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Hunter EMPLOYMENT AGREEMENT 2006
Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of March 28, 2006 between 1-800 CONTACTS, INC., a Delaware corporation (the “Company”), and Robert Hunter (the “Executive”). This Agreement shall be effective as of March 30, 2006 (the “Effective Date”).
In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement, for the period beginning on the Effective Date and ending as provided in paragraph 4 hereof (the “Employment Period”).
2. Position and Duties.
(a) During the Employment Period Executive shall serve as Chief Financial Officer for the Company and shall have such duties, authorities and responsibilities commensurate with the duties, responsibilities and authorities of persons in similar capacities in similarly sized companies and such other duties, responsibilities and authority assigned to Executive by the Company’s Chief Executive Officer or President that are not inconsistent with Executive’s position as Chief Financial Officer, or shall serve as such other senior management position as assigned to Executive by the Chief Executive Officer of the Company (the “Chief Executive Officer”), the President of the Company (the “President”) or the Board of Directors of the Company (the “Board”).
(b) Executive shall report to the Company’s Chief Executive Officer, the President or such other persons as the Chief Executive Officer or President may direct from time to time, and Executive shall devote Executive’s best efforts and full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of the Company and its Affiliates (as hereinafter defined). Executive shall perform Executive’s duties and responsibilities to the best of Executive’s abilities in a diligent, trustworthy, businesslike and efficient manner.
(c) For purposes of this Agreement, “Affiliate” shall mean a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by or is under common control with another person (within the meaning of Rule 12b-2) promulgated under the Securities Exchange Act of 1934, as amended.
3. Base Salary and Benefits.
(a) Executive’s initial base salary shall be $170,000 per annum, which salary shall be payable in regular installments in accordance with the Company’s general payroll practices and shall be subject to customary deductions and withholding. Thereafter, the Company shall periodically review Executive’s Base Salary for increase but not decrease (presently conducted
on
an annual basis). The base salary as determined herein from time to time
shall constitute “Base Salary” for purposes of this Agreement.
(b)
In addition to the Base Salary, Executive shall be eligible to participate in
the Company’s bonus and other incentive compensation plans and programs in
effect from time to time for the Company’s senior executives.
Executive shall have the opportunity to earn an annual bonus (the “Bonus”)
for each fiscal year during the Employment Period with a target Bonus that
will not be less than the target annual bonus Executive is eligible to receive
as of the Effective Date or that Executive may hereafter become eligible to
receive.
(c)
During the Employment Period, Executive shall be, to the extent eligible,
entitled to participate in the employee benefit programs made available to all
employees of the Company according to their terms. In addition,
Executive shall be entitled to other perquisites and fringe benefits in such
amounts as determined by the Chief Executive Officer or the President in
accordance with Company policy and practice and as approved by the
Compensation Committee. Without limiting the foregoing, Executive shall
be entitled to the following benefits during the Employment Period:
(i)
Participation
in any long-term incentive plan adopted by the Company for the benefit
of senior executives of the Company as determined by the Board (or a
committee thereof);
(ii)
Four
weeks (20 working days) of paid vacation each year (as prorated for
partial years), in addition to holidays, in accordance with the
Company’s policy on accrual and use applicable to senior executives,
which vacation may be taken at such times as mutually agreed between
Executive and the Company; and
(iii)
Reimbursement
for all reasonable and necessary travel, entertainment and other
business expenses incurred by Executive, in accordance with Company
policy (including presentment of appropriate documentation).
4.
Employment Period. Executive’s term of employment under this
Agreement (such term of employment, as it may be extended or terminated, is
herein referred to as the “Employment Period”) shall be for a term
commencing on the Effective Date and, unless terminated earlier as provided in
paragraph 5 hereof, ending on the fifth anniversary of the Effective Date (the
“Original Employment Period”), provided that the Employment Period
shall be automatically extended, subject to earlier termination as provided in
paragraph 5 hereof, for successive additional two (2) year periods (the “Additional
Terms”), unless, at least 180 days prior to the end of the Original
Employment Term or the then Additional Term, the Company or Executive has
notified the other in writing that the Employment Period shall terminate at
the end of the then current term.
5.
Termination. Executive’s employment and the Employment Period
shall terminate on the first of the following to occur:
(a)
Automatically on the date Executive dies.
2
(b)
Upon 30 days’ prior written notice by Executive to the Company of
Executive’s voluntary termination of employment without Good Reason.
(c)
Upon written notice by Executive to the Company of a termination for Good
Reason, unless such events are corrected in all material respects by the
Company within 20 days following written notification by Executive to the
Company that Executive intends to terminate employment hereunder for Good
Reason. “Good Reason” shall mean the occurrence of any of the
following events, without Executive’s express written consent:
(i)
A
substantial adverse change in duties that results in Executive
performing duties that are of a significantly lower level than those
customarily performed by Executive during the year preceding the
termination of the Employment Period.
(ii)
A
change in Executive’s regular worksite to a worksite that is more
than 50 miles by the most direct road from Executive’s regular
worksite during the year preceding the termination of the Employment
Period and that is also further from Executive’s principal
residence.
