EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this "AGREEMENT") is effective as
of February 17, 2006 (the "EFFECTIVE DATE"), by and between Patron Systems,
Inc., a Delaware corporation (the "COMPANY") and Xxxxxx Waverley ("EXECUTIVE").
1. ENGAGEMENT AND DUTIES.
1.1 Commencing upon the Effective Date, and upon the
terms and subject to the conditions set forth in this Agreement, the Company
hereby engages and employs Executive as an officer of the Company, with the
title and designation of Chief Operating Officer of the Company. Executive
hereby accepts such engagement and employment.
1.2 Executive's duties and responsibilities shall be
those normally and customarily vested in the office of Chief Operating Officer
of a corporation, subject to the supervision, direction and control of the Chief
Executive Officer and the Board of Directors of the Company ("BOARD"). In
addition, Executive's duties shall include those duties and services for the
Company and its affiliates as the Chief Executive Officer and the Board shall
from time to time reasonably direct. Executive shall report directly to the
Chief Executive Officer.
1.3 Executive agrees to devote his primary business time,
energies, skills, efforts and attention to his duties hereunder, and will not,
without the prior written consent of the Board, which consent will not be
unreasonably withheld, render any material services to any other business
concern. Notwithstanding the foregoing, Executive shall not be restricted from
serving on the board of directors of up to three non-competitive businesses at
any one time or from engaging in charitable or community affairs or managing his
personal passive investments, so long as such activities do not materially
interfere or conflict with Executive's duties hereunder. Executive will use his
best efforts and abilities faithfully and diligently to promote the Company's
business interests.
1.4 Except for routine travel incident to the business of
the Company, Executive shall perform his duties and obligations under this
Agreement principally from an office provided by the Company in Chicago,
Illinois, or such other location in the Chicago metropolitan area as the Chief
Executive Officer or the Board may from time to time determine.
2. TERM OF EMPLOYMENT. Unless earlier terminated pursuant to the
provisions hereof, the initial term ("INITIAL TERM") of Executive's employment
under this Agreement shall be for a period of one (1) year commencing on the
Effective Date. Said term shall be automatically renewed thereafter for
successive one (1)-year terms (the Initial Term and any renewal terms, the
"TERM") unless the Chief Executive Officer or the Board or any successor entity
provides Executive with written notice of termination or non-renewal 90 days
prior to the expiration of the then current Term.
3. TERMINATION.
3.1 Executive's employment pursuant to this Agreement
shall terminate on the earliest to occur of the following:
(a) the expiration of the Term;
(b) the death of Executive;
(c) delivery to Executive of written notice of
termination by the Company if Executive shall suffer a "permanent disability,"
which for purposes of this Agreement shall mean a physical or mental disability
which, in the reasonable judgment of the Board, is likely to render Executive
unable to perform his duties and obligations under this Agreement for 90 days in
any 12-month period;
(d) delivery to Executive of written notice of
termination by the Company "for cause," by reason of: (i) any act or omission
knowingly undertaken or omitted by Executive with the intent of causing damage
to the Company or its affiliates, its properties, assets or business, or its
stockholders, officers, directors or employees; (ii) any act of Executive
involving a material personal profit to Executive, such as, any fraud,
misappropriation or embezzlement, involving properties, assets or funds of the
Company or any of its subsidiaries; (iii) Executive's consistent failure to
perform his normal duties or any obligation under any provision of this
Agreement (other than if caused by a "permanent disability" as defined above),
in either case, as directed by the Chief Executive Officer or the Board; (iv)
conviction of, or pleading nolo contendere to, (A) any crime or offense
involving monies or other property of the Company; (B) any felony offense; or
(C) any crime of moral turpitude; or (v) the chronic or habitual use or
consumption of drugs or alcoholic beverages;
(e) delivery to the Company of written notice of
termination by Executive "for good reason," by reason of (i) a material change
in Executive's function, authority, duties, compensation or responsibilities,
without Executive's express written consent; (ii) the naming of a new Chief
Executive Officer other than himself (iii) Executive is not offered a promotion
to Chief Executive Officer with a base salary of at least $220,000 on or before
June 30, 2006; (iv) Executive's base salary is decreased below $200,000 per year
