 2(a) shall be
construed to prevent Executive from using his general knowledge and experience
in future employment so long as Executive complies with this Section 2(a) and the
other restrictions contained in this Agreement.
(b) Ownership
of Property.
Executive acknowledges that all inventions, innovations, improvements,
developments, methods, processes, programs, designs, analyses, drawings, reports
and all similar or related information (whether or not patentable) that
relate to the Company’s or any of its Affiliates’ actual or anticipated
business, research and development, or existing or future products or services
and that are conceived, developed, contributed to, made, or reduced to practice
by Executive (either solely or jointly with others) while employed by the
Company or any of its Affiliates (including any of the foregoing that
constitutes any Proprietary Information or Records) (“Work Product”) belong to the
Company or such Affiliate and Executive hereby assigns, and agrees to assign,
all
of the
above Work Product to the Company or such Affiliate. Any copyrightable
work prepared in whole or in part by Executive in the course of his work for any
of the foregoing entities shall be deemed a “work made for hire” under the
copyright laws, and the Company or such Affiliate shall own all rights therein.
To the extent that any such copyrightable work is not a “work made for hire,”
Executive hereby assigns and agrees to assign to Company or such Affiliate all
right, title and interest, including without limitation, copyright in and to
such copyrightable work. Executive shall promptly disclose such Work
Product and copyrightable work to the Board and perform all actions reasonably
requested by the Board (whether during or after Executive’s term of employment)
to establish and confirm the Company’s or its Affiliate’s ownership (including,
without limitation, execution of assignments, consents, powers of attorney and
other instruments). Notwithstanding anything contained in this Section
2(b) to the contrary, the Company’s ownership of Work Product
does not apply to any invention that Executive develops entirely on his own time
without using the equipment, supplies or facilities of the Company or its
Affiliates or Subsidiaries or any Proprietary Information (including trade
secrets), except that the Company’s ownership of Work Product does include those
inventions that: (a) relate to the business of the Company or its
Affiliates or Subsidiaries or to the actual or demonstrably anticipated research
or development relating to the Company’s business; or (b) result from any work
that Executive performs for the Company or its Affiliates or
Subsidiaries.
(c) Third
Party Information. Executive understands that
the Company and its Affiliates will receive from third parties confidential or
proprietary information (“Third
Party Information”) subject to a duty on the Company’s and its
Affiliates’ part to maintain the confidentiality of such information and to use
it only for certain limited purposes. During the term of Executive’s
employment and thereafter, and without in any way limiting the provisions
of Sections
2(a) and 2(b) above,
Executive shall hold Third Party Information in the strictest confidence and
shall not disclose to anyone (other than personnel of the Company or its
Affiliates who need to know such information in connection with their work for
the Company or its Affiliates) or use, except in connection with his work for
the Company or its Affiliates, Third Party Information unless expressly
authorized by a member of the Board in writing.
(d) Use of
Information of Prior Employers, etc. Executive will abide by any
enforceable obligations contained in any agreements that Executive has entered
into with his prior employers or other parties to whom Executive has an
obligation of confidentiality.
(e) Compelled
Disclosure. If
Executive is required by law or governmental regulation or by subpoena or other
valid legal process to disclose any Proprietary Information or Third Party
Information to any Person, Executive will immediately provide the Company with
written notice of the applicable law, regulation or process so that the Company
may seek a protective order or other appropriate remedy. Executive will
cooperate fully with the Company and the Company’s Representatives in any
attempt by the Company to obtain any such protective order or other
remedy. If the Company elects not to seek, or is unsuccessful in
obtaining, any such protective order or other remedy in connection with any
requirement that Executive disclose Proprietary Information or Third Party
Information, and if Executive furnishes the Company with a written opinion of
reputable legal counsel acceptable to the Company confirming that the disclosure
of such Proprietary Information or Third Party Information is legally required,
then Executive may disclose such Proprietary Information or Third Party
Information to the extent legally required; provided,
however, that Executive will use his reasonable best efforts
to ensure that such Proprietary Information is treated confidentially by each
Person to whom it is disclosed.
