EXECUTIVE EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EXECUTIVE EMPLOYMENT AND NONCOMPETITION AGREEMENT (this
"Agreement") entered into by and between EAGLE LAKE INCORPORATED, a Nevada
corporation that will change its name to RVISION, INC. in connection with the
closing of the transactions contemplated by the Consolidation Agreement, as
defined below (the "Company"), and XXXXXX X. XXXXXX III ("Employee").
RECITALS
WHEREAS, pursuant to that certain Consolidation Agreement dated August
30, 2005 (the "Consolidation Agreement"), the Company has this date completed
the acquisition of all of the outstanding equity ownership interests of
Employee's previous employer as part of an integrated plan to consolidate
certain business operations and technical and management resources in order to
enhance access to substantial amounts of additional equity, and Employee, as a
major equity owner in his previous employer and, therefore, in the Company as a
result of such acquisition, desires to assure the continuity of the management
and technical resources of the Company; and
WHEREAS, the Company desires to employ Employee in an executive
capacity on the terms and conditions and for the consideration hereinafter set
forth for the period provided herein commencing upon the Effective Date, and
Employee desires employment with the Company on such terms and conditions and
for such consideration as set forth herein; and
WHEREAS, Employee possesses significant capabilities and knowledge
important for the development of the Company's business and the Company desires
to provide incentive to Employee to provide his services to the Company; and
WHEREAS, Employee has, and will acquire during the term of his
employment, significant knowledge and experience in the Company's business and
intimate knowledge of its customers, processes, trade secrets, and/or other
business information, and the Company needs to protect its commercial goodwill
and other assets.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing, the agreements set
forth below, the parties' desire to preserve the value inherent in the Company
for their mutual benefit, and for other valuable consideration (the receipt of
which Employee hereby acknowledges), Employee, intending to be legally bound
hereby, agrees with the Company as follows:
1. Employment. The Company hereby agrees to employ Employee, and
Employee hereby accepts employment on the terms and conditions set forth herein,
commencing at the time of Closing under the Consolidation Agreement (as the term
"Closing" is defined in the Consolidation Agreement) (the "Effective Date"). The
commencement of the employment term and the Effective Date are expressly subject
to the consummation of the transactions contemplated by the Consolidation
Agreement set forth therein, subject to extension by the parties thereto as
provided by or permitted in such Consolidation Agreement. In the event that the
Closing is not effected, this Agreement shall be null and void ab initio.
2. Term of Employment. The term of Employee's employment shall begin on
the Effective Date and shall continue for a period of five years, unless
terminated earlier pursuant to other provisions of this Agreement. At the end of
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the initial term, the Agreement will renew for an additional one year, and
continue to renew each year unless terminated pursuant to other provisions of
this Agreement. The period during which Employee remains an employee of the
Company may be referred to herein as the "Employment Period").
3. Position. During Employee's employment with the Company, Employee
shall serve as Senior Vice President--Sales and Integration of the Company.
Employee shall report and be responsible to the board of directors of the
Company.
4. Scope of Services. Employee shall be responsible for assisting in
the management of sales and marketing and controlling the integration and
installation efforts for the Company. As Senior Vice President, he shall focus
his time and energy in the business development, sales, marketing, and special
projects (integration and installation) of the Company, and shall be responsible
for assisting the President and COO to oversee and manage the day-to-day
operations of Custom Federal, Inc. Employee agrees to devote Employee's full
business time, attention, skills, and best efforts to the performance of
Employee's duties hereunder and shall not, during Employee's employment by the
Company, without the prior written approval of the Company's board of directors,
be employed by or otherwise engaged in any other business activity requiring any
significant amount of Employee's business time. During the Employment Period,
the Employee (a) shall inform the Company of each actual business opportunity
available to the Company that falls within or is related to the business plan of
the Company or any Related Company (as hereinafter defined) of which he becomes
aware (each such actual business opportunity a "Company Related Business
Opportunity") and shall not, directly or indirectly, exploit any such Company
Related Business Opportunity for his own account or others in competition with
or planning to be in competition with the Company or any Related Company; and
(b) shall not render any services to any other such person or business to
develop any such Company Related Business Opportunity, other than in his
capacity as an employee of the Company or as otherwise approved by the board of
directors of the Company.
5. Salary, Compensation, and Benefits.
(a) Base Salary. The Company agrees to pay, and Employee
agrees to accept a base salary of one hundred fifty thousand dollars ($150,000)
per year ("Base Salary"). Employee's salary shall be payable upon the same
schedule that the Company pays its employees generally. The Base Salary is
subject to annual increases in the sole discretion of the board of directors of
the Company; however, the board of directors shall conduct an annual review of
the base salary and in no event may it be lowered during the term of the
employment agreement. Employee will not be entitled to overtime or additional
compensation as a result of services performed during evenings, weekends,
holidays, or at other times.