(or decreased below $220,000 as Chief Executive Officer), unless the base
salaries of the other senior executives are also subject to similar reductions;
(v) a substantial difference of opinion between Executive and the Board
develops, or other circumstances should arise such that Executive, in good
faith, no longer believes that he can function effectively as Chief Operating
Officer (or Chief Executive Officer once promoted) of the Company; (vi) any
material failure by the Company to comply with any of the provisions of this
Agreement; (vii) Executive is required to relocate his primary residence out of
the metropolitan Chicago area; (viii) the consummation of a Change in Control
(as hereinafter defined); or (ix) any other matter or circumstance requested by
the Board if either (a) made with the intent of hindering Executive in the
performance of his duties hereunder or creating an incentive for Executive to
exercise his rights under this Section 3.1(e) hereof or (b) the effect of such
request could reasonably be expected to hinder Executive in the performance of
his duties hereunder or create an incentive for Executive to exercise his rights
under this Section 3.1(e);
(f) delivery to the Company of written notice of
termination by Executive at least thirty days' prior to the effective date, at
any time subsequent to the expiration of the Initial Term; or
(g) delivery to Executive of written notice of
termination by the Company "without cause" at least thirty days prior to the
effective date.
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3.2 With regard to Section 3.1(d), the Company shall
first provide Executive with 30-days written notice of such alleged misconduct,
including a specific description of such misconduct sufficient to allow
Executive an opportunity to correct such noted problems. Executive shall have
the opportunity to appear before the Board, with his legal counsel, to present
any relevant information he believes the Board should consider. Executive shall
not be terminated under Section 3.1(d) unless, after the notice period expires,
Executive continues to fail to satisfactorily perform his duties.
3.3 With regard to Section 3.1(e), if Executive
determines that "good reason" as defined in Section 3.1(e) exists, Executive
shall so notify the Company in writing. The Company shall have thirty (30) days
to remedy the facts and circumstances that provided "good reason" as defined in
Section 3.1(e). If adequate remedy has occurred, Executive shall continue in the
employ of the Company as if no notice had been given. If adequate remedy has not
occurred, Executive may, at his option, terminate his employment for "good
reason" as defined in Section 3.1(e).
4. COMPENSATION; EXECUTIVE BENEFIT PLANS.
4.1 The Company shall pay to Executive a base salary at
an annual rate of $200,000 ($220,000 if promoted to Chief Executive Officer)
during the term of this Agreement ("BASE SALARY"). The Base Salary shall be
payable in installments throughout the year in the same manner and at the same
times the Company pays base salaries to other executive officers of the Company.
In the event that Executive's employment is terminated pursuant to Sections 3.1
(b), (c), (e), (f) or (g), above, Executive or Executive's estate shall continue
to receive Executive's Base Salary plus the Bonus, if any, applicable for
achieving "target" objectives and shall be entitled to continued participation
in the Company Executive Benefit Plans (as defined below) for a period of six
(6) months. Executive shall also receive payment for all approved expenses for
which he has not been reimbursed pursuant to Section 4.4. Notwithstanding the
foregoing, the Company shall not be obligated to pay Executive any amounts
hereunder following the termination of Executive's employment pursuant to
Section 3.1 (c), (e), (f) or (g), above, from and after any time that Executive
accepts an employment or consulting position with any person or entity that is
determined to be a competitor of the Company.
4.2 In addition to the Base Salary to be paid to
Executive hereunder, the Company shall pay a performance bonus (the "BONUS")
determined in accordance with revenue milestones to be agreed upon between
Executive and the Board on a quarterly basis. Executive shall be eligible to
receive a Bonus of up to seventy-five percent (75%) of Executive's Base Salary
for each quarter upon achieving the "target" objectives set forth in the
management incentive plan agreed to between Executive and the Chief Executive
Officer or the Board, and payments of such lesser or greater amounts upon
achieving results less than or greater than the "target" objectives as shall be
contained in the management incentive plan agreed to between Executive and the
Chief Executive Officer or the Board.
4.3 Executive shall be entitled each year to vacation for
a minimum of four (4) calendar weeks, plus such additional period or periods as
the Board may approve in the exercise of its reasonable discretion, during which
time his compensation shall be paid in full.