3. Nonsolicitation.
(a) Nonsolicitation. As long as Executive is an
employee of the Company or any Affiliate thereof, and for eighteen (18) months
thereafter, Executive shall not directly or indirectly through another entity:
(i) induce or attempt to induce any employee of the Company or any Affiliate to
leave the employ of the Company or such Affiliate, or in any way interfere with
the relationship between the Company or any Affiliate and any employee thereof;
(ii) hire or employ any person who was an employee of the Company or any
Affiliate at any time during the nine (9) month period
immediately
preceding
the date of such Executive’s termination; (iii) induce or attempt to induce any
customer, client, supplier, licensee or other business relation of the Company
or any Affiliate to cease doing business with the Company or such Affiliate, or
in any way interfere with the relationship between any such customer, client,
supplier, licensee or business relation and the Company or any Affiliate; (iv)
call on, solicit or service any Person who was a customer or client of the
Company or any Affiliate or (v) call on, solicit or service any Person who was
Prospective Client for any purpose which directly or indirectly competes with
the business of the Company. For purposes hereof, a “Prospective
Client” means any Person whom the Company or any of its
Affiliates has entertained discussions with to become a client or customer at
any time during the twelve (12) month period immediately preceding the date of
such Executive’s termination.
(b) Acknowledgment. Executive acknowledges that
in the course of his employment with the Company and its Affiliates, he has and
will become familiar with the trade secrets and other Proprietary Information of
the Company and its Affiliates. It is specifically recognized by Executive that
his services to the Company and its Subsidiaries are special, unique and of
extraordinary value, that the Company has a protectable interest in prohibiting
Executive as provided in this Section 3 , that
money damages are insufficient to protect such interests, that there is adequate
consideration being provided to Executive hereunder, that such prohibitions are
necessary and appropriate without regard to payments being made to Executive
hereunder and that the Company would not enter this Agreement with Executive
without the restriction of this Section 3 . Executive
further acknowledges that the restrictions contained in this Section 3 do not
impose an undue hardship on him and, since he has general business skills which
may be used in industries other than that in which the Company and its
Subsidiaries conduct their business, do not deprive Executive of his
livelihood. Executive further acknowledges that the provisions of
this Section
3 are separate and independent of the other sections of this
Agreement.
(c) Enforcement,
etc. If, at
the time of enforcement of Section 2 or 3 of this Agreement,
a court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum duration,
scope or geographical area reasonable under such circumstances as determined by
the court shall be substituted for the stated period, scope or area.
Because Executive’s services are unique, because Executive has access to
Proprietary Information and for the other reasons set forth herein, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, without limiting the generality of Section 7(g), in the
event of a breach or threatened breach of this Agreement, the Company or its
successors or assigns may, in addition to other rights and remedies existing in
their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent
any violations of, the provisions hereof.
(d)
Submission to Jurisdiction. The parties hereby:
(i) submit to the jurisdiction of any state or federal court sitting in
California in any action or proceeding arising out of or relating to Section 2
and/or 3
of this Agreement; (ii) agree that all claims in respect of such action or
proceeding may be heard or determined in any such court; and (iii) agree not to
bring any action or proceeding arising out of or relating to Section 2
and/or 3
of this Agreement in any other court. The parties hereby waive any defense
of inconvenient forum to the maintenance of any action or proceeding so brought
and waives any bond, surety or other security that might be required of any
other party with respect thereto. The parties hereby agree that a final judgment
in any action or proceeding so brought shall be conclusive and may be enforced
by suit on the judgment or in any other manner provided by law.
GENERAL
PROVISIONS
4. Definitions.
“Affiliate” of any Person
means any other Person which directly or indirectly controls, is controlled by
or is under common control with such Person.
“Board” means the Company’s
board of directors or the board of directors or similar management body of any
successor of the Company.
“EBITDA” means adjusted
earnings before interest, taxes, depreciation and amortization, as the term
adjusted EBITDA is defined in the Company’s Annual Incentive Award Targets for
the applicable calendar year.
“Proprietary Information”
means any and all data and information concerning the business affairs of the
Company or any of its Affiliates and not generally known in the industry in
which the Company or any of its Affiliates is or may become engaged, and any
other information concerning any matters affecting or relating to the Company’s
or its Affiliates businesses, but in any event Proprietary Information shall
include, any of the Company’s and its Affiliates’ past, present or prospective
business opportunities, including information concerning acquisition
opportunities in or reasonably related to the Company’s or its Affiliates
businesses or industries, customers, customer lists, clients, client lists, the
prices the Company and its Affiliates obtain or have obtained from the sale of,
or at which they sell or have sold, their products, unit volume of sales to past
or present customers and clients, or any other information concerning the
business of the Company and its Affiliates, their manner of operation, their
plans, processes, figures, sales figures, projections, estimates, tax records,
personnel history, accounting procedures, promotions, supply sources, contracts,
know-how, trade secrets, information relating to research, development,
inventions, technology, manufacture, purchasing, engineering, marketing,
merchandising or selling, or other data without regard to whether all of the
foregoing matters will be deemed confidential, material or important.
Proprietary Information does not include any information which Executive has
obtained from a Person other than an employee of the Company, which was
disclosed to him without a breach of a duty of confidentiality.
