Employment Agreement - Media Arts Group Inc. and Herbert D. Montgomery
EMPLOYMENT AGREEMENT
This Employment
Agreement (this “Agreement”) is entered into as of January 9, 2002 (“Contract
Date”) between MEDIA ARTS GROUP, INC., a Delaware corporation (the “Company”)
and Herbert D. Montgomery (“Executive”).
WHEREAS, the
Company hired Executive on May 14, 2001 to serve as an employee and officer of
the Company;
WHEREAS, the
Company desires to continue to employ Executive as an employee and officer of
the Company and Executive desires to serve as an employee and officer of the
Company on the terms and subject to the conditions set forth herein;
NOW, THEREFORE,
the parties hereby agree as follows:
1. Employment and Term.
The Company hereby
agrees to employ Executive, and Executive hereby agrees to be employed by the
Company, on the terms and subject to the conditions set forth in this
Agreement. The parties agree that the
term of employment of Executive by the Company pursuant to this Agreement is
three years (the “Contract Term”), which term commenced on January 9, 2002 (“Start Date”) and shall end on January 9, 2005, unless
earlier terminated or extended as expressly provided herein (the final date of
Executive’s employment, under any circumstances, shall be referred to herein as
the “Completion Date”; the actual period of Executive’s employment from Start
Date until Completion Date shall be referred to herein as “Employment Period”).
2. Position and Duties.
The Company shall
employ Executive during the Employment Period as Executive Vice President,
Chief Financial Officer and Treasurer; provided, however, that Executive may have
such other titles in addition to or in lieu thereof as the Company and
Executive may mutually agree. Executive
shall report to the Chief Executive Officer of the Company (“CEO”) or, in the event
the CEO is determined by the Board of Directors of the Company (“Board”) to be
incapacitated for any reason, Executive shall report directly to the
Board. During the Employment Period,
Executive shall perform faithfully and loyally and to the best of his abilities
the duties assigned to him hereunder.
Executive shall perform his duties at the Company offices in Morgan
Hill, California every Monday through Thursday of the Employment Period that
Executive is not on vacation, and shall be permitted to work from his home on
Friday of each week of the Employment Period. Executive shall have such
responsibilities as may from time to time be duly authorized or directed by the
CEO or the Board
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consistent with his position as Executive Vice President, Chief
Financial Officer and Treasurer or such other positions as to which he and the
Company have mutually agreed. During
the Employment Period, Executive shall devote his full business time, attention
and effort to the affairs of the Company and its subsidiaries; provided,
however, that Executive may engage in charitable, civic or community
activities to the extent that such activities do not materially interfere with
his duties hereunder, and Executive may serve as a director of any other
corporation or other entity only with the consent of the CEO and on the
condition that the Executive does not devote a material amount of time to such
service or participate in the management or operation of such entity. Executive agrees to comply with the
provisions of the Company’s employee handbook, as it may be revised from time
to time during the Employment Period; provided, however, that if there is a
conflict between the terms of the handbook and this Agreement, this Agreement
will control. If any provision of the
handbook is held to be invalid, illegal or unenforceable, such invalidity,
illegality or unenforceability shall not affect the validity, legality or
enforceability of this Agreement.
3. Compensation and Benefits.
3.1 Base Salary. During the Employment Period, the Company
shall pay to Executive a base salary no less than $300,000 per annum (the “Base
Salary”). Executive’s Base Salary may
be increased at the sole discretion of the Board, upon recommendation from the
Compensation Committee. Executive’s
Base Salary shall be paid to him according to the regular payroll schedule
utilized by the Company with respect to salary payment of the other executives
of the Company. The Company shall deduct from all amounts payable to Executive
pursuant to this Agreement the amount of all required federal, state and local
withholding taxes in accordance with Executive’s W-4 on file with the Company,
as well as any other authorized deductions.
In the event Executive receives any benefits under the Company’s long
term disability plan or policy during the Employment Period, any Base Salary
accrued during the Employment Period shall be reduced by the amount of the
benefits received.
