EMPLOYMENT AGREEMENT (John Elwood)
Exhibit 10.74
EMPLOYMENT AGREEMENT
(Xxxx Xxxxxx)
(Xxxx Xxxxxx)
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is effective as of February 1, 2010 (the
“Effective Date”), by and between Xxxxx Instruments Corp., a Delaware corporation (the “Company”),
and Xxxx Xxxxxx (“Executive”).
WITNESSETH:
WHEREAS, the Company and Executive desire to enter into this Agreement to assure the Company
of the continuing and exclusive service of Executive and to set forth the terms and conditions of
Executive’s employment with the Company.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the
parties agree as follows:
1. Term. The Company hereby employs Executive, and Executive hereby accepts such
employment, for an initial term commencing as of the Effective Date and ending on February 28,
2011, unless sooner terminated in accordance with the provisions of Section 5; with such employment
to continue thereafter for successive one-year periods in accordance with the terms of this
Agreement on March 1, 2011 and each anniversary thereof (subject to termination as aforesaid)
unless either party notifies the other party in writing not less than thirty (30) days before
expiration of the initial term and each annual renewal thereof (the period during which Executive
is employed hereunder being hereinafter referred to as the “Term”) of an intent not to renew this
Agreement.
2. Services and Exclusivity of Services. So long as this Agreement shall continue in
effect, Executive shall devote Executive’s full business time, energy and ability exclusively to
the business, affairs and interests of the Company and matters related thereto, shall use
Executive’s best efforts and abilities to promote the Company’s interests and shall perform the
services contemplated by this Agreement in accordance with policies established by and under the
direction of the Company’s Board of Directors (the “Board”) and/or the Company’s Chief Executive
Officer.
Without the prior express written authorization of the Board, Executive shall not, directly or
indirectly, during the term of this Agreement render services to any other person or firm for
compensation or engage in any activity competitive with or adverse to the Company’s business.
Executive may serve as a director or in any other capacity of any business enterprise or any
nonprofit or governmental entity or trade association, provided in each case that such service is
approved in advance of such service and in writing by the Board. Notwithstanding the foregoing,
Executive may make and manage personal business investments of Executive’s choice and serve in any
capacity with any civic, educational or charitable organization without seeking the approval of the
Board, provided that such activities and services do not materially interfere or conflict with the
performance of the duties hereunder or create any conflict of interest with such duties.
3. Duties and Responsibilities. Executive shall serve as the Chief Financial Officer
of the Company for the duration of this Agreement. In the performance of Executive’s duties,
Executive shall report directly to the Company’s Chief Executive Officer and shall be subject to
the direction of the Company’s Chief Executive Officer and to such limits on Executive’s authority
as the Company’s Chief Executive Officer may from time to time impose. During the term of this
Agreement, Executive shall be based at the Company’s principal executive offices in Orange County,
California. Executive agrees to observe and comply with the rules and regulations of the Company
and agrees to carry out and perform orders, directions and policies of the Company, the Board and
the Company’s Chief Executive Officer as they may be, from time to time, stated in writing.
4. Compensation.
(a) Base Compensation. During the term of this Agreement, the Company agrees to pay
Executive an annual base salary at the rate of One Hundred Sixty-Five Thousand Dollars ($165,000)
per year, payable in accordance with the Company’s practices in effect from time to time (the “Base
Salary”).
(b) Incentive Compensation.
(i) Executive shall also be entitled to a cash bonus if certain targets are achieved. The
calculation of such cash bonus amount shall be determined by the Company’s compensation committee
within the first sixty (60) days of each fiscal year; provided, however, that for the Company’s
FY2011 the cash bonus shall be calculated as set forth in Section 4(b)(ii) below.
(ii) If the Company’s Net Sales for FY2011 exceed Twenty-Five Million Dollars ($25,000,000),
Executive would be entitled to a cash bonus equal to the lesser of (A) the product of (1) the
amount of the Company’s Net Sales for FY2011 in excess of Twenty-Five Million Dollars ($25,000,000)
multiplied by (2) 0.0165, and (B) Eighty-Two Thousand Five Hundred Dollars ($82,500). Any such
cash bonus shall be paid to Executive prior to April 15, 2011. For purposes of this Agreement, the
following terms shall have the following meanings:
“FY2011” means the Company’s fiscal year ending February 28, 2011.
