THIRD AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT
Exhibit 10.2
THIRD
AMENDED AND RESTATED
This
Third Amended and Restated Change of Control Agreement (this “Agreement”) is
made effective as of November 13, 2007 by and between Primal Solutions, Inc.,
a
Delaware corporation, and Xxxxxx X. Xxxxxxx (the “Executive”).
Recitals
A. The
Executive has made and is expected to make a major contribution to the
profitability, growth and financial strength of the Company and its
affiliates.
B. The
Company considers the continued availability of the Executive’s services,
managerial skills and business experience to be in the best interest of the
Company and its stockholders and desires to assure the continued services
of the
Executive on behalf of the Company without the distraction of the Executive
occasioned by the possibility of an abrupt change in control of the
Company.
C. The
Executive is willing to remain in the employ of the Company, particularly
in the
event of a threat or the occurrence of a change in control of the Company,
upon
the understanding that the Company will provide him with income security
and
certain other benefits in accordance with the terms and conditions contained
in
this Agreement in the event of a change in control of the Company.
D. The
Company and the Executive previously entered into a Second Amended and Restated
Change of Control Agreement effective as of December 16, 2005 (the “Prior
Agreement”). This Agreement amends, restates and supersedes the Prior
Agreement. The Company and the Executive are also concurrently
entering into a Third Amended and Restated Employment Agreement dated as
of the
date hereof (the “Employment Agreement”) which amends, restates and supersedes
the Second Amended and Restated Employment Agreement effective December 16,
2005.
E. For
purposes of this Agreement, defined terms in this Agreement shall have the
meaning specified or referred to in Section 3.
Agreement
In
consideration of the foregoing premises and the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as
follows:
1. Effective
Date; Term
1.1 This
Agreement shall become effective on the date hereof and shall continue in
effect
until one (1) day after the termination of the Executive’s employment with the
Company for any reason; provided, however, this Agreement shall
expire no later than December 31, 2008.
No
termination of this Agreement shall limit, alter or
otherwise affect the Executive’s rights hereunder with respect to a Change of
Control which has occurred prior to, or within three months after, such
employment termination, including without limitation the Executive’s rights to
receive the various benefits hereunder; provided, however, this
Agreement shall expire no later than December 31, 2008.
2. Change
of Control Payment Upon A Change of Control
2.1 Events
Giving Rise to Change of Control Payment.
The
Company shall pay or cause to be paid to the Executive the Change of Control
Payment specified in Section 2.2 and the other benefits specified in this
Agreement if:
(i) there
is a Change of Control; or
(ii) the
Executive’s employment by the Company is terminated by the Company within three
months prior to the Change of Control, and such termination arose in connection
with or in anticipation of the Change of Control (for purposes of this
Agreement, meaning that at the time of such termination, the Company had
entered
into an agreement, the consummation of which would result in a Change of
Control, or the termination of the Executive’s employment was at the request of
a third party who has taken steps to effect a Change of Control), or the
Executive voluntarily terminates his employment for Good Reason during such
three-month period, and in each case, such Change of Control is consummated,
or
the Board adopts a resolution to the effect that a potential Change of Control
for purposes of this Agreement has occurred.
2.2 Change
of Control Payment Upon Change of Control.
(a) If
the Executive is entitled to benefits pursuant to Section 2.1, the Company
shall pay or provide to the Executive as a change of control payment (the
“Change of Control Payment”), the following:
(i) A
single lump sum cash payment equal to the sum of:
(A) any
accrued and unpaid portion of the Executive’s Incentive Compensation and other
bonuses for the prior fiscal year;
(B) an
amount equal to 150% of the Executive’s then current annual Salary;
and
(C) an
amount equal to 150% of the amount that would be payable to the Executive
under
the Incentive Compensation and other bonus plans, if any, in which the Executive
is then participating for the fiscal year in progress, calculated assuming
that
100% of the targets under such bonus plans are achieved (by way of
clarification, in the event that the Executive continues to be employed by
the
Company following the Change of Control, he shall receive the payment provided
in this clause (C) and also shall continue to be eligible to earn the Incentive
Compensation and other bonus, if any, in which the Executive is
then
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participating
for the fiscal year in which the Change of Control occurs, based upon actual
performance for such fiscal year).