(b) Bonus. Bonus payments and amounts shall be determined by
the compensation committee of the Company's board of directors in its sole
discretion in accordance with performance-based criteria applicable generally to
the executive-level employees of the Company and its other majority-owned
subsidiaries.
(c) Equity Participation. As soon as practicable following the
Effective Date (and in no case later than 10 days following the Effective Date,
Company shall grant to Employee options to purchase up to 425,000 shares of the
Company's common stock (as adjusted for stock splits, combinations,
recapitalizations, and the like occurring on and after the Effective Date) (such
options the "Options"), with an exercise price of $1.50 per share with regard to
the 20% of such options that vest during the first year following the Effective
Date; with an exercise price of $2.25 per share with regard to the 20% of such
options that vest during the second year following the Effective Date; with an
exercise price of $3.00 per share with regard to the 20% of such options that
vest during the third year following the Effective Date; with an exercise price
of $3.75 per share with regard to the 20% of such options that vest during the
fourth year following the Effective Date; and with an exercise price of $4.50
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per share with regard to the 20% of such options that vest during the fifth year
following the Effective Date. One-sixtieth (1/60) of the total number of shares
subject to the Options shall vest and become exercisable at the end of each
month following the Effective Date on the same day of each month as the
Effective Date, so that all shares subject to the Options will be fully vested
on the fifth anniversary of the Effective Date. These Options will be
exercisable for a period of seven years from the date of grant and will be
incentive stock options to the extent permitted by applicable law. In the event
that the Employment Period is extended as contemplated by Section 2 hereof,
Company shall grant to Employee additional options within 10 days of the
commencement of each year of the extended Employment Period exercisable for up
to 100,000 shares of the Company's common stock (as adjusted for stock splits,
combinations, recapitalizations, and the like occurring on and after the
Effective Date) (all such options "Additional Options"). All Additional Options
shall vest and be exercisable immediately upon grant, shall have a per-share
exercise price equal to the per-share fair market value of the common stock at
the time of grant, shall be exercisable for a period of five years from the date
of grant, and shall be incentive stock options to the extent permitted by
applicable law. Notwithstanding the foregoing, if on the date of grant of any
such Additional Options the exercise price is required, because of the
percentage of the Employee's stockholdings in the Company, to be greater than
the market price as of the date of grant, at the Employee's election, such
Additional Options shall either have the exercise price required by law or shall
not be incentive stock options. All stock options, whether granted during the
initial five-year employment term or any additional term of employment, will be
granted pursuant to the Company's 2005 Long-Term Incentive Plan, as it may be
amended and adopted from time to time.
(d) Fringe Benefits. During the Employment Period, Employee
shall be entitled to the benefits of such group medical, travel and accident,
short- and long-term disability, and term life insurance, if any, as the Company
shall make generally available from time to time to the Company's executive
officers.
(e) Other. During the Employment Period, Employee and, to the
extent applicable, Employee's family, dependents, and beneficiaries, shall be
allowed to participate in all benefits, plans, and programs, including
improvements or modifications of the same, that are now or may hereafter be
available to executive employees of the Company generally. Such benefits, plans,
and programs may include a profit sharing plan, a thrift plan, group medical
insurance, dental insurance, vision insurance, travel and accident insurance,
short-term and long-term disability insurance, life insurance, and a pension
plan. The Company shall not, however, by reason of this subsection be obligated
to institute, maintain, or refrain from changing, amending, or discontinuing any
such benefit plan or program, so long as such changes are similarly applicable
to executive employees of the Company generally.
(f) Reimbursement. The Company shall reimburse Employee (or,
in the Company's sole discretion, shall pay directly), upon presentation of
vouchers and other supporting documentation as the Company may reasonably
require, for reasonable out-of-pocket expenses incurred by Employee relating to
the business or affairs of the Company or the performance of Employee's duties
hereunder, including reasonable expenses respecting entertainment, travel, and
similar items, provided that Employee shall have complied with the Company's
regular reimbursement procedures and practices generally applicable from time to
time to the Company's executive officers.
(g) Vacation. In addition to statutory holidays and other
holidays declared by the Company that are of general applicability to the
Company's employees, during the term of this Agreement, Employee shall be
entitled to two weeks vacation each calendar year during Employee's employment,
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accruing ratably each month, to be taken in accordance with the procedures and
practices generally applicable from time to time to the Company's employees,
provided that such vacation time for any particular calendar year that accrues
but is not taken shall carry over to subsequent calendar years.
