EMPLOYMENT AGREEMENT
Peerless
Systems Corporation, a Delaware Corporation, (the “Company”) and its
successors and assigns, and Xxxxxxx X. Xxxx, a natural person (“Executive”)
(collectively, the “Parties”), make this
EMPLOYMENT AGREEMENT (“Agreement”) as of
August 26, 2010.
RECITALS
WHEREAS,
the Executive has been instrumental to the Company since he joined its Company’s
Board of Directors in 2007; and
WHEREAS,
the Company wishes to employ Executive and Executive wishes to be employed as
the Company’s Chief Executive Officer.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth, the Company and Executive agree as follows:
AGREEMENT
1. Term. The
Company hereby agrees to employ Executive as Chief Executive Officer commencing
on the date hereof and continuing for a period of one (1) year. On
each of the first and second anniversaries hereof, Executive’s employment and
this Agreement shall be automatically extended for an additional one (1) year
period unless terminated by either party to this Agreement by written notice
given to the other party not less than one hundred and twenty (120) days prior
to such anniversary. From and after the third anniversary hereof,
this Agreement may be terminated by either party upon ninety (90) days’ notice
to the Executive.
2.
Duties.
(a) Duties and
Responsibilities. The Executive will report to the Board of Directors
(the “Board”). Executive shall be employed as Chief Executive
Officer and shall
perform and discharge the duties which may be assigned to him from time to time
by the Board in connection with the conduct of the Company’s business as well as
those duties which are normally and customarily vested in a Chief Executive
Officer of a corporation. Executive’s job responsibilities shall
include, but not be limited to, anything reasonably requested or required of
Executive on behalf of the Company.
(b) Extent of Services and
Business Activities. Executive shall devote his full-time
efforts to the business of the Company and shall not devote material time to
other activities except (i) for serving on the Board of Directors of Eco-Bat
Technologies Ltd or (ii) with the prior written consent of the
Board. Executive covenants and agrees that for so long as he is
employed by the Company, Executive shall not, whether as an executive, employee,
employer, consultant, agent, principal, partner, member, stockholder, corporate
officer or director, or in any other individual or representative capacity, for
compensation, engage in or participate in or render material services to any
other person or entity, provided, however, that,
notwithstanding the foregoing, Executive (a) may invest in securities of any
entity, solely for investment purposes, if (x) such securities are traded on any
national securities exchange or the National Association of Securities Dealers,
Inc. Automated Quotation System, and (y) Executive does not, directly or
indirectly, own 4.9% or more of any class of securities of such
entity.
(c) Location. Executive
shall regularly perform his duties from a newly established Peerless office (the
“Office”) at such location as reasonably determined by the Executive and agreed
to by the Board. In addition to spending time at the Office,
Executive may be required to travel from time to time in order to perform his
duties hereunder.
3. Compensation.
(a) Base
Salary. From and after the date hereof until the termination
of his employment, Executive shall be paid an annual base salary (“Base Salary”) of
three hundred forty thousand dollars ($340,000). Executive’s Base
Salary shall be payable in installments consistent with the payroll practices
established by the Company with respect to its senior executive
employees.
(b) Equity and Incentive
Compensation. On the date hereof, the Company shall issue to
the Executive a total of 200,000 restricted shares (the “Restricted Shares”) of
common stock, par value $0.001 per share, of the Company (the “Common Stock”)
pursuant to the agreement attached hereto as Exhibit A, which shall vest in
accordance with the schedule set forth below. Such Restricted Shares
shall vest as follows:
|
Number of Restricted
Shares Vested
|
Target
Price
|
|
50,000
|
$3.75
|
|
50,000
|
$4.00
|
|
50,000
|
$4.25
|
|
50,000
|
$4.50
|
The
Restricted Shares shall vest on the first date before the third anniversary
hereof, if any, that the average closing price of the Common Stock as reported
on the Nasdaq Capital Market for any fifteen consecutive trading days
immediately prior to the such date (“Average Price”) is greater than or equal to
the Target Price for such Restricted Shares set forth in the table above,
provided that Executive remains employed by the Company i as of the vesting
date. Notwithstanding the foregoing, if the Executive’s employment
pursuant to this Agreement is terminated without Cause: (i) if 150,000 of the
Restricted Shares have vested on or before the date of such termination (the
“Termination Date”), then the remaining 50,000 Restricted Shares shall vest; and
(ii) if less than 150,000 of the Restricted Shares have vested on or before the
Termination Date, then 100,000 Restricted Shares shall vest and any other
unvested Restricted Shares shall expire and have no further
effect. Notwithstanding anything to the contrary in this Agreement,
all Restricted Shares that have not vested on or before the third anniversary
hereof shall expire and shall have no further effect.