“Net Sales” means the Company’s net sales, as determined in accordance with generally accepted
accounting principles in the United States.
(iii) If Executive is terminated by the Company for any reason or Executive voluntarily
terminates his employment for any reason at any time prior to end of FY2011, Executive shall not be
entitled to any payment under Section 4(b)(ii); provided, however, if after November 1, 2010,
Executive is terminated by the Company without Cause, he terminates his employment for Good Reason,
he dies, he suffers a Disability, or this Agreement is not renewed by the Company, then the Company
shall pay Executive or his estate (in the case of his death) any payment which would be due and
payable under Section 4(b)(ii) as if he had remained employed by the Company throughout the end of
FY2011.
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(c) Other Benefits. Executive shall also be entitled to all rights and benefits for
which Executive may otherwise be eligible under any applicable bonus plan, incentive agreement,
stock option or equity incentive plan, participation or extra compensation plan, pension plan,
profit-sharing plan, life, medical, dental, disability, or insurance plan or policy or other plan
or benefit that the Company may provide for Executive or (provided Executive is eligible to
participate therein) for employees of the Company generally, as from time to time in effect, during
the term of this Agreement.
(d) Perquisites. Executive shall be entitled to three (3) weeks paid vacation each
twelve-month period, which shall accrue on a pro rata basis from the date employment commences
under this Agreement. Vacation time will continue to accrue so long as Executive’s total accrued
vacation does not exceed six (6) weeks. Should Executive’s accrued vacation time reach six weeks,
Executive will cease to accrue additional vacation until Executive’s accrued vacation time falls
below this level. All vacation time shall be subject to the plans, policies, programs and
practices as in effect generally with respect to other peer employees of the Company.
5. Termination. This Agreement and all obligations hereunder (except the obligations
contained in Sections 7, 8, 9, 10 and 11 (Confidential Information, Inventions and Patents,
Non-Competition, No Solicitation of Customers, and Noninterference with Employees) which shall
survive any termination hereunder) shall terminate on the end of the Term or upon the earliest to
occur of any of the following:
(a) Voluntary Termination. Executive’s employment shall terminate upon the voluntary
termination by Executive or retirement from the Company in accordance with the normal retirement
policies of the Company. In such instance, all obligations hereunder to Executive (or Executive’s
heirs or legal representatives) shall cease, other than for payment of the sum of (i) Executive’s
annual Base Salary through the date of termination and (ii) any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts described in clauses (i) and (ii) shall
be hereinafter referred to as the “Accrued Obligations”), which shall be paid to Executive or
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days after the
date of termination or any earlier time required by applicable law.
(b) Death or Disability of Executive. Executive’s employment shall terminate upon the
death or Disability (as defined below) of Executive. In such instance, except as set forth below
or as provided in Section 4(b)(ii), all obligations hereunder to Executive (or Executive’s heirs or
legal representatives) shall cease, other than for (i) payment of the sum of the Accrued
Obligations, which shall be paid to Executive or Executive’s estate or beneficiary, as applicable,
in a lump sum in cash within 30 days after the date of termination or any earlier time required by
applicable law; and (ii) payment to Executive or Executive’s estate or beneficiary, as applicable,
of any amount due pursuant to the terms of any applicable benefit plan. For the purposes of this
Agreement, Disability shall mean the absence of Executive performing Executive’s duties with the
Company on a full-time basis for a period of six months, as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to Executive or
Executive’s legal representative (such agreement as to acceptability not to be withheld
unreasonably).