(ii) And,
if the Executive’s employment is terminated prior to the Change of Control in
accordance with Section 2.1(ii) or at the time of the Change of Control by
the
Company for any reason other than Cause, death, Disability or the Executive
reaching the mandatory retirement age established by the Company or by the
Executive for Good Reason, in lieu of any further compensation or other amounts
(except as provided in Section 2.2(a)(i)), and in settlement and complete
release of all claims the Executive may have against the Company (except
as
provided in Section 2.2(a)(i)): (A) any accrued and unpaid portion of
the Executive’s Salary and vacation through the Termination Date; and (B)
continuation, on the same terms as in effect on the Termination Date, including
general premium increases, of all medical, dental, life and disability Benefits
for the Executive for 18 months commencing on the Termination Date (the “payment
period”), including equivalent coverage for the Executive’s spouse and dependent
children, if such coverage was provided immediately prior to the Termination
Date. In the event that the Executive is ineligible under the terms
of such insurance to continue to be so covered, the Company shall provide
the
Executive with a lump sum payment equal to the cost to the Executive of
obtaining substantially similar coverage for the payment period, which lump
sum
payment shall be paid within ten days of the Change of Control. If
the Executive, prior to the Termination Date, was receiving any cash-in-lieu
payments designed to enable the Executive to obtain insurance coverage of
his
choosing, the Company shall, in addition to any other benefits to be provided
under this Section 2.2(a)(ii), provide the Executive with
continued payments of such in-lieu payments that the Executive would have
been
entitled to receive over the payment period. Any such in-lieu
payments shall be paid within ten days of the Change of Control. The
Company’s obligation hereunder with respect to the foregoing Benefits shall be
limited to the extent that the Executive obtains any such benefits pursuant
to a
subsequent employer’s benefit plans, in which case the Company may reduce the
coverage of any Benefits it is required to provide the Executive hereunder
so
long as the aggregate coverage and benefits of the combined benefit plans
are no
less favorable to the Executive than the Benefits required to be provided
hereunder; provided that in the event the Company has already provided the
Executive with a lump sum payment in lieu of such Benefits, the Executive
shall
promptly repay to the Company a pro rata amount of such lump sum payment
(calculated based upon the portion of the payment period remaining at the
time
the Executive obtains such comparable benefits).
(b) If
the Executive is entitled to benefits pursuant to Section 2.1, the lump sum
payment payable to the Executive under Section 2.2(a)(i) shall be paid within
ten days of the Change of Control. Notwithstanding anything in the
foregoing to the contrary, in the event that the Executive’s employment with the
Company has been terminated and he is entitled to a Change of Control Payment
pursuant to Section 2.1(ii) and the Executive has received severance
compensation and benefits pursuant to Section 5.5(a) of the Employment Agreement
in connection with such termination and prior to the determination that the
Executive is entitled to any compensation or Benefits hereunder, the amount
due
and payable under this Agreement shall be reduced dollar-for-dollar by any
amounts paid to the Executive under Section 5.5(a) of the Employment
Agreement.
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(c) Except
as set forth herein, in the event the Executive’s employment is terminated prior
to or at the time of the Change of Control, the Executive’s compensation by the
Company and its affiliates and accrual of, or participation in all benefit,
bonus, incentive and other plans or programs of the Company and its affiliates,
will cease on the Termination Date.