4.4 Executive shall be entitled to reimbursement from the
Company for the reasonable and necessary costs and expenses which he incurs in
connection with the performance
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of his duties and obligations under this Agreement in a manner consistent with
the Company's practices and policies as adopted or approved from time to time by
the Chief Executive Officer or the Board for executive officers.
4.5 The Company may deduct from any compensation payable
to Executive the minimum amounts sufficient to cover applicable federal, state
and/or local income tax withholding, old-age and survivors' and other social
security payments, state disability and other insurance premiums and payments.
4.6 During the term of his employment hereunder,
Executive shall be eligible to participate in all operative employee benefit and
welfare plans of the Company then in effect from time to time and in respect of
which all executive officers of the Company and its affiliates generally are
entitled to participate ("COMPANY EXECUTIVE BENEFIT PLANS"), including, to the
extent then in effect, group life, medical, disability and other insurance
plans, all on the same basis applicable to employees of the Company whose level
of management and authority is comparable to that of Executive.
4.7 Executive shall be added as a fully covered person
under the Company's director and officer liability insurance policy, and, to the
extent the Company has such policies in effect, the Company's errors and
omissions and employee practices liability insurance policies. Such director and
officer liability insurance policy shall have minimum coverage of $3 million,
and the Company shall maintain such director and officer liability insurance
policy in good standing with an A-rated insurance company. The Company will
fully disclose to Executive any and all exclusions in these policies, as
applicable.
5. STOCK OPTIONS
5.1 COMMON STOCK OPTIONS. The Company hereby grants to
Executive, as of the Effective Date, an option (the "INITIAL OPTION") to
purchase that number of shares of the Common Stock, par value $0.01 per share
("COMMON Stock") of the Company, representing an aggregate of three and one half
percent (3.5%) of the shares of Common Stock issued and outstanding on the
Effective Date on a fully-diluted basis, at an exercise price of $0.055 per
share. The Initial Option shall vest according to the following schedule: 20% on
the Effective Date and 1/48th of the balance on the last day of each month for
the 48 months following the Effective Date until fully vested. The Initial
Option shall expire on February 16, 2016. Concurrently herewith, Executive and
the Company shall enter into an Option Agreement substantially in the form
attached hereto as EXHIBIT A ("OPTION AGREEMENT"). Upon the completion of the
Recapitalization (as hereinafter defined) and subject to Section 5.2 below, the
Company shall grant to Executive an additional option (the "ADDITIONAL OPTION"
and together with the Initial Option, "OPTION") to purchase that number of
shares of Common Stock which shall enable Executive to purchase, along with the
Initial Option, shares of Common Stock representing an aggregate of three and
one half percent (3.5%) of the shares of Common Stock issued and outstanding
immediately after the completion of the Recapitalization on a fully-diluted
basis. The Additional Option shall be represented by an Option Agreement, shall
expire on February 16, 2016, and shall vest according to the following schedule:
20% on the date of grant and 1/48th of the balance on the last day of each month
for the 48 months following the Effective Date until fully vested. For purposes
of this Agreement, the "COMPLETION OF THE RECAPITALIZATION" shall mean the
completion of the Company's exchange offer pursuant to which all of the
Company's creditors and claimants are exchanging the aggregate of their
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collective claims (which claims amount to approximately $30,000,000) into shares
of the Series A-1 Preferred Stock of the Company and the completion of the
Company's Series A Preferred Stock financing pursuant to which the Company will
issue shares of Series A Preferred Stock in consideration of an amount not less
than $3,000,000.
5.2 OPTIONS UPON PROMOTION. Upon Executive's promotion to
Chief Executive Officer of the Company, the Company shall grant to Executive an
additional option (the "PROMOTION OPTION") to purchase that number of shares of
Common Stock representing an aggregate of an additional three and one half
percent (3.5%) of the shares of Common Stock issued and outstanding and on a
fully-diluted basis.
(a) In the event that Executive is promoted
subsequent to the completion of the Recapitalization, the Promotion Option shall
entitle Executive to purchase that number of shares of Common Stock representing
an aggregate of an additional three and one half percent (3.5%) of the shares of
Common Stock issued and outstanding immediately after the completion of the
Recapitalization and on a fully-diluted basis.
