EXHIBIT 10.3
EXECUTIVE EMPLOYMENT AGREEMENT
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THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") dated effective
as of January 1, 2006 ("Effective Date"), is made and entered into by and
between EMRISE CORPORATION, a Delaware corporation ("Employer"), and XXXXXX
XXXXXXXXX ("Executive").
R E C I T A L S
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.
A G R E E M E N T
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 Operating Officer of Employer as of the
Effective Date, reporting to the President and Chief Executive Officer Employer
(the "CEO"). Executive's duties and responsibilities shall be those normally
assumed by the Executive Vice President and Chief Operating 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 CEO.
Such other or additional duties shall be consistent with the senior executive
functions set forth above.
1.2 While employed hereunder, Executive shall use his reasonable
endeavors to obey the lawful directions of the CEO. Executive shall also use his
reasonable endeavors 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, through its
wholly-owned subsidiary, Emrise Electronics, Ltd. ("Emrise Electronics"), shall
pay to Executive an annual base salary of (pound)152,800 during the first
12-month period that this Agreement is in effect, payable in equal semimonthly
payments in accordance with the Employer's regular payroll policy for salaried
employees (the "Salary"). Thereafter, the Compensation Committee (the
"Compensation Committee") of the Board of Directors of Employer (the "Board")
shall perform an annual review of the Executive's Salary based on a review of
Executive's performance of his duties prepared by Employer's President and Chief
Executive Officer and Employer's other compensation policies. The Compensation
Committee may, at its sole discretion, increase (but not decrease) the Salary at
any time, and from time to time, after the first 12-month period that this
Agreement is in effect. In addition, Executive shall be eligible for an
incentive bonus ("Incentive Bonus"), payable no later than the date Employer's
Form 10-K for the previous fiscal year is filed with the Securities and Exchange
Commission based on criteria determined by the Compensation Committee, at its
sole discretion.
2.2 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, 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.
2.3 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 and his dependents to be paid by Employer, subject
to customary employee contributions.
2.4 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.
2.5 Executive shall be entitled to twenty-five (25) working days' paid
vacation in each calendar year in addition to public holidays in the United
Kingdom. Executive shall also be entitled to 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.
2.6 Executive shall be provided a monthly car allowance in the amount
of at least (pound)460.00.
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3. PRESERVATION OF BUSINESS; FIDUCIARY RESPONSIBILITY.
Executive shall use his reasonable endeavors 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 anniversary of the Effective Date, subject to earlier
termination as set forth in Section 5.
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 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.
5.2 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, this Agreement shall terminate immediately; provided, however,
that Executive shall remain an employee of Emrise Electronics and shall be
entitled to remuneration in an amount equal to the amount paid under Emrise
Electronics' permanent health scheme, subject to the provisions of Section 6.2.
5.3 This Agreement shall terminate immediately upon Executive's death,
subject to the provisions of Section 6.2.
5.4 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 5.1 for Due Cause, (ii) due to
incapacity pursuant to Section 5.2 or due to Executive's death pursuant to
Section 5.3, or (iii) Executive's 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.
5.5 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.
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6. EFFECT OF TERMINATION.
6.1 If the employment relationship is terminated (a) by Employer for
Due Cause pursuant to Section 5.1, or (b) by Executive breaching this Agreement
by refusing to continue his employment, 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 stock options which
have vested as of the date of termination pursuant to the terms of the agreement
granting the options; and (iv) accrued vacation as required by applicable law.
6.2 If this Agreement is terminated due to Executive's incapacity
pursuant to Section 5.2 or due to Executive's death pursuant to Section 5.3,
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, (ii) a prorated Incentive Bonus for the
fiscal year in which incapacity or death occurs, and (iii) 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 one year
following the date of termination, offset, however, by any payments received by
Executive as a result of any permanent health insurance scheme maintained by
Employer for Executive's benefit.
6.3 In the event of a termination of this Agreement as a result of
Constructive Termination, or by Executive for Good Reason, 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 on the date of termination as severance
pay an amount equal to two (2) times Executive's then current annual
Salary, which amount shall be net of all then applicable taxes payable
by Executive relating to such payment (said payment taking into
consideration the full gross-up effect of additional taxes payable with
respect to tax payments);
(c) pay to Executive on the date of termination the prorated
Incentive Bonus, if any, 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) 2 years 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
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"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 Benefits Date, 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 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.
6.5 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.
6.6 The amount of any payment provided under this Agreement shall not
be reduced by reason of any present value calculation.
6.7 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 stock options granted to Executive, if any, shall be governed by
the provisions of all stock option 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 Executive agrees that he will, upon the termination of this
Agreement, return all Employer's property including but not limited to mobile
telephone, fuel card, personal computer, all documents, working papers,
information whether stored on computer disc or otherwise, and all other records
relating to Employer and its business. Executive agrees that he will confirm in
writing that he has complied with this clause, if requested to do so by
Employer, within seven (7) days of receipt of such a request.