(iii)
A
material breach of this Agreement by the Company that is not cured, if
curable, within 30 days after written notice and demand by Executive
including, but not limited to, any failure to pay when due
Executive’s Base Salary or other amounts due under this Agreement.
(iv)
The
failure of the Company to obtain and deliver to Executive a written
agreement from any successor to the Company to assume and agree to
perform this Agreement.
Good
Reason will cease to exist for an event on the 60th day following its
occurrence, unless Executive shall have given the Company written notice
thereof prior to such date.
(d)
Upon written notice by the Company to Executive of termination due to
Disability. For purposes of this Agreement, “Disability” shall be
defined as a good faith determination by the Chief Executive Officer or
President that Executive has been or will be unable to perform Executive’s
material duties hereunder due to a physical or mental injury, infirmity or
incapacity for 90 days (including weekends and holidays) in any 365-day
period, regardless of whether Executive is deemed disabled pursuant to the
Company’s policies or plans.
(e)
The Company may terminate Executive’s employment hereunder for Cause
immediately upon written notice by the Company to Executive of a termination
for Cause. For purposes of this Agreement, “Cause” shall mean
any of the following:
(i)
The
willful and continued failure by Executive to perform the duties of
Executive’s then position or Executive’s willful failure to follow
the written direction of the Chief Executive Officer, the President,
other more senior executive or the Board.
3
(ii)
The
engaging by Executive in conduct that can reasonably be expected to be
materially monetarily or reputation-wise injurious to the Company or
an Affiliate.
(iii)
Gross
negligence or willful misconduct of a material nature by Executive
with regard to the Company or an Affiliate or in the performance of
Executive’s duties.
(iv)
Executive’s
indictment, conviction, pleading guilty or nolo contendere to a felony
or other civil or criminal offense involving fraud, dishonesty or
moral turpitude.
(v)
Executive’s
material violation of the Company’s code of ethics or a material
breach by Executive of a fiduciary duty or responsibility to the
Company or an Affiliate.
(vi)
Executive’s
material breach of this Agreement or any other written agreement
between Executive and the Company or an Affiliate that is not cured,
if curable, within 20 days of the giving of written notice thereof to
Executive (or such longer period specified in such other agreement).
(f)
Upon written notice by the Company to Executive of an involuntary termination
without Cause, other than for death or Disability.
6.
Consequences of Termination.
(a)
Upon a termination of the Employment Period pursuant to paragraph 5(a), the
Company shall pay or provide Executive’s estate with the following severance
benefits, subject to paragraph 6(d) hereof:
(i)
The
Accrued Benefits (as defined below).
(ii)
Continued
payment of Executive’s Base Salary (but not as an employee) for a
period of 12 months commencing on the date of termination.
(b)
Upon the expiration of the Employment Period or a termination of the
Employment Period pursuant to paragraph 5 (b), (d) and (e) hereof, the Company
shall pay or provide Executive (i) any unpaid Base Salary through the date of
termination; (ii) any annual bonus earned but unpaid with respect to the
fiscal year ending on or preceding the date of termination (other than in
connection with a termination pursuant to paragraphs 5(b) or (e) hereof);
provided, however, to the extent payment of such bonus is subject to Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”),
and the regulations issued or to be issued by the Department of the Treasury
thereunder (“Section 409A”), such payment shall be made at such
times in such calendar year as provided to other executives but in no event
prior to the expiration of the six-month period commencing on the date of the
expiration of the Employment Period or such termination if Executive is a
“specified employee” within the meaning of Section 409A and is not
otherwise exempt from the six-month delay requirement under Section 409A;
(iii) reimbursement for any unreimbursed expenses incurred through the
4
date
of termination; and (iv) all other payments, benefits or fringe benefits to
which Executive may be entitled under the terms of any applicable compensation
arrangement or benefit, equity or fringe benefit plan or program or grant or
this Agreement (collectively items (i) through (v) shall be hereafter referred
to as “Accrued Benefits”).
(c)
Upon a termination of the Employment Period pursuant to paragraph 5(c) or (f)
hereof, Executive shall be entitled to receive the following severance
benefits, subject to paragraph 6(d) hereof:
(i)
The
Accrued Benefits.
(ii)
Continued
payment of Executive’s Base Salary (but not as an employee) for a
period of 12 months commencing on the date of termination or such
later date provided for under Section 409A without triggering adverse
tax consequences to Executive under Section 409A; provided, however,
that if such payments commence more than 30 days following the date of
termination, the first such payment shall equal the sum of all
payments that would have been made from the date of termination to the
date of such first payment were it not for the delay in payment for
Section 409A purposes.