3.2 Participation in the Stock Option
Plan. Executive acknowledges and agrees
that he has been granted two separate options to purchase a total of 130,000
shares of Media Arts Group, Inc. common stock pursuant to the Media Arts Group,
Inc. 1998 Stock Incentive Plan (“Stock Option Plan”). Such options are subject to the terms and conditions of the Stock
Option Plan and the Incentive Stock Option Agreement (Date of Grant: May 14,
2001 or the Non-Qualified Stock Option Agreement (Date Of Grant: May 14, 2001),
as applicable with the exception of
change of control as defined in 4.4.2 at which time such options not
currently vested become 100 % vested.
Executive acknowledges that any additional option grants to Executive
shall be at the sole discretion of the Board or Committee as defined in the
Stock Option Plan, as it may be amended from time to time, or any successor
plan, and shall be governed by the terms of the applicable plan and option
agreement.
3.3 Employee Benefits. Except as
otherwise provided in this Agreement, during the Employment Period Executive
shall be entitled to participate in the Company’s employee benefit plans
generally available to regular, full-time salaried employees of the Company and
any nonqualified deferred compensation plans and management bonus programs
generally available to executives and officers of the Company (such benefits
being hereinafter referred to as the “Employee Benefits”). Executive’s participation in the Employee
Benefits shall be subject to the
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terms and conditions of
the Employee Benefits including, without limitation, the Company’s right to
amend or terminate the Employee Benefits at any time and without notice to
participants.
3.4 Employee Art Purchase and Art
Bonus Credit Program Enhancement.
During the Employment Period, the Company will provide Executive with an
enhancement of the Employee Art Purchase and Art Bonus Credit Program (the “Art
Program”) in addition to the four(4) lithographs previously granted on May 14,
2001, as follows: (a) Executive shall be entitled to receive, on each of the
three years of the Start Date in the term of this Agreement, provided he is
actively employed on that date, four
(4) lithographs of such selection as permitted within and under the terms of
the Art Program, at no cost to Executive; and (b) Executive shall receive ten
thousand (10,000) Art Bonus Credits upon execution of this Agreement by both
parties, subject to use as permitted within and under the terms of the Art
Program.
3.5 Automobile Expense Reimbursement. The Company shall pay Executive an
automobile allowance of $1,000 per month for the Employment Period, and
Executive agrees that such allowance shall reimburse him for all costs of
owning and operating said vehicle, including insurance with the exception of mileage.
3.6 Flexible Time Off/Vacation. Executive shall be entitled to FTO accrued
at the rate of 13.33 hours per month, to be used in accordance with the FTO
policy applicable to employees of the Company as in effect from time to time. Executive agrees to advise the CEO of his
anticipated vacation dates within a reasonable period, and such vacation dates
shall be subject to approval by the CEO.
3.7 Cellular Telephone. The Company agrees to provide Executive with
a cellular telephone of the Company’s selection, and to pay normal and
customary expenses for the business use of the telephone during the Employment
Period.
3.8 Life Insurance Enhancement. The Company will provide Executive with an
enhancement of the group term life insurance and supplemental group term life
insurance plans generally made available to Company employees as follows: The Company agrees to pay the premiums for
an individual term life insurance policy for Executive, with a death benefit of
one million dollars ($1,000,000), during the Employment Period. Executive understands and agrees that, at
the end of the Employment Period, the Company’s obligation to pay premiums for
this term life policy shall cease; that he may elect, subject to the terms of
the policy, to assume responsibility for such premiums in the event he desires
to continue that term life coverage; and that, if he does not assume payment of
said premiums, his term life insurance will cease as of the Completion Date.
3.9 Expense Reimbursement. During the Employment Period, the Company
shall reimburse Executive, in accordance with the Company’s policies and
procedures, for all proper expenses incurred by him in the performance of his
duties hereunder.
3.10 Living Expenses. In lieu of
benefits under the Company’s Relocation Policy, the Company agrees to pay
Executive’s lodging expenses, as the term “lodging expenses” is used and
defined in the Company’s Travel Policy,
as needed per week during which Executive is
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physically located and
working at the Company’s offices in Morgan Hill from the Start Date until the
earlier of the first anniversary date of the Start Date, and the Completion
Date.
4. Termination.
4.1 Death. Upon the death of Executive, this Agreement
shall automatically terminate and all rights of Executive and his heirs,
executors and administrators to compensation and other benefits under this
Agreement shall cease, except as provided in Section 5.2 hereof.