(h) Withholding. The Company may withhold from Employee's
compensation all applicable amounts required by law.
6. Termination by the Company. The following provisions shall govern
the termination of Employee's employment by the Company during the term of this
Agreement.
(a) Termination by the Company for Cause. The Company shall
have the right to terminate Employee's employment with the Company For Cause (as
such term is hereinafter defined), effective upon notice of termination to
Employee. As used herein, the term "For Cause" shall mean (i) Employee's
repeated failure, in the reasonable judgment of the Company's board of
directors, to substantially perform his assigned duties or responsibilities as
Senior Executive Vice President of the Company as reasonably directed or
assigned by the Company's board of directors (other than a failure resulting
from the Employee's Disability); (ii) Employee engaging in knowing and
intentional illegal conduct that was or is materially injurious to the Company;
(iii) Employee's knowing violation of a federal or state law or regulation
directly or indirectly applicable to the business of the Company, which
violation was or is reasonably likely to be injurious to the Company; (iv)
Employee's material breach of the terms of any confidentiality agreement or
invention assignment agreement between Employee and the Company; (v) repeated
misuse (following at least one written warning from the Company) of alcohol,
narcotics, or other controlled substances that is materially detrimental to the
Company and that materially interferes with Employee's performance of his duties
hereunder; or (vi) Employee being convicted of, or entering a plea of nolo
contendere to, a felony or committing any act of moral turpitude or fraud
against, or the misappropriation of material property belonging to, the Company,
provided, however, in all cases other than Employee being convicted of, or
entering a plea of nolo contendere to, a felony, that prior to the Company
having the right to terminate Employee's employment with the Company For Cause
pursuant to this Subsection 6(a), (1) the Company's board of directors must
first provide written notice to Employee describing in reasonable detail the
basis upon which the Company would terminate Employee's employment with the
Company For Cause and the Employee must have had opportunity to address the
Company's board of directors, with counsel, regarding such alleged basis; and
(2) Employee shall have failed, during the period of 30 days following such
opportunity to address the Company's board of directors, to remedy any such
alleged basis for For Cause termination. In the event Employee's employment is
terminated in accordance with this Subsection 6(a), the Company shall pay to
Employee all amounts accrued through the Termination Date (as hereinafter
defined), any unreimbursed expenses incurred pursuant to Subsection 5(f) of this
Agreement, and any other benefits specifically provided to Employee under any
benefit plan.
(b) Termination upon Death or Disability of Employee. This
Agreement shall terminate immediately upon Employee's death or upon the
Disability of Employee. In the event Employee's employment is terminated in
accordance with this Subsection 6(b), the Company shall provide to Employee the
Disability Termination Compensation as provided in Subsection 18(j).
(c) Other Termination by Company. In the event of any
termination of this Agreement by the Company other than in accordance with
subsections (a) or (b) of this Section 6, the Company shall provide to Employee
the Full Termination Compensation as provided in Subsection 18(c).
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7. Termination by Employee. The following provisions shall govern the
termination of Employee's employment by Employee during the term of this
Agreement.
(a) Termination for Good Reason. Employee's employment with
the Company may be regarded as having been constructively terminated by the
Company, and the Employee may therefore terminate his employment for Good Reason
(as defined below), by providing written notice to the Company and thereupon
become entitled to the Full Termination Compensation as provided in Subsection
18(c). For purposes of this section, "Good Reason" shall mean if, at any time
during the Employment Period, one or more of the following events shall occur:
(i) without the Employee's express written consent,
the assignment to the Employee of any duties or the reduction of the Employee's
duties, either of which results in a significant diminution in the Employee's
position or responsibilities with the Company in effect immediately prior to
such assignment, or the removal of the Employee from such position and
responsibilities; provided, however, that upon and following the consummation of
a Change of Control, Employee may not terminate his employment for Good Reason
pursuant to this subsection, unless Employee is assigned a title lower than that
of Senior Vice President--Sales and Integration of the controlling entity
following the Change of Control or Employee is assigned any duties or his duties
are reduced to a level inconsistent with the role of an Senior Vice
President--Sales and Integration or higher role with such controlling entity;
(ii) without the Employee's express written consent,
a substantial reduction, without good business reasons, as determined by the
Company's board of directors, of the facilities and perquisites (including
office space and location) available to the Employee immediately prior to such
reduction;
(iii) a material reduction by the Company in the Base
Salary or bonus opportunity of the Employee as in effect immediately prior to
such reduction;
(iv) a material reduction by the Company in the kind
or level of employee benefits to which the Employee is entitled immediately
prior to such reduction with the result that the Employee's overall benefits
package is significantly reduced;
(v) the relocation of the Employee to a facility or a
location more than 25 miles from the Employee's then present work location
without the Employee's express written consent;
(vii) the failure of the Company to obtain the
assumption of this Agreement by any successor; or
(viii) any material breach by the Company of any
material provision of this Agreement.
