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Exhibit 10.1
THIRD AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This
Third Amended and Restated Employment Agreement (this
“Agreement”) is made effective as of November
13, 2007 by and between Primal Solutions, Inc., a Delaware
corporation (the “Employer”), and Joseph R.
Simrell, an individual resident in Coto de Caza, California
(the “Executive”).
RECITALS
The
Employer desires to employ the Executive, and the Executive
wishes to accept such employment, upon the terms and
conditions set forth in this Agreement. The
Employer and the Executive previously entered into a Second
Amended and Restated Employment Agreement effective as of
December 16, 2005 (the “Prior
Agreement”). This Agreement amends, restates
and supersedes the Prior Agreement.
The
Executive and the Employer previously entered into a Second
Amended and Restated Change of Control Agreement effective as
of December 16, 2005 (“Prior Change of Control
Agreement”). Concurrently with this
Agreement, the parties are entering into a Third Amended and
Restated Change of Control Agreement dated as of the date
hereof (the “Change of Control
Agreement”) which amends, restates and supersedes
the Prior Change of Control Agreement.
For
the purposes of this Agreement, the terms defined in
Section 9 of this Agreement have the meanings specified
or referred to in such Section 9.
AGREEMENT
The
parties, intending to be legally bound, agree as
follows:
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1.
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EMPLOYMENT TERMS AND DUTIES
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The
Employer hereby employs the Executive, and the Executive
hereby accepts employment by the Employer, upon the terms and
conditions set forth in this Agreement.
The
term of the Executive’s employment under this Agreement
will commence on the Effective Date and continue until
December 31, 2008, unless earlier terminated as provided in
Section 5 of this Agreement.
No
later than October 31, 2008, the Board of Directors will
commence negotiations with Executive in good faith over the
terms of a new employment agreement which shall contain a
clause providing for at least twelve (12) months’
severance and benefits continuation. If the Board
of Directors negotiates in good faith and offers a new
employment agreement containing
such
a severance clause, but the Employer and the Executive are
unable to reach agreement on a new employment agreement, this
Agreement shall expire on December 31, 2008, and the Executive
shall receive no severance compensation but shall be paid his
final compensation as provided for in
Section 5.5(b) of this Agreement, except that the
Executive shall receive his Incentive Compensation for the
then-current Fiscal Year prorated through December 31,
2008. If the Board of Directors does not negotiate
in good faith or if the employment agreement offered does not
include a clause providing for at least twelve
(12) months’ severance and benefits continuation,
this Agreement will expire on December 31, 2008, and the
Executive will be paid the severance benefits provided for in
Sections 5.5(a) and (e) of this
Agreement.
The
Executive will have such duties as are assigned or delegated
to the Executive in writing by the Board of Directors, and
will serve as Chairman of the Board, Chief Executive Officer
and President of the Employer. The
Executive’s job duties shall include those
responsibilities set forth in Exhibit A
. The Executive will devote his entire business
time, attention, skill, and energy to the business of the
Employer, will use his best efforts to promote the success of
the Employer’s business, and will cooperate fully with
the Board of Directors in the advancement of the best
interests of the Employer. Nothing in this
Section 1.3, however, will prevent the Executive from
engaging in additional activities in connection with personal
investments and community affairs that are not inconsistent
with the Executive’s duties under this
Agreement. The Executive will fulfill his duties as
a director of the Employer or officer of any of
Employer’s affiliates without additional compensation as
long as the Executive’s employment by the Employer
continues under this Agreement.
(a)
Salary . The Executive will be
paid an annual salary of $200,000 (the “Salary”),
subject to adjustment as provided below, which will be payable in
equal periodic installments according to the Employer’s
customary payroll practices, but no less frequently than
monthly. The Salary will be reviewed by the Board of
Directors not less frequently than annually, and may be adjusted
upward in the sole discretion of the Board of
Directors.
(b)
Benefits . The Executive will,
during the Employment Period, be permitted to participate in such
stock option, restricted stock, pension, profit sharing, bonus,
life insurance, hospitalization, major medical, tuition
reimbursement, medical flexible spending accounts and other
employee benefit plans provided by the Employer that may be in
effect from time to time, at levels made available to other
similarly situated executives of the Employer, and to the extent
the Executive is eligible under the terms of those plans
(collectively, the “Benefits”). The Benefits
shall include life insurance on the Executive’s life in an
amount not less than the Executive’s Salary.