4.2 Disability. The Company may, in its sole discretion,
terminate this Agreement upon written notice to Executive if Executive, because
of physical or mental incapacity or disability, fails to perform the essential
functions of his position required of him hereunder for a continuous period of
45 days within any 60 consecutive days
within any twelve-month period. Upon
such termination, all obligations of the Company hereunder shall cease, except
as provided in Section 5.2 hereof. In
the event of any dispute regarding the existence of Executive’s incapacity
hereunder, the matter shall be resolved in good reasonable business judgement
by the Board after receiving and reviewing reports submitted by two physicians,
one selected by the Executive and one selected by the Company. Executive agrees that he will submit to
appropriate medical examinations for purposes of such determination.
4.3 Termination by the Company.
4.3.1
The Company may terminate Executive’s employment hereunder at any time,
whether or not for Cause. Any
termination for Cause shall be authorized by the CEO with approval of the Board
.. Executive shall be given written
notice by the Company of the intention to terminate his employment hereunder
for Cause (a “Cause Notice”). Each
Cause Notice shall state the particular action(s) or inaction(s) giving rise to
termination for Cause. If the basis for
such termination is one that is capable of being cured, Executive shall have
thirty (30) days after the Cause Notice is given to cure the particular action(s)
or inaction(s). If Executive effects a cure to the satisfaction of the CEO with
Board approval, exercised in their good faith reasonable business judgement,
the CEO with approval by the Board shall provide written notice of the
rescission of the Cause Notice, and it shall be of no further force or effect.
If, in the sole discretion of the Board, the basis for termination is not one
that is capable of being cured, the Cause Notice shall serve as the Notice of
Termination and the date thirty (30) calendar days after the date of the Cause
Notice shall be the Completion Date for all other purposes of this Agreement.
4.3.2 “Cause” shall mean any one or more of
the following:
4.3.2.1 any willful and material failure or
refusal by Executive to perform his duties under this Agreement (other than by
reason of Executive’s death or disability); excluding, however, any failure by
Executive to perform any specific duties because such performance is subject to
the existence of or satisfaction of conditions, or the occurrence of events,
that are not within Executive’s control;
4.3.2.2 any
intentional act of fraud or embezzlement by Executive in connection with his
duties hereunder or in the course of his employment hereunder, or the admission
or conviction of, or entering of a plea of nolo
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contendere by, Executive of any felony or any
lesser crime involving moral turpitude, fraud, embezzlement or theft;
4.3.2.3 any
gross negligence or willful misconduct of Executive which in good business
judgement determination by the CEO with approval of the Board resulting, in a loss to the Company or any of their
subsidiaries, or in damage to the reputation of the Company or any of their
subsidiaries; and/or
4.3.2.4 any
material breach by Executive of any of his covenants contained in this
Agreement.
4.4 Termination by Executive.
4.4.1 Executive shall be entitled to terminate
his employment hereunder for Good Reason or otherwise. “Good Reason” shall mean any one or more of
the following:
4.4.1.1 any
failure by the Company to comply with any material provision of this Agreement,
including, but not limited to (1) an unconsented change in the reporting
structure identified in Paragraph 2 above, (2) a material reduction in
Executive’s duties and responsibilities as described in Paragraph 2,or (3) an
unconsented change in Executive’s job title such that he is no longer a Senior
Executive of the Company , which
failure has not been cured within thirty (30) days after receipt by the Company
of notice from Executive of such noncompliance; or
4.4.1.2 within
the twelve (12) months following any Change of Control, as that term is defined
below, the assignment to Executive by the Company of a significant amount of
duties inconsistent in a material respect with Executive’s position (including
titles and reporting responsibilities), authority, duties or responsibilities
or any other action which results in a significant and material diminution in
such position, authority, duties or responsibilities, unless remedied by the
Company within thirty (30) days after receipt of notice thereof given by
Executive; or
4.4.1.3 any
failure or refusal of a successor to the Company or the purchaser of all, or
substantially all, of the assets of the Company to assume the Company’s
obligations under this Agreement.
4.4.1.4 the
Company relocates the administrative functions of the Company to a location
outside the San Francisco Bay Area from the current Morgan Hill ,CA Company
location.