(d) The
Executive shall not be required to mitigate the amount of any Change of Control
Payment provided for in this Agreement by seeking other employment or otherwise
and no such payment shall be offset or reduced by the amount of any compensation
or benefits provided to the Executive in any subsequent employment, except
as
provided in Section 2.2(a)(ii). Notwithstanding the foregoing,
to the extent permitted by applicable law, the Change of Control Payment
provided for in this Section 2 shall be reduced by the amount of any other
severance or termination pay to which the Executive may be entitled by operation
of any applicable law or under any agreement with the Company, any of its
affiliates or any successors of such entities; provided that the Change of
Control Payment shall not be reduced by the amount of any other severance
or
termination pay to which the Executive may be entitled under the terms of
the
Employment Agreement or any other agreement between the Executive and the
Company if the triggering termination of employment occurs on or after the
three
(3)-month anniversary of the Change of Control.
(e) If
the Executive’s employment with the Company is terminated prior to or at the
time of the Change of Control, the Company may, as a condition to the Executive
receiving any Change of Control Payment or Benefits under this Agreement,
require the Executive to execute a release of all claims the Executive may
have
against the Company or its affiliates arising from the Executive’s employment
with the Company or its affiliates or any successors, and the termination
thereof, in a form reasonably satisfactory to the Company.
(f) The
obligations of the Company hereunder, including its obligation to pay the
Change
of Control Payment provided for herein, are contingent upon the Executive’s
performance of the Executive’s obligations hereunder, including under Section
2.6. If the Executive breaches any of the material terms and
provisions of this Agreement, in addition to any other remedies that the
Company
may have for any such breach, the Company may immediately terminate providing
any Change of Control Payment then being made.
(g) Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Company shall be payable in accordance
with such plan or program, except as explicitly modified by this
Agreement.
2.3 Notice
of Termination. Any termination of the Executive’s employment by
the Company or by the Executive (other than termination based on the Executive’s
death) following or in connection with a Change of Control shall be communicated
by the terminating party in a Notice of Termination to the other party
hereto.
2.4 Withholding
Taxes. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local
law.
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2.5 Affiliates. Nothing
contained herein shall prohibit any affiliates of the Company from fulfilling
any obligation of the Company to the Executive hereunder and for such purposes
will be deemed the act of the Company.
2.6 Covenants
of the Executive. Payment of the Change of Control Payment under
this Agreement shall be contingent upon the Executive complying with the
covenants of the Executive set forth in Sections 7 and 8 of the Employment
Agreement through the payment period. The parties acknowledge that
the Executive’s agreement to comply with these covenants is an essential element
of this Agreement, and without which the Company would not have entered into
this Agreement.
2.7. Indemnification
for Excise Tax.
(a) In
the event that (i) the Executive becomes entitled to the Change of Control
Payment in accordance with this Section 2, and (ii) such Change of Control
Payment and any other benefits or payments (including transfers of property)
that the Executive receives, or is to receive, pursuant to this Agreement
or any
other agreement, plan or arrangement with the Company in connection with
a
Change of Control (“Other Benefits”) shall be subject to the tax imposed
pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended
(the
“Code”) (or any successor thereto) or any comparable provision of state law
(collectively, the “Excise Tax”), then the Company or its successor shall pay to
the Executive within 30 days after payment of the Change of Control Payment,
an
additional amount (the “Gross-Up Payment”) determined in accordance with the
following provisions. The Gross-Up Payment shall be equal to the
amount necessary so that the net amount retained by the Executive, after
subtracting the Excise Tax and after also subtracting all federal, state
or
local income tax, FICA tax and Excise Tax on the Gross-Up Payment, shall
be
equal to the net amount the Executive would have retained if no Excise Tax
had
been imposed and no Gross-Up Payment had been made. It is intended
that the Executive shall not suffer any loss or expense resulting from the
assessment of any Excise Tax or the Company’s reimbursement of the Executive for
any such Excise Tax.