(iii)
a
pro-rata portion of Executive’s Bonus for the performance year in
which Executive’s termination occurs at the time that annual bonuses
are paid to other senior executives or such later date provided for
under Section 409A without triggering adverse tax consequences to
Executive (determined by multiplying the amount Executive would have
received based solely upon achievement of corporate financial targets
had employment continued through the end of the performance year, as
determined by the Board in good faith, by a fraction, the numerator of
which is the number of days during the performance year of termination
that Executive is employed by the Company and the denominator of which
is 365);
(iv)
To
the extent Executive is eligible to and does elect COBRA continuation
coverage with respect to some or all of the Company’s health plans,
the Company shall continue to pay a share of the “applicable
premium” for such coverage until such coverage or the salary
continuation period described in paragraph 6 hereof ends or until
Executive receives health coverage under the plans and programs of a
subsequent employer, whichever is earlier, provided Executive
continues to timely pay Executive’s share of the “applicable
premium” for such coverage. The Company’s share shall be the same
portion of the normal cost of group health coverage borne by the
Company for similarly situated active employees at the same coverage
level (such as employee-only or employee-plus-spouse) as Executive,
disregarding coverage levels higher than the level of Executive on the
last day of the Employment Period; provided, however, that if such
payments commence more than 30 days following the date of termination,
the first such payment shall equal the
5
sum
of all payments that would have been made from the date of termination
to the date of such first payment were it not for the delay in payment
for Section 409A purposes.
Payments
provided in this paragraph 6(c) shall be in lieu of any termination or
severance payments or benefits for which Executive may be eligible under any
of the plans, policies or programs of the Company.
(d)
Any severance benefit that would otherwise be payable pursuant to paragraph
6(b) or (c) hereof shall be paid subject to the following rules:
(i)
No
severance benefit (or, in the event of Executive’s death, any
severance benefit beyond the first month’s severance benefit) shall
be paid unless Executive (or, in the event of Executive’s death,
Executive’s estate) signs a release in a form and manner acceptable
to the Company, which will be similar to Exhibit A to this Agreement,
and does not revoke that release within the time prescribed by law or
the terms of the release.
(ii)
If
the Compensation Committee of the Board determines in good faith,
after giving Executive written notice setting forth the factual basis
of such determination and a reasonable opportunity for Executive to
respond, that Executive has violated any of the provisions of
paragraphs 7, 8 or 9 hereof, no severance benefit shall be paid, any
severance benefit in pay status shall immediately cease to be paid and
any severance benefit paid to Executive subsequent to Executive’s
violation of the provisions of paragraphs 7, 8 or 9 hereof shall be
immediately repaid to the Company. The right granted to the Company by
this paragraph shall not limit the Company’s right to any additional
legal or equitable relief, including an injunction.
(e)
In the event that Executive becomes entitled to payments and/or benefits which
would constitute “parachute payments” within the meaning of Section
280G(b)(2) of the Code, the provisions of Exhibit B shall apply.
7.
Confidential Information; Return of Property. Executive
acknowledges that the information, observations, data, strategic and
development plans, financial condition, business plans, co-developer
identities, business records, customer lists, clients and suppliers, project
records, market reports, employee lists and business manuals, policies and
procedures, information relating to processes, technologies of theory and all
other information that may be disclosed or obtained by Executive while
employed by the Company and its Affiliates concerning the business or affairs
of the Company or any Affiliate (“Confidential Information”) are
the property of the Company or such Affiliate. Therefore, Executive
agrees not to disclose, other than in the course of Executive’s assigned
duties and for the benefit of the Company, to any unauthorized person or use
for Executive’s own purposes any Confidential Information without the prior
written consent of Company, unless and to the extent that (a) the
aforementioned matters become generally known to and available for use by the
public other than as a result of Executive’s (or any representative of
Executive’s) acts or omissions or
6
Executive
is required to disclose by applicable law, regulation or legal process
(provided that Executive provides the Company with prior notice of the
contemplated disclosure and reasonably cooperates with the Company at its
expense in seeking a protective order or other appropriate protection of such
information). Executive shall deliver to the Company at the termination
of the Employment Period, or at any other time the Company may request, all of
the property of the Company that Executive may then possess or have under
control, including all memoranda, notes, e-mails, plans, records, reports,
computer disks or tapes, printouts, software, computer access codes and other
documents and data (and copies or reproductions thereof) containing or
relating to Confidential Information, Work Product (as defined below) or the
business of the Company or any Affiliate and all computers (including
laptops), cell phones, keys, PDAs, Blackberries, credit cards, facsimile
machines, televisions and card access keys to any Company building.
Executive agrees not to retain any copies, duplicates, reproductions or
excerpts of such material or documents.
8.
Intellectual Property.
(a)
In accordance with UCA §34-39-1 et seq.,
Executive acknowledges and agrees that all of the following Intellectual
Property or parts thereof (the “Intellectual Property”), whether
patentable or unpatentable shall belong exclusively to the Company or an
Affiliate (or their designee), whether or not patent applications, trademark
registrations, or copyright registrations are filed thereon:
(i)
Intellectual
Property, whether in whole or in part that is conceived, developed,
reduced to practice, or created by Executive, solely or jointly with
others, within the scope of Executive’s employment, on the
Company’s or an Affiliate’s time, or with the aid, assistance, or
use of any of the Company’s or an Affiliate’s property,
facilities, supplies, resources, or Intellectual Property. For
purposes of this Agreement, “Intellectual Property” means
any and all patents, trade secrets, know-how, technology, confidential
information, ideas, copyrights, trademarks, and service marks and any
and all rights, applications, and registrations relating to them.