(b) Voluntary Termination. Employee may voluntarily terminate
his employment with the Company at any time, after which no further compensation
will be paid to Employee, by providing written notice to the Company in
accordance with Section 23 below. In the event Employee voluntarily terminates
his employment other than pursuant to Subsection 7(a), the Company shall pay to
Employee all amounts accrued through the Termination Date, any unreimbursed
expenses incurred pursuant to Subsection 5(f) of this Agreement, and any other
benefits specifically provided to Employee under any benefit plan. In the event
that Employee voluntarily terminates his employment other than pursuant to
Subsection 7(a) on or prior to December 31, 2007, the portion of the RVision
Earnout Consideration (as defined in the Consolidation Agreement) not yet earned
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as of the Termination Date shall be forfeited by the Employee, and the Company
shall have the assignable right, but not the obligation, to redeem or repurchase
all or any portion of the shares of the Company's common stock issued to the
Employee under the Consolidation Agreement (other than shares that constitute
RVision Earnout Consideration); provided, however that:
(i) there shall be no such right of redemption or
repurchase respecting 25% of the shares of the Company's common stock issued to
the Employee under the Consolidation Agreement (other than shares that
constitute RVision Earnout Consideration), and such right of redemption or
repurchase shall expire respecting an additional 3.125% of all shares of the
Company's common stock issued to the Employee under the Consolidation Agreement
on the last day of each month, commencing January 31, 2006, such that after the
last day of 2007, all such rights of redemption or repurchase held by the
Company in the Employee's shares shall have expired; and that
(ii) the price paid by the Company in the exercise of
such right of redemption or repurchase shall initially be the lower of (1) $0.25
per share through December 31, 2005, plus an amount equal to $0.025 per share
for each calendar month elapsing after December 31, 2005, and (2) the average
market price for such common stock for the 10 trading days following the fifth
trading day following the termination of the employment relationship pursuant to
Subsection 7(b) and Market Price, as determined in accordance with Subsection
18(k); and that
(iii) the Company shall exercise such right of
redemption or repurchase by giving written notice to the Employee, pursuant to
Section 23, within 100 days after the Termination Date, in which case such right
of redemption or repurchase must be consummated within 120 days after the
Termination Date; and that
(iv) upon Termination pursuant to this Subsection
7(b), any shares not redeemed or repurchased as provided above shall become
subject to an extended restricted period that will last until December 31, 2007,
whereby the Employee may not, directly or indirectly, sell, offer to sell,
contract to sell (including any short sale), grant any option to purchase, or
otherwise transfer or dispose (other than to donees who agree to be similarly
bound) such shares in any public trading market that may then exist; and that
(v) if the Company purchases at least 25% of the
Employee's shares of the Company's common stock issued to the Employee under the
Consolidation Agreement of the Company, such purchase shall be deemed to
constitute Equity Liquidity; and that
(vi) a legend noting the existence of the foregoing
rights of redemption or repurchase shall be placed conspicuously on the face of
all certificates evidencing the shares of the Company's common stock issued to
the Employee under the Consolidation Agreement.
8. Resignation upon Termination. The termination of this Agreement for
any reason shall also constitute the automatic resignation by Employee from all
positions held by Employee as an employee (but not as a consultant or a
director) of the Company and all Affiliates of the Company, including any
position as a manager, officer, agent or trustee of the Company or any Affiliate
of the Company. Upon the request of the Company, Employee shall deliver to the
Company such written confirmation of such resignation as the Company may
reasonably request.
9. Exit Interview. To ensure a clear understanding of this Agreement,
including but not limited to the protection of Employer's business interests,
Employee agrees, at no additional expense to Employee, to engage in an exit
interview with Employer at a time and place as may be reasonably designated by
Employer.