(b) In the event that Executive is promoted
prior to the completion of the Recapitalization, the Initial Option and
Promotion Option shall represent an aggregate of seven percent (7%) of the
shares of Common Stock issued and outstanding on the Effective Date on a
fully-diluted basis, and the Additional Option shall entitle Executive to
purchase that number of shares of Common Stock which shall enable Executive to
purchase, along with the Initial Option and Promotion Option, shares of Common
Stock representing an aggregate of seven percent (7%) of the shares of Common
Stock issued and outstanding after the Recapitalization on a fully-diluted
basis.
5.3 ACCELERATED VESTING IN THE EVENT OF A HOSTILE
TAKEOVER. Upon the consummation of a Hostile Takeover (as hereinafter defined),
each option of Executive granted pursuant to any option agreement between
Executive and the Company, will fully vest. For purposes of this Agreement, a
"HOSTILE TAKEOVER" shall mean, except as provided in Section 5.3 below, a
transaction or series of transactions that result in any person (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) other
than the Company, becoming the beneficial owner (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934), directly or indirectly, of securities of
the Company representing more than 50% of the Company's voting stock, without
the approval of the Board.
5.4 ACCELERATED VESTING IN THE EVENT OF A CHANGE OF
CONTROL. Upon the consummation of a Change in Control, each option of Executive
granted pursuant to any option agreement between Executive and the Company, will
immediately vest to the extent of 50% of those shares that have not previously
or otherwise vested prior to the Change of Control, whether or not Executive's
employment is terminated by the Company or a successor corporation of the
Company. Following a Change of Control, the balance of unvested shares of each
outstanding option of Executive granted pursuant to any option agreement between
Executive and the Company shall continue to vest at the same rate and under the
same terms as provided by the applicable option agreement. For purposes of this
Agreement, a "CHANGE IN CONTROL" shall mean (a) a merger or consolidation that
results in more than 50% of the voting stock of the Company or its successor
changing beneficial ownership (provided such change of ownership is approved by
the Board); (b) the sale or transfer of all or substantially all of the
Company's assets; (c) the approval of a plan of dissolution or liquidation of
the Company; or (d) a
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transaction pursuant to which fewer than a majority of the incumbent directors
remain directors after the consummation of such transaction.
5.5 EXERCISE FOLLOWING RETIREMENT. If Executive's
employment by the Company terminates after Executive has completed five years of
service as an employee of the Company and is at least 55 years of age, each
option of Executive granted pursuant to any option agreement between Executive
and the Company shall remain exercisable with respect to the number of shares
subject to such option that are exercisable upon the effective date of
Executive's retirement, until the Expiration Date defined in Exhibit A or two
years following the effective date of such termination, whichever comes first.
5.6 FULLY-DILUTED BASIS. Common Stock issued and
outstanding on a "FULLY-DILUTED BASIS" shall mean all shares of Common Stock
issued and outstanding on the date of calculation, plus all shares of Common
Stock issuable upon conversion of outstanding shares of preferred stock or
exercise of outstanding warrants.
6. CONFIDENTIALITY OF PROPRIETARY INFORMATION AND MATERIAL.
6.1 INDUSTRIAL PROPERTY RIGHTS. For the purpose of this
Agreement, "INDUSTRIAL PROPERTY RIGHTS" shall mean all of the Company's patents,
trademarks, trade names, inventions, copyrights, know-how or trade secrets,
formulas and science, now in existence or hereafter developed or acquired by the
Company or for its use, relating to any and all products and services which are
developed, formulated and/or manufactured by the Company.
6.2 TRADE SECRETS. For the purpose of this Agreement,
"TRADE SECRETS" shall mean any confidential formula, pattern, device, or
compilation of information that is used in the Company's business and gives the
Company an opportunity to obtain an advantage over its competitors who do not
know and/or do not use it. This term includes, but is not limited to,
information relating to the marketing of the Company's products and services,
including price lists, pricing information, customer lists, customer names, the
particular needs of customers, information relating to their desirability as
customers, financial information, intangible property and other such information
which is not in the public domain.