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2.2
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INCENTIVE COMPENSATION.
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As
additional compensation (the “Incentive
Compensation”) for the services to be rendered by
the Executive pursuant to this Agreement, the Employer will
pay the Executive with
respect
to each Fiscal Year during the Employment Period (including
Fiscal Year 2007), an amount not less than fifty percent (50%)
of the Executive’s Salary (the “Compensation
Plan”), if, and only if, the Employer meets or exceeds
the performance goals for the Employer established by the
Board of Directors (the “Employer Performance
Goal”). The Compensation Plan and Employer
Performance Goal will be established by the Board of Directors
within 60 days from the beginning of each Fiscal Year and will
be communicated to the Executive in writing within 30 days of
being so established. Incentive Compensation will
be paid to Executive no later than 2-1/2 months following the
close of the calendar year in which the Incentive Compensation
was earned; provided , however , if the Board of
Directors in its discretion determines that the Employer does
not have sufficient available cash to pay such amount on such
date, the Board of Directors may defer, without interest,
payment of any or all of such amount, to not later than
December 31 of the calendar year following the calendar year
in which the Incentive Compensation was earned.
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3.
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FACILITIES AND EXPENSES
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The
Employer will furnish the Executive office space, equipment,
supplies, and such other facilities and personnel as the
Employer deems necessary or appropriate for the performance of
the Executive’s duties under this
Agreement. The Employer will pay the
Executive’s dues in such professional societies and
organizations as the Board of Directors deems appropriate, and
will pay on behalf of the Executive (or reimburse the
Executive for) reasonable expenses incurred by the
Executive at the request of, or on behalf of, the Employer in
the performance of the Executive’s duties pursuant to
this Agreement, and in accordance with the Employer’s
employment policies, including reasonable expenses incurred by
the Executive in attending conventions, seminars, and other
business meetings, in appropriate business entertainment
activities, and for promotional expenses. The
Executive must file expense reports with respect to such
expenses in accordance with the Employer’s
policies.
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4.
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VACATIONS AND HOLIDAYS
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The
Executive will be entitled to four weeks’ paid vacation
each calendar year in accordance with the vacation policies of
the Employer in effect for its executive officers from time to
time. The Executive agrees to arrange his vacation
time with due regard for the circumstances and needs of the
Employer and to minimize disturbance of the Employer’s
operations. The Executive will also be entitled to
the paid holidays set forth in the Employer’s policies.
Any unused vacation days may be carried over to the subsequent
calendar year.
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5.1
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EVENTS OF TERMINATION
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(a)
Termination . The Employment
Period, the Executive’s Basic Compensation and Incentive
Compensation, and any and all other rights of the Executive under
this Agreement or otherwise as an employee of the Employer will
terminate (except as otherwise provided in this Section 5 or
in the Change of Control Agreement):
(i) upon
the death of the Executive;
(ii) upon
the disability of the Executive (as defined in
Section 5.2) for 120 consecutive days, or 180 days
during any twelve-month period, immediately upon notice from
either party to the other;
(iii) for
cause (as defined in Section 5.3), immediately upon
notice from the Employer to the Executive, or at such later
time as such notice may specify;
(iv) for
Good Reason (as defined in Section 5.4) upon not
less than thirty days’ prior notice from the Executive
to the Employer;
(v) without
cause immediately upon notice from either party to the other;
or
(vi) upon
the expiration of the Employment Period as provided in
Section 1.2.
(b)
Notice of Termination . Any
termination of the Executive’s employment by the Employer (or
its successor) or by the Executive (other than termination
based on the Executive’s death), pursuant to this Agreement,
shall be communicated by the terminating party in a written notice
to the other party hereto. Such written notice shall
(i) set forth the specific termination provision in this
Agreement relied upon, if applicable, (ii) set forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the
provision so indicated, and (iii) set forth the date the
Executive’s employment with the Employer shall
terminate.
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5.2
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DEFINITION OF DISABILITY
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The
Executive will be deemed to have a “disability”
if, for physical or mental reasons, the Executive is unable to
perform the essential functions of the Executive’s
duties under this Agreement, with or without reasonable
accommodation. The Executive shall be provided with
short term and long term disability benefits in accordance
with the terms of the Employer’s plans then in
effect.
