Exhibit 10.42
EMPLOYMENT
AGREEMENT
The parties to this employment
agreement (“Agreement”) dated this 18
th
day of July, 2006 are
Planar Systems, Inc. (“Company”) and Paul Gulick
(“Employee”).
RECITALS
A. WHEREAS, Employee has been an
employee and valued contributor to Clarity Systems, Inc.
(“Clarity”);
B. WHEREAS, Company, Clarity, and
other parties have entered into that certain Agreement And Plan Of
Merger And Reorganization (the “Merger Agreement”);
and
C. WHEREAS, Company wishes to obtain
the services of Employee following the closing of the transaction
contemplated in the Merger Agreement and Employee wishes to provide
such services, all under the terms and conditions of this
Agreement.
AGREEMENT
NOW, THEREFORE, for valuable
consideration the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
ARTICLE 1
EMPLOYMENT; TERM;
TERMINATION
1.1 Employment . Upon the terms and
conditions set forth in this Agreement, effective as of the Closing
Date, as that term is defined in the Merger Agreement, Company
shall employ Employee in the position of Chief Technology Officer
and Employee accepts such employment.
1.2 Term .
The term of this Agreement shall
begin on the Closing Date and extend until it is terminated
pursuant to Article 3 of this Agreement; provided, however, that
commencing on the first anniversary date of this Agreement and each
anniversary date thereafter, the term of this Agreement shall
automatically be extended for one additional year unless at least
90 days prior to such anniversary date, the Company or you shall
have given notice that this Agreement shall not be extended;
provided, however, that this Agreement shall continue in effect for
a period of twenty-four (24) months beyond the term provided
herein if a Change in Control, as defined in Section 3.2
hereto, shall have occurred during such term (the
“Term”). Notwithstanding anything in this
Section 1.2 to the contrary, this Agreement shall terminate if
you or the Company terminate your employment prior to a Change in
Control as defined in Section 3.2 hereof.
1.3 Termination
. Termination of this
Agreement also terminates Employee’s employment with Company.
Employee is an “at-will” employee of the Company.
Company may terminate this Agreement and Employee’s
employment at any time with or without Cause upon written notice to
Employee, subject to providing such benefits as may be provided in
Article 3. Any purported termination by the Company or by
Employee shall be communicated
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Gulick)
by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a “Notice of
Termination” shall mean a notice that shall indicate whether
termination is with or without Cause, for Disability or for Good
Reason, and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
Employee’s employment for Cause or Good Reason (as all such
capitalized terms are hereinafter defined). This Agreement shall
terminate automatically immediately upon Employee’s
death.
ARTICLE 2
COMPENSATION
2.1 Compensation . For all services
rendered under this Agreement, Company shall pay Employee a base
salary at the rate of Eighteen Thousand Three Hundred Seventy-Five
Dollars ($19,166) per month (annual rate of $230,000) ,
payable in accordance with Company’s usual payroll practices
(“Base Salary”). All compensation provided to Employee
under this Agreement, whether by way of Base Salary, bonus,
severance or otherwise, shall be reduced by such amounts as are
required to be withheld by law. In addition, Employee shall be
eligible for the opportunity to earn up to sixty (60%) of
Employee’s annual Base Salary pursuant to an annual
performance incentive bonus plan based upon individual and Company
performance milestones to be determined by Company. The incentive
bonus is earned and paid quarterly. Employee must be employed
through the end of the quarter in order to be eligible for a bonus
for that quarter. Employee’s bonus will be pro-rated for the
quarter in which Employee begins employment with the Company based
upon the number of days Employee is employed with Company during
that quarter.
2.2 Employee Benefit Plans . Employee
shall be entitled to participate in any and all employee welfare
and health benefit plans (such as life insurance, health and
medical, dental and disability plans) and other employee benefit
plans, including but not limited to any 401(k) plans, established
by the Company from time to time for the benefit of all employees
of the Company, which plans shall include at a minimum health
insurance and a retirement plan. Employee shall be required to
comply with the conditions attendant to coverage by such plans and
shall comply with and be entitled to benefits only in accordance
with the terms and conditions of such plans as they may be amended
from time to time. Except as stated in this paragraph, nothing
herein contained shall be construed as requiring the Company to
establish or continue any particular benefit plan.
2.3 Paid Time Off . Employee shall be
entitled to paid vacation and other paid time off in accordance
with Company’s standard policies regarding accrual and use of
vacation and other paid time off.
2.4 Reimbursement of Business Expenses
. Company shall reimburse Employee’s reasonable and
necessary business expenses subject to Company’s policies
regarding accounting for and requesting such
reimbursement.
2.5 Directors’ and Officers’
Insurance . Company shall maintain during the Term
directors’ and officers’ liability insurance applicable
to Employee upon his appointment as an officer of the Company. Such
coverage shall be in amounts customary for similarly situated
companies.
