|
Exhibit
10.1
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT
(this “ Agreement ”) is dated as of
September 6, 2007, and is made and entered into by and between
The Wet Seal, Inc., a Delaware corporation (the “
Company ”), and Edmond S. Thomas (“
Executive ”).
IN CONSIDERATION of the
premises and the mutual covenants set forth below, the parties
hereby agree as follows:
1.
EMPLOYMENT
The Company hereby agrees to
employ Executive as the President and Chief Executive Officer of
the Company and Executive hereby accepts such employment upon the
terms and conditions set forth below.
2. TERM AND PLACE OF
PERFORMANCE
The term of this Agreement
shall begin on October 8, 2007 (the “ Effective
Date ”), and, unless sooner terminated as provided
herein, shall end on October 8, 2010 (the “
Term ”). The Term may be sooner terminated by
either party in accordance with the provisions of Section 5.
The principal place of employment of Executive shall be at the
Company’s headquarters in Foothill Ranch, California (or at
such other locations within the fifty (50) mile radius of its
current location as it may be relocated); provided ,
that , Executive shall be required to travel from time to
time on the business of the Company during the Term.
3.
COMPENSATION
3.1 Base Compensation
. For the services to be rendered by Executive under this
Agreement, Executive shall be entitled to receive, commencing as of
the Effective Date, salary at the annual rate of Seven Hundred
Fifty Thousand Dollars ($750,000) (the “ Base
Compensation ”), less all applicable tax withholdings
by the Company. The Base Compensation shall be payable in
accordance with the Company’s customary payroll practices.
The Compensation Committee of the Board of Directors of the Company
(the “ Committee ”) shall review
Executive’s Base Compensation annually and may make
adjustments to increase but not decrease such Base Compensation, in
accordance with the compensation practices and guidelines of the
Company.
3.2 Annual Bonus;
Guaranteed 2007 Annual Bonus .
(a) Commencing on the
Effective Date, Executive shall participate in the Company’s
annual performance based bonus program, as the same may be
established from time to time by the Committee for executive
officers of the Company (the “ Incentive Plan
”). For each fiscal year during which Executive is employed
hereunder during the Term, Executive’s target award under the
Incentive Plan shall be up to 100% of the Base Compensation (the
“ Target Bonus ”), and the maximum
incentive opportunity shall be up to 200% of the Base Compensation.
Any bonus earned during a fiscal year shall be paid at such time as
the Company customarily pays annual bonuses to its executive
officers and following certification by the
1
Committee of the achievement of
agreed-upon performance measures and the amount of the bonus to be
paid by Executive for the applicable fiscal year. Except as
otherwise provided by the Board or herein, Executive shall not be
paid any bonus unless he is employed on the date the Company
customarily pays bonuses to its executive officers.
(b) Executive shall be
guaranteed a bonus of $250,000 for fiscal year 2007, subject to tax
withholdings by the Company, for the partial year that Executive
will be employed. Executive shall be paid the guaranteed bonus on
April 15, 2007 (the “ Guaranteed Bonus Payment
Date ”); provided , that , he has not
been terminated by the Company for Cause (as defined below) or
terminated his employment with the Company without Good Reason (as
defined below) on or before the Guaranteed Bonus Payment
Date.
3.3 Vacation . During
the Term, Executive shall be entitled to four (4) weeks of
paid vacation per year to be used and accrued in accordance with
the Company’s policy as it may be established from time to
time. In addition, Executive shall receive other paid time-off in
accordance with the Company’s policies for senior executives
as such policies may exist from time to time.
3.4 Welfare, Pension and
Incentive Benefit Plans . During the Term, Executive shall be
entitled to participate in such employee benefit plans and
insurance programs offered by the Company to its employees
generally, or which it may adopt from time to time for its
employees generally, in accordance with the eligibility
requirements for participation therein.
3.5 Automobile
Perquisite . During the Term, the Company shall provide
Executive with a luxury sedan automobile for his use and shall
provide customary insurance coverage for such automobile. The
Company shall also pay for all maintenance costs, including
gasoline, repairs and service for such automobile.