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(c) Options and
Bonus. Executive is eligible to receive semi-annual incentive
options and bonus payments at the sole discretion of the Board. All
equity awards shall be subject to the terms and conditions set forth in the
Peerless 2005 Incentive Award Plan (the “Plan”) and such other terms approved by
the Board.
(d) Payment. Payment
of all compensation to Executive hereunder shall be made in accordance with the
relevant written Company policies in effect from time to time, including normal
payroll practices, and shall be subject to all applicable employment and
withholding taxes. This provision shall survive the termination of
Executive’s employment with the Company, for any reason.
4.
Other Employment
Benefits.
(a) Business
Expenses. Upon submission of itemized expense statements, in
the manner as shall be specified by the Company, Executive shall be entitled to
reimbursement for reasonable business and travel expenses duly incurred by
Executive in the performance of his duties under this Agreement, pursuant to
written Company policy and any relevant written policies established by the
Board and provided to Executive.
(b) Benefit
Plans. To the extent offered by the Company, Executive shall
be entitled to participate, on a basis commensurate with his position, in the
Company’s medical insurance, retirement (e.g., non-matching 401(k)
plan) and other benefit plans pursuant to their terms and conditions during the
term of this Agreement. Nothing in this Agreement shall preclude the Company or
any affiliate of the Company from terminating or amending any employee benefit
plan or program from time to time.
(c) No Other
Benefits. Executive understands and acknowledges that the
compensation and benefits specified in Paragraphs 3, 4 and 5 of this Agreement
are the only compensation and benefits he is entitled to receive under this
Agreement.
5.
Termination of
Employment.
(a) Payments Upon
Termination. If Executive’s employment is terminated for any
reason by either party, the Company shall promptly pay or provide to the
Executive, or his estate, (i) the Executive’s earned but unpaid Base Salary
accrued through the date of termination, (ii) accrued, but unpaid, vacation time
through such date of termination, (iii) reimbursement of any business expenses
incurred by the Executive prior to the Date of Termination that are reimbursable
under Paragraph 4(a) above, and (iv) any vested benefits and other amounts due
to Executive under any plan, program, policy of, or other agreement with, the
Company (subsections (i) to (iv), above, are referred to together as the “Accrued
Obligations”). If Executive’s employment is terminated by the
Company without Cause (as Cause is defined below) for any reason prior to the
end of this agreement, the Company shall pay Executive in a lump sum payment any
remaining payments owed through the end of this Agreement.
(b) Severance
Payments. In addition to the payments set forth in Section
5(a), in the event Executive’s employment is terminated by the Company without
Cause (as Cause is defined below) or resulting from a non-renewal of this
Agreement without Cause and Executive executes a general release in favor of the
Company in the form attached hereto as Exhibit B, the Company shall pay (i)
Executive his Base Salary for a period of six months (the “Severance Period”)
and (ii) Executive’s health insurance (i.e., medical, dental and vision) for the
Severance Period (collectively, the “Severance Payment”). The
Severance Payment, if any, would be payable in a lump sum at the termination of
Executive’s employment.
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(c) Benefits. Executive
shall have one year from his last day of employment to exercise any vested but
unexercised stock options.
(d) Definition of
Cause. For purposes of this Agreement, Cause shall be defined
as (i) Executive’s conviction, pleading guilty or no contest with respect to a
felony involving dishonesty or moral turpitude, (ii) Executive’s commission of
any act of theft, fraud, dishonesty, or falsification of any employment or
Company records (iii) Executive’s refusal without proper legal reason to
substantially perform the duties and responsibilities required of Executive, or
(iv) any material breach by Executive of any material term of this Agreement
and/or of Executive’s fiduciary duties to the Company.
6. Executive’s Duties Upon
Termination.
(a) Cooperation. After
notice of termination, Executive shall, at the Company’s expense and subject to
Executive’s professional availability, cooperate with the Company, as reasonably
requested by the Company, to effect a transition of Executive’s responsibilities
and to ensure that the Company is aware of all matters being handled by
Executive.