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(c) Cause. The Company may terminate Executive’s employment and all of Executive’s
rights to receive Base Salary and any other benefits hereunder for Cause. For purposes of this
Agreement, the term “Cause” shall be defined as any of the following; provided, however, that the
Company must determine the presence of such Cause in good faith:
(i) Willful misconduct by Executive, including, without limitation (A) Executive’s material
breach of any duties and responsibilities under this Agreement (other than as a result of
incapacity due to Executive’s disability), (B) Executive’s commission of a material act of fraud
upon the Company, or (C) Executive’s immoderate use of alcoholic beverages or narcotics or other
substance abuse. For purposes of this Section 5(c), no act or failure to act on the part of
Executive shall be considered “willful” unless done, or omitted to be done, by Executive in bad
faith or without reasonable belief that Executive’s action or omission was in the best interest of
the Company;
(ii) Executive’s conviction by, or entry of a plea of guilty or nolo contendere in, a court of
competent and final jurisdiction for a felony or any crime which adversely affects the Company
and/or its reputation in the community or which involves moral turpitude or is punishable by
imprisonment in the jurisdiction involved; or
(iii) Executive’s willful violation of any duty of loyalty to the Company or a material breach
of Executive’s fiduciary duties to the Company.
(d) Without Cause. Notwithstanding any other provision of this Agreement, the Company
may terminate Executive’s employment with the Company without cause at any time, but in the event
of such termination without Cause, Executive shall be entitled to receive a lump sum payment equal
to the sum of (i) Executive’s then current monthly Base Salary for a period of twelve months, and
(ii) funds equal to the aggregate amount of the Company sponsored portion of Executive’s group
medical and dental insurance coverage for Executive and Executive’s spouse and/or family (if
applicable), as in place immediately before notice of the termination, for a period of 18 months,
as governed by the Consolidated Omnibus Budget Reconciliation Act of 1984, as amended (“COBRA”),
effective June 1, 2006. The Company will provide Executive with a COBRA notice, which will include
the insurance premium rate information for coverage for Executive under COBRA. It will be
Executive’s responsibility and obligation to pay the applicable COBRA premiums for such coverage.
All payments set forth in this Section 5(d) shall be paid on or before the earlier of 10 days after
the date the termination occurs or in compliance with applicable law.
(e) Non-Renewal. In the event Executive is terminated pursuant to a notice of
non-renewal tendered by the Company to Executive, then Executive shall be entitled to receive
payment equal to and on the same terms and conditions as that paid to Executive under Section 5(d)
hereof. In the event Executive is terminated pursuant to a notice of non-renewal tendered by
Executive to the Company then such termination shall be treated as a voluntary termination by
Executive without Good Reason.
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(f) Good Reason. In the event Executive voluntarily terminates Executive’s employment
pursuant to Section 5(a) hereof, and such termination is made by Executive for Good Reason (as
defined below), then Executive shall be entitled to receive payment equal to and on the same terms
and conditions as that paid to Executive under Section 5(d) hereof; provided, however, that before
Executive may terminate his or her employment pursuant to this Section 5(f) and be entitled to
receive the payments set forth in Section 5(d), the Company shall have the opportunity to remedy
the conditions constituting Good Reason for a period of 30 days after the receipt of written notice
by Executive specifying (in reasonable detail) the facts and circumstances for such Good Reason
termination and the corrective action Executive believes is required to remedy such action;
provided further, that such notice must be delivered in writing to the Board hereunder no later
than ninety (90) days after the time Executive first becomes aware of the facts and circumstances
giving rise to Executive’s notice of Good Reason hereunder. For purposes of this Agreement “Good
Reason” shall be defined as any of the following:
(i) The material diminution of authority, duties or responsibilities of Executive under this
Agreement.
(ii) Any reduction by the Company to Executive’s Base Salary as in effect on the date hereof
or as the same may be increased from time-to-time.
(iii) The Company requiring Executive to be based at any office or location which increases
the distance from Executive’s home to the office or location by more than 45 miles from the
distance in effect at the beginning of the term of this Agreement.
