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EXHIBIT 10.19
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into as of May 1, 1997, by and between ANDATACO, a California corporation (the
"Company"), and Xxxxxx Ravine ("Employee"). Capitalized terms used herein and
not otherwise defined shall have the meaning given to such terms in that certain
Agreement and Plan of Merger and Reorganization dated as of February 28, 1997 by
and among IPL Systems, Inc., IPL Acquisition Corp., W. Xxxxx Xxxxx and the
Company.
1. DUTIES.
(a) GENERAL. The Company hereby employs Employee, and Employee
hereby agrees to serve, as the Chief Executive Officer and Chairman of the Board
of Directors of the Company during the Term (as defined in Section 2) hereof.
Employee shall have such duties and powers as are normally accorded to a Chief
Executive Officer of a corporation and shall loyally, conscientiously and in
good faith perform such duties as may be assigned to him from time to time by
the Board of Directors of the Company.
(b) BUSINESS PLAN COMMITTEE. Prior to the beginning of each
fiscal year of the Company, Employee and the Company's Board of Directors (the
"Business Plan Committee") shall work together to establish performance goals
for the Company and Employee for the coming fiscal year. The performance goals
shall be mutually agreeable to the parties and shall be set forth in a formal
business plan (the "Business Plan") to be adopted by the Board of Directors of
the Company. The Business Plan shall set forth the performance goals in a manner
that permits a quantitative determination that such performance goals have been
satisfied. Performance goals subject to quantitative analysis may include, for
example, target total sales, target net income, target earnings per share, or
any other number or financial ratio that the Business Plan Committee shall
adopt. The performance goals set forth in the Business Plan may be amended or
modified only by written consent of each member of the Business Plan Committee.
2. TERM AND TERMINATION.
(a) TERM OF AGREEMENT.
(i) ORIGINAL TERM. Unless earlier terminated as
provided in this Agreement, the term of Employee's employment shall commence on
the Closing Date and shall continue until June 30, 2002 (the "Original Term").
(ii) ONE-YEAR RENEWALS. Unless (A) the Company or
Employee delivers written notice of its or his intention not to extend the term
of this Agreement on or prior to the date that is three (3) months prior to the
expiration of the Original Term or the then applicable Annual Renewal Period (as
defined below), if any, or (B) this Agreement is otherwise terminated prior to
the expiration of the Original Term or the then applicable Annual Renewal Period
as provided in this Agreement, this Agreement shall be automatically renewed for
an
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unlimited number of additional one (1) year periods (each an "Annual Renewal
Period"). The Original Term and any Annual Renewal Periods are hereinafter
collectively referred to as the "Term."
(b) TERMINATION BY COMPANY FOR CAUSE. Notwithstanding anything in
this Agreement to the contrary, express or implied, or Section 2924 of the
California Labor Code or any similar provision, this Agreement (and Employee's
employment) may be terminated immediately and without notice by the Company for
"Cause." For the purposes of this Agreement, "Cause" shall be defined as
Employee's:
(i) material failure to perform his duties and
obligations hereunder following notice from the Board of Directors specifying
such failures in detail and Employee fails to cure or diligently commence curing
such failures within thirty (30) days of receipt of such notice;
(ii) engaging or participating in any activity which is
directly competitive with or intentionally injurious to the Company;
(iii) commission of any fraud against the Company or use
or appropriation for his personal use and benefit of any funds, assets or
properties of the Company not authorized by the Company to be so used or
appropriated; or
(iv) knowing violation of law, conviction for commission
of a felony or conviction for a crime involving dishonesty or moral turpitude.
Upon termination of this Agreement by the Company pursuant to
this Section 2(b), Employee shall be entitled to receive on the date of
termination an amount equal to Employee's Base Salary (as defined in Section 4)
prorated through the date of termination. Upon any termination of this Agreement
under this Section 2(b), Employee shall not be entitled to any Bonus amounts
otherwise due under Section 4 and, except as expressly provided under this
Section 2(b), the Company shall have no further obligations to Employee under
this Agreement.
