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Exhibit 10.6
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement"), dated
March 13, 2006 and effective as of December 7, 2006, is
between C REDENCE S
YSTEMS C ORPORATION (the "Company") and L
AVI L EV ("Executive").
I. POSITION AND RESPONSIBILITIES
A. Position. The Company shall employ Executive to render
services to the Company in the position of President and Chief
Executive Officer ("CEO"), reporting to the Company’s Board
of Directors (the "Board"). Executive shall perform such duties and
responsibilities as are normally related to such position in
accordance with the standards of the industry and any additional
duties now or hereafter assigned to Executive by the Company and/or
its Board. Executive shall abide by the rules, regulations, and
practices as adopted or modified from time to time in the
Company’s sole discretion.
B. Other Activities. Except upon the prior written
consent of the Company, Executive will not, during the term of this
Agreement, (i) accept any other employment, or
(ii) engage, directly or indirectly, in any other business
activity (whether or not pursued for pecuniary advantage) that
might interfere with Executive’s duties and responsibilities
hereunder or create a conflict of interest with the Company. The
following shall be understood not to interfere with
Executive’s duties and responsibilities hereunder:
(i) Executive’s management of his personal finances,
(ii) Executive’s participation in charitable
organizations; and (iii) Executive’s participation as a
member of the Board of Directors or similar body of the companies
listed on Schedule I to this Agreement (as amended by mutual
agreement of the parties from time to time) and their respective
affiliates, provided that Executive shall not serve as an operating
officer of any such company.
C. No Conflict. Executive represents and warrants that
his execution of this Agreement, his employment with the Company,
and the performance of his proposed duties under this Agreement
shall not violate any obligations he may have to any other
employer, person or entity, including any obligations with respect
to proprietary or confidential information of any other person or
entity.
II. COMPENSATION AND BENEFITS
A. Base Salary. In consideration of the services to be rendered
under this Agreement, the Company shall pay Executive an annual
base salary of Five Hundred Thousand Dollars ("Base Salary"). The
Base Salary shall be paid in accordance with the Company’s
regularly established payroll practice. Executive’s Base
Salary will be reviewed on an annual basis by the Compensation
Committee of the Board (the "Compensation Committee") and may be
adjusted in the sole discretion of the Compensation Committee.
B. Bonus. Executive shall be eligible for an annual target
incentive bonus equal to One Hundred Percent (100%) of his
then-current Base Salary ("Target Bonus") under the Company’s
management incentive bonus plan, based on Executive’s
achievement of performance objectives determined by the
Company.
C. Benefits. Executive shall be
eligible to participate in the benefits made generally available by
the Company to similarly-situated executives, in accordance with
the benefit plans established by the Company, and as may be amended
from time to time in the Company’s sole discretion.
D. Expenses. The Company shall reimburse Executive for
reasonable business expenses (including travel and entertainment
expenses) incurred in the performance of Executive’s duties
hereunder in accordance with the Company’s expense
reimbursement guidelines.
E. Stock Options. Executive will be granted a
non-qualified option to purchase 1,000,000 shares of the
Company’s Common Stock (the "Option Shares"), subject to the
terms of the Company’s Stock Option Agreement (the "Stock
Option Agreement") and the Company’s 2005 Stock Incentive
Plan (the "Stock Incentive Plan"). The Option Shares shall vest
according to the following schedule, subject to Executive’s
continued service to the Company: (i) 25% of the Option Shares
shall vest on the first anniversary of the date of grant, and
(ii) the remaining 75% of the Option Shares shall vest in
twelve equal and successive quarterly installments upon the
Executive’s completion of each additional three
(3) month period of service thereafter. The date of grant and
the exercise price per share of the Option Shares shall be
determined by the Board.
F. Restricted Stock. Executive will be granted 200,000
restricted shares of the Company’s Common Stock (the
"Restricted Shares"), subject to the terms of the Company’s
Restricted Stock Agreement (the "Restricted Stock Agreement") and
the Company’s Stock Incentive Plan. The Restricted Shares
shall vest according to the following schedule, subject to
Executive’s continued service to the Company: 25% of the
Restricted Shares shall vest on the first anniversary of the date
of grant, and an additional 25% of the Restricted Shares shall vest
on each anniversary thereafter for the next three years. The date
of grant and the exercise or purchase price per share of the
Restricted Shares shall be determined by the Board.
III. AT-WILL EMPLOYMENT; TERMINATION BY COMPANY
A. At-Will Termination by Company. Executive’s employment
with the Company shall be "at-will" at all times. The Company may
terminate Executive’s employment with the Company at any
time, without any advance notice, for any reason or no reason at
all, notwithstanding anything to the contrary contained in or
arising from any statements, policies or practices of the Company
relating to the employment, discipline or termination of its
employees. Upon and after such termination, all obligations of the
Company under this Agreement shall cease, except as otherwise
provided herein.