7.4 Executive agrees that, while Executive is employed with Employer
and for a period of 24 months after the date of termination of this Agreement
(the "Restricted Period"), provided that Executive continues to be paid his
Salary (as in effect at the date of termination) during the Restricted Period,
he will not, either directly or indirectly, have an interest in any business
(whether as manager, operator, licensor, licensee, partner, 5% or greater equity
holder, employee, consultant, director, advisor or otherwise) competitive with
Employer or any of its business activities or solicit individuals or other
entities that are customers or competitors of Employer during the six-month
period immediately prior to the date of termination of this Agreement. Executive
also agrees that, for the Restricted Period, he will not, either directly or
indirectly, solicit any employee of Employer to terminate his employment with
Employer.
7.5 For purposes of this Section 7, "Employer" shall include any of its
subsidiaries or any other entity in which it holds a 50% or greater equity
interest.
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.
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(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.
(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.
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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. 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 Section 12.2.
12.2 Any dispute that is not settled by mediation as provided in
Section 12.1 shall be resolved by arbitration under the Rules of the Chartered
Institute of Arbitrators (the "Rules"), which Rules are deemed to be
incorporated herein by reference. The prevailing party in any such arbitration
shall also be entitled to recover reasonable solicitors', 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: EMRISE Corporation
0000 Xxxxx Xxxxxx
Xxxxxx Xxxxxxxxx, XX 00000
Attention: Chief Financial Officer
If to Executive: Xxxxxx Xxxxxxxxx
0 Xxxxxxxx Xxxxx, Xxx Xxxxxx
Xxxxx, XX0 0XX, Xxxxxx Xxxxxxx
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.
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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 EMRISE Corporation 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.
13.4 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 United Kingdom 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. All
disputes, claims or proceedings between the parties relating to the validity
construction or performance of this Agreement shall be subject to the
non-exclusive jurisdiction of the Courts of England to which the parties
irrevocably submit.
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.
EMRISE CORPORATION
Date: _________________ By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx,
President and Chief Executive Officer
Date: __________________ /s/ Xxxxxx Xxxxxxxxx
-----------------------------------------
Xxxxxx Xxxxxxxxx
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APPENDIX I
ADDITIONAL DEFINITIONS
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For purposes of this Agreement, the following additional capitalized
terms shall have the respective definitions set forth below:
BENEFIT PLAN. The term "Benefit Plan" means any benefit plan or
arrangement (including, without limitation, Employer's profit sharing or stock
option 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 (A) there shall be consummated any consolidation or merger of
Employer in which Employer is not the continuing or surviving corporation or
pursuant to which all or substantially all of the shares of Employer's common
stock would be converted into cash, securities or other property, other than a
merger of Employer in which the holders of Employer's common stock immediately
prior to the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger; (B) there shall be
consummated any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets of
Employer; (C) the stockholders of Employer approve any plan or proposal for the
liquidation or dissolution of Employer; (D) any "person" (as such term is used
in Sections 13(d) and 14(d) (2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than "persons" who are stockholders of
Employer on the date of this Agreement, becomes the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of 50% or more of Employer's
outstanding common stock after the date hereof; (E) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the entire Board shall cease for any reason to constitute a majority thereof
unless the election, or the nomination for election by Employer's stockholders,
of each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
period; or (F) there shall be any change of control of a nature required to be
reported in response to Item 6 (e) of Schedule 14A of Regulation 14A promulgated
under the Exchange Act or any successor regulation of substantially similar
import, regardless of whether Employer is subject to such reporting requirement.
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
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(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 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 written consent:
(a) the assignment to Executive by the Board of duties
substantially inconsistent with Executive's position, duties,
responsibilities or status with Employer; a substantial change in
Executive's titles or offices; any removal of Executive from or any
failure to reelect Executive to any of his positions as an officer,
except in connection with the termination of his employment for
disability; Retirement; Executive's death; or by Executive other than
for Good Reason;
(b) a purported reduction by Employer in Executive's base
salary to an amount less than the greater of (i) the base salary as in
effect on the date hereof or (ii) 10% below the base salary in effect
at the time of the purported reduction;
(c) any failure by Employer to continue in effect any Benefit
Plan;
(d) any failure by Employer to obtain the assumption of this
Agreement by any successor or assign of Employer;
(e) a failure by Employer to comply with any material
provision of this Agreement which has not been cured within 30 days
after notice of noncompliance has been given by Executive to Employer,
or if the failure is not capable of being cured in that time, a cure
shall not have been diligently initiated by Employer within the 30 day
period;
(f) a material reduction in the highest level of support
services and staff, office space and accouterments available to
Executive during the term of this Agreement and that which is necessary
to perform any additional duties assigned to Executive thereafter,
which reduction is not generally effective for all officers employed by
Employer; or
(g) If Employer avails itself of, or is subjected by any third
party to, a proceeding in bankruptcy in which Employer is the named
debtor, an assignment by Employer for the benefit of its creditors, the
appointment of a receiver for Employer, or any other proceeding
involving insolvency or the protection of or from creditors and the
proceeding has not been discharged or terminated within 90 days;
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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