Exhibit 10.6
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (this
“Agreement”) is effective as of the 1st day of
November, 2006, by and between Victor Garcia
(“Employee”) and Container Applications International,
Inc., a Nevada corporation (the “Company”). In
consideration of the mutual covenants herein contained, and in
consideration of the continued employment of Employee by the
Company, the parties agree as follows:
1. Duties and Scope of
Employment.
(a) Position. The Company
agrees to employ the Employee for the term of his employment under
this Agreement in the position of Senior Vice President and Chief
Financial Officer on the terms and conditions set forth in this
Agreement.
(b) Management Authority. As
such officer, Employee shall be responsible for the relations of
the Company with financial institutions, including lenders, lessors
and owners of equipment managed by the Company. Employee shall
report directly to Mr. Masaaki Nishibori, the Chief Executive
Officer of the Company, and shall also be responsible for any other
duties which Mr. Nishibori may specify; provided that such
duties are consistent with Employee’s position as an
executive officer of the Company.
(c) Obligations. During the
term of his employment under this Agreement, the Employee shall
perform and discharge well and faithfully his duties and shall
devote his full business efforts and time to the Company. The
foregoing, however, shall not preclude the Employee from engaging
in appropriate civic or charitable activities or from serving on
the boards of directors of other noncommercial entities, as long as
such activities and service do not interfere or conflict with his
responsibilities to the Company.
2. Base Salary.
During his employment under this
Agreement, the Company agrees to pay to the Employee as
compensation for his services, effective November 1, 2006 (the
“Effective Date”), a base salary (“Base
Salary”) at an initial annual rate of $300,000, payable in
twenty-four (24) equal bi-monthly installments. On
November 1 of each of the two (2) subsequent years that
this Agreement is in place, beginning on November 1, 2007, the
Employee’s Base Salary shall be increased by at least four
percent (4%) of the Employee’s then-current Base
Salary.
3. Employee Benefits.
(a) General. During the term
of his employment under this Agreement, the Employee shall be
eligible to participate in the employee benefit plans and executive
compensation programs made available by the Company to its
executive officers generally, including (without limitation) any of
the following plans if and when adopted and made available by the
Board of Directors: pension plans, savings plans, deferred
compensation plans, life, disability, health, accident and other
insurance programs, paid vacations, and similar plans or programs
subject in each case to the generally applicable terms and
conditions of the plan in question and to the determination of any
committee administering such plan or program.
(b) Death and Disability.
Subject to the Employee’s insurability, the Company will
(a) maintain a policy of long-term disability insurance
providing for a 60-day exclusion period and disability coverage for
sixty percent (60%) of Employee’s Base Salary, with the
Employee named as the direct beneficiary and (b) reimburse
Employee for the cost of life insurance equal to six hundred
thousand dollars ($600,000).
(c) Vacation . The Employee
shall be entitled to paid vacation accruing at the rate of 20 days
per year. No more than 20 days of accrued vacation shall carry
forward to the next year.
(d) Relocation Expenses .
Upon delivery of valid receipts to the Company, the Company shall
reimburse the Employee for relocation expenses for his move from
Massachusetts to the San Francisco Bay Area, up to a maximum
reimbursement of $35,000, plus travel expenses for the Employee and
his immediate family. For purposes of the above allowance,
relocation expenses will include without limitation expenses
incurred by Employee in the sale of his residence in Massachusetts.
In addition, the Company shall reimburse the Employee for up to two
months of temporary housing expense while Employee seeks permanent
housing in the San Francisco Bay Area.
4. Options to Purchase Common
Stock .