(b) For
purposes of determining whether any of the Change of Control Payment or Other
Benefits will be subject to Excise Tax and the amount of such Excise
Tax:
(i)
any
payments or benefits received or to be received by the Executive in connection
with a Change of Control (whether pursuant to the terms of this Agreement
or any
other plan, arrangement or agreement with the Company, any Person whose actions
result in a Change of Control or any Person affiliated with the Company or
such
Person) shall be treated as “parachute payments” within the meaning of Section
280G(b)(2) of the Code (or any successor thereto), and all “excess parachute
payments” within the meaning of Section 280G(b)(1) of the Code (or any successor
thereto) shall be treated as subject to Excise Tax, unless in the opinion
of tax
counsel selected by the Company’s independent auditors and acceptable to the
Executive, (A) such other payments or benefits (in whole or in part) do not
constitute such parachute payments or (B) such excess parachute payments
(in
whole or in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280(G)(b)(4) of the Code (or any
successor thereto),
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(ii) the
amount of the Change of Control Payment and Other Benefits which shall be
treated as subject to Excise Tax shall be equal to the lesser of (A) the
total
amount of the Change of Control Payment and Other Benefits or (B) the amount
of
excess parachute payments within the meaning of Sections 280G(b)(1) and (4)
of
the Code (or any successor or successors thereto) after applying clause (i)
above, and
(iii)
the
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company’s independent auditors in accordance with the
principles of Sections 280(G)(d)(3) and (4) of the Code (or any successor
or
successors thereto).
(c) For
purpose of determining the amount of the Gross-Up Payment, the Executive
shall
be deemed to pay (i) federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment
is to
be made, and (ii) state and local income taxes at the highest marginal rates
of
taxation in the state and locality of the Executive’s residence on the date of
the Change of Control, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local
taxes.
(d) In
the event that the actual amount of Excise Tax (the “Actual Excise Tax”) is
subsequently determined to be less than the amount taken into account hereunder
at the time of the Change of Control entitling the Executive to the Change
of
Control Payment (the “Pre-determined Excise Tax”), the Executive shall repay to
the Company, at the time that the amount of the Actual Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to the amount
by
which the Pre-determined Excise Tax exceeds the Actual Excise Tax, plus interest
on the amount of such repayment at the rate provided in Section 1274(b)(2)(B)
of
the Code (or any successor thereto) (the “Applicable Rate”). In the
event that the Actual Excise Tax is determined to exceed the amount of
Pre-determined Excise Tax (including by reason of any payment the existence
or
amount of which cannot be determined at the time of the Gross-Up Payment),
the
Company shall make an additional Gross-Up Payment in respect of such excess
(plus interest, determined at the Applicable Rate, payable with respect to
such
excess) at the time that the amount of the Actual Excise tax is finally
determined.
2.8 Acceleration
of Vesting of Options. Notwithstanding anything contained herein
to the contrary, whether or not the Executive’s employment with the Company or
its successor is terminated upon a Change of Control, to the extent permitted
under applicable law, upon the occurrence of a Change of Control all outstanding
unvested stock options and all previously granted unvested restricted stock
awards granted to the Executive by the Company shall accelerate and
vest.
3. Definitions
For
purposes of this Agreement:
3.1 “Board”
shall mean the Board of Directors of the Company.
3.2 “Benefits” shall
have the meaning set forth in Section 2.1(b) of the Employment Agreement,
including without limitation life insurance and independent financial and
tax
consulting services.
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3.3 “Beneficial
Ownership” shall have the meaning in Rule 13d-3
promulgated under the Exchange Act.
3.4 “Cause”
shall mean: (a) an intentional act which materially injures the
Employer; (b) an intentional refusal or failure to follow lawful and reasonable
directions of the Board of Directors or an individual to whom the Executive
reports (as appropriate); (c) a willful or habitual neglect of duties; or
(d) the conviction of, or the entering of a guilty plea or plea of no
contest by the Executive with respect to, a felony involving an act of moral
turpitude.