6. Business Expenses. During the term of this Agreement, to the extent that such
expenditures satisfy the criteria under the Internal Revenue Code for deductibility by the Company
(whether or not fully deductible by the Company) for federal income tax purposes as ordinary and
necessary business expenses, the Company shall reimburse Executive promptly for reasonable business
expenditures, including travel, entertainment, parking, business meetings, and professional dues,
made and substantiated in accordance with the reasonable policies, practices and procedures
established from time to time by the Company generally with respect to other peer employees and
incurred in the pursuit and furtherance of the Company’s business and goodwill. Such
reimbursements shall be made in accordance with Internal Revenue Code Section 409A, including the
following provisions: (i) the amount of any such expense reimbursement provided during one of
Executive’s tax years shall not affect any expenses eligible for reimbursement in any other taxable
year; (ii) the reimbursement of the eligible expense shall be made no later than the last day of
Executive’s tax year that immediately follows the tax year in which the expense was incurred; and
(iii) Executive’s right to any reimbursement shall not be subject to liquidation or exchange for
another benefit or payment.
7. Confidential Information. Executive acknowledges that the nature of Executive’s
engagement by the Company is such that Executive shall have access to information of a confidential
nature which has great value to the Company and which constitutes a substantial basis and
foundation upon which the business of the Company is based. Such information includes financial,
manufacturing and marketing data, techniques, processes, formulas, developmental or experimental
work, work in process, methods, trade secrets (including, without limitation, customer lists and
lists of customer sources), or any other secret or confidential
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information relating to the products, services, customers, sales or business affairs of the
Company or any of its subsidiaries (the “Confidential Information”). Executive acknowledges that
the Confidential Information constitutes trade secrets of the Company. Executive shall keep all
such Confidential Information in confidence during the term of this Agreement and at any time
thereafter and shall not disclose any of such Confidential Information to any other person, except
to the extent such disclosure is (i) necessary to the performance of this Agreement and in
furtherance of the Company’s best interests, (ii) required by applicable law, (iii) lawfully
obtainable from other sources, or (iv) authorized by the Company. Upon termination of Executive’s
employment with the Company, Executive shall deliver to the Company all documents, records,
notebooks, work papers, and all similar material containing any of the foregoing information,
whether prepared by Executive, the Company or anyone else.
8. Inventions and Patents. Except as may be limited by Section 2870 of the California
Labor Code, all inventions, designs, improvements, patents, copyrights and discoveries conceived by
Executive during the term of this Agreement which are useful in or directly or indirectly related
to the business of the Company or to any experimental work carried on by the Company, shall be the
property of the Company. Executive will promptly and fully disclose to the Company all such
inventions, designs, improvements, patents, copyrights and discoveries (whether developed
individually or with other persons) and shall take all steps necessary and reasonably required to
assure the Company’s ownership thereof and to assist the Company in protecting or defending the
Company’s proprietary rights therein.
Executive acknowledges hereby receipt of written notice from the Company pursuant to
California Labor Code Section 2872 that this Agreement (to the extent it requires an assignment or
offer to assign rights to any invention of Executive) does not apply fully to an invention which
qualifies fully under California Labor Code Section 2870.
9. Non-Competition. Executive acknowledges that the Confidential Information
constitutes trade secrets of the Company, and Executive acknowledges that the following is
necessary to protect the Confidential Information: Executive agrees that during the term of
Executive’s employment, and for a period of 12 months thereafter, Executive shall not, directly or
indirectly, whether as an owner, partner, shareholder, agent, employee, creditor, consultant, or
otherwise, promote, participate or engage in any activity or other business competitive with the
business of the Company or any of its subsidiaries in any jurisdiction in which the Company or any
of its subsidiaries operates at the time of such termination if such activity or other business
involves any use by the Executive of any of the Confidential Information.
10. Non-Solicitation of Customers. Executive acknowledges that the Confidential
Information constitutes trade secrets of the Company, and Executive acknowledges that the following
is necessary to protect the Confidential Information: Executive agrees that for a period of 12
months after the termination of employment with the Company or any of its subsidiaries, Executive
will not, on behalf of Executive or on behalf of any other individual, association or entity, call
on any of the customers of the Company or any of its subsidiaries for the purpose of soliciting or
inducing any of such customers to acquire (or providing to any of such customers) any product or
service provided by the Company or any of its subsidiaries, nor will Executive in any way, directly
or indirectly, as agent or otherwise, in any other manner solicit, influence or encourage such
customers to take away or to divert or direct their business to Executive or any
other person or entity by or with which Executive is employed, associated, affiliated or
otherwise related.