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5.3
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DEFINITION OF “CAUSE”
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“Cause”
means: (a) an intentional act which materially injures
the Employer; (b) an intentional refusal or failure to
follow lawful and reasonable directions of the Board of
Directors or an individual to whom the Executive reports (as
appropriate); (c) a willful or habitual neglect of
duties; or (d) the conviction of, or the entering of a
guilty plea or plea of no contest by the Executive with
respect to, a felony involving an act of moral
turpitude.
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5.4
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DEFINITION OF “GOOD REASON”
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“Good
Reason” means the occurrence of any of the following
without the consent of the Executive: (a) a material
diminution of the Executive’s Salary; (b) a
material diminution in the Executive’s authority, duties
or responsibilities (including, without limitation, a
requirement that the Executive report to a corporate officer
rather than directly to the Board of Directors); (c) a
material change in the geographic location at which the
Executive works; provided that for purposes of this Agreement,
a “material change” is defined to mean a change in
the geographic location at which the Executive works which
increases the distance from his residence to such
location
by more than fifty (50) miles; or (d) a material breach
of this Agreement by the Employer; provided ,
however , that in no event shall a termination by the
Executive be deemed to have been for “Good Reason”
if (i) such termination occurs later than two years after
the initial existence of Good Reason; (ii) the Executive
fails to give the Employer written notice of the applicable
Good Reason event within 90 days after such event first occurs
or (iii) the Employer corrects such event in all material
respects within 30 days following its receipt of such written
notice from the Executive.
Effective
upon the termination of the Executive’s employment, the
Employer will be obligated to pay the Executive (or, in the
event of his death, his designated beneficiary as defined
below) only such compensation as is provided in this
Section 5.5, or, if applicable, as provided in the Change
of Control Agreement, and in lieu of all other amounts and in
settlement and complete release of all claims the Executive
may have against the Employer. If the Executive
receives payments under the Change of Control Agreement, then
he will not also receive payments under this Agreement in
connection with any termination of his employment which occurs
with respect to the Change of Control or within three (3)
months of the occurrence of the Change of Control; provided
that for any termination of his employment occurring on or
after the three (3)-month anniversary of the Change of
Control, the Executive shall be entitled to such compensation
as is provided in this Section 5.5. The Employer
may, as a condition to the Executive receiving any unvested
pay or benefits under this Section 5.5, require the
Executive to execute a release of all claims the Executive may
have against the Employer or its affiliates arising from the
Executive’s employment with the Employer or the
termination thereof in a form reasonably satisfactory to the
Employer. Except as set forth herein, all amounts
to be paid under this Section 5.5 shall be paid in equal
periodic installments according to the Employer’s
customary payroll practices, including without limitation any
payments of Incentive Compensation; provided ,
however , that the Executive’s Salary and
vacation accrued through the date termination is effective
shall be paid in accordance with California law.
For
purposes of this Section 5.5, the Executive’s
designated beneficiary will be such individual beneficiary or
trust, located at such address, as the Executive may designate
by notice to the Employer from time to time or, if the
Executive fails to give notice to the Employer of such a
beneficiary, the Executive’s
estate. Notwithstanding the preceding sentence, the
Employer will have no duty, in any circumstances, to attempt
to open an estate on behalf of the Executive, to determine
whether any beneficiary designated by the Executive is alive
or to ascertain the address of any such beneficiary, to
determine the existence of any trust, to determine whether any
person or entity purporting to act as the Executive’s
personal representative (or the trustee of a trust established
by the Executive) is duly authorized to act in that
capacity, or to locate or attempt to locate any beneficiary,
personal representative, or trustee.
(a)
Termination Without Cause or By the Executive for Good
Reason . If Employer terminates the
Executive’s employment without cause or the Executive
terminates his employment for Good Reason, the Employer will pay
the Executive (i) the Executive’s Salary for the
remainder, if any, of the calendar month in which such termination
is effective, and for an additional 12-month period, (ii) 100%
of the Executive’s Incentive Compensation for the Fiscal Year
during which the termination is effective and calculated assuming
that 100% of the targets
under
such bonus plans are achieved, (iii) accrued vacation
through the date of termination, and (iv) Incentive
Compensation accrued and unpaid from the previous Fiscal Year,
if any. In no event will payments under (i) and
(ii), above extend beyond 2-1/2 months following the close of
the calendar year in which termination under this paragraph
occurs, and payments will be accelerated, if necessary, to
prevent such 2-1/2 month period to be exceeded.