3.5 “Change
of Control” shall mean, after the date hereof, any of the following
events:
(a) An
acquisition in one or a series of related transactions of any voting securities
of the Company (“Voting Securities”), directly or indirectly by any Person,
other than (1) the Company, (2) any wholly-owned subsidiary of the
Company, (3) any employee benefit plan of the Company or any wholly-owned
subsidiary of the Company (including an employee stock ownership plan), (4)
any
trustee or other fiduciary holding securities under any employee benefit
plan
adopted by the Company or any subsidiary of the Company, (5) any underwriter
in
connection with a firm commitment public offering of the Company’s capital
stock, immediately after which such Person has beneficial ownership of 35%
or
more of the combined voting power of the Company’s then outstanding Voting
Securities, or (6) a Person which includes the Executive.
(b) An
acquisition in one or a series of related transactions of any voting securities
of any material subsidiary of the Company (being defined for purposes hereof,
as
any subsidiary representing at least 50% of the Company’s combined revenue or
assets), directly or indirectly by any Person, other than (1) the Company,
(2) any wholly-owned subsidiary of the Company, (3) any employee
benefit plan of the Company or any wholly-owned subsidiary of the Company
(including an employee stock ownership plan), (4) any trustee or other fiduciary
holding securities under any employee benefit plan adopted by the Company
or any
subsidiary of the Company, or (5) any underwriter in connection with a firm
commitment public offering of such subsidiary’s capital stock, immediately after
which such Person has beneficial ownership of 50% or more of the combined
voting
power of such subsidiary’s then outstanding voting securities.
(c) During
any period of 12 consecutive months, the individuals who, as of the beginning
of
such period, are members of the Board (the “Incumbent Board”), cease for any
reason to constitute at least a majority of the Board; provided,
however, that if the election, or nomination for election by the Company’s
stockholders, of any new director was approved by a vote of at least two-thirds
of the then Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual
or
threatened election contest relating to the election of the members of the
Board, as such terms are used in Rule 14A-11 of Regulation 14A promulgated
under
the Exchange Act), such new director shall, for purposes of this Agreement,
be
considered a member of the Incumbent Board.
(d) Approval
by the Company’s stockholders of a complete liquidation or dissolution of the
Company.
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(e) Consummation
of a merger, consolidation or reorganization (or series of related transactions)
involving the Company, unless the stockholders of the Company having the
power
to vote in the ordinary election of directors immediately before such merger,
consolidation or reorganization, own, directly or indirectly, immediately
following such merger, consolidation or reorganization, at least 50% of the
combined voting power of the outstanding voting securities of the corporation
resulting from such merger, consolidation or reorganization in substantially
the
same proportion as their ownership of the Voting Securities of the Company
immediately before such merger, consolidation or reorganization (or series
of
related transactions).
(f) Consummation
of an agreement for the sale or other disposition of all or substantially
all of
the assets of the Company (evaluated on a consolidated basis, without regard
to
whether the sale or other disposition is effected via a sale or other
disposition of assets of the Company, the sale or other disposition of the
securities of one or more subsidiaries of the Company or the sale or other
disposition of the assets of one or more subsidiaries of the Company) to
any
Person (other than a transfer to a subsidiary of the Company).
(g) The
occurrence of any other event of a nature that would be required to be reported
by the Company in response to Item 1 of a Current Report on Form 8-K (or
any successor to such form) promulgated pursuant to the Exchange
Act.
3.6 “Company”
shall mean Primal Solutions, Inc., a Delaware corporation or any successor
of
the Company.
3.7 “Disability”
shall have the meaning set forth in Section 5.2 of the Employment
Agreement.
3.8 “Exchange
Act” shall mean the Securities Exchange Act of 1934, as
amended.
3.9 “Good
Reason” shall have the meaning set forth in Section 5.4 of the
Employment Agreement.
3.10 “Incentive
Compensation” shall have the meaning set forth in Section 2.2 of the
Employment Agreement.
3.11 “Notice
of Termination” shall mean a written notice of termination of the
Executive’s employment delivered by the Company to the Executive or by the
Executive to the Company, as applicable, upon termination of the Executive’s
employment with the Company which (a) sets forth the specific termination
provision in this Agreement relied upon, (b) sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of
the Executive’s employment under the provision so indicated and (c) sets
forth the date the Executive’s employment with the Company shall
terminate.