(c) TERMINATION BY COMPANY WITHOUT CAUSE. Notwithstanding
anything in this Agreement to the contrary, express or implied, or Section 2924
of the California Labor Code or any similar provision, this Agreement (and
Employee's employment) may be terminated at the will of the Company without
Cause upon delivery of written notice to Employee. Upon any termination of this
Agreement pursuant to this Section 2(c), Employee shall be entitled to receive
an amount equal to (i) eighteen (18) months of Employee's Base Salary, plus (ii)
any unpaid Bonus amounts then earned by Employee up through the date of
termination. All amounts payable to Employee under clause (i) of the preceding
sentence shall be paid to Employee in eighteen (18) equal monthly installments
commencing on the date of termination and any Bonus amounts payable to Employee
under clause (ii) shall be paid to Employee within thirty (30) days of
termination. The total amount of Bonus due to Employee under clause (ii) above
shall be determined as of the date of termination on a prorated basis and shall
be calculated pursuant to Section 4(b)(i). Upon any termination of this
Agreement under this Section 2(c),
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except as expressly provided under this Section 2(c), the Company shall have no
further obligations to Employee under this Agreement.
(d) VOLUNTARY TERMINATION BY EMPLOYEE. Employee may voluntarily
terminate his employment with the Company by giving the Company thirty (30) days
advance written notice. Upon any voluntary termination of his employment with
the Company under this Section 2(d), Employee shall be entitled to receive an
amount equal to Employee's Base Salary prorated through the date of termination.
Upon any termination of Employee's employment with the Company pursuant to this
Section 2(d), Employee shall not be entitled to any Bonus Amounts otherwise due
under Section 4 and, except as expressly provided under this subsection (d), the
Company shall have no further obligations to Employee under this Agreement.
(e) AUTOMATIC TERMINATION. This Agreement (and Employee's
employment) shall terminate immediately and without the necessity of any notice
or any other action by any party hereto upon the first to occur of any of the
following:
(i) The death of Employee;
(ii) The loss of Employee's legal capacity to contract;
(iii) The inability of Employee to perform his duties or
responsibilities hereunder, as a result of mental or physical ailment or
incapacity, for an aggregate of ninety (90) days (whether or not consecutive)
unless waived in writing by Company;
(iv) the expiration of the Term of this Agreement,
provided that timely notice has been given as required by Section 2(a)(ii); or
Upon termination of this Agreement pursuant to any of clauses
(i), (ii) or (iii) of this Section 2(e), Employee or Employee's estate, as the
case may be, shall be entitled to an amount equal to (1) Employee's Base Salary
prorated through the date of termination and any unpaid Bonus then earned by
Employee as of the date of termination, plus (2) Employee's Base Salary for a
period of twelve (12) months. The amounts payable under (1) above shall be
payable on the date of termination. The amount payable under (2) above shall be
payable in twelve (12) equal monthly installments commencing on the date of
termination. Upon payment of such amounts, the Company shall have no further
obligations to Employee or Employee's estate, as the case may be, under this
Agreement.
(f) TERMINATION UPON CHANGE OF CONTROL. In the event that
Employee's employment with the Company (or its successor) is terminated without
Cause within twelve (12) months after a "Change of Control" of the Company,
Employee shall be entitled to receive an amount equal to (i) eighteen (18)
months of Employee's Base Salary, plus (ii) any unpaid Bonus amounts then earned
by Employee up through the date of termination. Such amount shall be paid to
Employee in eighteen (18) equal monthly installments commencing on the date of
termination. For purposes of this Agreement, a "Change of Control" shall be
deemed to have occurred upon the consummation of a (1) merger or consolidation
of the Company with
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or into any other corporation or other entity or person, or any other corporate
reorganization, in which the stockholders of the Company immediately prior to
such consolidation, merger or reorganization, own less than 30% of the Company's
voting power immediately after such consolidation, merger or reorganization; (2)
transaction or series of related transactions in which in excess of 30% of the
Company's voting power is transferred; or (3) sale of all or substantially all
of the assets of the Company."
3. EXCLUSIVITY OF EMPLOYMENT.
(a) LOYAL AND CONSCIENTIOUS SERVICE. During the Term of this
Agreement, Employee shall devote his full business time, interest, abilities and
energies to the Company and use his best efforts, skills and abilities to
promote the general welfare and interest of the Company and to preserve,
maintain and enhance its business and business relationships with its customers
and employees.
(b) NONCOMPETITION. During Employee's employment with the
Company, Employee shall not, directly or indirectly, render services of a
business, professional or commercial nature to any other person or entity that
competes with the Company's business or welfare, whether for compensation or
otherwise, or engage in any business activities competitive with the Company's
business or welfare, whether alone, as an employee, as a partner, or as a
shareholder, officer or director of any other corporation or other business
entity, or as a trustee, fiduciary or in any other similar representative
capacity of any other entity. Notwithstanding the foregoing, the expenditure of
reasonable amounts of time for educational, charitable or professional
activities shall not be deemed a breach of this Agreement if those activities do
not materially interfere with the services required under this Agreement. The
noncompetition provisions of this Section 3(b) shall terminate on June 30, 2002.
