EMPLOYMENT AGREEMENT
Exhibit
10.14
This
EMPLOYMENT AGREEMENT (“Agreement”), effective as of May 3, 2007, (“Effective Date”)
is entered into by and between Fallbrook Technologies Inc., a Delaware corporation
(the “Company”) and Xxxxxxx Xxxxx, an individual resident of the State of California
(“Executive”).
WHEREAS, Executive began his employment with the Company on May 3, 2004 and has continued an
uninterrupted tenure as President and Chief Executive Officer of the
Company;
WHEREAS,
Executive’s Employment Agreement with the Company expired on May 2, 2007; and
WHEREAS,
the parties desire to continue this employment relationship.
NOW, THEREFORE, the Company and Executive hereby agree as follows:
1. Position and Duties
A. In
accordance with the terms and conditions of this agreement, Executive shall continue to
serve as President and Chief Executive Officer of the Company. In
such capacity, Executive shall
have the duties, responsibilities and authority consistent with such position. Executive shall
report directly and exclusively to the Company’s Board of Directors (the “Board”).
B. Executive shall continue his service as an elected member of the Board and agrees to serve
in such capacity without additional compensation. The Company agrees to use its commercially
reasonable efforts to provide that Executive continues to be elected to the Board as long as he
remains in his position as President and Chief Executive Officer of the Company.
C. Executive shall diligently, and to the best of his ability, perform all duties incident to
his position, and devote substantially all of his time, attention, and effort to the business and
affairs of the Company, and shall use his good and faithful efforts to promote the interests of the
Company. In addition, Executive agrees to comply with all applicable governmental laws, rules and
regulations and to abide by the Company’s policies and rules, including the rules and regulations
set forth in any Employee Handbook adopted by the Board, as such Employee Handbook may be amended
from time to time.
D. Except
for the consulting arrangement described in a letter dated May 3, 2004, from
Executive to the Company’s Chairman. Executive shall not directly or indirectly render any services
of any kind or character for Executive’s own account or for any other person, firm or entity
without first obtaining the written consent of the Chairman of the
Board. Notwithstanding the
foregoing, Executive shall have the right to perform such incidental
services as are necessary in
connection with (i) his private passive investments, but only if Executive is not obligated or
required to and, in fact, does not devote any managerial efforts that interfere in a material
fashion with the services required to be performed by him hereunder; (ii) his charitable or
community activities; (iii) his participation in trade or professional organizations, but only if
such incidental services do not significantly interfere with the performance of Executive’s
services hereunder, or (iv) subject to the reasonable prior approval of the Board, his service on
the boards of directors of other companies.
E. After the Effective Date, and during the term of this Agreement together with any period
(if any) in which Executive is receiving payments from the Company
pursuant to Section 9.C.
Executive shall not acquire, assume or participate in, directly or indirectly, any position,
investment or interest known by Executive to be adverse or antagonistic to the Company, its
business or prospects, financial or otherwise, or in any company, person or entity that is,
directly or indirectly, in competition with the business of the
Company or any of its Affiliates.
For purposes of this Agreement, “Affiliate” means, with
respect to an specific entity, any other
entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by
or is under common control with such specified entity. Ownership by Executive, as a passive
investment, of less than one percent (1%) of the outstanding shares of capital stock of any
corporation with one or more classes of its capital stock listed on a national securities exchange
or publicly traded on the Nasdaq Stock Market or in the over-the-counter market shall not
constitute a breach of this Section 1.E.
F. Executive hereby represents that he is not a party to any agreement which would be a
material impediment to entering into this Agreement and that he is permitted to enter into this
Agreement and perform the obligations hereunder. Executive represents and warrants that he will not
use or disclose, in connection with his employment by the Company, any trade secrets or other
proprietary information or intellectual property in which Executive or any other person has any
right, title or interest. Executive represents that his employment by the Company as contemplated
by this Agreement will not infringe or violate the rights of any other person or entity, Executive
represents and warrants to the Company that he has returned all property and confidential
information belonging to any prior employers, and that he will not bring onto the Company’s
premises any unpublished documents or property belonging to any former employer or other person to
whom he has an obligation of confidentiality.