3.12 “Person”
shall have the meaning of “person” as used in Section 13(d) and
14(d) of the Exchange Act, including a “group” as defined in such
sections.
3.13 “Salary”
shall have the meaning set forth in Section 2.1(a) of the Employment
Agreement.
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3.14 “Termination
Date” shall mean (a) in the case of the Executive’s death, his
date of death, and (b) in all other cases, the date specified in the Notice
of Termination.
4. Miscellaneous
4.1. Successors;
Binding Agreement.
(a) This
Agreement shall be binding upon and shall inure to the benefit of the Company,
its successors (whether by purchase of assets, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company and its assigns, and the Company shall require any successors and
assigns to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform
it
if no such succession or assignment had taken place (including the obligation
to
cause any subsequent successor to also assume the obligations of this
Agreement). Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the laws of
descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s legal personal representative. The
duties and covenants of the Executive under this Agreement, being personal,
may
not be delegated.
(b) Nothing
in this Section 4.1 is intended to require that a Person referred to in
Section 3.5 as being the beneficial owner of shares of stock of the Company
must assume the obligations under this Agreement as a result of such stock
ownership.
4.2 Non-Exclusivity
of Rights; No Guaranteed Employment.
(a) Nothing
in this Agreement shall prevent or limit the Executive’s continuing or future
participation in any benefit, bonus, incentive or other plan or program provided
by the Company and for which the Executive may qualify, nor shall anything
herein limit or reduce such rights as the Executive may have under any other
agreements with the Company, except as expressly stated therein.
(b) The
Executive and the Company acknowledge that, except as may otherwise be provided
under any other written agreement between the Executive and the Company,
the
employment of the Executive by the Company is “at will” and may be terminated by
either the Executive or the Company at any time.
4.3 Waiver. The
rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by either party in
exercising any right, power, or privilege under this Agreement will operate
as a
waiver of such right, power, or privilege, and no single or partial exercise
of
any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power,
or
privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim
or
right unless in writing signed by the other party; (b) no waiver that may
be given by a party will be applicable except in the specific instance for
which
it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party
giving
such notice or demand to take further action without notice or demand as
provided in this Agreement.
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4.4 Notices. All
notices, consents, waivers, and other communications under this Agreement
must
be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by facsimile (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, within 24 hours thereafter, or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate address and
facsimile number set forth below (or to such other address and facsimile
number
as a party may designate by notice to the other party pursuant to the terms
of
this Section 4.4):
If
to the
Executive:
Xxxxxx
X.
Xxxxxxx
00
Xxx
Xxxxxxx
Xxxx
xx
Xxxx, Xxxxxxxxxx 00000
Facsimile
No. (000) 000-0000
If
to the
Company:
Primal
Solutions, Inc.
00000
XxxXxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxxxx 00000
Attention: Chairman
of the Compensation Committee
Facsimile
No. (000) 000-0000
4.5 Entire
Agreement; Amendments. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral or written, between
the
parties hereto with respect to the subject matter hereof (including, without
limitation, the Prior Agreement). The parties acknowledge that no
agreement or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which
are
not expressly set forth in this Agreement. This Agreement may not be
amended orally, but only by an agreement in writing signed by the parties
hereto.
4.6 Arbitration
of Disputes.
(a) Except
as set forth in Section 4.6(b), arbitration shall be the sole and exclusive
remedy for any dispute, claim, or controversy of any kind or nature (a “Claim”)
arising out of, related to, or connected with this Agreement or the termination
of the Executive’s employment relationship with the Company as a result of or in
connection with a Change of Control. This mutual agreement to
arbitrate includes any Claim by the Executive against any parent, subsidiary,
or
affiliated entity of the Company, or any director, officer, general or limited
partner, employee or agent of the Company or of any such parent, subsidiary
or
affiliated entity. It also includes any claim against the Executive
by the Company, or any parent, subsidiary or affiliated entity of the
Company.