4.4.1.5 the
requirement the Executive travel away from the San Francisco Bay Area or Morgan
Hill CA. In connection with the performance of
his duties for more than 120 days in any given calendar year.
4.4.2 “Change of Control” shall mean (i) the
disposition by the Company or its subsidiaries of all or substantially all of
its assets, in contemplation of the distribution of
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the net proceeds
of such sale to the Company’s stockholders, or (ii) a merger or consolidation
in which the shares of Common Stock are converted into securities of another
entity and/or the right to receive cash or other property and as a result of
which the stockholders of the Company immediately prior to such transaction own
less than 50% of the surviving entity; or (iii) an event after which any “person”
(as that term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) is or becomes the “beneficial owner” (as defined in
Rule 13d-j of the Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of the Company representing 51% or more of the
combined voting power of the Company’s then outstanding securities; provided,
that, this subparagraph (iii) shall not apply to ownership by (x) any trustee
or other fiduciary holding securities under an employee benefit plan of the
Company; or (y) ownership by any corporation or entity owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of the stock of the Company.
4.5 Notice of Termination. Any purported termination of Executive’s
employment by the Company or by Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 7
hereof. “Notice of Termination” shall
mean a notice that indicates the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive’s
employment under the provision so indicated
4.6 Completion Date. “Completion Date” shall mean (i) if
Executive’s employment is terminated because of death, the date of Executive’s
death; (ii) if Executive’s employment is terminated for disability, the date of
such notice to Executive pursuant to Section 4.2 herein; (iii) if Executive’s
employment is terminated for Cause pursuant to Section 4.3.1 and 4.3.2, or for
Good Reason pursuant to Section 4.4.1 hereof, or for any other reason other
than death or disability, the date specified in the Notice of Termination; and
(iv) if the parties have not mutually agreed to engage in good faith
negotiations as provided hereinafter in Section 5.1, and no other termination
of the Agreement occurs prior to the expiration of the Contract Term, January
9, 2005.
5. Compensation Upon Termination.
5.1 Extension of Agreement. No less than ninety (90) days prior to
January 9, 2005, the Company shall give notice to Executive if it is interested
in extending or renewing the Agreement or entering into a successor agreement
for Executive’s services. The parties
hereby agree that, if both parties are interested in extending or renewing the
Agreement or entering into a successor agreement for Executive’s services, they
will engage in good faith negotiation of such terms. In the event one or both party(ies) is not interested in
extending or renewing the Agreement or entering into a successor agreement for
Executive’s services, Executive agrees that he will nonetheless complete the
Contract Term to the best of his abilities and will be entitled to one year
base salary and benefits as provided
for in this Agreement and additional compensation and/or benefits, if any, in
accordance with the terms of the plans and programs of the Company then in
effect .
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5.2 Death/Disability/Non-Good
Reason/Cause Termination Payment.
If Executive’s employment is terminated prior to the end of the Contract
Term (i) by reason of Executive’s death or disability, (ii) by Executive for other than Good Reason,
or (iii) by the Company for Cause, Executive shall be entitled to receive only
any Base Salary accrued for the time period up to the Completion Date and not
previously paid. Executive’s
participation in the Art Program, FTO accrual, life insurance, reimbursement
for automobile expense, cellular telephone expense, living expense (if still in
effect), and business expenses described in Sections 3.4 through and including
3.10 shall cease on and/or be paid on a pro rata basis, as applicable, through
the Completion Date. Executive’s participation in and right and obligations
under Employee Benefits pursuant to Section 3.3 shall be governed by the terms
of the plans and programs of the Company then in effect; and Executive’s rights
and obligations under any incentive stock option agreement and/or non-qualified
stock option agreement to which he is a party, including the agreements listed
in Section 3.2, shall be governed by the terms and conditions of the applicable
option agreement and the terms of the Stock Option Plan then in effect.
