EMPLOYMENT AGREEMENTEmployee Retention Agreement |
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EMPLOYMENT AGREEMENT
Peerless Systems Corporation, a Delaware Corporation, (the “ Company ”) and its successors and assigns, and Edward M. Gaughan, a natural person (“ Executive ”) (collectively, the “ Parties ”), make this EMPLOYMENT AGREEMENT (“ Agreement ”) as of December 3, 2008 (“ Commencement Date ”).
RECITALS
1. WHEREAS, Executive is currently employed by the Company as the Acting President.
2. WHEREAS, the Company wishes to employ Executive and Executive wishes to be employed by Company in said position.
3. WHEREAS, the Company and Executive thus enter into this Employment Agreement to outline the terms and conditions of Executive’s new position with Company and except as set forth herein, simultaneously wish to extinguish any and all obligations owed by each Party to the other arising out of their prior employment relationship.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the Company and Executive agree as follows:
AGREEMENT
1. Employment.
(a) At-Will . The Term of this Agreement shall begin on the Commencement Date and shall continue “at-will” until either party elects to terminate this Agreement pursuant to Paragraph 5 (the “Term”).
(b) Duties and Responsibilities . The Executive will report to William Neil (“Neil”), the Board of Directors (the “Board”), or another appointee of the Board. Executive shall be employed as Acting President and Vice President/Head of Sales and shall perform and discharge well and faithfully the duties which may be assigned to him from time to time by the Board and/or Neil in connection with the conduct of the Company’s business as well as those duties which are normally and customarily vested in an Acting President and Vice President/Head of Sales of a corporation.
Executive’s job responsibilities shall include, but not be limited to, anything reasonably requested or required of Executive on behalf of the Company.
(c) Extent of Services and Business Activities . Executive shall devote his full-time efforts to the business of the Company and shall not devote time to other activities except with the prior consent of the Board of the Company. Executive covenants and agrees that for so long as he is employed by the Company, Executive shall not, whether as an executive, employee, employer, consultant, agent, principal, partner, member, stockholder, corporate officer or director, or in any other individual or representative capacity, whether or not for compensation, engage in or participate in or render services to any other, provided , however , that, notwithstanding the foregoing, Executive (a) may invest in securities of any entity, solely for investment purposes and without participating in the business thereof, if (x) such securities are traded on any national securities exchange or the National Association of Securities Dealers, Inc. Automated Quotation System, and (y) Executive does not, directly or indirectly, own two percent (2%) or more of any class of securities of such entity.
(d) Location . During the Term, Executive shall regularly perform his duties from his home office located in the state of Kentucky or at the request of the Board, at the Company’s principal location (the “Headquarters”). In addition to spending time at the Headquarters, Executive may be required to travel from time to time in order to perform his duties hereunder.
2. Compensation .
(a) Base Salary . Executive shall be paid an annual base salary (“ Base Salary ”) during the Term of two hundred thousand dollars ($200,000.00). Executive’s Base Salary shall be payable in installments consistent with the payroll practices established by the Company with respect to its senior executive employees.
(b) [*************] 1
(c) [*************] 2
(d) [*************] 3
(e) Payment . Payment of all compensation to Executive hereunder shall be made in accordance with the relevant written Company policies in effect from time to time, including normal payroll practices, and shall be subject to all applicable employment and withholding taxes. This provision shall survive the termination of Executive’s employment with the Company, for any reason.
3. Other Employment Benefits .
(a) Business Expenses . Upon submission of itemized expense statements, in the manner as shall be specified by the Company, Executive shall be entitled to reimbursement for reasonable business and travel expenses duly incurred by Executive in the performance of his duties under this Agreement, pursuant to written Company policy and any relevant written policies established by the Board and provided to Executive.
1 Material omitted pursuant to Confidentiality Treatment Request with the Securities and Exchange Commission 2 Material omitted pursuant to Confidentiality Treatment Request with the Securities and Exchange Commission 3 Material omitted pursuant to Confidentiality Treatment Request with the Securities and Exchange Commission
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(b) Benefit Plans . To the extent offered by the Company, Executive shall be entitled to participate, on a basis commensurate with his position, in the Company’s medical insurance, retirement ( e.g., non-matching 401(k) plan) and other benefit plans pursuant to their terms and conditions during the Term of this Agreement. Nothing in this Agreement shall preclude the Company or any affiliate of the Company from terminating or amending any employee benefit plan or program from time to time.
(c) Vacation . Executive shall be credited with Six Hundred and Sixty-One (661) vacation hours as of the execution of this Agreement. Executive agrees to use a minimum of Eighty (80) of those hours during the 2008 calendar year and another One Hundred Sixty (160) hours ending the calendar year 2010. Executive must exhaust the remaining balance of his vacation bank during the 2011 calendar year. Executive acknowledges that he is not entitled to accrue any further vacation until all vacation balances are exhausted. However, once exhausted Executive will again begin to accrue vacation at the rate applicable to other senior executives of the Company.
(d) No Other Benefits . Executive understands and acknowledges that the compensation and benefits specified in Paragraphs 2 and 3 of this Agreement are the only compensation and benefits he is entitled to receive under this Agreement.
4. Confidentiality; Unfair Competition; Non-Solicitation Agreement . Concurrent with Executive’s execution of this Agreement, Executive shall execute and deliver to the Company a non-disclosure and confidentiality agreement in the form attached hereto as Exhibit A (the “ Non-Disclosure Agreement ”). The terms of the Non-Disclosure Agreement are incorporated by this reference as if set forth in full.
5. Termination of Employment .
(a) Termination of At-Will Employment . Either the Company or Executive may terminate Executive’s employment at any time with or without advance notice or cause. In such an event, Executive will only be entitled to the Accrued Obligations as set forth below.
(b) Payments Upon Termination . If Executive’s employment is terminated for any reason by either party, the Company shall promptly pay or provide to the Executive, or his estate, (i) the Executive’s earned but unpaid Base Salary accrued through the date of termination, (ii) accrued, but unpaid, vacation time through such date of termination, (iii) any Bonus or Incentive Compensation required to be paid to the Executive pursuant to this Agreement, to the extent earned prior to the date of termination and payable, but not previously paid, (iv) reimbursement of any business expenses incurred by the Executive prior to the Date of Termination that are reimbursable under Paragraph 3(a) above, and (v) any vested benefits and other amounts due to Executive under any plan, program, policy of, or other agreement with, the Company(subsections (i) to (v), above, are referred to together as the “ Accrued Obligations ”).
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(c) Severance Payments . In addition, in the event Executive’s employment is terminated by the Company without Cause (as Cause is defined below) and Executive executes a general release in favor of the Company in the form attached hereto as Exhibit “B” no later than thirty (30) days following Executive’s last day of employment with the Company (but not before Executive’s last day of employment) Executive shall receive the equivalent of nine (9) months Base Salary payable in one lump sum within ten (10) business days from Executive’s full execution of such release agreement less deductions required by law. Executive shall also receive reimbursement for nine (9) months of COBRA premiums for Executive’s existing healthcare coverage and shall have ninety (90) days from his last day of employment to exercise any vested but unexercised stock options.
For purposes of Section 5(c) only, Cause shall be defined as (i) Executive’s conviction, pleading guilty or no contest with respect to a felony involving dishonesty or moral turpitude, (ii) Executive’s commission of any act of theft, fraud, dishonesty, or falsification of any employment or Company records, (iii) Executive’s engagement in misconduct that is detrimental to the Company’s reputation or business, (iv) Executive’s refusal without proper legal reason to substantially perform the duties and responsibilities required of Executive, or (v |
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