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Exhibit 10.4 EMPLOYMENT
AGREEMENT This EMPLOYMENT AGREEMENT
(“Agreement”), effective July 1, 2006, is entered into
by and between SYS Technologies, a California corporation, with its
principal office at 5050 Murphy Canyon Road, Suite 200,
San Diego, California 92123 (“Company”), and Cliff
Cooke, (“Employee”), collectively the
“Parties.” The Parties hereto desire to enter into an
employment arrangement and in order to accomplish that purpose and
in consideration of the terms, covenants and conditions hereinafter
set forth, the Parties hereby enter into this Agreement.
SECTION 1 EMPLOYMENT; TERM;
DUTIES 1.1 Employment . Upon the
terms and conditions hereinafter set forth, the Company employs
Employee, and Employee hereby accepts employment, as President and
Chief Executive Officer (“CEO”). 1.2
Term . Employee’s employment hereunder shall be for a
term (the “Term”) commencing on the date this Agreement
is effective and ending on June 30, 2008, unless the Agreement
terminates sooner pursuant to Section 4 below; provided, however,
that the Agreement shall renew automatically for successive periods
of one (1) year unless the Company or Employee provides written
notice to the other Party of a desire to change, modify, amend or
terminate the Agreement at least thirty (30) days prior to the
then-current expiration date of the Agreement. If the Company
elects not to renew this Agreement at the conclusion of the Term,
Employee will be eligible for severance benefits pursuant to and in
accordance with subsections 4.2 or 4.4. 1.3
Duties . During the Term, Employee shall perform such duties
for the Company as are prescribed by applicable job specifications,
the Bylaws of the Company and such other or additional duties,
consistent with such Bylaws, as may be assigned to him/her from
time to time by the Board of Directors of the Company. Employee
shall devote his/her best efforts, attention and energies to the
performance of his/her duties hereunder. This employment is
full-time and exclusive. Employee may not work for any other
company or enterprise during the Term of this Agreement such that
such employment would conflict or interfere with his/her
obligations to the Company under this Agreement. Employee must
advise the Board in writing prior to undertaking any employment in
addition to his/her employment with the Company.
SECTION 2 COMPENSATION
2.1 Base Salary . For all services
rendered by Employee hereunder and all covenants and conditions
undertaken by both Parties pursuant to this Agreement, the Company
shall pay, and Employee shall accept, as compensation, an annual
base salary (“Base Salary”) of Two Hundred Seventy Five
Thousand Dollars ($275,000). This Base Salary shall be payable in
accordance with the normal payroll practices of Company, less
required deductions pursuant to state and federal law, and less any
amounts to be deducted pursuant to agreement between the Parties.
2.2 Incentive Compensation . The Employee
shall also be paid such bonuses and/or other compensation as may be
determined from time to time by the Board of Directors as they, in
their sole discretion, may determine based upon the performance of
the employee and/or of the Company.
2.3 Performance and Salary Review . Employee's
performance will be reviewed periodically, usually on an annual
basis. Adjustments to salary or other compensation, if any, will be
made by the Board of Directors. SECTION 3
BENEFITS/BUSINESS EXPENSES
3.1 Benefits . During the Term, Employee shall
be entitled to participate in such life, health, accident,
disability and hospitalization insurance plans, pension plans and
retirement plans as the Company makes available to the employees of
the Company as a group. 3.2 Business
Expenses . Employee will be reimbursed for all reasonable,
out-of-pocket business expenses incurred in the performance of
his/her duties on behalf of Company. To obtain reimbursement,
expenses must be submitted promptly with appropriate supporting
documentation in accordance with Company’s policies and
procedures. SECTION 4
TERMINATION; RESIGNATION; CHANGE OF CONTROL; DEATH;
DISABILITY 4.1 Termination of
Employment With Cause . If (a) Employee fails to meet the
performance standards established for his/her position and does not
remedy such shortcomings within 30 days after written notice from
the Company of such failure; or (b) Employee breaches any
material provision of this Agreement; or (c) Employee has been
convicted of any felony; or (d) Employee commits any act of
fraud, misappropriation of funds or embezzlement; or
(e) Employee fails to report to work for three
(3) consecutive business days without informing his/her
superior; or (f) Employee commits any act, or fails to take
any action, the effect of which is to bring the Company into
disrepute with any of its customers, including, but not limited to
a material violation of the Company Code of Ethics, the Company
shall have the right, upon written notice to the Employee, to
immediately terminate his/her employment (“Termination With
Cause”) hereunder, without any further liability or
obligation to him/her hereunder or otherwise in respect of his/her
employment, other than its obligation to pay unpaid Base Salary and
unused personal time accrued as of the date of termination.