3.6 Equity Award
Shares .
(a) On the Effective Date,
the Company shall grant Executive the following:
(i) Three Hundred Thirty
Three Thousand Three Hundred Thirty Three (333,333) shares of
the Company’s Class A common stock, $0.10 par value per
share (“ Common Stock ”), all of which
shall be subject to the performance-based vesting terms and
conditions set forth in the Performance Share and Restricted Share
Award Agreement attached hereto as Exhibit A , as may be
amended and/or restated from time to time (the “ Award
Agreement ”); and
(ii) pursuant to
Section 4350(I)(1)(A)(iv) of the NASDAQ Marketplace Rules,
Five Hundred Thousand (500,000) shares of Common Stock, all of
which shall be subject to the time-based vesting terms and
conditions set forth in the Award Agreement.
(b) On October 8, 2008
and October 8, 2009, respectively, the Company shall grant
Executive Three Hundred Thirty Three Thousand Three Hundred Thirty
Three (333,333) and Three Hundred Thirty Three Thousand Three
Hundred Thirty Four (333,334) shares of Common Stock, all of
which shall be subject to the performance-based
2
vesting terms and conditions set forth
in the Award Agreement; provided , that , Executive
is employed with the Company on each of the foregoing dates and a
Notice of Termination has not be delivered with respect to
Executive’s employment.
(c) The shares of Common
Stock issued pursuant to Section 3.6(a) have not been
registered and are not freely transferable (the “ Award
Shares ”). The Award Shares shall have the
registration rights set forth in the Award Agreement.
3.7 Expenses . While
Executive is employed by the Company hereunder, the Company shall
reimburse Executive for all reasonable and necessary out-of-pocket
business, travel and entertainment expenses incurred by Executive
in the performance of his duties and responsibilities hereunder,
subject to the Company’s normal policies and procedures for
expense verification and documentation.
4. POSITION AND
DUTIES
4.1 Position and
Duties .
(a) Executive shall serve as
the President and Chief Executive Officer of the Company and shall
report to the Board of Directors of the Company (the “
Board ”). Executive shall have those powers and
duties customarily associated with the office of President and
Chief Executive Officer and as provided for in the By-Laws of the
Company, at all times, subject to the direction and control of the
Board, and such other powers and duties as may be assigned by the
Board. If requested by the Board, Executive shall serve as an
officer and/or director of any of the Company’s affiliates or
subsidiaries for no additional consideration.
(b) While Executive remains
an employee of the Company, the Company will nominate Executive for
election to the Board by the stockholders of the Company. Executive
shall not be entitled to any additional compensation in
consideration for his service on the Board. Executive agrees to
resign from the Board upon the termination of his
employment.
4.2 Devotion of Time and
Effort . Executive shall use Executive’s good faith, best
efforts and judgment (a) in performing Executive’s
duties required hereunder and (b) to act in the best interests
of the Company. Executive shall devote his full time, attention and
efforts to the business of the Company, but may participate in
charitable and personal investment activities to a reasonable
extent, as long as such activities do not interfere with the
performance of his duties and responsibilities hereunder. Except
with respect to the boards of directors set forth on Schedule
I , Executive shall not serve on the board of directors of any
other company without the prior written consent of the
Board.
5. TERMINATION;
TERMINATION BENEFITS
5.1 Due to Death or
Disability .
(a) If Executive dies during
the Term, Executive’s employment shall terminate on the date
of his death. The Company may terminate Executive’s
employment if he becomes “ Disabled ,” as
defined below, upon delivery of a Notice of Termination (as defined
below) to Executive. Upon termination of Executive’s
employment as a result of death or Disability, certain of his then
unvested restricted stock awards shall vest in the manner set forth
in the Award Agreement.