5.3 Non-Cause/Good Reason Termination
Payment. If Executive’s employment
is terminated prior to the end of the Contract Term by the Company for other
than Cause, or by Executive for Good Reason, then Executive shall be entitled
to receive the Base Salary for the Contract Term or one year base salary
whichever is greater, payable in one lump sum on the next regularly scheduled payroll date utilized by the Company with
respect to salary payment of the other executives of the Company and beginning
after the Completion Date, or according to such other payment schedule as
requested by executive and determined in the sole discretion of the Company, In
addition the Executive shall be entitled to continued participation for
Executive(and Family) for one year in the Company’s welfare benefit
plans,. Executive’s participation in
the Art Program, FTO accrual, life insurance, reimbursement for automobile
expense, cellular telephone expense, living expense (if still in effect), and
business expenses described in Sections 3.4 through and including 3.10 shall
cease on and/or be paid on a pro rata basis, as applicable, through the
Completion Date except as modified herein; Executive’s participation in and
rights and obligations under Employee Benefits pursuant to Section 3.3 shall be
governed by the terms of the plans and programs of the Company then in effect
except modified herein; and Executive’s rights and obligations under any
incentive stock option agreement and/or non-qualified stock option agreement to
which he is a party, shall be governed by the terms and conditions of the
applicable option agreement and the terms of the Stock Option Plan then in
effect except modified herein.
5.4 Executive and Company agree that the
salary continuation and other post employment severance payments made pursuant
to this Agreement are in the nature of severance payments that would not be
reduced by mitigation or other earnings received by Executive after the
termination of his employment .
6. Arbitration.
Any dispute or controversy between the Company and Executive, whether
arising out of or relating to this Agreement, Executive’s employment with the
Company, the termination of such employment, or otherwise, shall be submitted
to binding arbitration before a single arbitrator as set forth in Appendix A
attached hereto and incorporated herein in its entirety. This provision expressly waives all rights
to a civil court action before a judge or jury for disputes between Executive
and the Company. Company agrees to pay up to $50,000 expenses toward the retention of Counsel and legal fees for
the Executive (“Legal Fees”), should
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the Executive have any
dispute or controversy between the Company and the Executive. Any Legal Fees
paid by the Company to Executive under this section shall not be recoverable by
the Company under any circumstances.
7. Notices.
All notices and other communications required or permitted hereunder
shall be in writing and shall be deemed given when (i) delivered personally or
by overnight courier to the following address of the other party hereto (or
such other address for such party as shall be specified by notice given
pursuant to this Section) or (ii) sent by facsimile to the following facsimile
number of the other party hereto (or such other facsimile number for such party
as shall be specified by notice given pursuant to this Section), with the
confirmatory copy delivered by overnight courier to the address of such party
pursuant to this Section:
If to the Company, to:
Media
Arts Group, Inc.
900
Lightpost Way
Morgan
Hill, CA 95037
Attn:
Chief Executive Officer
Facsimile: (408) 201-5082
If to Executive, to:
132 Diablo Ranch Court
Danville, CA 94506-2072
Facsimile: [ 925-552-5244]
8. Severability.
Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect the validity, legality or
enforceability of any other provision of this Agreement or the validity,
legality or enforceability of such provision in any other jurisdiction, but
this Agreement shall be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision had never been contained
herein.
9. Entire Agreement. This Agreement constitutes the entire agreement and understanding
between the parties with respect to the subject matter hereof except as
expressly provided and incorporated herein, and supersedes and replaces all
prior negotiations, understandings, agreements or representations by or between
the parties, written or oral, which may have related in any manner to the
subject matter hereof.
10. Successors and Assigns. This Agreement is personal to Executive and
shall not be assignable by Executive.
This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns; the Company may assign this Agreement
or any interest herein, by operation of law or otherwise, to (a) any successor
to all or substantially all of its equity ownership interests, assets or business
by dissolution, merger, consolidation, transfer of assets, or otherwise; or (b)
any direct or indirect subsidiary of the Company or of any successor referred
to in (a) hereof. Except as stated
herein, nothing in this Agreement, expressed or
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implied, is intended to
confer on any person other than the parties and their respective successors and
permitted assigns any rights or remedies under or by reason of this Agreement.
11. Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the internal laws of the State of
California without regard to principles of conflict of laws.
12. Amendment and Waiver. No waiver of any breach of any term or
provision of this Agreement shall be construed to be, nor shall be, a waiver of
any other breach of this Agreement. No
waiver shall be binding unless in writing and signed by the party waiving the
breach. No course of conduct or failure
or delay in enforcing the provisions of this Agreement shall affect the
validity, binding effect or enforceability of this Agreement.