6.3 TECHNICAL DATA. For the purpose of this Agreement,
"TECHNICAL DATA" shall mean all confidential information of the Company in
written, graphic or tangible form relating to any and all products which are
developed, formulated and/or manufactured by the Company, as such information
exists as of the Effective Date or is developed by the Company during the term
hereof.
6.4 PROPRIETARY INFORMATION. For the purpose of this
Agreement, "PROPRIETARY INFORMATION" shall mean any and all of the Company's
Industrial Property Rights, Trade Secrets and Technical Data. Proprietary
Information shall not include any information which (i) was lawfully in the
possession of Executive prior to Executive's employment with the Company, (ii)
may be obtained by a reasonably diligent businessperson from readily available
and public sources of information, (iii) is lawfully disclosed to Executive
after termination of Executive's employment by a third party which does not have
an obligation to the Company to keep such information confidential, or (iv) is
independently developed by Executive after termination of Executive's employment
without utilizing any of the Company's Proprietary Information.
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6.5 AGREEMENT NOT TO COPY OR USE. Executive agrees, at
any time during the term of his employment and for a period of ten years
thereafter, not to copy, use or disclose (except as required by law after first
notifying the Company and giving it an opportunity to object or except for
internal Company use) any Proprietary Information without the Company's prior
written permission. The Company may withhold such permission as a matter within
its sole discretion during the term of this Agreement and thereafter.
7. RETURN OF CORPORATE PROPERTY AND TRADE SECRETS. Upon any
termination of this Agreement, Executive shall turn over to the Company all
property, writings or documents then in his possession or custody belonging to
or relating to the affairs of the Company or comprising or relating to any
Proprietary Information.
8. DISCOVERIES AND INVENTIONS.
8.1 DISCLOSURE. Executive will promptly disclose in
writing to the Company complete information concerning each and every invention,
discovery, improvement, device, design, apparatus, practice, process, method,
product or work of authorship, whether patentable or not, made, developed,
perfected, devised, conceived or first reduced to practice by Executive, whether
or not during regular working hours (hereinafter referred to as "Developments"),
either solely or in collaboration with others, (a) prior to the term of this
Agreement while working for the Company, (b) during the term of this Agreement
or (c) within six months after the term of this Agreement, if relating either
directly or indirectly to the business, products, practices, techniques or
confidential information of the Company.
8.2 ASSIGNMENT. Executive, to the extent that he has the
legal right to do so, hereby acknowledges that any and all Developments are the
property of the Company and hereby assigns and agrees to assign to the Company
any and all of Executive's right, title and interest in and to any and all of
such Developments; PROVIDED, HOWEVER, that the provisions of this Section 8.2
shall not apply to any Development that Executive developed entirely on his own
time without using the Company's equipment, supplies, facilities or trade secret
information except for those Developments that either:
(a) relate at the time of conception or
reduction to practice to the Company's business, or actual or demonstrably
anticipated research or development of the Company; or
(b) result from any work performed by Executive
for the Company.
8.3 ASSISTANCE OF EXECUTIVE. Upon request and without
further compensation therefor, but at no expense to Executive, and whether
during the term of this Agreement or thereafter, Executive will do all
reasonable lawful acts, including, but not limited to, the execution of papers
and lawful oaths and the giving of testimony, that, in the reasonable opinion of
the Company, its successors and assigns, may be necessary or desirable in
obtaining, sustaining, reissuing, extending and enforcing United States and
foreign Letters Patent, including, but not limited to, design patents, on any
and all Developments and for perfecting, affirming and recording the Company's
complete ownership and title thereto, subject to the proviso in Section 8.2
hereof, and Executive will otherwise reasonably cooperate in all proceedings and
matters relating thereto.
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8.4 RECORDS. Executive will keep complete and accurate
accounts, notes, data and records of all Developments in the manner and form
requested by the Company. Such accounts, notes, data and records shall be the
property of the Company, subject to the proviso in Section 8.2 hereof, and, upon
request by the Company, Executive will promptly surrender the same to it or, if
not previously surrendered upon its request or otherwise, Executive will
surrender the same, and all copies thereof, to the Company upon the conclusion
of his employment.