3
(b) Upon termination of
Executive’s employment due to Executive’s death or by
the Company due to Executive’s Disability, Executive shall be
entitled to:
(i) compensation and payment
for any unreimbursed expenses incurred, accrued but unpaid then
current Base Compensation and other accrued but unpaid employee
benefits as provided in this Agreement, in each case through the
Date of Termination (as defined below);
(ii) Executive’s Target
Bonus for the fiscal year in which the Date of Termination occurs
(the “ Termination Fiscal Year ”), which
shall be pro rated for the number of full calendar quarters
Executive was employed by the Company during the Termination Fiscal
Year;
(iii) subject to
Section 5.8, if Executive’s employment is terminated due
to Disability and Executive intends to continue his medical
coverage under The Consolidated Omnibus Reconciliation Act of 1985
(“ COBRA ”), the Company shall pay for
coverage under COBRA for one (1) year following the Date of
Termination; and
(iv) the vesting in full of
certain of his then unvested restricted stock awards in the manner
set forth in the Award Agreement.
(c) For purposes of this
Agreement, the term “ Disabled ” or
“ Disability ” shall mean a medically
determined physical or mental incapacity as a result of which
Executive becomes unable to continue the proper performance of
Executive’s duties hereunder for ninety (90) consecutive
days or one-hundred twenty (120) non-consecutive days in any
three hundred sixty-five (365) day period, or, if this
provision is inconsistent with any applicable law, for such period
or periods as permitted by law.
5.2 By the Company Without
“Cause” .
(a) The Company may terminate
Executive’s employment without “Cause” (as
defined below) at any time following the Effective Date upon
delivery of a Notice of Termination to Executive.
(b) Upon termination of
Executive’s employment by the Company Without Cause,
Executive shall be entitled to (contingent on Executive signing and
not revoking a release, substantially in the form attached hereto
as Exhibit B (a “ Release ”),
within thirty (30) days of the Date of Termination of
Executive’s employment):
(i) the greater of
(A) Executive’s aggregate Base Compensation for the
remainder of the Term and (B) Executive’s then current
Base Compensation, multiplied by two (2), which payment under this
Section 5.2(b)(i) shall be made in twelve (12) equal
monthly installments (each such installment shall be treated as a
separate payment under Section 409A of the Internal Revenue
Code of 1986, as amended (the “ Code
”));
4
(ii) subject to
Section 5.8, if Executive intends to continue his medical
coverage under COBRA, the Company shall pay for coverage under
COBRA for one (1) year following the Date of Termination;
and
(iii) the vesting in full of
certain of his then unvested restricted stock awards in the manner
set forth in the Award Agreement.
5.3 By the Company For
Cause .
(a) The Company may terminate
Executive’s employment for “Cause” at any time,
upon an affirmative vote of a majority of the non-employee members
of the Board, by providing Executive a Notice of Termination, which
shall set forth in reasonable detail the Company’s basis for
such termination.
(b) Upon termination of
Executive’s employment by the Company for Cause, Executive
shall be entitled to receive compensation and payment for any
unreimbursed expenses incurred, accrued but unpaid Base
Compensation and other accrued but unpaid employee benefits as
provided in this Agreement, in each case through the Date of
Termination.
(c) For purposes of this
Agreement, “ Cause ” shall
mean:
(i) any act of misconduct or
dishonesty by Executive in the performance of his
duties;
(ii) any willful failure,
neglect or refusal by Executive to perform his duties under this
Agreement or to follow the lawful instructions of the
Board;
(iii) any breach by Executive
of his fiduciary duties to the Company or Executive’s
commission of any fraud or embezzlement against the Company
(whether or not a misdemeanor);
(iv) any material breach of
any covenant of this Agreement, which breach has not been cured by
Executive (if curable) within ten (10) days after written
notice thereof to Executive from the Company;
(v) Executive’s being
convicted of (or pleading guilty or nolo contendere to) any
felony or misdemeanor involving theft, embezzlement, dishonesty or
moral turpitude; and/or
(vi) Executive’s
failure to comply with the policies of the Company in effect from
time to time relating to conflicts of interest, ethics, codes of
conduct, insider trading, or discrimination and harassment, or
other breach of Executive’s fiduciary duties to the Company,
which failure or breach is materially injurious to the business or
reputation of the Company.