(b) Return of Company
Property. Within seven days of the termination of Executive’s
employment under this Agreement for any reason, Executive will return all
Company property in Executive’s possession to the Company.
7. Assignment and
Transfer. Executive’s rights and obligations under this
Agreement shall not be transferable by assignment or otherwise, and any
purported assignment, transfer or delegation thereof shall be
void. This Agreement shall be assignable by the Company and inure to
the benefit of, and be binding upon and enforceable by, any purchaser of
substantially all of Company’s assets, any corporate successor to Company or any
assignee thereof; provided however that such assignee assumes in writing the
Company’s obligations thereunder.
8. No Inconsistent
Obligations. This Agreement shall represent the sole agreement
with Company as to the subject matter herein, and Executive has no material
obligations, legal or otherwise, inconsistent with the terms of this Agreement
or with Executive undertaking employment with the Company. Executive
represents and warrants that Executive has the right and power to enter into
this Agreement, to perform Executive’s obligations hereunder and by entering
into this Agreement and performing Executive’s obligations hereunder Executive
is not in conflict with any agreement with any third party. The
Company represents and warrants that the Company has all requisite corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder.
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9. Miscellaneous.
(a) Survival. The
provisions of this Agreement, including, without limitation Paragraphs 9(c)
(Arbitration), contained herein shall survive the termination of
employment.
(b) Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware without regard to conflict of law principles.
(c) Arbitration
. With the exception of any claims for workers compensation,
unemployment insurance, claims before any governmental administrative agencies
or claims related to the National Labor Relations Act, any controversy relating
to this Agreement or Executive’s employment shall be settled by binding
arbitration according to the American Arbitration Association’s Employment
Arbitration Rules and Mediation Procedures (available at xxxx://xxx.xxx.xxx) and
subject to the Federal Arbitration Act and the Federal Rules of Civil Procedure
(including their mandatory and permission rights to discovery.) This
provision to arbitrate applies to both Company and Executive. Such
arbitration shall be presided over by a single arbitrator in
Delaware. Such binding arbitration is applicable to any and all
claims under state and federal employment related statutes including, without
limitation, the Fair Employment and Housing Act, the Age Discrimination in
Employment Act, the Family Medical Leave Act, the Title VII of the Civil Rights
Act and any similar statute law or regulation of the state of Delaware, as well
as any claims related to a claimed breach of this Agreement. The
Company shall bear all costs uniquely associated with the arbitration process,
including the arbitrator’s fees where required by law. The arbitrator
shall have the authority to award any damages authorized by law, including,
without limitation, costs and attorneys’ fees. The Parties agree to
execute all documents necessary to keep the documents, findings, and award, if
any, of the arbitration confidential, including, without limitation, execution
of a protective order.
(d) Amendment. This
Agreement may be amended only by a writing signed by Executive and by a duly
authorized representative of the Company (other than Executive) as approved by
the Board.
(e) Severability. If any
term, provision, covenant or condition of this Agreement, or the application
thereof to any person, place or circumstance, shall be held to be invalid,
unenforceable or void, the remainder of this Agreement and such term, provision,
covenant or condition as applied to other persons, places and circumstances
shall remain in full force and effect, provided however, that any such provision
found invalid, unenforceable or void shall be deemed amended only to the extent
necessary and shall preserve the intent of the parties hereto.
(f) Construction. The
headings and captions of this Agreement are provided for convenience only and
are intended to have no effect in construing or interpreting this
Agreement. The language in all parts of this Agreement shall be in
all cases construed according to its fair meaning and not strictly for or
against the Company or Executive.
(g) Nonwaiver. No failure
or neglect of either party hereto in any instance to exercise any right, power
or privilege hereunder or under law shall constitute a waiver of any other
right, power or privilege or of the same right, power or privilege in any other
instance. All waivers by either party hereto must be contained in a written
instrument signed by the party to be charged and, in the case of the Company, by
an officer of the Company (other than Executive) or other person duly authorized
by the Company.
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(h) I.R.C.