2. Salary. Beginning on the Effective Date, Executive shall be paid as compensation
for his services an annual salary at a rate of Four Hundred Thousand Dollars ($400,000) per year
(“Base Salary”), less all applicable withholdings and deductions, to be paid in accordance with the
Company’s standard payroll policy (but not less than semi-monthly).
3. Bonus. Executive shall be eligible to receive an annual cash bonus, subject to the
sole discretion of the Board, upon such other date as determined by
the Board.
4. Stock
Option/Stock Purchases
A. Option Grant. As soon as practicable after the Effective Date, the Company
shall grant Executive an additional stock option (the
“Option”) to purchase up to 300,000 shares
(the “Option Shares”) of the Company’s common stock (“ Common Stock”). So long as your employment
relationship with the Company continues, the Option Shares shall vest in accordance with the
following schedule: one-third (1/3rd) of the total number of Option Shares shall vest and become
exercisable on the twelve (12) month anniversary of the vesting
commencement date (as defined in the
underlying option agreement, the terms of which shall
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govern the
option), and one-twenty-forth (1/24th) of the remaining Option Shares shall vest and
become exercisable on the same day of each month thereafter. The exercise price of the Option Shares
will be $1.30 per share. On the date of grant, all or any part of the
Option Shares shall be
immediately exercisable, if Executive elects to do so, but the purchased shares shall be subject to
repurchase by the Company at the exercise price in the event that Executive’s employment terminates
before he vests in the Option Shares underlying such shares. The Option granted pursuant to this
Agreement shall be an incentive stock option to the maximum extent permitted under
United States tax laws.
B. Exercise of Option. Except as provided herein, the Option Grant made pursuant to
Section 4.A above shall be subject to the terms of the
Company’s 2004 Stock Plan (the “Plan”) and
the Company’s standard form of stock option agreement, which must be executed as a condition of the
grant and exercise.
C. Effect
of Change of Control. The provisions of the Plan or
other agreements
entered into by the Company and Executive relating to the potential acceleration of Options in the
event of certain events occurring after a Change of Control after the Effective Date, will be
applied to the Option Shares, so long as Executive’s employment with the Company has not been
terminated prior to such Change of Control.
5. Golden Parachute Excise Tax. In the event that the benefits provided for in this
Agreement or otherwise payable to Executive (including, without limitation, any accelerated vesting
of stock options or removal of repurchase restrictions on restricted stock) (the “Total Payments”)
would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the “Code”) and, but for this
Section 5, would be subject to the excise
tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments will be
delivered either (i) in full, or (ii) to such lesser extent as would result in no portion of the
benefits and payments being subject to the Excise Tax, whichever results in the receipt by
Executive of the larger amount of economic value (on an after-tax basis, including application of
the Excise Tax). All determinations regarding Sections 280G and 4999 of the Code will be made in
writing by the Company’s independent auditors (the
“Accountants”). In the event a reduction in benefits or payments is required under this Section 5, Executive will have the
choice of which benefits or payments to reduce. For purposes of making the calculations required
by this Section 5, the Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good-faith interpretations concerning the application
of Sections 280G and 4999 of the Code. The Company and Executive will furnish to the Accountants
such information and documents as the Accountants may reasonably request in order to make a
determination under this Section 5. The Company will pay all costs that the Accountants may
reasonably incur in connection with any calculations contemplated by this Section 5. To the extent
then applicable, the Company agrees to use its reasonable commercial efforts to solicit shareholder
approval pursuant to Section 2800(b)(5) of the Code in order to preclude the application of Section
280G.