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11. Noninterference with Employees. Executive acknowledges that the Confidential
Information constitutes trade secrets of the Company, and Executive acknowledges that the following
is necessary to protect the Confidential Information: Executive agrees that during the term hereof
and for a period of 12 months thereafter, Executive will not, directly or indirectly, solicit any
employee of the Company or any of its subsidiaries to leave such employment.
12. Remedies. The parties hereto agree that the services to be rendered by Executive
pursuant to this Agreement, and the rights and privileges granted to the Company pursuant to this
Agreement, are of a special, unique, extraordinary and intellectual character, which gives them a
peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in any
action at law, and that a breach by Executive of any of the terms of this Agreement will cause the
Company great and irreparable injury and damage. Executive hereby expressly agrees that the
Company shall be entitled to the remedies of injunction, specific performance and other equitable
relief to prevent a breach of this Agreement by Executive. This Section 12 shall not be construed
as a waiver of any other rights or remedies which the Company may have for damages or otherwise.
13. Severability. If any provision of this Agreement is held to be unenforceable for
any reason, it shall be adjusted rather than voided, if possible, to achieve the intent of the
parties to the extent possible. In any event, all other provisions of this Agreement shall be
deemed valid and enforceable to the extent possible.
14. Succession. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns and any such successor or assignee shall be deemed
substituted for the Company under the terms of this Agreement for all purposes. As used herein,
“successor” and “assignee” shall include any person, firm, corporation or other business entity
which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires the
stock of the Company or to which the Company assigns this Agreement by operation of law or
otherwise. The obligations and duties of Executive hereunder are personal and otherwise not
assignable.
15. Notices. Any notice or other communication provided for in this Agreement shall
be in writing and sent if to the Company to its principal executive office at:
| Xxxxx Instruments Corp. 00 Xxxxxx Xxxxxx, Xxxxxxxxxx 00000 Phone: (000) 000-0000; Facsimile: (000) 000-0000 Attention: Chief Executive Officer |
or at such other address as the Company may from time to time in writing designate, and if to
Executive at such address as Executive may from time to time in writing designate. Each such
notice or other communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in (or pursuant to) this Section and a
verification of receipt is received, (ii) if given by mail, three days after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid or (iii) if given
by any other means, when actually delivered at such address.
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16. Entire Agreement. This Agreement contains the entire agreement and final
understanding of the parties relating to the subject matters hereof and shall supersede and replace
any prior agreements (including, without limitation, any prior employment agreements),
undertakings, negotiations, commitments, and practices relating to Executive’s employment with the
Company, whether written or oral. Except as contained herein, any representation, promise or
agreement not specifically included in this Agreement shall not be binding upon or enforceable
against either party. This Agreement is an integrated agreement.
17. Amendments. No amendment or modification of the terms of this Agreement shall be
valid unless made in writing and duly executed by both parties.
18. Waiver. No failure on the part of any party to exercise or delay in exercising
any right hereunder shall be deemed a waiver thereof or of any other right, nor shall any single or
partial exercise preclude any further or other exercise of such right or any other right.
19. Governing Law. This Agreement, and the legal relations between the parties, shall
be governed by and construed in accordance with the laws of the State of California without regard
to conflicts of law doctrines All actions or proceedings under or relating to this Agreement will
be resolved in a state or federal court located in Orange County, California; provided, however,
that in the Company’s discretion, such an action may be heard in some other place designated by it
if necessary to acquire jurisdiction over third persons so that the dispute can be resolved in one
action. Each party hereby (i) agrees to submit to the exclusive jurisdiction of the federal and
state courts located in Orange County, California, (ii) agrees to appear in any such action, (iii)
consents to the exclusive jurisdiction of such courts and (iv) waives any objections it might have
as to exclusive venue in any such court. Service of process may be made in any action, suit or
proceeding by mailing or delivering a copy of such process to a party at its address and in the
manner set forth in Section 15.