If the Board has reasonable belief that
Executive has committed any of the acts described above, it may
suspend Executive (with pay) while it investigates whether it has
or could have Cause to terminate Executive and such suspension
shall not give Executive Good Reason (as defined below) to
terminate his employment.
5
5.4 By Executive For Good
Reason .
(a) Executive may terminate
his employment for “Good Reason” (as defined below) by
providing a Notice of Termination to the Board within sixty
(60) days of the occurrence of the circumstances giving rise
to such Good Reason. The foregoing notice shall describe the
claimed event or circumstance and set forth Executive’s
intention to terminate his employment with the Company;
provided , that , the Company has not substantially
cured such event within thirty (30) days after receiving such
notice.
(b) Upon termination by
Executive of his employment for “Good Reason”,
Executive will be entitled to (contingent on Executive signing and
not revoking the Release within thirty (30) days of the Date
of Termination):
(i) the greater of
(A) Executive’s aggregate Base Compensation for the
remainder of the Term and (B) Executive’s then current
Base Compensation, multiplied by two (2), which payment under this
Section 5.4(b)(i) shall be made in twelve (12) equal
monthly installments (each such installment shall be treated as a
separate payment under Section 409A of the Code);
(ii) subject to
Section 5.8, if Executive intends to continue his medical
coverage under COBRA, the Company shall pay for coverage under
COBRA for one (1) year following the Date of Termination;
and
(iii) the vesting in full of
certain of his then unvested restricted stock award in the manner
set forth in the Award Agreement.
(c) For purposes of this
Agreement, “ Good Reason ” shall
mean:
(i) The Company (or its
successor) relocates Executive’s primary work location by
more than fifty (50) miles from the Company’s current
headquarters;
(ii) Executive is required to
perform such duties that constitute a material diminution of
Executive’s duties, responsibilities and authority as set
forth in Section 4.1; and or
(iii) The Company (or its
successor) breaches a material term or condition of this
Agreement.
5.5 By Executive Without
Good Reason .
(a) Executive may terminate
his employment without Good Reason by providing a Notice of
Termination to the Company at least ninety (90) days prior to
the Date of Termination.
6
(b) Upon termination by
Executive of his employment without Good Reason, Executive shall be
entitled to receive compensation and payment for any unreimbursed
expenses incurred, accrued but unpaid Base Compensation and other
accrued but unpaid employee benefits as provided in this Agreement,
in each case through the Date of Termination (contingent on
Executive signing the Release within thirty (30) days of the
Date of Termination).
5.6 Change of Control
.
(a) In the event there is a
Change of Control (as defined below) and, within ninety
(90) days after the Change of Control, Executive either
terminates his employment for Good Reason or the Company (or its
successor) terminates Executive’s employment without Cause,
Executive shall be entitled to (contingent on Executive signing and
not revoking the Release within thirty (30) days of the Date
of Termination):
(i) a payment equal to the
sum of (A) Executive’s then current Base Compensation,
multiplied by two (2) and (B) Executive’s Target
Bonus for the fiscal year in which the Date of Termination occurs
(pro rated for the number of full calendar quarters Executive was
employed by the Company during the Termination Fiscal Year),
multiplied by two (2); provided , however , in the
event Executive is entitled to payment under Section 5.6 in
connection with a Change of Control and such payment is to be made
prior to February 3, 2008, Executive shall only receive the
payment set forth in clause (A) hereof (all payments under
this Section 5.6(a)(i) shall be payable in twelve
(12) equal monthly installments (each such installment shall
be treated as a separate payment under Section 409A of the
Code);
(ii) subject to
Section 5.8, if Executive intends to continue his medical
coverage under COBRA, the Company will pay for coverage under COBRA
for one (1) year following the Date of Termination;
and
(iii) the vesting in full of
certain of his then unvested restricted stock award in the manner
set forth in the Award Agreement.