4.2 Termination of Employment Without Cause .
Notwithstanding any provision to the contrary herein, the Company
may at any time, in its sole and absolute discretion and for any or
no reason, terminate the employment of the Employee hereunder;
PROVIDED, that if such termination is not a Termination With Cause,
as defined by subsection 4.1, and such termination is not
caused by the death or Disability of the Employee, the Company
shall pay and/or provide the Employee as follows:
4.2.1 All accrued but unpaid Base Salary.
4.2.2 Reimbursement of normal incidental employee
expenses as of the date of the termination as and when such amount
is due and payable hereunder in accordance with
subsection 3.2. 4.2.3 Company shall pay
eighteen (18) severance payments (“Severance Payments”)
payable monthly to Employee equivalent to one-twelfth (1/12) of the
Base Salary in effect as of the date of such termination (the
“Termination Date”) for a period of twelve months
from the Date of Termination (the “Severance Period”),
provided that Employee and the Company execute an appropriate
mutual general release before Employee has any entitlement to the
Severance Payments. Company will also pay the premiums on the COBRA
insurance coverages during the Severance Period, provided that
Employee qualifies for such coverages and timely elects COBRA
coverage. The Company may, at its option, pay for and acquire
insurance which will provide the Severance Payments and such
benefits during the Severance Period. 4.2.4 All
stock options issued to Employee or earned but not yet issued prior
to the Termination Date shall immediately become fully vested.
4.2.5 Accrued but unused personal leave shall be
paid out in accordance with legal requirements. No personal leave
or other benefits shall continue to accrue during the Severance
Period. 4.2.6 Notwithstanding the foregoing, if
any amounts due to Employee pursuant to this Agreement are
determined to be “Parachute Payments” as such term is
defined in Section 280G of the Internal Revenue Code of 1986,
as amended (the “Code”), and the regulations
promulgated thereunder, then the total compensation paid to
Employee pursuant to this Agreement, together with any other
payment or the value of any benefit received or to be received by
Employee which is treated as a Parachute Payment shall not exceed
2.99 times Employee’s Base Amount (as such term is defined in
Section 280G of the Code). In the event a reduction of the
payments set forth in this Agreement is required pursuant to this
Section, Employee may select the compensation which will be reduced
in order to fall within the 2.99 times Base Amount limitation.
4.3 Resignation .
4.3.1 If Employee resigns (except as set forth in
subsections 4.3.2 or 4.4 below), this Agreement shall
immediately terminate and the Company shall have no further
liability or obligation to Employee hereunder, including any
severance payments, or otherwise in respect of his/her employment,
other than its obligation to pay unpaid Base Salary and unused
personal leave accrued as of the date of resignation.
4.3.2 Resignation with Cause . If Employee
resigns his/her employment because (a) his/her position or
duties are modified by the Company to such an extent that his/her
duties are substantially no longer consistent with the position for
which he/she was employed pursuant to this Agreement, or
(b) there has been a material breach by the Company of a
material term of this Agreement which continues uncured following
fourteen (14) days after written notice by Employee to the Company
of such breach, then Employee will be entitled to the severance
benefits set forth in subsection 4.2, consistent with the
terms of said provision. 4.4 Change In
Control . In the event of a Change in Control (as that term is
defined below), Company shall immediately take all necessary
measures, consistent with the Company’s Stock Option Plans,
to accelerate the vesting of any unvested options held by the
Employee under such Plans so that such options will be treated as
vested options during the Change in Control. In addition,
employment separation, as provided in this section, that occurs as
a result of a Change in Control shall result in Severance Payments
on the same terms set forth in subsection 4.2 above, except that
the Severance Period shall be three (3) months, or until
restrictions on Mr. Cooke selling his tock are lifted, whichever
occurs later. Such Change In Control Severance Payments will be
made in the event of: (a) Employee’s involuntary
dismissal or discharge by the Company, other than pursuant to
subsections 4.1, 4.3.1, or 4.5, or (b) Employee’s
voluntary resignation, other than pursuant to subsection 4.3,
following (i) a change in his/her position with the Company (or
Parent or Subsidiary employing Employee) which materially reduces
his/her duties and responsibilities or the level of management to
which he/she reports, (ii) a reduction in Employee’s level of
compensation as of the date of the Change in Control (including
base salary and fringe benefits), or (iii) a relocation of
Employee’s place of employment by more than fifty (50) miles,
provided and only if such change, reduction, or relocation is
effected by the Company without Employee’s express consent.
4.4.1 For purposes of this Agreement, a
“Change in Control” shall mean: (i) the acquisition, by
one person or a group, of stock of the Company that causes such
person or group to own more than 50% of the total fair market value
or total voting power of the stock of such Company; (ii) either:
(1) the acquisition, by one person or a group, of ownership of
35% or more of the total voting power of the stock of the Company;
or (2) the replacement of a majority of the members of the
Board with directors whose appointment or election is not endorsed
by the existing Board; AND (iii) the acquisition of assets from the
Company that have a total gross fair market value of 40% or more of
the total gross fair market value of all assets of the Company
prior to the acquisition. 4.5 Termination Due
to Death or Disability . This Agreement will immediately
terminate upon Employee’s death. This Agreement will
terminate upon Employee’s Disability (as defined below), when
consistent with state and federal law. In the event of
Employee’s termination due to death or Disability, Employee,
or Employee’s heirs, personal representatives or estate, as
the case may be, will be entitled to receive only the standard
entitlements and those benefits available under any applicable
Company plan or insurance policy, subject
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