(ii)
Intellectual
Property or parts thereof that are suggested by any work, services or
duties performed by Executive for the Company or an Affiliate, either
while performing Executive’s duties with the Company or an Affiliate
or on Executive’s own time, but only insofar as the Intellectual
Property is related to Executive’s work as an employee or other
service provider to the Company or an Affiliate.
(iii)
Intellectual
Property or parts thereof that are related to the industry or trade of
the Company or an Affiliate.
(iv)
Intellectual
Property or parts thereof that are related to the current or
demonstrably anticipated business, research, or development of the
Company or an Affiliate.
7
(b)
Executive agrees and acknowledges that any Intellectual Property that is
worked on, developed, or in any way conceived of or commenced in any way
during the Employment Period, including any Intellectual Property developed
subsequent to the Employment Period that can be reasonably shown to have
evolved from or germinated during the Employment Period shall presumptively
belong exclusively to the Company or an Affiliate (or their designee).
(c)
Executive will keep full and complete written records (the “Records”),
in the manner prescribed by the Company, of all Intellectual Property, and
will promptly disclose all Intellectual Property completely and in writing to
the Company. The Records shall be the sole and exclusive property of the
Company, and Executive will surrender them upon the termination of the
Employment Period, or upon the Company’s request. Executive will
assign to the Company or an Affiliate the Intellectual Property including all
patents, trademarks, and/or copyrights that may issue thereon in any and all
countries, whether during or subsequent to the Employment Period, together
with the right to file, in Executive’s name or in the name of the Company or
an Affiliate (or their designees), applications for patents, trademarks,
and/or copyrights and equivalent rights (the “Applications”).
Executive will, at any time during and subsequent to the Employment Period,
make such applications, sign such papers, take all rightful oaths, and perform
all acts as may be requested from time to time by the Company or an Affiliate
with respect to the Intellectual Property. Executive will also execute
assignments to the Company or an Affiliate (or their designees) of the
Applications, and give the Company or an Affiliate and their attorneys all
reasonable assistance (including the giving of testimony) to obtain the
Inventions for its benefit, all without additional compensation to Executive
from the Company or an Affiliate, but entirely at the Company’s or an
Affiliate’s expense.
(d)
In addition, the Intellectual Property will be deemed Work for Hire, as such
term is defined under the copyright law of the United States, on behalf of the
Company and its Affiliates and Executive agrees that the Company or an
Affiliate will be the sole owner of the Intellectual Property, and all
underlying rights therein, in all media now known or hereinafter devised,
throughout the universe and in perpetuity without any further obligations to
Executive. If the Intellectual Property, or any portion thereof, is
deemed not to be Work for Hire, Executive hereby irrevocably conveys,
transfers and assigns to the Company or an Affiliate, all rights, in all media
now known or hereinafter devised, throughout the universe and in perpetuity,
in and to the Intellectual Property, including without limitation, all of
Executive’s right, title and interest in the copyrights (and all renewals,
revivals and extensions thereof) to the Intellectual Property, including
without limitation, all rights of any kind or any nature now or hereafter
recognized, including without limitation, the unrestricted right to make
modifications, adaptations and revisions to the Intellectual Property, to
exploit and allow others to exploit the Intellectual Property and all rights
to sue at law or in equity for any infringement, or other unauthorized use or
conduct in derogation of the Intellectual Property, known or unknown, prior to
the date hereof, including without limitation the right to receive all
proceeds and damages therefrom. In addition, Executive hereby waives any
so-called “moral rights” with respect to the Intellectual Property.
Executive hereby waives any and all currently existing and future monetary
rights in and to the Intellectual Property and all patents, trademarks, and/or
copyrights that may issue thereon, including, without limitation, any rights
that would otherwise accrue to Executive’s benefit by virtue of Executive
being an employee of or other service provider to the Company or an Affiliate.
8
(e)
Further, Executive recognizes and acknowledges the validity of the Company or
an Affiliate’s rights in the Intellectual Property and all applications and
registrations secured and to be secured therefore, and that the Company or an
Affiliate is the owner thereof. Executive further agrees not to
challenge the validity of or the Company or an Affiliate’s title in the
Intellectual property and will not oppose, petition to cancel, or request
re-examination of any applications filed or issued or registrations received
in respect of the Intellectual Property.
9.
Non-Compete, Non-Solicitation, Non-Disparagement; Cooperation.
(a)
In further consideration of the compensation to be paid to Executive
hereunder, Executive acknowledges that in the course of Executive’s
employment with the Company Executive shall become familiar with the
Company’s trade secrets and with other Confidential Information concerning
the Company and Affiliates. Therefore, Executive agrees that during the
Employment Period and for two years thereafter (the “Noncompete Period”),
Executive shall not, without the express written consent of the Company,
directly or indirectly own any interest in, manage, control, participate in,
consult with, advise, render services for, or in any manner engage in any
activity competing with the business of the Company or Affiliates within any
geographical area in which the Company or Affiliates engage or plan to engage
in such businesses as of the date of the termination of Executive’s
employment. Nothing herein shall prohibit Executive from being a passive
owner of not more than 1% of the outstanding stock of any class of a
corporation that is publicly traded, so long as Executive has no active
participation in the business of such corporation.