(b) For purposes of this
Agreement, “ Change of Control ” shall
mean either (i) or (ii) below and a Change in the
Incumbent Board (as defined below).
(i) any “person”
(as such term is defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the “ Exchange
Act ”) and as used in Sections 13(d)(3) and 14(d)(2)
of the Exchange Act is or becomes, after the Effective Date, a
“beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing more than 50% of the combined voting power of the
Company’s then outstanding securities eligible to vote for
the election of the Board (the “ Company Voting
Securities ”); provided , however ,
that an event described in this paragraph (i) shall not be
deemed to be a Change in Control if any of following becomes such a
beneficial owner: (A) the Company or any majority-owned
subsidiary ( provided , that , this exclusion applies
solely to the ownership levels of the Company or the majority-owned
subsidiary), (B) any tax-qualified, broad-based employee
benefit plan sponsored or maintained by the Company or any
majority-owned subsidiary, (C) any underwriter temporarily
holding securities pursuant to an offering of such securities, or
(D) any person pursuant to a Non-Qualifying Transaction (as
defined in paragraph (ii)); or
7
(ii) the consummation of a
merger, consolidation, statutory share exchange or similar form of
corporate transaction involving the Company or any of its
subsidiaries that requires the approval of the Company’s
stockholders, whether for such transaction or the issuance of
securities in the transaction (a “ Business
Combination ”), unless immediately following such
Business Combination: (A) more than 50% of the total voting
power of (x) the corporation resulting from such Business
Combination (the “ Surviving Corporation
”), or (y) if applicable, the ultimate parent
corporation that directly or indirectly has beneficial ownership of
100% of the voting securities eligible to elect directors of the
Surviving Corporation (the “ Parent Corporation
”), is represented by Company Voting Securities that were
outstanding immediately prior to such Business Combination (or, if
applicable, is represented by shares into which such Company Voting
Securities were converted pursuant to such Business Combination),
and such voting power among the holders thereof is in substantially
the same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior to the
Business Combination, (B) no person (other than any employee
benefit plan (or related trust) sponsored or maintained by the
Surviving Corporation or the Parent Corporation), is or becomes the
beneficial owner, directly or indirectly, of more than 50% of the
total voting power of the outstanding voting securities eligible to
elect directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) and (C) at
least a majority of the members of the board of directors of the
Parent Corporation (or if there is no Parent Corporation, the
Surviving Corporation) following the consummation of the Business
Combination were members of the Incumbent Board at the time of the
Board’s approval of the execution of the initial agreement
providing for such Business Combination (any Business Combination
which satisfies all of the criteria specified in (A), (B) and
(C) above shall be deemed to be a “ Non-Qualifying
Transaction ”).
(c) For purposes of this
Agreement, a “ Change in the Incumbent Board
” shall be deemed to have occurred if during any period of
three (3) consecutive years, individuals who, as of the date
hereof, constitute the Board (the “ Incumbent
Board ”) cease for any reason to constitute at least
a majority of the Board; provided , however , the
voluntary resignation of one or more individuals who constitute the
Board as of the date hereof shall not constitute a Change in the
Incumbent Board; provided , further , that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the
Board.
5.7 Expiration of the
Term . Executive’s employment shall automatically
terminate upon expiration of the Term unless the parties agree to
extend the Term or continue the employment relationship “at
will”.
8
5.8 Set–Off
Agreements . The obligation to make COBRA payments under this
Section 5 shall be reduced upon Executive becoming eligible
for medical benefits from any subsequent employer. The
Company’s obligation to make any severance payments provided
in this Agreement shall be subject to set-off, counterclaim or
recoupment of amounts owed by Executive to the Company or its
affiliates under this Agreement or otherwise.
5.9 Nonqualified Deferred
Compensation . Notwithstanding any provision of Sections 5.2.