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(b) This
Section 4.6 does not apply to any claims by Executive: (1) for
workers’ compensation benefits; (2) for unemployment insurance benefits; (3)
under a benefit plan where the plan specifies a separate arbitration procedure;
(4) filed with an administrative agency which are not legally subject to
arbitration under this Agreement; or (5) which are otherwise expressly
prohibited by law from being subject to arbitration under this
Agreement.
(c) Any
arbitration proceedings shall be conducted in Orange County,
California. Any Claim submitted to arbitration shall be decided by a
single, neutral arbitrator (the “Arbitrator”). The parties to the
arbitration shall mutually select the Arbitrator not later than 45 days after
service of the demand for arbitration. If the parties for any reason
do not mutually select the Arbitrator within the 45 day period, then any
party
may apply to any court of competent jurisdiction to appoint a retired judge
as
the Arbitrator. The parties agree that arbitration shall be conducted
in accordance with California Code of Civil Procedure sections 1280
etseq., including Code of Civil Procedure section 1283.05
regarding discovery, except as modified in this Agreement. The
Arbitrator shall apply the substantive federal, state, or local law and statute
of limitations governing any Claim submitted to arbitration. In
ruling on any Claim submitted to arbitration, the Arbitrator shall have the
authority to award only such remedies or forms of relief as are provided
for
under the substantive law governing such Claim. The Arbitrator shall
issue a written decision revealing the essential findings and conclusions
on
which the decision is based. Judgment on the Arbitrator’s decision
may be entered in any court of competent jurisdiction.
(d) The
Company shall be responsible for paying the fees and costs incurred in the
arbitration (e.g., filing fees, transcript costs and Arbitrator’s
fees). The parties shall be responsible for their own attorneys’ fees
and costs, except that the Arbitrator shall have the authority to award
attorneys’ fees and costs to the prevailing party in accordance with the
applicable law governing the dispute.
(e) The
Arbitrator, and not any federal or state court, shall have the exclusive
authority to resolve any issue relating to the interpretation, formation
or
enforceability of this Agreement, or any issue relating to whether a Claim
is
subject to arbitration under this Agreement, except that any party may bring
an
action in any court of competent jurisdiction to compel arbitration in
accordance with the terms of this Agreement.
4.7 ERISA. This
Agreement is an unfunded compensation arrangement for a member of a select
group
of the Company’s management or that of its subsidiaries and any exemptions under
the Employee Retirement Income Security Act of 1974, as amended, as applicable
to such an arrangement shall be applicable to this Agreement.
4.8 Headings;
Construction. The headings in this Agreement are provided for
convenience only and will not affect its construction or
interpretation. All references to “Section” or “Sections” refer to
the corresponding Section or Sections of this Agreement unless otherwise
specified. All words used in this Agreement will be construed to be
of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word “including” does not limit the preceding words or
terms.
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4.9 Severability. If
any provision of this Agreement is held invalid or unenforceable by any
Arbitrator or court of competent jurisdiction, to the extent that the rights
or
obligations of the parties under this Agreement will not be materially and
adversely effected thereby, the other provisions of this Agreement will remain
in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force
and
effect to the extent not held invalid or unenforceable.
4.10. Counterparts. This
Agreement may be executed in counterparts, each of which will be deemed to
be an
original copy of this Agreement and all of which, when taken together, will
be
deemed to constitute one and the same agreement.
4.11 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
entered into and wholly to be performed within the State of
California.
4.12 Further
Assurances. Each party shall execute such further instruments as
the other party may reasonably request in order to carry out the provisions
of
this Agreement.
[Remainder
of This Page Intentionally Left Blank]
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IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as
of
the date above first written above.
| THE EXECUTIVE | ||
| Xxxxxx X. Xxxxxxx | ||
| THE COMPANY | ||
| PRIMAL
SOLUTIONS, INC.,
a
Delaware corporation
|
||
| By: | ||
| Name: | ||
| Title: |
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