(b)
During the Noncompete Period, Executive shall not, directly or indirectly,
individually or on behalf of any other person, firm corporation or other
entity (i) hire any person who was an employee, representative or agent of the
Company or any Affiliate at any time during the three-month period prior to
the beginning of the Noncompete Period or solicit, aid, induce or attempt to
induce such an employee, representative or agent to terminate its relationship
with the Company or an Affiliate or (ii) solicit, induce or attempt to induce
any customer, supplier, vendor, licensee, licensor, franchisee or other
business relation of the Company or any Affiliate to cease doing business with
the Company or such Affiliate, or in any way interfere with the relationship
between any such customer, supplier, vendor, licensee or business relation and
the Company or any Affiliate, which interference may reasonably be expected to
cause material monetary damage to the Company or its Affiliates.
(c)
During the Employment Period and for three years thereafter, Executive shall
not or encourage or induce others to do or say anything at any time that
disparages the Company or an Affiliate or any of the Company’s or an
Affiliate’s past or present directors, officers, employees or agents or
their products or services (the “Company Parties”). For
purposes of this Agreement, the term “disparage” includes, without
limitation, comments or statements to the press and/or media, the Company
Parties or any individual or entity with whom any Company Party has a business
relationship that would adversely affect in any manner: (i) the conduct of the
business of any Company Party (including, without limitation, any business
plans or prospects); or (ii) the business reputation of any Company Party.
(d)
Upon the receipt of reasonable notice from the Company (including outside
counsel), Executive agrees that while employed by the Company and thereafter,
Executive will
9
on an annual basis). The base salary as determined herein from time to time shall constitute “Base Salary” for purposes of this Agreement.
(b) In addition to the Base Salary, Executive shall be eligible to participate in the Company’s bonus and other incentive compensation plans and programs in effect from time to time for the Company’s senior executives. Executive shall have the opportunity to earn an annual bonus (the “Bonus”) for each fiscal year during the Employment Period with a target Bonus that will not be less than the target annual bonus Executive is eligible to receive as of the Effective Date or that Executive may hereafter become eligible to receive.
(c) During the Employment Period, Executive shall be, to the extent eligible, entitled to participate in the employee benefit programs made available to all employees of the Company according to their terms. In addition, Executive shall be entitled to other perquisites and fringe benefits in such amounts as determined by the Chief Executive Officer or the President in accordance with Company policy and practice and as approved by the Compensation Committee. Without limiting the foregoing, Executive shall be entitled to the following benefits during the Employment Period:
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Participation in any long-term incentive plan adopted by the Company for the benefit of senior executives of the Company as determined by the Board (or a committee thereof); |
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(ii) |
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Four weeks (20 working days) of paid vacation each year (as prorated for partial years), in addition to holidays, in accordance with the Company’s policy on accrual and use applicable to senior executives, which vacation may be taken at such times as mutually agreed between Executive and the Company; and |
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(iii) |
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Reimbursement for all reasonable and necessary travel, entertainment and other business expenses incurred by Executive, in accordance with Company policy (including presentment of appropriate documentation). |
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4. Employment Period. Executive’s term of employment under this Agreement (such term of employment, as it may be extended or terminated, is herein referred to as the “Employment Period”) shall be for a term commencing on the Effective Date and, unless terminated earlier as provided in paragraph 5 hereof, ending on the fifth anniversary of the Effective Date (the “Original Employment Period”), provided that the Employment Period shall be automatically extended, subject to earlier termination as provided in paragraph 5 hereof, for successive additional two (2) year periods (the “Additional Terms”), unless, at least 180 days prior to the end of the Original Employment Term or the then Additional Term, the Company or Executive has notified the other in writing that the Employment Period shall terminate at the end of the then current term.
5. Termination. Executive’s employment and the Employment Period shall terminate on the first of the following to occur:
(a) Automatically on the date Executive dies.
2
(b) Upon 30 days’ prior written notice by Executive to the Company of Executive’s voluntary termination of employment without Good Reason.
(c) Upon written notice by Executive to the Company of a termination for Good Reason, unless such events are corrected in all material respects by the Company within 20 days following written notification by Executive to the Company that Executive intends to terminate employment hereunder for Good Reason. “Good Reason” shall mean the occurrence of any of the following events, without Executive’s express written consent:
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A substantial adverse change in duties that results in Executive performing duties that are of a significantly lower level than those customarily performed by Executive during the year preceding the termination of the Employment Period. |
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A change in Executive’s regular worksite to a worksite that is more than 50 miles by the most direct road from Executive’s regular worksite during the year preceding the termination of the Employment Period and that is also further from Executive’s principal residence. |
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(iii) |
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A material breach of this Agreement by the Company that is not cured, if curable, within 30 days after written notice and demand by Executive including, but not limited to, any failure to pay when due Executive’s Base Salary or other amounts due under this Agreement. |
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The failure of the Company to obtain and deliver to Executive a written agreement from any successor to the Company to assume and agree to perform this Agreement. |
Good Reason will cease to exist for an event on the 60th day following its occurrence, unless Executive shall have given the Company written notice thereof prior to such date.