“Records” means (i) any and
all procedure manuals, books, records and accounts; (ii) all property of the
Company and its Affiliates, including papers, note books, tapes and similar
repositories containing Proprietary Information; (iii) all invoices and
commission reports; (iv) customer lists — partial and/or complete; (v) data
layouts, magnetic tape layouts, diskette layouts, etc.; (vi) samples; (vii)
promotional letters, brochures and advertising materials; (viii) displays and
display materials; (ix) correspondence and old or current proposals to any
former, present or prospective customer of the Company and its Affiliates; (x)
information concerning revenues and profitability and any other financial
conditions of the Company and its Affiliates; (xi) information concerning the
Company and its Affiliates which was input by Executive or at his direction,
under his supervision or with his knowledge, including on any floppy disk,
diskette, cassette or similar device used in, or in connection with, any
computer, recording devices or typewriter; (xii) data, account information or
other matters furnished by customers of the Company and its Affiliates; and
(xiii) all copies of any of the foregoing data, documents or devices whether in
the form of carbon copies, photo copies, copies of floppy disks, diskettes,
tapes or in any other manner whatsoever.
“Person” means an individual,
a partnership, a limited liability company, a corporation, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization
and a governmental entity or any department, agency or political subdivision
thereof.
“Subsidiary” means any
corporation of which the Company owns securities having a majority of the
ordinary voting power in electing the board of directors directly or through one
or more subsidiaries.
5. Notices. Any notice provided for in
this Agreement must be in writing and must be either personally delivered,
mailed by first class United States mail (postage prepaid, return receipt
requested) or sent by reputable overnight courier service (charges prepaid) or
by facsimile to the recipient at the address below indicated:
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Xxxxx
X. Xxxxxxx
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00000
Xxxx Xxxxxx Xxxx
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Xxxxxxxxx,
Xxxxxxxxxx 00000
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Tel
No.:
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(000)
000-0000
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If to the Company:
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00000
Xxxx Xxxxxx Xxxx
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Xxxxxxxxx,
Xxxxxxxxxx 00000
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Attention:
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General
Counsel
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Tel
No.:
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(000)
000-0000
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Fax
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(000)
000-0000
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with a copy to:
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Xxxxx
& Xxxxxxx, LLP
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000
Xxxxxxxxxx Xxxxxx, X.X.
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Xxxxxxxxxx,
X.X. 00000
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Attention:
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X.
Xxxxx Xxxx
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Tel
No.:
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(000)
000-0000
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Fax
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or
such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending
party.
6. Executive’s
Representations and Warranties. Executive represents
and warrants that he has full and authority to enter into this Agreement and
fully to perform his obligations hereunder, that he is not subject to any
non-competition agreement, and that his past, present and anticipated future
activities have not and will not infringe on the proprietary rights of others,
including, but not limited to, proprietary information rights or interfere with
any agreements he has with any prior employee. Executive further
represents and warrants that he is not obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, which
would conflict with or result in a breach of this Agreement or which would in
any manner interfere with the performance of his duties for the
Company.
7. Section
409A.
(a) General. The
payments and benefits provided hereunder are intended to be exempt from or
compliant with the requirements of Section 409A. Notwithstanding any
provision of this Agreement to the contrary, in the event that following the
effective date hereof, the Company reasonably determines that any payments or
benefits hereunder are not either exempt from or compliant with the requirements
of Section 409A, the Company and Executive shall work together to adopt such
amendments to this Agreement or adopt such other policies and procedures
(including amendments, policies and procedures with retroactive effect), or take
any other actions, that are necessary or appropriate (i) to preserve the
intended tax treatment of the payments and benefits provided hereunder, to
preserve the economic benefits with respect to such payments and benefits,
and/or (ii) to exempt such payments and benefits from Section 409A or to comply
with the requirements of Section 409A and thereby avoid the application of
penalty taxes thereunder, provided¸ that the Company
shall have no obligation to take any action described in this Section 7(a) or to
indemnify Executive for any failure to take any such action.
(b) Certain
Reimbursements. To the extent that any reimbursements
hereunder constitute taxable compensation to Executive, such reimbursements
shall be made to Executive promptly, but in no event after December 31st of the
year following the year in which the expense was incurred, the amount of any
such amounts reimbursed in one year shall not affect the amount eligible for
reimbursement in any subsequent year, and Executive’s right to reimbursement of
any such expenses shall
not be
subject to liquidation or exchange for any other benefit.
8. General
Provisions.
(a) Expenses. Each party shall bear his or
its own expenses in connection with the negotiation and execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement.
(b) Severability. Whenever possible,
each provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other jurisdiction,
but this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision had never been contained
herein.