20. Waiver of Jury Trial.
THE COMPANY AND EXECUTIVE HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON, ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE EMPLOYMENT
RELATIONSHIP BETWEEN THEM OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
AGREEMENT OR SUCH RELATIONSHIP. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court or that relate to the subject matter of this
Agreement, including without limitation, contract claims, tort claims, breach of duty claims,
wrongful termination claims, claims for discharge in violation of public policy, claims of
discrimination and all other common law and statutory claims, to the maximum extent permitted by
law. The Company and Executive each acknowledge that this waiver is a material inducement to enter
into this Agreement, that each has already relied on the waiver in entering into this Agreement,
and that each will continue to rely on the waiver in their related future dealings. THE COMPANY
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AND EXECUTIVE FURTHER WARRANT AND REPRESENT THAT EACH HAS HAD AN OPPORTUNITY TO REVIEW THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING SUCH OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT
IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
MODIFICATIONS TO OR EXTENSIONS OF THIS AGREEMENT. In the event of arbitration or litigation, this
Agreement may be filed as a written consent to arbitration or to a trial by the court.
21. Arbitration. As a material inducement to enter into this Agreement, Executive and
the Company each hereby agree that any “Claims” or “Controversies” (as defined below) arising out
of or in respect to this Agreement (or its validity, interpretation or enforcement), or Executive’s
employment or termination, that Executive may have against the Company or it officers, directors,
employees, or agents, in their capacity as such, or that the Company may have against Executive,
shall be resolved solely through binding arbitration. Executive and the Company each hereby
acknowledge that this agreement to arbitrate means that Executive and the Company are relinquishing
his/her/its rights to either a jury trial or court trial for the resolution of any claims that
Executive and the Company may have against the other.
“Claims” or “Controversies” arising out of this Agreement or Executive’s employment or
termination means and includes all claims for breach of this Agreement, harassment and/or
discrimination (including sexual harassment and harassment or discrimination based on race, color,
religion, age, sex, sexual orientation, ancestry, national origin, marital status, military
service, pregnancy, physical or mental disability, medical condition or any other protected class
or condition), breach of any contract or covenant (express or implied), tort claims, wrongful
termination, whistle-blowing and all other claims relating to this Agreement or Executive’s
employment or termination, except that claims covered by the Workers’ Compensation Act and claims
for unemployment benefits are not covered by this agreement to arbitrate.
All Claims or Controversies shall be submitted to a single neutral arbitrator. The
arbitration shall take place in Orange County, California, unless otherwise mutually agreed. The
arbitrator shall be mutually agreed-upon by Executive and the Company. If Executive and the
Company cannot agree upon an arbitrator, the selection process shall be governed by the employment
arbitration rules and procedures of the American Arbitration Association (“AAA”). Regardless of
the arbitrator chosen, the arbitration proceedings shall be governed by the then current AAA
procedural rules, except that if a contrary rule exists: (1) all monetary or provisional remedies
available under applicable state or federal statutory law or common law will remain available to
both parties; (2) except as mutually agreed upon by the parties, there will be no limitation on
discovery beyond that which exists in cases litigated in Orange County Superior Court; and (3) the
California Rules of Evidence shall apply to the arbitration hearing. In connection with any
arbitration proceeding commenced hereby, the prevailing party shall be entitled to reimbursement of
its reasonable attorney’s fees and costs, including arbitrator fees. This agreement to arbitrate
and arbitration procedure is intended to be the exclusive method of resolving all Claims or
Controversies as described above between Executive and the Company
and judgment upon the award rendered by the arbitrator hereunder may be entered in any court
having jurisdiction thereof.
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22. Withholding. All compensation payable hereunder, including salary and other
benefits, shall be subject to applicable taxes, withholding and other required, normal or elected
employee deductions.