13. Modification. This Agreement may not be extended, renewed,
amended or modified other than by a written agreement executed by Executive and
the Company, and approved by the Board.
14. Construction. Each party has cooperated in drafting and
preparation of this Agreement. Hence,
the usual rule of construction, that ambiguities shall be construed against the
drafter, shall have no force or effect in interpreting this Agreement.
15. Confidential Information. Executive agrees that all styles, designs,
customer lists, files, reports, correspondence, records, financial data of any
kind and all other confidential documents, regardless of form or medium,
(i) developed by Executive, (ii) received by Executive from or on behalf
of the Company, or (iii) to which Executive is given access, in the course of
Executive’s services hereunder (the “Confidential Information”) shall remain
the sole and exclusive property of the Company. Employee shall keep the Confidential Information strictly
confidential and shall not sell, trade, publish or otherwise disclose it to
anyone in any manner whatsoever including, without limitation, by means of
photocopy, reproduction or electronic media.
Employee agrees that it shall use the Confidential Information only for
the purpose of providing his services under this Agreement. In the event Employee is requested or
required to disclose any Confidential Information pursuant to a subpoena in the
course of a civil or criminal action, Employee shall provide the Company with
prompt notice of any such request or requirement so that the Company may seek
an appropriate protective order to prevent such disclosure. Executive expressly agrees that, upon termination
of his employment, Executive will return all Confidential Material to the
Company. The parties expressly agree
that this provision shall continue after and survive the expiration or
termination of this Agreement indefinitely.
16. Nonsolicitation. Executive agrees that, for a period of one
(1) year following the Completion Date, he will not, without the prior written
consent of the Board, directly or indirectly solicit, induce, or attempt to
solicit or induce any “Company Person” (defined hereinafter) to terminate
his/her employment or other relationship with the Company or any of its
subsidiaries, affiliates, successors or assigns for the purpose of associating
with any entity engaged in the business of the Company; or otherwise encourage
any Company Person to terminate his/her employment or other relationship with
the Company or any of its subsidiaries, affiliates, successors or assigns for
any other purpose or no purpose. As
used herein, “Company Person” is defined as a person known to Executive to be a
partner, principal, member, employee,
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officer, director of the Company, its parent and/or subsidiary
corporations, or their affiliates, successors or assigns. Executive further agrees that, for a period of one year following the
Completion Date, he will not, without the prior written consent of the Board,
directly or indirectly use any Company trade secret, Confidential Material,
proprietary information, knowledge or data to solicit, induce, or attempt to
solicit or induce any person, firms, corporations or entities which were the
Company’s customers during the time of his employment with the Company to enter
into business arrangements with him or any entity or person with whom he is
employed or otherwise affiliated with respect to products or services
competitive with those offered or proposed to be offered by the Company on the
Completion Date.
17. Nondisparagement. Executive agrees that he will not, at
any time in the future, disparage or discredit the Company, or Thomas Kinkade,
in any communication, and the Company
agrees that it will not, at any time in the future, disparage or discredit
Executive in any private communication. Any public communication shall be
governed by Securities Exchange Commission rules and regulations and applicable
law.
18. Executive Representations. Executive represents and warrants that he is
not under contract of any kind with any entity or business that would prohibit
or restrict him from entering into this Agreement. Executive further warrants, represents and agrees that he neither
has nor will enter into any agreement or other obligation while this Agreement
is in effect that might conflict or interfere with the operation of this
Agreement or his obligations hereunder.
19. Legal Representation. The parties understand that this is a
legally binding contract and acknowledge and agree that they have had a
reasonable opportunity to consult with legal counsel of their choice prior to
execution.
20. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same original instrument.
21. Indemnification. Executive agrees that he will indemnify the
Company for the costs of defense and any liability that results from his
improper conduct as an employee and/or officer including, but not limited to,
all conduct outside the course and scope of employment. The Company agrees that it will indemnify
Executive, both during and after the Employment Period, for all actions taken
in the course and scope of Executive’s duties under the Agreement, including as
a director, to the fullest extent permitted under Delaware Corporation Law,
including an undertaking to advance litigation expenses; provided, however,
that if the Company’s Certificate of Incorporation and By-Laws impose a lower
limit on indemnification, then such documents will control, except to the
extent such limit is lower than that imposed under the Company’s current
Certificate of Incorporation and By-Laws.