(d) Upon written notice by the Company to Executive of termination due to Disability. For purposes of this Agreement, “Disability” shall be defined as a good faith determination by the Chief Executive Officer or President that Executive has been or will be unable to perform Executive’s material duties hereunder due to a physical or mental injury, infirmity or incapacity for 90 days (including weekends and holidays) in any 365-day period, regardless of whether Executive is deemed disabled pursuant to the Company’s policies or plans.
(e) The Company may terminate Executive’s employment hereunder for Cause immediately upon written notice by the Company to Executive of a termination for Cause. For purposes of this Agreement, “Cause” shall mean any of the following:
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The willful and continued failure by Executive to perform the duties of Executive’s then position or Executive’s willful failure to follow the written direction of the Chief Executive Officer, the President, other more senior executive or the Board. |
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The engaging by Executive in conduct that can reasonably be expected to be materially monetarily or reputation-wise injurious to the Company or an Affiliate. |
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Gross negligence or willful misconduct of a material nature by Executive with regard to the Company or an Affiliate or in the performance of Executive’s duties. |
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Executive’s indictment, conviction, pleading guilty or nolo contendere to a felony or other civil or criminal offense involving fraud, dishonesty or moral turpitude. |
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Executive’s material violation of the Company’s code of ethics or a material breach by Executive of a fiduciary duty or responsibility to the Company or an Affiliate. |
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Executive’s material breach of this Agreement or any other written agreement between Executive and the Company or an Affiliate that is not cured, if curable, within 20 days of the giving of written notice thereof to Executive (or such longer period specified in such other agreement). |
(f) Upon written notice by the Company to Executive of an involuntary termination without Cause, other than for death or Disability.
6. Consequences of Termination.
(a) Upon a termination of the Employment Period pursuant to paragraph 5(a), the Company shall pay or provide Executive’s estate with the following severance benefits, subject to paragraph 6(d) hereof:
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The Accrued Benefits (as defined below). |
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Continued payment of Executive’s Base Salary (but not as an employee) for a period of 12 months commencing on the date of termination. |
(b) Upon the expiration of the Employment Period or a termination of the Employment Period pursuant to paragraph 5 (b), (d) and (e) hereof, the Company shall pay or provide Executive (i) any unpaid Base Salary through the date of termination; (ii) any annual bonus earned but unpaid with respect to the fiscal year ending on or preceding the date of termination (other than in connection with a termination pursuant to paragraphs 5(b) or (e) hereof); provided, however, to the extent payment of such bonus is subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations issued or to be issued by the Department of the Treasury thereunder (“Section 409A”), such payment shall be made at such times in such calendar year as provided to other executives but in no event prior to the expiration of the six-month period commencing on the date of the expiration of the Employment Period or such termination if Executive is a “specified employee” within the meaning of Section 409A and is not otherwise exempt from the six-month delay requirement under Section 409A; (iii) reimbursement for any unreimbursed expenses incurred through the
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date of termination; and (iv) all other payments, benefits or fringe benefits to which Executive may be entitled under the terms of any applicable compensation arrangement or benefit, equity or fringe benefit plan or program or grant or this Agreement (collectively items (i) through (v) shall be hereafter referred to as “Accrued Benefits”).
(c) Upon a termination of the Employment Period pursuant to paragraph 5(c) or (f) hereof, Executive shall be entitled to receive the following severance benefits, subject to paragraph 6(d) hereof:
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The Accrued Benefits. |
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Continued payment of Executive’s Base Salary (but not as an employee) for a period of 12 months commencing on the date of termination or such later date provided for under Section 409A without triggering adverse tax consequences to Executive under Section 409A; provided, however, that if such payments commence more than 30 days following the date of termination, the first such payment shall equal the sum of all payments that would have been made from the date of termination to the date of such first payment were it not for the delay in payment for Section 409A purposes. |
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a pro-rata portion of Executive’s Bonus for the performance year in which Executive’s termination occurs at the time that annual bonuses are paid to other senior executives or such later date provided for under Section 409A without triggering adverse tax consequences to Executive (determined by multiplying the amount Executive would have received based solely upon achievement of corporate financial targets had employment continued through the end of the performance year, as determined by the Board in good faith, by a fraction, the numerator of which is the number of days during the performance year of termination that Executive is employed by the Company and the denominator of which is 365); |
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To the extent Executive is eligible to and does elect COBRA continuation coverage with respect to some or all of the Company’s health plans, the Company shall continue to pay a share of the “applicable premium” for such coverage until such coverage or the salary continuation period described in paragraph 6 hereof ends or until Executive receives health coverage under the plans and programs of a subsequent employer, whichever is earlier, provided Executive continues to timely pay Executive’s share of the “applicable premium” for such coverage. The Company’s share shall be the same portion of the normal cost of group health coverage borne by the Company for similarly situated active employees at the same coverage level (such as employee-only or employee-plus-spouse) as Executive, disregarding coverage levels higher than the level of Executive on the last day of the Employment Period; provided, however, that if such payments commence more than 30 days following the date of termination, the first such payment shall equal the |
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sum of all payments that would have been made from the date of termination to the date of such first payment were it not for the delay in payment for Section 409A purposes. |
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Payments provided in this paragraph 6(c) shall be in lieu of any termination or severance payments or benefits for which Executive may be eligible under any of the plans, policies or programs of the Company.