23. Counterparts. This Agreement and any amendment hereto may be executed in one or
more counterparts. All of such counterparts shall constitute one and the same agreement and shall
become effective when a copy signed by each party has been delivered to the other party.
24. Headings. Section and other headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning or interpretation of this
Agreement.
25. Drafting. The parties hereto each hereby waives the benefit of any statute or
rule of law or judicial decision, which would otherwise require that the provisions of this
Agreement be construed or interpreted most strongly against the party responsible for the drafting
thereof.
26. Compliance with Section 409A.
(a) Generally. The Company and Executive each acknowledge and agree that it is
intended that any amounts payable hereunder as well as the Company’s and Executive’s exercise of
authority or discretion hereunder shall either be exempt from or comply with Section 409A of the
Internal Revenue Code of 1986 (the “Code”), as amended (including the Treasury regulations and
other published guidance relating thereto) (“Section 409A”) so as not to subject Executive to
payment of any interest or additional tax imposed under Section 409A. To the extent that any
amount payable under this Agreement would trigger the additional tax imposed by Section 409A, this
Agreement shall be modified to avoid such additional tax yet preserve (to the nearest extent
reasonably possible) the intended benefit payable to Executive.
(b) Specified Employee. Notwithstanding anything to the contrary in this Agreement,
if Executive is a “specified employee” within the meaning of Section 409A at the time of
Executive’s termination of employment (other than due to death), and the severance payable to
Executive, if any, pursuant to this Agreement, when considered together with any other severance
payments or separation benefits which may be considered deferred compensation under Section 409A
(together, the “Deferred Compensation Separation Benefits”) will not and could not under any
circumstances, regardless of when such termination occurs, be paid in full the later of: (i) two
and one-half (21/2) months following the end of the Company’s taxable year in which such termination
occurs, or (ii) two and one-half (21/2) months following the end of Executive’s taxable year in which
such termination occurs, then only that portion of the Deferred Compensation Separation Benefits
which does not exceed the Section 409A Limit (as defined below) may be made within the first six
(6) months following Executive’s termination of employment in accordance with the payment schedule
applicable to each payment or benefit. For these purposes, each severance payment is hereby
designated as a separate payment and will not collectively be treated as a single payment. Any
portion of the Deferred
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Compensation Separation Benefits in excess of the Section 409A Limit shall accrue and, to the
extent such portion of the Deferred Compensation Separation Benefits would otherwise have been
payable within the first six (6) months following Executive’s termination of employment, will
become payable (without interest) on the first payroll date that occurs on or after the date six
(6) months and one (1) day following the date of Executive’s termination. All subsequent Deferred
Compensation Separation Benefits, if any, will be payable in accordance with the payment schedule
applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if
Executive dies following Executive’s termination of employment but prior to the six (6) month
anniversary of Executive’s termination, then any payments delayed in accordance with this paragraph
will be payable (without interest) in a lump sum as soon as administratively practicable after the
date of Executive’s death and all other Deferred Compensation Separation Benefits will be payable
in accordance with the payment schedule applicable to each payment or benefit.
(c) Section 409A Limit. For purposes of this Agreement, “Section 409A Limit” will
mean the lesser of two (2) times: (i) Executive’s annualized compensation based upon the annual
rate of pay paid to Executive during Executive’s taxable year preceding the taxable year of
Executive’s termination of employment as determined under Treasury Regulation
1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or
(ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section
401(a)(17) of the Code for the year in which Executive’s termination of employment occurs.
(d) Separation From Service. For purposes of this Agreement, references to
termination of Executive’s employment shall mean “separation from service,” within the meaning of
Section 409A(a)(2)(A)(i) of the Code.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
| XXXXX INSTRUMENTS CORP. |
||||
| By: | /s/ Xxxxxx Xxxxxxx | |||
| Xxxxxx Xxxxxxx | ||||
| Chief Executive Officer | ||||
EXECUTIVE |
||||
| /s/ Xxxx X. Xxxxxx | ||||
Xxxx X. Xxxxxx |
||||
| (ADDRESS) | ||||
11