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10. Confidential Information. The Company hereby agrees to provide the
Employee with, and the Employee hereby acknowledges that he will be made aware
of, certain confidential business information, trade secrets, innovations and
inventions, expertise and know-how, customer information, and other nonpublic
information concerning the business of Company and the Related Companies
including (a) any and all trade secrets concerning the business and affairs of
the Company, costs, bidding practices, price lists, product specifications,
data, know-how, formulae, compositions, processes, designs, sketches,
photographs, graphs, drawings, samples, inventions and ideas, past, current and
planned research and development, current and planned manufacturing and
distribution methods and processes, customer lists, current and anticipated
customer requirements, market studies, business plans, computer software and
programs (including object code and source code), computer software and database
technologies, systems, structures and architectures (and related processes,
formulae, compositions, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information of the Company),
and any other information, however documented; and (b) any and all information
concerning the business and affairs of the Company (which includes historical
financial statements, financial projections and budgets, historical and
projected sales, capital spending budgets and plans, the names and backgrounds
of key personnel, personnel training and techniques and materials); and (c) any
and all notes, analysis, compilations, studies, summaries, and other material
prepared by or for the Company containing or based, in whole or in part, on any
information included in the foregoing ("Confidential Information"). Employee
further acknowledges that such information, even though it may be contributed,
developed, or acquired by the Employee, constitutes valuable, special, and
unique assets of the Company, which are to be used by the Employee solely for
the Company's benefit. The Employee further acknowledges that the Confidential
Information includes "trade secrets." In addition to the other protections
provided herein, all trade secrets shall be accorded the protections and
benefits of the Uniform Trade Secrets Act and any other applicable law.
11. Confidentiality of Information. The Employee shall not, during the
Employee's employment and for a period of two years thereafter, divulge or
disclose to any third person, firm, or company, or make personal or non-Company
use of, any Confidential Information. These obligations of nondisclosure shall
not apply to information that: (a) is in the public domain or is generally known
or available, or hereafter becomes part of the public domain or is generally
known or available through no violation of this Agreement; (b) is henceforth
lawfully acquired by the Employee from any third party not bound, to the actual
knowledge of the Employee, by an obligation of confidence to the Company; (c) is
required, pursuant to judicial action or governmental regulations or other
requirements, to be disclosed by the Employee, provided that the Employee has
notified the Company of such imminent disclosure and cooperates with the Company
in the event that the Company elects to contest and avoid such disclosure; or
(d) is approved for release by prior written authorization from the Company.
Notwithstanding anything to the contrary contained herein, Employee may disclose
this Agreement and any other agreement to which Employee is or to which Employee
may become a party to Employee's immediate family, attorneys, accountants,
auditors, tax preparers, and financial advisors and otherwise insofar as such
disclosure may be necessary to enforce its terms or as otherwise required by
law.
12. Return of Information. Upon termination or expiration of this
Agreement, or at any time the Company may request, the Employee shall return to
the Company, and will not keep in his possession, all Confidential Information,
including documents, drawings, computer files, or any other information in
tangible form.
13. Noncompetition. While Employee is an employee of the Company and
for a period of two years following the Termination Date (the "Noncompetition
Period"), Employee agrees that Employee will not, singly, jointly, or as a
partner, member, employee, agent, officer, director, stockholder (except as a
holder, for investment purposes only, of not more than 1% of the outstanding
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stock of any company listed on a national securities exchange or actively traded
in a national over-the-counter market), equity holder, lender, consultant,
independent contractor, or joint venturer of any other person, or in any other
capacity, directly or beneficially, own, manage, operate, join, control,
participate in the ownership, management, operation or control of, permit the
use of his name by, work for, provide consulting, financial or other assistance
to a Competing Business (as hereinafter defined) anywhere in the Protected
Territory (as hereinafter defined). Notwithstanding the foregoing provisions of
this Section 13, subject to the provisions of Subsection 7(b)(v), the
Noncompetition Period will terminate 120 days following the Termination Date
(the "Equity Liquidity Date") unless the Company provides Employee with Equity
Liquidity by such Equity Liquidity Date. The company's failure to provide the
Employee with the Equity Liquidity by such Equity Liquidity Date shall not
relieve the Company of its obligation to pay and provide the Equity Liquidity to
Employee.
14. Nondisparagement. Employee shall not, during or after the term of
this Agreement (a) attempt or seek to cause any of the customers of the Company
to refrain from maintaining, selling to, or acquiring from or through the
Company any service or product relating to the Company's business as conducted
during the term of this Agreement; or (b) openly disparage the Company or any of
its equity holders, directors, officers, employees, or agents, which has or may
reasonably be expected to have a material adverse effect on a current or
prospective business relationship with a current or prospective customer,
supplier, investor, direct or indirect equity owner, or creditor.
15. Nonsolicitation. During the Noncompetition Period, Employee agrees
that Employee shall not: (a) employ, retain, engage (as an employee, consultant,
or independent contractor), or induce or attempt to induce to be employed,
retained, or engaged, any person that is or was during the Noncompetition Period
an employee, consultant, or independent contractor of the Company; (b) induce or
attempt to induce any person that during the Noncompetition Period is an
employee, consultant, or independent contractor of the Company to terminate his
or her employment or other relationship with the Company; (c) induce or attempt
to induce any person that is a customer of the Company or that otherwise is a
contracting party with the Company during the Noncompetition Period to terminate
any written or oral agreement, understanding, or other relationship with the
Company; or (d) solicit any direct or indirect customers of the Company or any
Related Company within the Protected Territory for a Competing Business.