(d) Any severance benefit that would otherwise be payable pursuant to paragraph 6(b) or (c) hereof shall be paid subject to the following rules:
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No severance benefit (or, in the event of Executive’s death, any severance benefit beyond the first month’s severance benefit) shall be paid unless Executive (or, in the event of Executive’s death, Executive’s estate) signs a release in a form and manner acceptable to the Company, which will be similar to Exhibit A to this Agreement, and does not revoke that release within the time prescribed by law or the terms of the release. |
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If the Compensation Committee of the Board determines in good faith, after giving Executive written notice setting forth the factual basis of such determination and a reasonable opportunity for Executive to respond, that Executive has violated any of the provisions of paragraphs 7, 8 or 9 hereof, no severance benefit shall be paid, any severance benefit in pay status shall immediately cease to be paid and any severance benefit paid to Executive subsequent to Executive’s violation of the provisions of paragraphs 7, 8 or 9 hereof shall be immediately repaid to the Company. The right granted to the Company by this paragraph shall not limit the Company’s right to any additional legal or equitable relief, including an injunction. |
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(e) In the event that Executive becomes entitled to payments and/or benefits which would constitute “parachute payments” within the meaning of Section 280G(b)(2) of the Code, the provisions of Exhibit B shall apply.
7. Confidential Information; Return of Property. Executive acknowledges that the information, observations, data, strategic and development plans, financial condition, business plans, co-developer identities, business records, customer lists, clients and suppliers, project records, market reports, employee lists and business manuals, policies and procedures, information relating to processes, technologies of theory and all other information that may be disclosed or obtained by Executive while employed by the Company and its Affiliates concerning the business or affairs of the Company or any Affiliate (“Confidential Information”) are the property of the Company or such Affiliate. Therefore, Executive agrees not to disclose, other than in the course of Executive’s assigned duties and for the benefit of the Company, to any unauthorized person or use for Executive’s own purposes any Confidential Information without the prior written consent of Company, unless and to the extent that (a) the aforementioned matters become generally known to and available for use by the public other than as a result of Executive’s (or any representative of Executive’s) acts or omissions or
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Executive is required to disclose by applicable law, regulation or legal process (provided that Executive provides the Company with prior notice of the contemplated disclosure and reasonably cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information). Executive shall deliver to the Company at the termination of the Employment Period, or at any other time the Company may request, all of the property of the Company that Executive may then possess or have under control, including all memoranda, notes, e-mails, plans, records, reports, computer disks or tapes, printouts, software, computer access codes and other documents and data (and copies or reproductions thereof) containing or relating to Confidential Information, Work Product (as defined below) or the business of the Company or any Affiliate and all computers (including laptops), cell phones, keys, PDAs, Blackberries, credit cards, facsimile machines, televisions and card access keys to any Company building. Executive agrees not to retain any copies, duplicates, reproductions or excerpts of such material or documents.
8. Intellectual Property.
(a) In accordance with UCA §34-39-1 et seq., Executive acknowledges and agrees that all of the following Intellectual Property or parts thereof (the “Intellectual Property”), whether patentable or unpatentable shall belong exclusively to the Company or an Affiliate (or their designee), whether or not patent applications, trademark registrations, or copyright registrations are filed thereon:
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Intellectual Property, whether in whole or in part that is conceived, developed, reduced to practice, or created by Executive, solely or jointly with others, within the scope of Executive’s employment, on the Company’s or an Affiliate’s time, or with the aid, assistance, or use of any of the Company’s or an Affiliate’s property, facilities, supplies, resources, or Intellectual Property. For purposes of this Agreement, “Intellectual Property” means any and all patents, trade secrets, know-how, technology, confidential information, ideas, copyrights, trademarks, and service marks and any and all rights, applications, and registrations relating to them. |
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Intellectual Property or parts thereof that are suggested by any work, services or duties performed by Executive for the Company or an Affiliate, either while performing Executive’s duties with the Company or an Affiliate or on Executive’s own time, but only insofar as the Intellectual Property is related to Executive’s work as an employee or other service provider to the Company or an Affiliate. |
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Intellectual Property or parts thereof that are related to the industry or trade of the Company or an Affiliate. |
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Intellectual Property or parts thereof that are related to the current or demonstrably anticipated business, research, or development of the Company or an Affiliate. |
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(b) Executive agrees and acknowledges that any Intellectual Property that is worked on, developed, or in any way conceived of or commenced in any way during the Employment Period, including any Intellectual Property developed subsequent to the Employment Period that can be reasonably shown to have evolved from or germinated during the Employment Period shall presumptively belong exclusively to the Company or an Affiliate (or their designee).