4. COMPENSATION.
(a) BASE SALARY.
(i) Beginning on the date hereof, and continuing
throughout the entire Term of this Agreement, the Company shall pay Employee a
fixed annual salary in an amount equal to Three Hundred Thousand Dollars
($300,000) or such greater amount as may be determined by the Board of Directors
from time to time (the "Base Salary").
(ii) The Base Salary shall be paid in equal installments
(subject to proration for a period of employment of greater or less than a year
or any applicable payroll period therein) on the Company's regular payroll
dates. Employee authorizes the Company to make such deductions and withholdings
from his Base Salary and any other earnings of Employee from Company as are
required by law, which deductions shall include, without limitation, withholding
for federal and state income tax and Social Security and Medicare withholdings.
(b) BONUS.
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(i) Subject to Section 4(b)(ii) below, commencing on the
fiscal year beginning November 1, 1997 and for each fiscal year of the Company
thereafter during the Term of this Agreement, Employee shall be eligible to
receive a cash bonus (the "Bonus"), assuming achievement of "100% of Plan," in
an amount equal to fifty percent (50%) of (A) Employee's Base Salary in effect
during the last fiscal year, or (B) in the event Employee's Base Salary
increases or decreases during the last fiscal year, the Employee's average
annual Base Salary during the last fiscal year. For the purposes of this
Agreement, the term "100% of Plan" shall be understood to mean that the Company
and Employee shall have satisfied each performance goal set forth in the
Business Plan for a given fiscal year.
(ii) Upon the Company and Employee achieving 100% of Plan
during any fiscal year, the Company shall pay to Employee the Bonus set forth in
Section 4(b)(i). In the event the Company and Employee fail to achieve 100% of
Plan during any fiscal year, Employee shall be entitled to receive only that
percentage of the Bonus that is equal to that percentage of the Business Plan
which the Company and Employee have achieved, as determined by the Board of
Directors; provided, however, that in no event shall Employee be entitled to any
Bonus amounts if the Company and Employee fail to achieve at least 90% of Plan,
as determined by the Board of Directors.
(c) STOCK OPTIONS.
(i) GENERAL TERMS. As soon as practicable after the
Closing Date, the Company agrees to use its best efforts to cause to be granted
to Employee an option to purchase up to seven hundred thousand (700,000) shares
of Common Stock of IPL Systems, Inc., a Massachusetts corporation ("IPL"), at an
exercise price equal to the fair market value of the Common Stock of IPL on the
date of grant (the "Option"). The Option shall be a nonstatutory stock option
and is not intended to qualify as an "incentive stock option" within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended. The Option
shall be granted under IPL's standard form of nonstatutory stock option
agreement used in connection with its employee stock option plans. The shares of
Common Stock underlying the Option shall have been registered pursuant to the
Securities Act of 1933, as amended, such that the shares when issued shall be
shall be freely tradable (subject to any restrictions that may be imposed on
"control shares" and restrictions generally placed on officers, directors or 5%
or greater shareholders of a company).
(ii) VESTING. The shares of Common Stock underlying the
Option shall vest and the Option shall become exercisable as follows:
(1) During the first year of this Agreement (the
"Initial Vesting Period"), 250,000 shares shall vest ratably and monthly
commencing on the date of this Agreement;
(2) 225,000 shares shall vest at the rate of 56,250
shares per year at the end of each year during the four-year period commencing
on the first anniversary of the end of the Initial Vesting Period;
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(3) an additional 225,000 shares shall vest at the
rate of 56,250 per year at the end of each year during the four-year period
commencing on the first anniversary of the end of the Initial Vesting Period,
provided, that, the Company meets 100% of Plan for the fiscal year in which such
vesting date occurs (that portion of the Option vesting in any fiscal year under
this Section 4(c)(ii)(3) being referred to herein as the "Contingent Option").