16. Employee's Representations and Warranties. Employee represents and
warrants that Employee is not a party to any other employment, noncompetition,
or other agreement or restriction that could interfere with Employee's
employment with the Company or Employee's or the Company's rights and
obligations hereunder and that Employee's acceptance of employment with the
Company and the performance of Employee's duties hereunder will not breach the
provisions of any contract, agreement, or understanding to which Employee is
party or any duty owed by Employee to any other person. Employee further
warrants that Employee has provided to the Company a copy of any employment
agreement, consulting agreement, noncompetition covenant, nondisclosure
agreement, or other agreement, covenant, understanding, or restriction with
respect to any employment, consultancy, or confidentiality of information
thereunder, to which Employee is subject or a party, and that such copy is a
true and correct representation of such agreement, provided that the Employee
may redact from such document any provision specifying the amount of financial
remuneration and other highly sensitive information. The Employee hereby
represents and warrants to the Company that he has the legal capacity to execute
and perform this Agreement, that this Agreement is a valid and binding agreement
enforceable against him according to its terms, and that the execution and
performance of this Agreement by him does not violate the terms of any existing
agreement or understanding, written or oral, to which the Employee is a party or
any judgment or decree to which the Employee is subject.
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17. Excise Tax and Gross-Up Payments. If any payment Employee receives
or would receive pursuant to this Agreement (any such payment a "Payment") will
be subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended, or any interest or penalties are incurred by Employee
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "Excise
Tax"), then Employee will be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount equal to the Excise Tax imposed upon the
Payments made to the Employee in excess of 10% above the capped limit of 2.99
times the base amount as such term is defined in Section 280G of the Internal
Revenue Code, and any Excise Tax imposed upon the Gross-Up Payment. An initial
determination (the "Determination") as to whether a Gross-Up Payment is required
pursuant to this Agreement and the amount of such Gross-Up Payment shall be made
at the Company's expense by an accounting firm selected by the Company (the
"Accounting Firm"). The Accounting Firm shall provide its Determination,
together with detailed supporting calculations and documentation to the Company
and Employee within 30 days of the effective date of the Termination Date, or
such other time as requested by the Company. If the Accounting Firm determines
that no Excise Tax is payable by Employee with respect to a Payment, it shall
furnish Employee with an opinion that no Excise Tax will be imposed with respect
to any such Payment. Employee shall have 30 days to dispute the Determination.
The Company shall pay the Gross-Up Payment, if any, to Employee within 30 days
of the receipt of the Determination, regardless of whether Employee has disputed
the Determination. Upon the final resolution of a dispute, the Company shall
promptly pay to Employee any additional amount required by such resolution and
such resolution shall be binding, final, and conclusive upon the Company and
Employee. If there is no dispute, the Determination shall be binding, final, and
conclusive upon the Company and Employee. Notwithstanding anything contained in
this Agreement to the contrary, in the event that, according to the
Determination, an Excise Tax will be imposed on any Payment, the Company shall
pay to the applicable government taxing authorities, as Excise Tax withholding,
the amount of the Excise Tax that the Company withholds from the Payment.
18. Definitions. Capitalized terms used in this Agreement but not
otherwise defined herein shall have the meaning hereby assigned to them as
follows.
(a) Competing Business. "Competing Business" shall mean any
one or more of the following: (i) any business that engages in the development
and marketing of surveillance products; (ii) any other business in which the
Company engages in following the Effective Date that the Company is actively
continuing as of the Termination Date; or (iii) any other business in which the
Company develops an intention to engage on or before the Termination Date, as
determined by resolution of the Company's board of directors, and for which the
Company prepared business plan on or before the Termination Date or for which
the Company commissioned a business plan on or before the Termination Date.
(b) Disability. Employee shall be deemed to have a
"Disability" for purposes of this Agreement if Employee is substantially unable
to perform Employee's duties under this Agreement either for more than 180 days,
whether or not consecutive, in any 12-month period by reason of a physical or
mental illness or injury. Time spent for vacation under Subsection 5(g) shall
not be taken into account in the foregoing calculation for purposes of
determining Disability.