5.4 and 5.6 to the contrary, if all or any portion of the severance
payments due under Section 5 are determined to be
“nonqualified deferred compensation” subject to
Section 409A of the Code, and the Company determines that
Executive is a “specified employee” as defined in
Section 409A(a)(2)(B)(i) of the Code and the regulations and
other guidance issued thereunder, then such severance payments (or
portion thereof) shall commence no earlier than the first day of
the seventh month following the month in which Executive’s
termination of employment occurs (with the first such payment being
a lump sum equal to the aggregate severance payments Executive
would have received during such six-month period if no such payment
delay had been imposed).
5.10 Notice of
Termination . Any termination of employment pursuant to
Sections 5.1 through 5.5 shall be communicated by a Notice of
Termination to the other party hereto given in accordance with
Section 20.2.
(a) For purposes of this
Agreement, a “ Notice of Termination ”
means a written notice that (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to
the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated and
(iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination
date. The failure by Executive or the Company to set forth in the
Notice of Termination any fact or circumstance that contributes to
a showing of Good Reason or Cause shall not waive any right of
Executive or the Company, as the case may be, hereunder or preclude
Executive or the Company, as the case may be, from asserting such
fact or circumstance in enforcing Executive’s or the
Company’s rights hereunder.
(b) For purposes of this
Agreement, “ Date of Termination ” means
(i) if Executive’s employment is terminated pursuant to
Section 5.1 through 5.5, the date of receipt of the Notice of
Termination (in the case of a termination with or without Good
Reason, provided , such Date of Termination is in accordance
with Section 5.4 or 5.5, as the case may be), (ii) if
Executive’s employment is terminated by reason of death, the
date of death, and (iii) the expiration of the
Term.
5.11 Exclusive Remedy
. Except as provided in Section 5, from and after the Date of
Termination, Executive shall not be entitled to any other payments
under this Agreement or the Award Agreement and/or the respective
termination thereof, and shall have no further right to receive
compensation or other consideration from the Company or have any
other remedy whatsoever against the Company as a result of the
termination of this Agreement, the Term or the termination of
Executive’s employment.
9
6.
NON-SOLICITATION
Executive acknowledges that
by virtue of Executive’s position as President and Chief
Executive Officer of the Company, and Executive’s employment
hereunder, he will have advantageous familiarity with, and
knowledge about, the Company and will be instrumental in
establishing and maintaining goodwill between the Company and its
customers, which goodwill is the property of the Company.
Therefore, Executive agrees as follows during the Term and for a
twelve (12) month period commencing from the Date of
Termination: (a) Executive shall not on behalf of himself, or
any other person or entity, solicit, take away, hire, employ or
endeavor to employ any of the employees of the Company and/or
(b) Executive shall not influence or attempt to influence
vendors or business partners of the Company or any of its present
or future subsidiaries or affiliates, either directly or
indirectly, to divert their business to any individual,
partnership, firm, corporation or other entity then in competition
with the business of the Company, or any subsidiary or affiliate of
the Company.
7.
NON-COMPETITION
Executive acknowledges and
recognizes the highly competitive nature of the business of the
Company and its affiliates and accordingly agrees as follows:
During his employment, Executive will not, directly or indirectly,
(a) engage in any business for Executive’s own account
that competes with the business of the Company or its affiliates
(including, without limitation, businesses which the Company or its
affiliates have specific plans to conduct in the future and as to
which Executive is aware of such planning), (b) enter the
employ of, or render any services to, any person engaged in any
business that competes with the business of the Company or its
affiliates, (c) acquire a financial interest in any person
engaged in any business that competes with the business of the
Company or its affiliates, directly or indirectly, as an
individual, partner, stockholder, officer, director, principal,
agent, trustee or consultant, or (d) interfere with business
relationships (whether formed before or after the date of this
Agreement) between the Company or any of its affiliates and
customers, suppliers, partners, members or investors of the Company
or its affiliates. Without limiting the generality of the
foregoing, Executive agrees that any designer, manufacturer,
wholesaler or retailer which designs, manufactures, markets or
sells specialty apparel, clothing or accessories to primarily the
age groups between fourteen (14) and thirty-five (35) and
where such designer, manufacturer, wholesaler or retailer operates
a retail store within seventy-five (75) miles of any location
of the Company or any subsidiary or affiliate, would be “in
competition with the business of the Company” or its
subsidiaries or affiliates. Notwithstanding anything to the
contrary in this Agreement, Executive may, directly or indirectly,
own, solely as an investment, securities of any person engaged in
the business of the Company or its affiliates which are publicly
traded on a national or regional stock exchange or on an
over-the-counter market if Executive (i) is not a controlling
person of, or a member of a group which controls, such person and
(ii) does not, directly or indirectly, own five percent
(5%) or more of any class of securities of such
person.