6. Expenses. Executive shall be entitled to receive prompt reimbursement for all
reasonable and necessary employment-related expenses incurred by Executive after the Effective
Date. Such reimbursement is contingent upon Executive providing itemized accounts, receipts
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and other documentation of expenses, in accordance with standard Company practice’s
applicable to other senior executives of the Company.
7. Vacation. Executive will accrue (on a ratable basis) four (4) weeks of
paid vacation/sick leave per year, on the same terms as applicable to other senior executives
of the Company. Executive will be eligible to begin using any accrued
vacation/sick leave at any
time after the Effective Date.
8. Other Employee Benefits. Executive shall receive medical insurance covering him
and his family on the same terms as available to other senior executives of the Company
(including the applicability of any co-pays and deductibles). Executive shall be eligible to
participate in all other employee benefit plans and insurance maintained by the Company that are
applicable to other senior management to the full extent provided for under those plans,
including dental, vision, short and long term disability and life insurance. Such benefits shall
continue uninterrupted, so long as the Executive remains employed by the Company The Company
reserves the right to cancel or change its benefits plans and programs it offers to its employees
at any time.
9. Term of Employment/Termination Benefits.
A. Basic
Rule. The Company agrees to continue Executive’s employment, and
Executive agrees to remain in employment with the Company, from the Effective Date until May 2,
2008; provided, however, Executive’s employment with the Company
shall be “at will,” which means
that either Executive or the Company may terminate Executive’s employment at any time, for any
reason, with Cause or Without Cause (both, as defined below), subject to the severance provisions
in Section 9.C below. This Agreement shall constitute the full and complete agreement between
Executive and the Company on the “at will” nature of Executive’s employment, which may only be
changed in an express written agreement signed by Executive and the Board. Any contrary
representations, which may have been made to Executive shall be superseded by this Agreement.
B. Automatic
Renewal. This Agreement shall renew automatically each year unless
either party provides the other party with written notice of non-renewal at least ninety (90)
days prior to the end of the contract year. No action shall be necessary to effectuate the
renewal of this Agreement. All terms and conditions contained herein shall continue to bind the
parties during each consecutive term until the termination of the Executive’s employment.
C. Termination. The Company may terminate Executive’s employment at any time
and for any reason (or no reason), and with Cause or Without Cause, by giving Executive notice in
writing. Executive may terminate his employment by giving the Company fourteen (14) days’ advance
notice in writing. Executive’s employment shall terminate automatically in the event of his
death, and may be terminated by the Company if Executive becomes permanently disabled or
incapacitated. Upon termination of Executive’s employment, Executive shall be paid his Base
Salary through his date of termination (the “Termination Date”) and for the value of all accrued
but unused vacation earned through the Termination Date. In addition, all unvested Option Shares
granted to Executive will be forfeited on the Termination
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Date, and the expiration date by which all vested Option Shares must be exercised after the
Termination Date shall be determined in accordance with the terms of the Option.
X.
Xxxxxxxxx Payment. If Executive’s
employment is terminated for Cause or
Executive resigns without Good Reason, then, except as specifically stated in this Agreement, all
of the compensation and benefits to which he was entitled shall cease upon the Termination Date. If
the Company terminates Executive’s employment “Without Cause” or Executive resigns for “Good
Reason” prior to May 2, 2008 or a subsequent anniversary of this date resulting from an automatic
renewal as contemplated in Section 9.B, then (i) the Company shall pay Executive an amount equal to
six (6) months of his base salary then in effect, less all applicable withholdings and deductions,
and (ii) Executive shall be additionally vested in the number of Base Option Shares which would
have vested during the six months following his termination of employment. The benefits provided in
the preceding sentence shall be conditioned upon the execution by Executive of the Company’s
standard form of Separation Agreement and General Release (which will include the non-competition
covenant referred to in Section 1.E and a one-year non-solicitation clause). Such cash severance
payment shall be paid in six (6) equal payments over a six month period beginning on the
Termination Date. Executive shall not be required to mitigate damages or the amount of any
severance payment provided for by this Section 9.C and no future income earned by Executive from
employment or otherwise shall in any way reduce or offset the severance payments due to Executive
hereunder.