(c) Full Termination Compensation. "Full Termination
Compensation" shall mean:
(i) all amounts accrued to Employee through the
Termination Date, any unreimbursed expenses incurred pursuant to Subsection 5(f)
of this Agreement, and any other benefits specifically provided to Employee
under any benefit plan;
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(ii) the continuation of Employee's Base Salary for
24 months, payable on the Company's payroll payment dates;
(iii) Equity Liquidity by the Equity Liquidity Date;
(iv) the continuation, at the Company's expense, of
group medical coverage under the same terms as in effect at the Termination Date
for the earlier of (1) three months past the Termination Date, or (2) until
Employee obtains alternate health insurance coverage, in addition to any health
insurance continuation obligation under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA); and
(v) full acceleration of all vesting of Options and
any other options or shares of capital stock that may be subject to vesting, so
that all Options and any other options and shares subject to any vesting will be
immediately vested and exercisable as of and for a period of two years following
the Termination Date.
(d) Person. The term "person" shall mean an individual,
partnership, corporation, limited liability company, association, trust, joint
venture, unincorporated organization, and any government, governmental
department or agency, or political subdivision thereof.
(e) Protected Territory. "Protected Territory" shall mean the
world.
(f) Termination Date. "Termination Date" shall mean the date
Employee ceases to be employed by the Company.
(g) Related Company. "Related Company" means any Affiliate (as
defined below) of the Company that is engaged in a business substantially
similar to, complementary with, or directly related to the business in which the
Company is engaged during the Employment Period.
(h) Affiliate. "Affiliate" means, with respect to a person,
another person that controls, is controlled by, or is under common control with
such person.
(i) Change of Control. For purposes of this Agreement, a
"Change of Control" means either: (i) consummation of the acquisition of the
Company by another entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger or
consolidation, or stock transfer, but excluding any such transaction effected
primarily for the purpose of changing the domicile of the Company), unless the
Company's stockholders of record immediately prior to such transaction or series
of related transactions hold, immediately after such transaction or series of
related transactions, at least 50% of the voting power of the surviving or
acquiring entity (provided that the sale by the Company of its securities for
the purposes of raising additional funds shall not constitute a Change of
Control hereunder); or (ii) consummation of a sale of all or substantially all
of the assets of the Company in a single transaction or series of related
transactions.
(j) Disability Termination Compensation. "Disability
Termination Compensation" shall mean:
(i) all amounts accrued to Employee through the
Termination Date, any unreimbursed expenses incurred pursuant to Subsection 5(f)
of this Agreement, and any other benefits specifically provided to Employee
under any benefit plan;
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(ii) the continuation for a period of 12 months of
Employee's Base Salary, payable on the Company's regular payroll payment dates;
(iii) the continuation, at the Company's expense, of
group medical coverage under the same terms as in effect at the Termination Date
for the earlier of (1) two months past the Termination Date, or (2) until
Employee obtains alternate health insurance coverage, in addition to any health
insurance continuation obligation under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA); and
(iv) full acceleration of all vesting of Options and
any other options or shares of capital stock that may be subject to vesting, so
that all Options and any other options and shares subject to any vesting will be
immediately vested and exercisable as of and for a period of two years following
the Termination Date.
(k) Equity Liquidity. "Equity Liquidity" shall consist of, at
the discretion of the Company, either: (i) the Company transferring, or
otherwise making available, immediately available funds to Employee in an
aggregate amount of up to one million, two hundred and fifty thousand dollars
($1,250,000) (with such amount up to $1,250,000 to be determined by Employee) in
exchange for shares of the Company's common stock held by Employee as of the
date of exchange at a price equal to the Market Price (as defined below),
subject to Employee's tender to the Company of a sufficient number of shares to
yield the aggregate liquidation amount as so calculated, with Employee retaining
all other shares owned by Employee in the Company; or (ii) the Employee being
able to sell publicly within 30 days of Employee's decision to so sell, up to
$1,250,000 in shares of the Company's common stock (with such amount up to
$1,250,000 determined by the Employee) pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or Rule 144(k)
promulgated thereunder, subject to Employee owning a sufficient number of shares
to yield the aggregate liquidation amount as so calculated, with Employee
retaining all other shares owned by Employee in the Company. For the purposes of
this subsection, the term "Market Price" means, as of any date, the value of a
share of common stock determined as follows: (I) if the common stock is listed
on any registered national stock exchange or quoted on The Nasdaq Stock Market,
Market Price shall be the average of closing sales prices for such stock (or the
closing bid, if no sales were reported) for the five trading days ending on the
close of trading on the third trading day preceding the Termination Date as
quoted on such exchange or market on the day of determination, as reported by
Nasdaq, The Wall Street Journal, or such other reliable source as the Company
deems reliable; (II) if the common stock is regularly quoted in an interdealer
quotation medium, but sales prices are not reported, the Market Price shall be
the mean between the high bid and low asked prices for the common stock for the
five trading days ending on the close of trading on the third trading day
preceding the Termination Date, as reported by such interdealer quotation
medium, The Wall Street Journal, or such other source as the Company deems
reliable; or (III) in the absence of an established market for the common stock,
the Market Price shall be determined in good faith by the board of directors of
the Company. The Market Price, as determined in accordance with the foregoing,
shall be conclusive in the absence of manifest error.