8. CONFIDENTIALITY/TRADE
SECRETS
Executive specifically agrees
that Executive will not at any time, whether during or subsequent
to the Term, in any fashion, form or manner, except in furtherance
of Executive’s duties at the Company or with the specific
written consent of the Company, either directly or indirectly use,
divulge, disclose or communicate to any person in any manner
whatsoever, any confidential information or trade secrets of any
kind, nature or description concerning any
10
matters affecting or relating to the
business of the Company (the “ Proprietary
Information ”), including (i) all information,
design or software programs (including object codes and source
codes), techniques, drawings, plans, experimental and research
work, inventions, patterns, processes and know-how, whether or not
patentable, and whether or not at a commercial stage related to the
Company or any subsidiary thereof, (ii) buying habits or
practices of any of its customers or vendors, (iii) the
Company’s marketing methods, sales activities, promotion,
credit and financial data and related information, (iv) the
Company’s costs or sources of materials, (v) the prices
it obtains or has obtained or at which it sells or has sold its
products or services, (vi) lists or other written records used
in the Company’s business, (vii) compensation paid to
employees and other terms of employment, or (viii) any other
confidential information of, about or concerning the business of
the Company, its manner of operation, or other confidential data of
any kind, nature, or description (excluding any information that is
or becomes publicly known or available for use through no fault of
Executive or as directed by court order). The parties hereto
stipulate that as between them, Proprietary Information constitutes
trade secrets that derive independent economic value, actual or
potential, from not being generally known to the public or to other
persons who can obtain economic value or cause economic harm to the
Company from its disclosure or use and that Proprietary Information
is the subject of efforts which are reasonable under the
circumstances to maintain its secrecy and of which this
Section 8 is an example, and that any breach of this
Section 8 shall be a material breach of this Agreement. All
Proprietary Information shall be and remain the Company’s
sole property.
9.
INVENTIONS
9.1 Executive agrees to
disclose promptly to the Company any and all concepts, designs,
inventions, discoveries and improvements related to the
Company’s business that Executive may conceive, discover or
make from the beginning of Executive’s employment with the
Company until the termination thereof; whether such is made solely
or jointly with others, whether or not patentable, of which the
conception or making involves the use of the Company’s time,
facilities, equipment, personnel, supplies or trade secret
information (collectively, “ Inventions
”).
9.2 Executive agrees to
assign, and does hereby assign, to the Company (or its nominee)
Executive’s right, title and interest in and to any and all
Inventions that Executive may conceive, discover or make, either
solely or jointly with others, whether or not patentable, from the
beginning of Executive’s employment with the Company until
the termination thereof of which the conception or making involves
the use of the Company’s time, facilities, equipment,
personnel, supplies or trade secret information.
9.3 Executive agrees to sign
at the request of the Company any instrument necessary for the
filing and prosecution of patent applications in the United States
and elsewhere, including divisional, continuation, revival, renewal
or reissue applications, covering any Inventions and all
instruments necessary to vest title to such Inventions in the
Company (or its nominee). Executive further agrees to cooperate and
assist the Company in preparing, filing and prosecuting any and all
such patent applications and in pursuing or defending
| 