If the Company fails to achieve 100% of Plan during any fiscal year, Employee
shall be entitled to receive only that percentage of the Contingent Option that
is equal to that percentage of the Business Plan that the Company and Employee
have achieved; provided, however, that in no event shall Employee be entitled to
any portion of the Contingent Option that would otherwise vest in any fiscal
year if the Company and Employee fail to achieve at least 90% of Plan for such
fiscal year, as determined by the Board of Directors. Any portion of the
Contingent Option that fails to vest as set forth in this Section 4(c)(ii)(3)
shall expire and no longer be exercisable and in no event shall the shares
subject to any portion of the Contingent Option that expires under this Section
4(c)(ii)clause (3) be carried forward to any subsequent fiscal year.
(iii) LOCK-UP PERIOD. Employee acknowledges that the
shares of Common Stock of IPL underlying the Option shall be subject to certain
restrictions on disposition and in that regard Employee shall execute the form
of Lock-Up Agreement attached hereto as Exhibit A.
(iv) GOOD FAITH NEGOTIATION. In the event the Company is
unable to cause to be granted to Employee the Option, the Company and Employee
agree to negotiate in good faith alternative compensation to be paid to Employee
that is reasonably equivalent in value to the Option; provided, however, that
payment of such alternative compensation shall be in a manner that reasonably
correlates to the time period in which the Option would have vested in
accordance with this Agreement.
(d) ADDITIONAL COMPENSATION AND BENEFITS. During the term of
this Agreement:
(i) Employee shall be entitled to five (5) weeks paid
vacation in each twelve-month period during Employee's employment hereunder;
(ii) the Company shall pay or reimburse Employee for all
reasonable and necessary travel and other business expenses incurred or paid by
Employee in connection with the performance of his services under this Agreement
upon approval of the Company and presentation of expense statements, vouchers,
logs and such other supporting information as the Company may reasonably request
from time to time;
(iii) the Company shall pay or reimburse Employee for the
annual cost of premiums for a term life insurance policy insuring the life of
Employee and providing for death benefits in the amount of One Million Dollars
($1,000,000). If Employee's employment is terminated in accordance with this
Agreement, Employee shall immediately assume sole financial responsibility for
the payment of the premiums with respect to such life insurance policy;
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(iv) the Company shall provide a monthly car allowance
(including the cost of leasing, maintaining and operating the car) in an amount
to be determined by the Company and Employee upon the Employee's relocation to
San Diego;
(v) the Company shall reimburse Employee for reasonable
costs and expenses of one professional organization membership upon prior
written approval of the Company of such expenses;
(vi) Employee shall be entitled to participate in any
other policies, programs and benefits which the Company may, in its sole and
absolute discretion, make generally available to its other senior executives
from time to time including, but not limited to, disability insurance, pension
and retirement plans, health or medical insurance and similar programs; and
(vii) Employee shall be entitled to a relocation allowance
in an amount to be reasonably determined by the Company and Employee.
5. NONDISCLOSURE AND ASSIGNMENT OF PROPRIETARY AND CONFIDENTIAL
INFORMATION. In consideration and recognition of the fact that Employee has had,
or during the course of his employment with the Company may have, access to
Confidential Information (as hereinafter defined) of the Company or other
information and data of a secret or proprietary nature of the Company which the
Company desires to keep confidential, and that the Company has furnished, or
during the course of Employee's employment will furnish, such Confidential
Information to Employee, Employee agrees and acknowledges as follows:
(a) CONFIDENTIAL INFORMATION. As used herein, the term
"Confidential Information" shall mean and include, without limitation, any and
all marketing and sales data, plans and strategies, financial projections,
customer lists, prospective customer lists, promotional ideas, data concerning
the Company's services, designs, methods, inventions, improvements, discoveries
or designs, whether or not patentable, "know-how," training and sales
techniques, and any other information of a similar nature disclosed to Employee
or otherwise made known to him as a consequence of or through his employment
with the Company (including information originated by Employee) during
Employee's employment; provided, however, that the term Confidential Information
shall not include any information that (i) at the time of the disclosure or
thereafter is or becomes generally available to and known by the public, other
than as a result of a disclosure by Employee or any agent or representative of
Employee in violation of this Agreement, or (ii) was available to Employee on a
non-confidential basis from a source other than the Company, or any of its
officers, directors, employees, agents or other representatives.
(b) EXCLUSIVE RIGHTS; ASSIGNMENT TO COMPANY. The Company has
exclusive property rights to all Confidential Information, and Employee hereby
assigns to Company all rights he might otherwise possess in any Confidential
Information. Except as required in the performance of his duties to the Company,
Employee will not at any time during or after his employment, directly or
indirectly use, communicate, disclose, disseminate, lecture upon, publish
articles or otherwise disclose or put in the public domain, any Confidential
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Information relating to the Company, or its services, products or business.