409A. Unless otherwise expressly provided, any payment of
compensation by Company to Executive, whether pursuant to this Agreement or
otherwise, shall be made within two and one-half months (2½ months) after the
later of the end of the calendar year of the Company’s fiscal year in which
Executive’s right to such payment vests (i.e., is not subject to a “substantial
risk of forfeiture” for purposes of Code Section 409A of the Internal Revenue
Code of 1986, as amended (“Code”)). To the extent that any severance
payments come within the definition of “involuntary severance” under Code
Section 409A, such amounts up to the lesser of two times the Executive’s annual
compensation for the year preceding the year of termination or two times the
401(a)(17) limit for the year of termination, shall be excluded from “deferred
compensation” as allowed under Code Section 409A, and shall not be subject to
the following Code Section 409A compliance requirements. All payments
of “nonqualified deferred compensation” (within the meaning of Section 409A) are
intended to comply with the requirements of Code Section 409A, and shall be
interpreted in accordance therewith. Neither party individually or in
combination may accelerate any such deferred payment, except in compliance with
Code Section 409A, and no amount shall be paid prior to the earliest date on
which it is permitted to be paid under Code Section 409A. In the
event that Executive is determined to be a “key employee” (as defined in Code
Section 416(i) (without regard to paragraph (5) thereof)) of Company at a time
when its stock is deemed to be publicly traded on an established securities
market, payments determined to be “nonqualified deferred compensation” payable
following termination of employment shall be made no earlier than the earlier of
(i) the last day of the sixth (6th) complete calendar month following such
termination of employment, or (ii) Executive’s death, consistent with the
provisions of Code Section 409A. Any payment delayed by reason of the
prior sentence shall be paid out in a single lump sum at the end of such
required delay period in order to catch up to the original payment
schedule. Notwithstanding anything herein to the contrary, no
amendment may be made to this Agreement if it would cause the Agreement or any
payment hereunder not to be in compliance with Code Section 409A.
(i) Notices. All notices,
requests, demands, claims and other communications hereunder will be in
writing. Any notice, request, demand, claim or other communication
hereunder will be deemed duly given as of the day such information is sent by
registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
If to
Executive to the address set forth on Exhibit C hereto.
With a
copy to:
If to
Company:
Peerless
Systems Corporation
Attn: Chairman
of the Compensation Committee
0000
Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx
Xxxxxxx, XX 00000
Tel:
(000) 000-0000
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With a
copy to:
Peerless
Systems Corporation
Attn: General
Counsel
0000
Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx
Xxxxxxx, XX 00000
Tel:
(000) 000-0000
Any party
may send any notice, request, demand, claim, or other communication hereunder to
the intended recipient at the address set forth above using any other means
(including personal delivery with receipt acknowledged, expedited courier,
messenger service, telecopy, telex, or electronic mail), but no such notice,
request, demand, claim, or other communication will be deemed to have been duly
given unless and until it is received by the intended recipient (which shall be
evidenced by fax or e-mail confirmation, or registered receipt, or declaration
via a messenger). Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set
forth.
(i) Assistance in
Litigation. Executive shall, during and after termination of employment,
upon reasonable notice, furnish such information and proper assistance to the
Company as may reasonably be required by the Company in connection with any
litigation in which it or any of its subsidiaries or affiliates is, or may
become a party; provided, however, that such assistance following termination
shall be furnished at mutually agreeable times and for mutually agreeable
compensation.
(j) Executive
Acknowledgment. The undersigned Executive hereby acknowledges that he has
had the option to consult legal counsel in regard to this Agreement, that he has
read and understands this Agreement, that he is fully aware of its legal effect,
and that he has entered into it freely and voluntarily and based on his own
judgment and not on any representations or promises other than those contained
in this Agreement (k)Counterparts. This
Agreement may be executed in two (2) or more counterparts, each of which will be
deemed an original and all of which together will constitute one and the same
instrument.
(l) Entire Agreement.
This Agreement and the documents referenced herein and executed herewith contain
the entire agreement and understanding between the Parties hereto and supersede
any prior or contemporaneous written or oral agreements, representations and
warranties between them respecting the subject matter hereof.
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IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
date set forth above.
|
Peerless
Systems Corporation, Inc. (“Company”)
|
|
By:
/s/ Xxxxxx X.
Xxxxxxxx
Name: Xxxxxx
X. Xxxxxxxx
Title:
Director and Authorized Signatory
|
|
Dated: August 26,
2010
|
|
Xxxxxxx
Xxxx (“Executive”)
|
|
Dated:
August 26,
2010
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