E. Definitions.
1. Good
Reason. For all purposes under this Agreement, “Good Reason” for
Executive’s resignation will exist if he resigns within sixty days of any of the following: (i) any
reduction in his Base Salary, other than a reduction in Base Salary in connection with general
cost-cutting objectives instituted by the Company which reduction is proportional when compared to
reductions of other employees of the Company; (ii) termination of Executive’s service as a member
of the Company’s Board (other than a termination as a result of Executive’s voluntary resignation
from the Board); (iii) a change in title or a change in his position with the Company or a
successor company which materially reduces his duties, authority, reporting, position or level of
responsibility: or(iv) any requirement that he relocate his place of employment by more than fifty
(50) miles from his then-current office, provided such reduction, change or relocation is effected
by the Company without his written consent. A resignation by Executive under any other
circumstances or for any other reasons will be a resignation “Without Good Reason.”
2. Cause;
Without Cause. For all purposes under this Agreement, a termination
for “Cause” shall mean a good faith determination by the Board after consideration of all relevant
facts that Executive’s employment be terminated for any of the following reasons; (i) willful
misconduct which materially damages the Company; (ii) willful and material misappropriation of the
assets of the Company; or (iii) conviction of, or a plea of “guilty” or “no contest” to a felony
under the laws of the United States or any state thereof. A termination of Executive’s employment
in any other circumstances or for any other reasons will be a
termination “Without Cause.”
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10. Non-Solicitation and Non-Disclosure.
A. Non-Solicitation. During the period commencing on the Effective Date and continuing
until the first anniversary of the date when Executive’s employment is terminated for any reason,
Executive shall not directly or indirectly, personally or through others, solicit or attempt to
solicit (on Executive’s own behalf or on behalf of any other person or entity) the employment or
retention of any employee or consultant of the Company or any of the Company’s affiliates.
B. Non-Disclosure.
As a condition of employment, Executive will execute the Company’s
standard Employee Proprietary Information and Inventions Agreement.
11. Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of, and shall be binding upon, the Company, its successors and assigns, and Executive, the
personal representative of his estate and his heirs and legatees. This Agreement and all rights and
obligations of Executive hereunder are personal to Executive and may not be transferred or
assigned by Executive at any time. The Company may assign its rights under this Agreement to any
entity that assumes the Company’s obligations hereunder in connection with any sale or transfer of
all or a substantial portion of the Company’s assets to such entity.
12. Notices.
A. Any and all notices, demands or other communications required or desired to be given
hereunder by any party shall be in writing and shall be validly given or made to another party if
served either personally or, if deposited in the United States mail, certified or registered,
postage prepaid, return receipt requested. If such notice, demand or other communication shall be
served personally, service shall be conclusively deemed made at the time of such personal service.
If such notice, demand or other communication is given by mail, service shall be conclusively
deemed made at the time of the receipt by the party to whom such notice, demand or other
communication is sent. Any and all notices, demands or other communications shall be delivered to
the following address:
To the Company:
|
Fallbrook Technologies Inc. | |||
| 0000 Xxxxxxxxxx Xxxxx | ||||
| Xxxxxxxxx, XX 00000 | ||||
To Executive:
|
Xxxxxxx Xxxxx | |||
B. Any party hereto may change its address for the purpose of receiving notices,
demands and other communications as herein provided by a written notice given in the manner
aforesaid to the other party hereto.
13. Waivers. No waiver of any term or provision of this Agreement shall be valid
unless such waiver is in writing signed by the party against whom enforcement of the waiver is
sought. In the case of the Company, such waiver shall be signed by at least one (1) member of
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the Board
other than the President and CEO. The waiver of any term or provision of this
Agreement shall not apply to any subsequent breach of this Agreement.