B. Separation Benefits. Except in situations where the
employment of Executive is terminated For Cause (as defined in
Section IV below), in the event that the Company terminates
Executive’s employment at any time, Executive will be
eligible to receive the following benefits (collectively,
"Separation Benefits"):
1. an amount equal to eighteen (18) months’
pay at Executive’s then-current Base Salary, payable in equal
monthly installments over the eighteen (18) month period
following the date of such termination ("Salary Continuation
Period");
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2. accelerated vesting of
Executive’s outstanding and unvested stock options and/or
restricted stock such that said stock options and/or restricted
stock shall be vested as of the date Executive’s employment
terminates to the same extent as if he were continuously employed
through the end of the Salary Continuation Period; provided that
notwithstanding the terms of the relevant notice of stock option
award or notice of restricted stock award (each an "Award"), such
vesting shall be calculated as if such stock options and restricted
stock vested in equal amounts on a monthly basis commencing on the
initial grant date and ending on the final vesting date under the
relevant Award;
3. if Executive elects to continue medical coverage for
himself or his dependents then covered by the Company’s
medical plans under the Consolidated Omnibus Reconciliation Act
("COBRA"), the Company shall pay the premiums for Executive’s
COBRA coverage until the earlier of (a) the end of the Salary
Continuation Period or (b) the date Executive becomes covered
under another employer’s health plan; and
4. continued payment of the premiums required to maintain
Executive’s coverage under his Company-provided life
insurance policy during the Salary Continuation Period.
Notwithstanding the foregoing, if Executive begins other
employment during the Salary Continuation Period, Executive shall
receive an accelerated lump-sum payment of the remaining payments
for the Salary Continuation Period, in lieu of salary continuation.
Executive shall not be eligible to participate in the
Company’s deferred compensation, 401K, or employee stock
purchase plans during the Salary Continuation Period.
Executive’s eligibility for the foregoing Separation
Benefits is conditioned on (a) Executive remaining available
during the Salary Continuation Period to consult with the Company
regarding matters for which he previously had responsibility as a
Company executive; (b) Executive having first signed a release
agreement in the form attached as Exhibit A, and
(c) Executive’s agreement not to compete with the
Company, or its successors or assigns, during the Salary
Continuation Period. If Executive engages in any business activity
competitive with the Company or its successors or assigns during
the Salary Continuation Period, all Separation Benefits immediately
shall cease.
Notwithstanding any other provision of this Agreement to the
contrary, the Company, in its sole discretion and without the
Executive’s consent, may amend or modify this Agreement in
any manner to provide for the application and effects of
Section 409A of the Internal Revenue Code (the "Code")
(relating to deferred compensation arrangements) and any related
regulatory or administrative guidance issued by the Internal
Revenue Service. The Company shall have the authority to delay the
payment of any benefits described under this Agreement to the
extent it deems necessary or appropriate to comply with
Section 409A(a)(2)(B)(i) of the Code (relating to payments
made to certain "key employees" of certain publicly-traded
companies) and in such event, any such payments to which the
Executive would otherwise be entitled during the six (6) month
period immediately following the Executive’s separation from
service will be paid on the first business day following the
expiration of such six (6) month period.
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IV. OTHER TERMINATIONS BY
COMPANY
A. Termination for Cause. For purposes of this Agreement, "For
Cause" shall mean: (i) Executive is convicted of or pleads no
contest to a crime involving dishonesty, breach of trust, or
intentional physical harm to any person; (ii) Executive
willfully engages in conduct that is in bad faith and materially
injurious to the Company, including but not limited to,
misappropriation of trade secrets, fraud or embezzlement;
(iii) Executive commits a material breach of this Agreement,
which breach is not cured within twenty days after written notice
to Executive from the Company; (iv) Executive willfully
refuses to implement or follow a lawful policy or directive of the
Company, which refusal has a material adverse effect on the Company
and which refusal is not cured within twenty days after written
notice to Executive from the Company; or (v) Executive engages
in misfeasance or malfeasance demonstrated by a pattern of failure
to perform job duties diligently and professionally and Executive
has been notified of such pattern and has not remedied such failure
within thirty (30) days after receipt of such notice. The
Company may terminate Executive’s employment For Cause at any
time, without any advance notice except as specified above. The
Company shall pay to Executive all compensation to which Executive
is entitled up through the date of termination, subject to any
other rights or remedies of the Company under law; and thereafter
all obligations of the Company under this Agreement shall
cease.
B. By Death. Executive’s employment shall terminate
automatically upon Executive’s death. The Company shall pay
to Executive’s beneficiaries or estate, as appropriate, any
compensation then due and owing and the Separation Benefits
describe
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