Employee agrees to deliver to the Company any and all copies of Confidential
Information in the possession or control of Employee upon the expiration or
termination of this Agreement, or at any other time upon request. This Section 5
shall survive the termination of this Agreement and the termination of
Employee's employment with the Company.
6. SOLICITATION OF EMPLOYEES. In consideration and recognition of
the fact that Employee's position with the Company is an executive position
involving fiduciary responsibility to the Company and access to the Company's
Confidential Information, Employee agrees that he will not solicit or take away
any employees of the Company for employment by any enterprise that competes
with, or is engaged in a substantially similar business to, the business of, the
Company. This Section 6 shall survive for a period of two (2) years from the
date of termination of this Agreement.
7. REPRESENTATION BY EMPLOYEE. Employee represents and warrants that
he is under no restriction or disability by reason of any prior contract or
otherwise which would prevent him from entering into and performing his duties
and obligations under this Agreement.
8. NOTICES. All notices, requests, demands and other communications
under this Agreement must be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or on the date indicated on the return receipt as the date of
receipt or refusal if mailed to the party to whom notice is to be given by first
class mail, registered or certified, postage prepaid, return receipt requested,
and properly addressed as follows:
to the Company: ANDATACO
00000 Xxxx Xxx Xxxx
Xxx Xxxxx, XX 00000
Attn: President
Fax: (000) 000-0000
to the Employee: XXXXXX RAVINE
0000 Xxxxxxxxx Xxxxx
Xxxxx, XX 00000
Fax: (000) 000-0000
Any party may change its address for the purpose of this Section
8 by giving the other party written notice of the new address in the manner set
forth above.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding of the parties with respect to the transactions contemplated
hereby, and supersedes all prior agreements, arrangements and understandings
relating to the subject matter hereof, written or otherwise.
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10. AMENDMENT. This Agreement may be amended, modified, superseded or
canceled, and any of the terms, covenants or conditions hereof may be amended,
only by a written instrument executed by Employee and by an authorized
representative of the Company which expressly states the intention of the
parties to modify the terms of this Agreement.
11. WAIVER. Any failure to exercise or delay in exercising any right,
power or privilege herein contained, or any failure or delay at any time to
require the other party's performance of any obligation under this Agreement,
shall not affect the right to subsequently exercise that right, power or
privilege, or to require performance of that obligation. A waiver of any of the
provisions of this Agreement shall not be deemed, nor shall constitute, a waiver
of any other provision, whether or not similar, nor shall any waiver constitute
a continuing waiver. A waiver shall not be binding unless executed in writing by
the party making the waiver.
12. ASSIGNMENT; BINDING EFFECT. This Agreement shall inure to the
benefit of, and be enforceable by, the Company and its successors and assigns;
however, this Agreement is personal to Employee and may not be assigned by
Employee in whole or in part.
13. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be valid and effective under
applicable law. If any provision of this Agreement shall be unlawful, void or
for any reason unenforceable, it shall be deemed separable from, and shall in no
way affect the validity or enforceability of, the remaining provisions of this
Agreement, and the rights and obligations of the parties shall be enforced to
the fullest extent possible.
14. ATTORNEYS' FEES. In any judicial action or proceeding or any
arbitration proceeding between the parties to enforce any of the provisions of
this Agreement, to seek damages on account of the breach hereof, to seek
injunctive relief to prevent the breach hereof, to seek a judicial determination
of the rights or obligations of any party hereto, or in any judicial action or
proceeding or any arbitration proceeding between the parties in which this
Agreement is raised as a defense, regardless of whether the action or proceeding
is prosecuted to judgment, and in addition to any other remedy, the unsuccessful
party shall pay the successful party all costs and expenses, including
reasonable attorneys' fees, incurred by the successful party.
15. GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed by, the laws of the State of California, excluding any choice
of law principles which direct the application of the laws of another
jurisdiction.
16. EFFECT OF HEADINGS. The subject headings of this Agreement are
included for convenience only, and shall not affect the construction or
interpretation of any of its provisions.
17. COUNTERPARTS. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
"Company" ANDATACO,
a California corporation
By: /s/ W. XXXXX XXXXX
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Name: W. Xxxxx Xxxxx
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Title: President
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"Employee" /s/ XXXXXX RAVINE
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XXXXXX RAVINE
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