14. Governing Document. This Agreement and Executive’s Proprietary Information and
Inventions Agreement and any documents referenced herein or therein, including without limitation
any stock option agreement evidencing the Option, constitute the entire agreement and understanding
of the Company and Executive with respect to the terms and conditions of Executive’s employment
with the Company and the payment of severance benefits and supersede
all prior and contemporaneous
written or verbal agreements and understandings between Executive and the Company relating to such
subject matter. To the extent the provisions of this Agreement and the provisions of the
Proprietary Information and Inventions Agreement (which Executive will be required to sign on or
before the Effective Date) are inconsistent, the provisions of this Agreement shall govern the
relationship between the parties hereto.
15. Governing Law. The provisions of this Agreement shall be construed and interpreted
under the laws of the State of California applicable to agreements executed and to be wholly
performed within the State of California. Subject to the provisions of Section 17. Executive
hereby consents to the personal jurisdiction of the state and federal courts located in San Diego
County, California for any lawsuit arising from or related to this Agreement.
16. Severability. If any provision of this Agreement as applied to any party or to any
circumstance should be adjudged by a court of competent jurisdiction to be void or unenforceable
for any reason, the invalidity of that provision shall in no way affect (to the maximum extent
permitted by law) the application of such provision under circumstances different from those
adjudicated by the court, the application of any other provision of this Agreement, or the
enforceability or invalidity of this Agreement as a whole.
17. Arbitration. The parties agree that, with the exception of the subjects listed
below, any and all disputes that they have with one another which arise out of Executive’s
employment or under the terms of this Agreement shall be resolved through final and binding
arbitration, as specified herein. This shall include, without limitation, disputes relating to this
Agreement, Executive’s employment by the Company or the termination thereof, the stock options
granted to Executive, claims for breach of contract or breach of the covenant of good faith and
fair dealing, and any claims of discrimination or other claims under any state or local law or
regulation now in existence or hereinafter enacted and as amended from time to time concerning in
any way the subject of Executive’s employment with the Company or its termination. The following
exceptions will be resolved as required by law then in effect: (a) claims for benefits under the
workers’ compensation, unemployment insurance and state disability insurance laws; (b) claims
concerning the validity, infringement or enforceability of any trade secret, patent right,
copyright trademark, or any other intellectual or confidential property held or sought by the
Company; and (c) claims of employment discrimination or harassment brought under federal statutes.
Binding arbitration will be conducted in San Diego County, California, before one arbitrator with
expertise in the subject area of the dispute. The arbitration shall be administered by JAMS
pursuant to its Comprehensive Arbitration Rules and Procedures. Judgment on the award may be
entered in any court having jurisdiction. The arbitrator shall be selected by the parties’ mutual
agreement within ten (10) days following either party’s demand for arbitration. If the parties
cannot timely mutually agree upon an arbitrator.
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each party shall select one arbitrator, and the two selected arbitrators shall promptly select a
third arbitrator who shall arbitrate the arbitration. This provision shall not preclude the parties
from seeking provisional remedies in aid of arbitration from a court
of appropriate jurisdiction.
Each party shall bear its own costs and expenses of participating in the arbitration, and each
party shall bear one-half (1/2) of the fees and expenses of the arbitrator; provided, however, that
the arbitrator will have authority to award attorneys’ fees. Executive understands and agrees that
the arbitration shall be instead of any civil litigation and that the arbitrator’s decision shall
be final and binding to the fullest extent permitted by law and enforceable by any court having
jurisdiction thereof.