(a) Subject to the approval of the
Company’s Board of Directors, the Employee will be granted an
incentive stock option (“Option”) to purchase 310
shares of the Company’s Common Stock (as adjusted for any
stock dividends, combinations or splits with respect to such
shares, the “Shares”). The Option shall be
exercisable at the fair market value of the Company’s Common
Stock as of the date of grant (the “Exercise
Price”). The fair market value of the Company’s Common
Stock as of the grant date shall be determined as follows:
(a) if such grant is made upon the initial public offering of
the Company’s Common Stock (the “IPO”), the fair
market value of the Company’s Common Stock will be deemed to
be the initial per share price of such Common Stock as set by the
underwriters immediately prior to the effective date of of the IPO
(the “IPO Price”), or (b) if the IPO has not
been consummated on or before July 1, 2007,
the
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fair market value of the Company’s Common
Stock will be determined based on an arms’ length valuation
of the Company’s Common Stock. The Option shall be issued
upon the pricing by the underwriters of the shares of Common Stock
to be issued in the IPO; provided, however, if the IPO has not been
consummated on or before July 1, 2007, the Company will
begin the process of obtaining third party independent valuation of
the Company’s Common Stock. In such event, the Option will be
issued following receipt by the Company of a final report of such
third party independent valuation. The Option will be subject to
the terms and conditions of an equity incentive plan to be adopted
by the Company (the “Plan”).
(b) Subject to the Employee’s
continued employment, the Option will vest and become exercisable
with respect to twenty-five percent (25%) of the Shares on
November 1, 2007 and an additional 1/48th of the total
Shares shall vest and become exercisable each month thereafter,
such that the Option will be fully vested and exercisable after
four (4) years of employment. Notwithstanding the foregoing
and subject to the Employee’s continued employment and
Section 10 of this Agreement, if the Company undergoes a
“Change in Control” (as defined in the Plan), and if,
in anticipation of, or during the twelve (12) months
following, the Change in Control, the Employee is terminated
without Cause or experiences a Constructive Termination pursuant to
Section 7(c) of this Agreement, all Shares subject to the
Option shall immediately vest and become exercisable.
(c) For all purposes of this
Agreement, “Change in Control” shall mean any of the
following transactions, but only if such transaction constitutes a
change in the ownership or effective control of the Company, or a
change in the ownership of a substantial portion of the assets of
the Company, for purposes of Section 409A of the Internal
Revenue Code of 1986, as amended:
(i) a merger or consolidation of the
Company with or into any other company or other entity (other than
for the sole purpose of changing the Company’s state of
incorporation);
(ii) a sale in one transaction or a
series of transactions undertaken with a common purpose of all or a
controlling portion of the Company’s outstanding voting
securities or such amount of the Company’s outstanding voting
securities as would enable the purchaser to obtain the right to
appoint a majority of the Company’s Board of Directors;
or
(iii) a sale, lease, exchange or
other transfer in one transaction or a series of related
transactions undertaken with a common purpose of all or
substantially all of the Company’s assets;
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provided, however, the IPO or a
private sale of stock owned by Hiromitsu Ogawa shall not constitute
a Change in Control unless (after giving effect thereto) a single
party (or group of related parties) obtains control of the Company
as a result of such transactions.
5. Bonuses.
(a) Profit Sharing Bonus. For
each Fiscal Year (as defined below) during the term of this
Agreement, the Company may pay to the Employee a cash bonus based
on the performance of the Employee and on whether the Company meets
its earnings goals. The amount of any bonus awarded pursuant to
this Section 5(a) will be determined by the Board of Directors
of the Company (in its complete discretion), but shall not exceed
forty percent (40%) of the Employee’s Base Salary.
Except as provided in Section 8(b)(iii), no bonus shall be
payable under this Section 5(a) unless Employee’s
employment under this Agreement continues through the end of the
Fiscal Year to which the bonus relates. Any amounts due to the
Employee under this Section 5(a) shall be paid not later than
March 15 of the calendar year immediately following the Fiscal
Year to which the bonus relates. For all purposes of this
Agreement, “Fiscal Year” shall mean the Company’s
fiscal year ending on December 31.