19. Registration Rights. Contemporaneously with the execution of this
Agreement, Employee and Company are entering into a registration rights
agreement setting forth the terms and conditions under which Company agrees to
register for sale under the Securities Act of 1933, as amended, certain
securities of the Company.
20. Waivers and Amendments. The respective rights and obligations of
the Company and Employee under this Agreement may be waived (either generally or
in a particular instance, either retroactively or prospectively, and either for
a specified period of time or indefinitely) or amended only with the written
consent of a duly authorized representative of the Company and Employee.
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21. Successors and Assigns. The provisions hereof shall inure to the
benefit of, and be binding upon, the Company's successors and assigns.
22. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement of the parties with regard to the subjects hereof
and supersedes in their entirety all other or prior agreements, whether oral or
written, with respect thereto.
23. Notices. Any notice, demand, request, or other communication
permitted or required under this Agreement shall be in writing and shall be
deemed to have been given as of the date so delivered, if personally served; as
of the date so sent, if transmitted by facsimile and receipt is confirmed by the
facsimile operator of the recipient; as of the date so sent, if sent by
electronic mail and receipt is acknowledged by the recipient; one day after the
date so sent, if delivered by overnight courier service; or five days after the
date so mailed, if mailed by certified mail, return receipt requested, addressed
as follows:
If to the Company, addressed to: RVision, Inc.
0000 X Xxxxxxx Xx.
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxx Xxxxx Xxxxxxx & Xxxxx, LLC
Attn: Xxxxx X. Xxxxx
00 Xxxx Xxxxxxxx, Xxxxxx Xxxxx
Xxxx Xxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Employee, to the address set forth on the signature page of this
Agreement or at the current address listed in the Company's regular
payroll records.
24. Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of California (without giving effect to
any conflicts or choice of laws provisions thereof that would cause the
application of the domestic substantive laws of any other jurisdiction).
25. Consent to Jurisdiction and Venue.
(a) Jurisdiction. Each of the parties hereto hereby consents
to the jurisdiction of all state and federal courts located in Santa Xxxxx
County, California, as well as to the jurisdiction of all courts to which an
appeal may be taken from such courts, for the purpose of any suit, action, or
other proceeding arising out of, or in connection with, this Agreement or any of
the transactions contemplated hereby, including any proceeding relating to
ancillary measures in aid of arbitration, provisional remedies, and interim
relief, or any proceeding to enforce any arbitral decision or award. Each party
hereby expressly waives any and all rights to bring any suit, action, or other
proceeding in or before any court or tribunal other than the courts described
above and covenants that it shall not seek in any manner to resolve any dispute
other than as set forth in this section, or to challenge or set aside any
decision, award, or judgment obtained in accordance with the provisions hereof.
(b) Venue. Each of the parties hereto hereby expressly waives
any and all objections it may have to venue, including the inconvenience of such
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Xxxxxx Employment Agreement Exec. 08/30/05
forum, in any of such courts. In addition, each party consents to the service of
process by personal service or any manner in which notices may be delivered
hereunder in accordance with this Agreement.
26. Severability; Titles and Subtitles; Gender; Singular and Plural;
Counterparts; Facsimile.
(a) Headings. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
(b) Mutual Terms. The use of any gender in this Agreement
shall be deemed to include the other genders, and the use of the singular in
this Agreement shall be deemed to include the plural (and vice versa), wherever
appropriate.
(c) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
constitute one instrument. Counterpart signatures of this Agreement (or
applicable signature pages hereof) that are manually signed and delivered by
facsimile transmission shall be deemed to constitute signed original
counterparts hereof and shall bind the parties signing and delivering in such
manner.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement this
30th day of August, 2005
COMPANY: EMPLOYEE:
------- --------
EAGLE LAKE INCORPORATED
By: /s/ Xxxxxx X. Xxxxx /s/ Xxxxxx X. Xxxxxx III
---------------------------------- ---------------------------------
Name: Xxxxxx X. Xxxxx Xxxxxx X. Xxxxxx III
Title: President Address: [private]
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Xxxxxx Employment Agreement Exec. 08/30/05