18. Indemnification. To the fullest extent permitted under California General
Corporation Law and the Company’s Articles of Incorporation or Bylaws, the Company shall indemnify
Executive against loss, liability, damages and other reasonable expenses incurred as a consequence
of his employment under this Agreement. Executive shall be entitled to indemnification (contractual
or otherwise) to the same extent as the Company’s other Board members and senior executives. Such
right of indemnification will not be deemed exclusive of any other rights to which Executive may be
entitled under the Company’s Articles of Incorporation or Bylaws. The indemnification provisions
for officers and directors under the Company’s Articles of Incorporation, Bylaws and any applicable
indemnification agreement between Executive and the Company will (to the maximum extent permitted
by law) be extended to Executive, during the period following Executive’s Termination of
Employment, with respect to any and all matters occurring or effected during Executive’s employment
hereunder.
19. Reformation. Should any provision of this Agreement become or be deemed invalid,
illegal or unenforceable in any jurisdiction by reason of the scope, extent or duration of its
coverage, then such provision shall be deemed amended to the extent necessary to conform to
applicable law so as to be valid and enforceable or, if such provision cannot be so amended without
materially, altering the intention of the parties, then such provision shall be stricken and the
remainder of this Agreement shall continue in full force and effect.
20. Taxes. All payments made under this Agreement shall be subject to reduction to
reflect taxes or other charges required to be withheld by law.
21. Modification/Amendment. This Agreement may be modified or amended only by a
written agreement signed by a member of the Board (other than Executive) and Executive.
22. Remedies. All rights and remedies provided pursuant to this Agreement or by law
shall be cumulative, and no such right or remedy shall be exclusive of any other. Subject to the
provisions of Section 17, a party may pursue any one or more rights or remedies hereunder or may
seek damages for specific performance in the event of another party’s breach hereunder or may
pursue any other remedy by law or equity, whether or not stated in
this Agreement.
23. Drafting. This Agreement shall not be construed against any party by reason of the
drafting or preparation thereof.
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24. Counterparts. This Agreement may be executed in more than one counterpart,
each of which shall be deemed an original, but all of which together shall constitute but one and
the same instrument.
[Remainder of Page Intentionally Left Blank]
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25. Acknowledgement. EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD THE
OPPORTUNITY TO SEEK THE ADVICE OF HIS OWN INDEPENDENT LEGAL COUNSEL IN CONNECTION WITH THE
NEGOTIATION AND EXECUTION OF THIS AGREEMENT. EXECUTIVE ALSO ACKNOWLEDGES THAT HE HAS READ
AND UNDERSTANDS ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above.
| /s/ Xxxxxxx Xxxxx | ||||||
| Xxxxxxx Xxxxx | ||||||
| FALLBROOK TECHNOLOGIES INC., | ||||||
| a Delaware corporation | ||||||
| /s/ Xxxx Xxxxx | ||||||
| By: | Xxxx Xxxxx | |||||
| Chairman of the Board of Directors | ||||||
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AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT OF XXXXXXX XXXXX
This Amendment No. 1 to the Employment Agreement between the Company and Xxxxxxx Xxxxx
(the “Amendment”) is being made as of January 16, 2008, by and between Fallbrook Technologies
Inc., a Delaware corporation (the “Company”) and Xxxxxxx Xxxxx (“Executive”). Capitalized
terms used herein which are not defined herein shall have the definitions ascribed to them in
the Agreement (defined below).
RECITALS
| WHEREAS, the Company and Executive have previously entered into an Employment Agreement effective May 3, 2007 (the “Agreement”); |
| WHEREAS, the Board of Directors recently approved the execution of Executive Employment Agreements with senior executives of the Company other than Executive, and such employment agreements contain certain terms and provisions which the Board has approved extending to Executive; |
| WHEREAS, Section 21 of the Agreement provides that the Agreement may be amended in a written agreement signed by Executive and a member of the Board of Directors of the Company (other than Executive). |
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the promises and covenants contained
herein and in the Agreement, and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. Addendum to the Agreement. The Agreement is hereby amended as follows:
Section 9 of the Agreement shall be amended to read as follows:
9. Term of Employment/Termination Benefits.
A. Basic Rule. The Company agrees to continue Executive’s employment, and
Executive agrees to remain in employment with the Company, from the Effective Date until May 2,
2008; provided, however, Executive’s employment with the Company shall be “at will,” which means
that either Executive or the Company may terminate Executive’s employment at any time, for any
reason, with Cause or without Cause (both, as defined below), subject to the severance provisions
in Section 9.C below. This Agreement shall constitute the full and complete agreement between
Executive and the Company on the “at will” nature of Executive’s employment, which may only be
changed in an express written agreement signed by Executive and the Company. Any contrary
representations, which may have been made to Executive shall be superseded by this Agreement.
B. Automatic Renewal. This Agreement shall renew automatically each year unless either
party provides the other party with written notice of non-renewal at least ninety (90) days prior
to the end of the contract year. No action shall be necessary to effectuate the renewal of this
Agreement. All terms and conditions contained herein shall continue to bind the parties during each
consecutive term until the termination of the Executive’s employment.
C. Termination.
(a) Termination With Cause.
(1) During the period of employment, the Executive’s employment with the Company may be
terminated by the Company at any time for Cause.
(2) Upon termination for Cause, Executive shall be entitled only to accrued and unpaid Base
Salary and the benefits provided in Section 8 of this Agreement, and payment for any vacation or
leave accrued, through the date of termination of employment.
(b) Termination Without Cause.
(1) During the period of employment, the Executive’s employment with the Company may be
terminated by the Company at any time without Cause.
(2) If the Executive’s employment is terminated without Cause during the initial term or any
renewal term of this Agreement, then the Executive will receive (i) severance in an amount equal to
six (6) months of the then-current annual Base Salary exclusive of bonus or incentive payments (the
“Severance Period”), within sixty (60) days of the date of such termination (or such later date as
may be necessary to avoid any adverse tax consequences under Section 409(A) of the Internal Revenue
Code); (ii) continuation of health benefits and the benefits provided in Section 8 of this
Agreement for the Severance Period (medical, dental, vision, life insurance, and long term
disability, to the extent then provided by the Company and permitted by the various respective
policies and by law); (iii) immediate accelerated vesting of any existing options which have been
granted but are not fully vested as of the date of termination; and (iv) payment for any vacation
or leave accrued through the date of termination.
(c) By Executive (Resignation).
(1) At any time during the period of employment, Executive may resign his employment by giving
thirty (30) days prior notice of termination to the Company.
(2) In the event Executive resigns his employment at any time during the period of
employment, Executive shall be entitled to accrued and unpaid Base Salary and the benefits
provided in Section 8 of this Agreement, and payment for any vacation or leave accrued, through
the date of termination of employment.
(d) Termination of Employment by Reason of Death. If Executive shall die during the
period of employment, this Agreement shall terminate automatically as of the date of death, and
Company shall pay to Executive’s legal representative the compensation and
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benefits under Section 9.C.(c)(2), which would otherwise be payable to Executive up to the end
of the month in which death occurs, and, to the extent applicable, any insurance or insurance
proceeds, vested death benefits, compensation for accrued vacation or leave time. Should the
Executive die during the execution of, or during travel in connection with, his or her duties, then
the Company shall pay to the Executive’s legal representative the compensation and benefits under
Section 9.C.(b)(2).
(e) Termination of Employment by Reason of Disability.
(1) As used herein, the term “permanent disability” shall mean, and be limited to, any
physical or mental illness, disability or impairment that prevents or may reasonably be expected to
prevent the Executive from continuing for the performance of his normal duties and responsibilities
hereunder for a period in excess of four consecutive months. For purposes of determining whether a
“permanent disability” has occurred under this Agreement, the written determination thereof by two
(2) qualified practicing physicians selected and paid for by the Company (and reasonably acceptable
to the Executive) shall be conclusive, provided however that if the disability is the result of an
acute episode such determination shall be made in a reasonable period of time, which in any case
shall be less than sixty (60) days.