(c) Executive will keep full and complete written records (the “Records”), in the manner prescribed by the Company, of all Intellectual Property, and will promptly disclose all Intellectual Property completely and in writing to the Company. The Records shall be the sole and exclusive property of the Company, and Executive will surrender them upon the termination of the Employment Period, or upon the Company’s request. Executive will assign to the Company or an Affiliate the Intellectual Property including all patents, trademarks, and/or copyrights that may issue thereon in any and all countries, whether during or subsequent to the Employment Period, together with the right to file, in Executive’s name or in the name of the Company or an Affiliate (or their designees), applications for patents, trademarks, and/or copyrights and equivalent rights (the “Applications”). Executive will, at any time during and subsequent to the Employment Period, make such applications, sign such papers, take all rightful oaths, and perform all acts as may be requested from time to time by the Company or an Affiliate with respect to the Intellectual Property. Executive will also execute assignments to the Company or an Affiliate (or their designees) of the Applications, and give the Company or an Affiliate and their attorneys all reasonable assistance (including the giving of testimony) to obtain the Inventions for its benefit, all without additional compensation to Executive from the Company or an Affiliate, but entirely at the Company’s or an Affiliate’s expense.
(d) In addition, the Intellectual Property will be deemed Work for Hire, as such term is defined under the copyright law of the United States, on behalf of the Company and its Affiliates and Executive agrees that the Company or an Affiliate will be the sole owner of the Intellectual Property, and all underlying rights therein, in all media now known or hereinafter devised, throughout the universe and in perpetuity without any further obligations to Executive. If the Intellectual Property, or any portion thereof, is deemed not to be Work for Hire, Executive hereby irrevocably conveys, transfers and assigns to the Company or an Affiliate, all rights, in all media now known or hereinafter devised, throughout the universe and in perpetuity, in and to the Intellectual Property, including without limitation, all of Executive’s right, title and interest in the copyrights (and all renewals, revivals and extensions thereof) to the Intellectual Property, including without limitation, all rights of any kind or any nature now or hereafter recognized, including without limitation, the unrestricted right to make modifications, adaptations and revisions to the Intellectual Property, to exploit and allow others to exploit the Intellectual Property and all rights to sue at law or in equity for any infringement, or other unauthorized use or conduct in derogation of the Intellectual Property, known or unknown, prior to the date hereof, including without limitation the right to receive all proceeds and damages therefrom. In addition, Executive hereby waives any so-called “moral rights” with respect to the Intellectual Property. Executive hereby waives any and all currently existing and future monetary rights in and to the Intellectual Property and all patents, trademarks, and/or copyrights that may issue thereon, including, without limitation, any rights that would otherwise accrue to Executive’s benefit by virtue of Executive being an employee of or other service provider to the Company or an Affiliate.
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(e) Further, Executive recognizes and acknowledges the validity of the Company or an Affiliate’s rights in the Intellectual Property and all applications and registrations secured and to be secured therefore, and that the Company or an Affiliate is the owner thereof. Executive further agrees not to challenge the validity of or the Company or an Affiliate’s title in the Intellectual property and will not oppose, petition to cancel, or request re-examination of any applications filed or issued or registrations received in respect of the Intellectual Property.
9. Non-Compete, Non-Solicitation, Non-Disparagement; Cooperation.
(a) In further consideration of the compensation to be paid to Executive hereunder, Executive acknowledges that in the course of Executive’s employment with the Company Executive shall become familiar with the Company’s trade secrets and with other Confidential Information concerning the Company and Affiliates. Therefore, Executive agrees that during the Employment Period and for two years thereafter (the “Noncompete Period”), Executive shall not, without the express written consent of the Company, directly or indirectly own any interest in, manage, control, participate in, consult with, advise, render services for, or in any manner engage in any activity competing with the business of the Company or Affiliates within any geographical area in which the Company or Affiliates engage or plan to engage in such businesses as of the date of the termination of Executive’s employment. Nothing herein shall prohibit Executive from being a passive owner of not more than 1% of the outstanding stock of any class of a corporation that is publicly traded, so long as Executive has no active participation in the business of such corporation.
(b) During the Noncompete Period, Executive shall not, directly or indirectly, individually or on behalf of any other person, firm corporation or other entity (i) hire any person who was an employee, representative or agent of the Company or any Affiliate at any time during the three-month period prior to the beginning of the Noncompete Period or solicit, aid, induce or attempt to induce such an employee, representative or agent to terminate its relationship with the Company or an Affiliate or (ii) solicit, induce or attempt to induce any customer, supplier, vendor, licensee, licensor, franchisee or other business relation of the Company or any Affiliate to cease doing business with the Company or such Affiliate, or in any way interfere with the relationship between any such customer, supplier, vendor, licensee or business relation and the Company or any Affiliate, which interference may reasonably be expected to cause material monetary damage to the Company or its Affiliates.
(c) During the Employment Period and for three years thereafter, Executive shall not or encourage or induce others to do or say anything at any time that disparages the Company or an Affiliate or any of the Company’s or an Affiliate’s past or present directors, officers, employees or agents or their products or services (the “Company Parties”). For purposes of this Agreement, the term “disparage” includes, without limitation, comments or statements to the press and/or media, the Company Parties or any individual or entity with whom any Company Party has a business relationship that would adversely affect in any manner: (i) the conduct of the business of any Company Party (including, without limitation, any business plans or prospects); or (ii) the business reputation of any Company Party.
(d) Upon the receipt of reasonable notice from the Company (including outside counsel), Executive agrees that while employed by the Company and thereafter, Executive will
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