8.5 OBLIGATIONS, RESTRICTIONS AND LIMITATIONS. Executive
understands that the Company may enter into agreements or arrangements with
agencies of the United States Government and that the Company may be subject to
laws and regulations which impose obligations, restrictions and limitations on
it with respect to inventions and patents which may be acquired by it or which
may be conceived or developed by employees, consultants or other agents
rendering services to it. Executive agrees that he shall be bound by all such
obligations, restrictions and limitations applicable to any such invention
conceived or developed by him during the term of this Agreement and shall take
any and all further action which may be required to discharge such obligations
and to comply with such restrictions and limitations.
9. NON-SOLICITATION COVENANT; COVENANT NOT TO COMPETE.
9.1 NON-SOLICITATION AND NONINTERFERENCE. During the term
of this Agreement and for a period of one year thereafter, Executive shall not
(a) induce or attempt to induce any employee of the Company to leave the employ
of the Company or in any way interfere adversely with the relationship between
any such employee and the Company, (b) induce or attempt to induce any employee
of the Company to work for, render services or provide advice to or supply
confidential business information or trade secrets of the Company to any third
person, firm or corporation or (c) induce or attempt to induce any customer,
supplier, licensee, licensor or other business relation of the Company to cease
doing business with the Company or in any way interfere with the relationship
between any such customer, supplier, licensee, licensor or other business
relation and the Company.
9.2 INDIRECT SOLICITATION. Executive agrees that, during
the term of this Agreement and the period covered by Section 9.1 hereof, he will
not, directly or indirectly, assist or encourage any other person in carrying
out, directly or indirectly, any activity that would be prohibited by the
provisions of Section 9.1 if such activity were carried out by Executive, either
directly or indirectly; and, in particular, Executive agrees that he will not,
directly or indirectly, induce any employee of the Company to carry out,
directly or indirectly, any such activity.
9.3 COVENANT NOT TO COMPETE. During the term of this
Agreement and for a period of one year thereafter, Executive shall not, directly
or indirectly, either individually or as a principal, partner, agent, employee,
employer, consultant, stockholder, joint venturer, or investor, or as a director
or officer of any corporation or association, or in any other manner or capacity
whatsoever, engage in, assist or have any active interest in a business that
engages in the business of the development and distribution of email security
software, electronic forms software and homeland security software and systems
competitive with the Company's products and services. Notwithstanding the above,
this paragraph shall not be construed to prohibit Executive from owning less
than two percent (2%) of the securities of a corporation which is publicly
traded on a securities exchange or over-the-counter. This paragraph shall have
no effect subsequent to the Company's cessation of business due to dissolution
or liquidation, or the Company's material breach of the
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terms of this Agreement, where such breach is not cured within 10 days of
receipt of written notice from Executive, which notice shall have been
transmitted by Executive no later than 10 days subsequent to the occurrence of
such material breach.
10. INJUNCTIVE RELIEF. Executive hereby recognizes, acknowledges
and agrees that in the event of any breach by Executive of any of his covenants,
agreements, duties or obligations contained in Sections 6, 7, 8 and 9 of this
Agreement, the Company would suffer great and irreparable harm, injury and
damage, the Company would encounter extreme difficulty in attempting to prove
the actual amount of damages suffered by the Company as a result of such breach,
and the Company would not be reasonably or adequately compensated in damages in
any action at law. Executive therefore covenants and agrees that, in addition to
any other remedy the Company may have at law, in equity, by statute or
otherwise, in the event of any breach by Executive of any of his covenants,
agreements, duties or obligations contained in Sections 6, 7, 8 and 9 of this
Agreement, the Company shall be entitled to seek and receive temporary,
preliminary and permanent injunctive and other equitable relief from any court
of competent jurisdiction to enforce any of the rights of the Company, or any of
the covenants, agreements, duties or obligations of Executive hereunder, and/or
otherwise to prevent the violation of any of the terms or provisions hereof, all
without the necessity of proving the amount of any actual damage to the Company
or any affiliate thereof resulting there from; provided, however, that nothing
contained in this Section 10 shall be deemed or construed in any manner
whatsoever as a waiver by the Company of any of the rights which the Company may
have against Executive at law, in equity, by statute or otherwise arising out
of, in connection with or resulting from the breach by Executive of any of his
covenants, agreements, duties or obligations hereunder.