(b) IPO Bonus. If, during the
Employee’s employment under this Agreement, the Company
consummates the IPO, then the Employee shall be entitled to receive
the following cash bonus payment(s), provided, in the case of any
payment described in clause (ii), he is an employee of the Company
on the date of such payment:
(i) If one or more of the first four
(4) yearly anniversaries of the Effective Date occur prior to
consummation of the IPO, then the Employee shall be entitled to
receive a payment in an amount equal to (A) $100,000,
less twenty-five percent (25%) of the Net Value of the
Option (as defined below), multiplied by (B) the number
of yearly anniversaries of the Effective Date that have occurred
prior to consummation of the IPO (not to exceed four (4)), which
payment shall be made to the Employee within thirty (30) days
after the consummation of the IPO; and
(ii) If one or more of the first
four (4) yearly anniversaries of the Effective Date occur
after consummation of the IPO, then the Employee shall be entitled
to receive a payment with respect to each such anniversary in an
amount equal to $100,000, less twenty-five percent
(25%) of the Net Value of the Option, each of which payments
shall be made within thirty (30) days after the anniversary
date to which it relates.
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For purposes of this Section 5(b), the
“Net Value of the Option” shall be calculated by
multiplying (i) the total number of Shares subject to the
Option by (ii) (A) the aggregate IPO Price less
(B) the aggregate Exercise Price.
If the Option is not issued prior to
the closing of the IPO, the Net Value of the Option shall be
$0.
(c) Change in Control Bonus .
If, during the Employee’s employment under this Agreement and
prior to consummation of the IPO, the Company undergoes a Change in
Control, the Company shall pay the Employee a cash bonus (the
“Change in Control Bonus”) equal to (a) $400,000
less (b) the Net Value of the Option upon a Change in Control.
The “Net Value of the Option upon a Change in Control”
shall be equal to (i) the aggregate value of the Shares
subject to the Option as determined based on the valuation of the
Company pursuant to the Change in Control less (ii) the
Exercise Price multiplied by the number of Shares subject to the
Option. If the Option has not been granted as of a Change in
Control, the Change in Control Bonus shall equal $400,000. The
Change in Control Bonus shall be paid within thirty (30) days
after the date of the Change in Control.
6. Business Expenses and
Travel.
During the term of his employment
under this Agreement, the Employee shall be authorized to incur
necessary and reasonable travel, entertainment and other business
expenses in connection with his duties hereunder. The Company shall
reimburse the Employee for such expenses upon presentation of any
itemized account and appropriate supporting documentation, all in
accordance with the Company’s generally applicable
policies.
7. Term of
Employment.
(a) Basic Rule. Unless the
Employee’s employment terminates at an earlier date pursuant
to the provisions of this Agreement, the Company agrees to continue
the Employee’s employment, and the Employee agrees to remain
in the employ of the Company, beginning on the Effective Date until
November 1, 2009. If not terminated in writing by either party
at least ninety (90) days prior to the end of the applicable
term, this Agreement shall automatically renew for an additional
twenty-four (24) months.
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(b) Termination by the
Company. Notwithstanding the foregoing, the Company may
terminate Employee’s employment for any of the following
reasons:
(i) Death . Upon the event of
the Employee’s death, Employee’s employment with the
Company shall be considered automatically terminated.
(ii) Disability . Upon the
event of the Employee’s Disability, Employee’s
employment with the Company shall terminate 30 days after the
Company gives the Employee written notice of such termination. For
all purposes of this Agreement, “Disability” shall mean
that the Board of Directors determines (with the Employee
abstaining) that the Employee is unable to perform his duties under
this Agreement for a continuous period of at least 180 days due to
physical or mental illness or impairment.
(iii) Company Insolvency. If
the Company becomes insolvent or the Company seeks relief (or an
order is entered against the Company) under any bankruptcy,
reorganization, receivership, transfer for the benefit of creditors
or other debtor relief statute or arrangement, Employee’s
employment with the Company shall terminate 30 days after the
Company gives Employee written notice of the
termination.
(iv) Termination for Cause .
The Company, at its option and without prejudice to any other
remedy to which the Company may be entitled either at law, in
equity, or under this Agreement, may terminate the Employee’s
employment at any time for Cause by giving the Employee notice
in