(2) Upon any termination of this Agreement as hereinabove provided, the Company’s obligations
under this Agreement to pay further compensation shall cease forthwith, except that the Executive
(or his estate or legal representatives, as the case may be) shall be entitled to receive any and
all compensation and benefits under Section 9.C.(c)(2), which would otherwise be payable to
Executive as of the effective date of termination. Should the Executive become disabled during the
execution of, or during travel in connection with, his or her duties, then the Executive (or his or
her estate or legal representatives, as the case may be) shall be entitled to the compensation and
benefits under Section 9.C.(b)(2).
(f) Termination by Executive for Good Reason.
(1) The Executive may terminate this Agreement for “Good Reason” upon sixty (60) days’ written
notice by the Executive to the Company of the occurrence of any of the events listed in Section
9.D.(1).
(2) In the event Executive resigns his employment at any time for “Good Reason” during the
period of employment, Executive shall be entitled to the compensation and benefits set forth in
Section 9.C.(b)(2) of this Agreement.
D. Definitions.
(1) Good Reason. For all purposes under this Agreement, “Good Reason” for
Executive’s resignation will exist if he resigns within sixty days of any of the following: (i) any
reduction in his Base Salary, other than a reduction in Base Salary in connection with general
cost-cutting objectives instituted by the Company which reduction is proportional when compared to
reductions of other employees of the Company; (ii) termination of Executive’s service as a member
of the Company’s Board (other than a termination as a result of Executive’s voluntary resignation
from the Board); (iii) a change in title or a change in his position with the Company or a
successor company which materially reduces his duties,
3
authority, reporting, position or level of responsibility; or (iv) any requirement that he
relocate his place of employment by more than fifty (50) miles from his then-current office,
provided such reduction, change or relocation is effected by the Company without his written
consent. A resignation by Executive under any other circumstances or for any other reasons will be
a resignation “Without Good Reason.”
(2) Cause; Without Cause. For all purposes under this Agreement, a termination
for “Cause” shall mean a good faith determination by the Board after consideration of all relevant
facts that Executive’s employment be terminated for any of the following reasons; (i) willful
misconduct which materially damages the Company; (ii) willful and material misappropriation of the
assets of the Company; or (iii) conviction of, or a plea of “guilty” or “no contest” to a felony
under the laws of the United States or any state thereof. A termination of Executive’s employment
in any other circumstances or for any other reasons will be a termination “Without Cause.”
E. Separation Agreement/Release Condition to Severance Benefits.
Other than the payment of accrued vacation or leave, the benefits provided in the preceding
sections 2(b), 2(d), 2(e) and 2(f) shall be conditioned upon the execution by Executive of the
Company’s then-standard form of Separation Agreement and General Release (which will include the
one-year non-solicitation|non-interference provisions in Section 10.A herein).
2. Effect of Amendment. Except as expressly modified by this Amendment, the Agreement
shall remain unmodified and in full force and effect.
3. Entire Agreement. This Amendment together with the Agreement and all
documents referred to herein and therein constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
4. Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Amendment shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Amendment, express or implied, is intended
to confer upon any party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations or liabilities under or by reason of this Amendment, except as
expressly provided in this Amendment.
5. Governing Law. This Amendment shall be governed by and construed under the laws of
the State of California as applied to agreements among California residents entered into and to be
performed entirely within California.
6. Counterparts. This Amendment may be executed in counterparts, each of which shall
be deemed an original, but all of which shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first
above written.
| COMPANY | ||||
| FALLBROOK TECHNOLOGIES INC. | ||||
By:
|
/s/ Xxxx X. Xxxxx
|
|||
| Xxxx X. Xxxxx, Chairman of the Board | ||||
| EXECUTIVE | ||||
| /s/ Xxxxxxx Xxxxx | ||||
| Xxxxxxx Xxxxx | ||||