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Gulick)
ARTICLE 3
EFFECT OF
TERMINATION
3.1 Payment Upon Termination. Upon
termination of this Agreement for any reason, Company shall pay
Employee accrued wages, including earned but unpaid Base Salary and
any earned but unpaid bonus owing to Employee through the date of
termination. Except as expressly stated in this Agreement, Employee
shall not be entitled to any bonuses or incentives which are not
earned at the time of the termination and will not be entitled to
any severance pay or benefits continuation (except as may otherwise
be required by law) or any other compensation of any
kind.
3.2 Change in Control
Termination . This
Section 3.2 is applicable in the event, within twenty-four
(24) months after a Change in Control, Employee is terminated
or resigns for Good Reason, unless such termination is
(A) because of Employee’s death; (B) by the Company
for Cause or Disability or (C) by Employee other than for Good
Reason (as all such capitalized terms are hereinafter
defined).
3.2.1 “ Change in
Control” Definition . For purposes of this Agreement, a “Change
in Control” shall mean the occurrence of any of the following
events:
(i) The approval by the
Company’s shareholders of a merger or consolidation to which
the Company is a party if the individuals and entities who were
shareholders of the Company immediately prior to the effective date
of such merger or consolidation would have beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of
1934) of less than fifty percent (50%) of the total combined
voting power for election of directors of the surviving corporation
immediately following the effective date of such merger or
consolidation;
(ii) The acquisition (other than
directly from the Company) by any person or entity, or group of
associated persons or entities acting in concert of direct or
indirect beneficial ownership (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934) of securities of the Company
representing twenty-five percent (25%) or more of the total
combined voting power of the Company’s then issued and
outstanding securities;
(iii) The approval by the
Company’s shareholders of the sale of all or substantially
all of the assets of the Company to any person or entity which is
not a wholly-owned subsidiary of the Company;
(iv) The approval by the
Company’s shareholders of any plan or proposal for the
liquidation of the Company; or
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Gulick)
(v) A change in the Board occurring
with the result that the members of the Board on the effective date
hereof (the “Incumbent Directors”) no longer constitute
a majority of such Board, provided that any person becoming a
director whose election or nomination for election was supported by
a majority of the Incumbent Directors shall be considered an
Incumbent Director for purposes hereof.
3.2.2 “
Disability” Definition . Termination by the Company of Employee’s
employment based upon “Disability” shall mean
termination because of Employee’s absence from
Employee’s duties with the Company on a full-time basis for a
continuous period of five (5) months as a result of
Employee’s incapacity due to physical or mental illness,
unless within thirty (30) days after Notice of Termination (as
hereinafter defined) is given to Employee following such absence,
Employee shall have returned to the full-time performance of
Employee’s duties.
3.2.3 “ Good
Reason” Definition . Termination by Employee of Employee’s
employment for “Good Reason” shall mean a good faith
determination by Employee, in Employee’s reasonable judgment,
that any one or more of the following events has occurred without
Employee’s express written consent:
(i) A change in Employee’s
responsibilities, titles or offices as in effect immediately prior
to the Change in Control, or any removal of Employee from, or any
failure to re-elect Employee to, any of such positions, which has
the effect of materially diminishing Employee’s
responsibility or authority;
(ii) A reduction by Company in
Employee’s Base Salary as in effect immediately prior to the
Change in Control or any failure to pay Employee any compensation
or benefits to which Employee is entitled when due;
(iii) A requirement by Company that
Employee be based anywhere other than within 25 miles of Beaverton,
Oregon;
(iv) Without replacement by Plans,
programs or arrangements which when taken as a whole provide
benefits to Employee at least reasonably comparable to those
discontinued or adversely affected, the (A) failure by Company
to continue in effect (without reduction in benefit level and/or
reward opportunities), any material compensation or employee
benefit Plan, program or arrangement in which Employee was
participating immediately prior to a Change in Control; or
(B) taking of any action by Company that would materially
adversely affect Employee’s participation or materially
reduce Employee’s benefits under any of such Plans, programs
or arrangements;
(v) The failure by Company to obtain
an agreement reasonably satisfactory to Employee from any successor
or assign of the Company to assume and agree to perform this
Agreement; or
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Gulick)
(vi) Any material breach of this
Agreement by Company which breach is not remedied for a period of
thirty (30) days following written notice by Employee to
Company, which notice specifically identifies the nature of the
breach.
For purpose of this
Section 3.2, “Plan” shall mean any compensation
plan such as an incentive, stock option or restricted stock plan or
any employee benefit plan such as a thrift, pension, profit
sharing, medical, disability, accident, life insurance, or
relocation plan or policy or any other plan, program or policy of
the Company intended to benefit employees.
3.2.4 Date of Termination
. For purposes of this
Section 3.2, “Date of Termination” shall mean:
(a) if Employee’s employment is to be terminated for
Disability, thirty (30) days after Notice of Termination is
given (provided that Employee shall not have returned to the
performance of Employee’s duties on a full-time basis during
such thirty (30)-day period); (b) if Employee’s
employment is to be terminated by the Company for Cause, the date
on which a Notice of Termination is given; and (c) if
Employee’s employment is to be terminated by Employee or by
the Company for any other reason, the date specified in the Notice
of Termination, which sh