The Company agrees to maintain adequate Directors and Officers Liability
Insurance naming Executive as insured, covering claims made with respect to
occurrences during the Employment Period and having coverage and policy limits
no less favorable to directors and officers than those in effect at the Start
Date.
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Dated: ____________________
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By:
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/s/ Anthony D.
Thomopoulos
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Anthony D.
Thomopoulos
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Chairman of the
Board and Interim CEO
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Dated: ____________________
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/s/ Herbert D. Montgomery
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Herbert D. Montgomery
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APPENDIX A
AGREEMENT TO ARBITRATE
Employee understands and agrees that any dispute
arising out of his employment with the Company will be governed by Federal
Arbitration Act, 9 U.S.C. §1 et seq., and resolved by a neutral arbitrator in a
binding arbitration administered by the American Arbitration Association
(“AAA”) under its National Rules for the Resolution of Employment Disputes
(“National Rules”), such arbitration to take place within 50 miles of the
Company’s offices.
Executive further understands and agrees that this
agreement to arbitrate applies to any claims or disputes Executive may have
against the Company (including its shareholders, officers, directors,
employees, agents, attorneys, affiliates or benefit plans), and it also applies
to any claims or disputes that the Company may have against Executive. Executive understands and agrees that it
applies to all statutory claims, except claims filed under workers’
compensation and unemployment insurance statutes and administrative charges
filed under the National Labor Relations Act.
Executive understands and agrees that it is not intended to supersede
any binding arbitration provision that may exist in an ERISA benefit plan. Further, Executive understands and agrees
that preliminary injunctive relief and other provisional remedies in aid of
arbitration may be sought by either Executive or the Company in a court under
applicable state laws.
Executive and the Company will jointly select the
neutral arbitrator in the manner provided in the National Rules. The arbitrator’s award will be provided in
writing, as required by the National Rules.
Discovery will be permitted prior to the arbitration hearing in the
nature and manner as the arbitrator considers necessary to obtain a full and
fair exploration of the issues in dispute, pursuant to the National Rules.
Executive understands and agrees that if the Company
or Executive files a claim under this arbitration agreement regarding a
violation of the Agreement, Executive and the Company shall share equally in
the fees and costs associated therewith, including the AAA’s administrative
fees for such disputes, and the fees and expenses of the arbitrator. Executive expressly acknowledges and agrees
that this arbitration agreement was freely negotiated and the parties agreed to
the cost provisions contained herein with the specific intent of limiting
meritless claims. Each party shall bear
its own fees and costs; provided, however, that the prevailing
party shall be entitled to recover said fees and costs, including attorneys’
fees, incurred as a result of the arbitration.
Executive understands and agrees that if the
Executive files a claim under this arbitration provision other than for a
violation of this Agreement, Executive will pay part of the AAA’s filing fee
for disputes arising under employer-promulgated plans, in the same amount that
Executive would be required to pay to file a lawsuit in state court. Under these circumstances, Employer will pay
the remaining part of the filing fee, the AAA’s administrative fees for such disputes,
and the fees and expenses of the arbitrator, and it will provide the hearing
facilities. Employer acknowledge that
the Company’s payment of such fees shall in no way affect the neutrality of the
arbitrator, and will stipulate to same prior to the commencement of the
arbitration.
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Executive understands that a claim under this
arbitration provision must be filed with the AAA within the time limit
established by the applicable statute of limitations. Executive understands and agrees that any claim not filed within
the applicable time limit will be waived.
Executive understands that this arbitration provision
and requirement that arbitration be used instead of a court as the forum in
which to resolve employment disputes does not limit any of Executive’s
statutory rights or remedies, except the right to file a lawsuit in court, or
receive a remedy arising in any lawsuit in court.
Except as necessary in court proceedings to enforce
this arbitration provision or an award rendered hereunder, or to obtain interim
relief, neither a party nor an arbitrator may disclose the existence, content
or results of any arbitration hereunder without the prior written consent of
the Company and Executive.
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