(c) Complete
Agreement. This
Agreement and those documents expressly referred to herein embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way,
including without limitation, the Prior Agreement (as amended).
(d) Counterparts;
Facsimile Transmission. This Agreement may be
executed in separate counterparts, each of which is deemed to be an original and
all of which taken together constitute one and the same agreement. Each party to
this Agreement agrees that it will be bound by its own telecopied signature and
that it accepts the telecopied signature of each other party to this
Agreement.
(e) Successors
and Assigns.
Except as otherwise provided herein, this Agreement shall bind and inure to the
benefit of and be enforceable by Executive, the Company and their respective
successors and assigns;
provided that the rights and obligations of Executive under this
Agreement shall not be assignable and, provided further that, the
rights and obligations of the Company may be assigned to any Affiliate of the
Company.
(f) Choice of
Law; Jurisdiction. All questions concerning the
construction, validity and interpretation of this Agreement and the exhibits
hereto will be governed by and construed in accordance with the internal laws of
the State of Delaware, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware. The parties hereby: (i) submit to the
jurisdiction of any state or federal court sitting in California in any action
or proceeding arising out of or relating to Agreement; (ii) agree that all
claims in respect of such action or proceeding may be heard or determined in any
such court; and (iii) agree not to bring any action or proceeding arising out of
or relating to this Agreement in any other court. Executive hereby waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety or other security that might be required of
any other party with respect thereto. The parties hereby agree that a final
judgment in any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner provided by
law.
(g) Remedies. Each of the parties to this
Agreement will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including attorney’s fees) caused by
any breach of any provision of this Agreement and to exercise all other rights
existing in its favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction (without posting any bond or deposit)
for specific performance and/or other injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
(h) Amendment
and Waiver. The
provisions of this Agreement may
be
amended or waived only with the prior written consent of the Company and
Executive.
(i) Business
Days. If any time
period for giving notice or taking action hereunder expires on a day which is a
Saturday, Sunday or holiday in the state in which the Company’s chief executive
office is located, the time period shall be automatically extended to the
business day immediately following, such Saturday, Sunday or
holiday.
(j) Termination. This Agreement shall survive
the termination of Executive’s employment with the Company and shall remain in
full force and effect after such termination.
(k) No
Waiver. A waiver
by any party hereto of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which such party would
otherwise have on any future occasion. No failure to exercise nor any
delay in exercising on the part of any party hereto, any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided are cumulative and may be exercised singly or concurrently, and
are not exclusive of any rights or remedies provided by law.
(l) Insurance. The Company, at its
discretion, may apply for and procure in its own name for its own benefit life
and/or disability insurance on Executive in any amount or amounts considered
available. Executive agrees to cooperate in any medical or other examination,
supply any information, and to execute and deliver any applications or other
instruments in writing as may be reasonably necessary to obtain and constitute
such insurance. Executive hereby represents that he has no reason to believe
that his life is not insurable at rates now prevailing for healthy men of his
age.
(m) Offset. Whenever the Company
or any of its Subsidiaries is obligated to pay any sum to Executive or any
Affiliate or related person thereof pursuant to this Agreement, any bona fide
debts that Executive or such Affiliate or related person owes to the Company or
any of its Subsidiaries may be deducted from that sum before payment, to the
greatest extent permitted under applicable law.
(n) Indemnification
and Reimbursement of Payments on Behalf of Executive. The Company and its
Subsidiaries shall be entitled to deduct or withhold from any amounts owing from
the Company or any of its Subsidiaries to Executive any federal, state,
provincial, local or foreign withholding taxes, excise taxes, or employment
taxes ( “Taxes” )
imposed with respect to Executive’s compensation or other payments from the
Company or any of its Subsidiaries or Executive’s ownership interest in the
Company, including, but not limited to, wages, bonuses, dividends, the receipt
or exercise of stock options and/or the receipt or vesting of restricted
stock.
(o) Insurance
and Indemnification. For the period from the date of this Agreement
through at least the tenth anniversary of the Employee’s termination of
employment from the Employer, the Employer shall maintain Executive as an
insured party on all directors’ and officers’ insurance maintained by the
Employer for the benefit of its directors and officers on at least the same
basis as all other covered individuals and provide the Employee with at least
the same corporate indemnification as it provides to the peer executives of the
Employer.
(p) Clawback. To the extent
permitted under applicable law, Executive agrees to reimburse the Company for
amounts determined by final judicial process to be due to the Company pursuant
to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002.
[THIS
SPACE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on the date first written
above.
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ON
ASSIGNMENT, INC.
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By:
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/s/
Xxxxxx Xxxxx
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/s/
Xxxxx X. Xxxxxxx
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XXXXX
X. XXXXXXX
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