11. MISCELLANEOUS.
11.1 MEDIATION OF DISPUTES. Neither party shall initiate
arbitration, or other legal proceedings (except for any claim in equity under
Sections 6, 7, 8 and 9 of this Agreement), against the other party , or, in the
case of the Company, any of its directors, officers, employees, agents, or
representatives, relating in any way to this Agreement, to Executive's
employment with Company, the termination of his employment or any or all other
claims that one party might have against the other party until 30 days after the
party against whom the claim is made ("RESPONDENT") receives written notice from
the claiming party of the specific nature of any purported claim and the amount
of any purported damages. Executive and Company further agree that if Respondent
submits the claiming party's claim to the Center for Public Resources, 000 Xxxxx
Xxxxxx, Xxx Xxxx, XX 00000 for nonbinding mediation prior to the expiration of
such 30 day period, the claiming party may not institute arbitration or other
legal proceedings against Respondent until the completion of nonbinding
mediation efforts so long as Respondent proceeds with diligence to complete the
mediation.
11.2 BINDING ARBITRATION. The parties agree that they will
use their best efforts to amicably resolve any dispute arising out of or
relating to this Agreement. Any controversy, claim or dispute that cannot be
resolved by mediation shall be settled by final binding arbitration in
accordance with the rules of the American Arbitration Association and judgment
upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. Any such arbitration shall be conducted in Xxxx County,
Illinois, or such other place as may be mutually agreed upon by the parties.
Within fifteen (15) days after the commencement of the arbitration the parties
shall agree upon an arbitrator. If the parties cannot agree within ten (10)
days, the American Arbitration Association shall select the arbitrator. Each
party shall bear its
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own costs and expenses and an equal share of the arbitrator's expenses and
administrative fees of arbitration.
11.3 NOTICES. All notices, requests and other
communications (collectively, "NOTICES") given pursuant to this Agreement shall
be in writing, and shall be delivered by personal service or by United States
first class, registered or certified mail (return receipt requested), postage
prepaid, addressed to the party at the address set forth below:
If to Company:
Patron Systems, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: Board of Directors
If to Executive, at the address maintained for
Executive in the Company's payroll records.
Any Notice shall be deemed duly given when received by the addressee thereof,
provided that any Notice sent by registered or certified mail shall be deemed to
have been duly given three days from date of deposit in the United States mails,
unless sooner received. Either party may from time to time change its address
for further Notices hereunder by giving notice to the other party in the manner
prescribed in this section.
11.4 ENTIRE AGREEMENT. This Agreement contains the sole
and entire agreement and understanding of the parties with respect to the entire
subject matter of this Agreement, and any and all prior agreements, discussions,
negotiations, commitments and understandings, whether oral or otherwise, related
to the subject matter of this Agreement are hereby merged herein. No
representations, oral or otherwise, express or implied, other than those
contained in this Agreement have been relied upon by any party to this
Agreement.
11.5 ATTORNEYS' FEES. If any action, suit or other
proceeding is instituted to remedy, prevent or obtain relief from a default in
the performance by any party of its obligations under this Agreement, each party
shall bear its own costs and expenses.
11.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
11.7 CAPTIONS. The various captions of this Agreement are
for reference only and shall not be considered or referred to in resolving
questions of interpretation of this Agreement.
11.8 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
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11.9 BUSINESS DAY. If the last day permissible for
delivery of any Notice under any provision of this Agreement, or for the
performance of any obligation under this Agreement, shall be other than a
business day, such last day for such Notice or performance shall be extended to
the next following business day (provided, however, under no circumstances shall
this provision be construed to extend the date of termination of this
Agreement).
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Company: Executive:
PATRON SYSTEMS, INC.
By: /s/ Xxxxxx Xxxxx /s/ Xxxxxx Waverley
---------------------------------------- --------------------------------
Xxxxxx Xxxxx, Chief Executive Officer Xxxxxx Waverley
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EXHIBIT A
OPTION AGREEMENT