(b)
Termination by the Employer for Cause or Voluntarily by
the Executive . If the Employer terminates
the Executive’s employment for cause, or the Executive
voluntarily terminates his employment other than for Good Reason or
disability, the Employer will pay the Executive (i) his Salary
and accrued vacation through the date such termination is
effective, and (ii) accrued and unpaid Incentive Compensation,
if any, from the previous Fiscal Year and the then-current Fiscal
Year, but the Executive will only be entitled to Incentive
Compensation for the Fiscal Year during which such termination
occurs to the extent it has been earned ( i.e. targets have
been achieved) prior to such employment
termination.
(c)
Termination upon Disability
. Upon the disability of the Executive for 120
consecutive days, or 180 days during any twelve-month period, the
Executive’s employment may be terminated by either party, and
upon such termination the Employer will pay the Executive
(i) that part of the Executive’s Incentive Compensation,
if any, for the Fiscal Year during which the disability occurs,
prorated through the end of the calendar month during which the
disability is deemed to have occurred under Section 5.2, as
described in Section 5.5(f), (ii) accrued vacation
through the date of termination, (iii) accrued and unpaid
Incentive Compensation, if any, from the previous Fiscal Year, and
(iv) his Salary through the date such termination is
effective, subject to an offset for any Salary payments made or
disability insurance benefits received pursuant to
Section 6.1. Payments under (i) above will be made
no later than 2-1/2 months following the close of the calendar year
in which termination under this paragraph occurs, and payments will
be accelerated, if necessary, to prevent such 2-1/2 month period to
be exceeded.
(d)
Termination upon Death
. If Executive’s employment is
terminated because of the Executive’s death, the Employer
will pay the Executive’s designated beneficiary (i) the
Executive’s Salary through the end of the calendar month in
which his death occurs, (ii) accrued vacation through the date
of termination, (iii) accrued and unpaid Incentive
Compensation, if any, from the previous Fiscal Year, and
(iv) that part of the Executive’s Incentive
Compensation, if any, for the Fiscal Year during which his death
occurs, prorated through the end of the calendar month during which
his death occurs, as described in Section 5.5(f), and
calculated assuming that 100% of the targets under such bonus plans
are achieved.
(e) Benefits.
(i) If
the Executive’s employment hereunder is terminated by
the Employer without cause or by the Executive for Good
Reason, then the Employer will provide and pay for continued
medical, dental, life, and disability insurance coverage for
the Executive and the Executive’s dependents on the same
terms as in effect at the time of termination of the
Executive’s employment, including general premium
increases, for the period from the date of termination until
the Executive obtains replacement coverage
through
other employment, or for a period of 12 months after such
employment termination, whichever is less.
(ii) If
the Executive’s employment hereunder is terminated by
death or disability, then the Employer will provide and pay
for continued medical and dental coverage for the Executive,
if applicable, and the Executive’s dependents, on the
same terms as in effect at the time of termination of the
Executive’s employment, including general premium
increases, for a period of 90 days after the effective date of
termination. If such coverage is pursuant to COBRA, the
Employer’s obligations hereunder will be contingent upon
the Executive or his dependents, as applicable, executing all
documents required to obtain such coverage.
(iii) Except
as set forth in this Section 5.5(e), the
Executive’s accrual of, or participation in plans
providing for, the Benefits will cease at the effective date
of the termination of his employment, and the
Executive will be entitled to accrued Benefits pursuant to
such plans only as provided in such plans.
(f)
Incentive Compensation . That
portion of the Executive’s Incentive Compensation to be paid
pursuant to subsections (c)(i) or (d)(iv) above shall be
paid only if the Employer Performance Goal is met for the Fiscal
Year during which the termination is effective. If such
Employer Performance Goal is met during such Fiscal Year, then the
amount due shall be paid no later than March 15 of the following
Fiscal Year. Notwithstanding the foregoing, if the Board
of Directors in its discretion determines that the Employer does
not have sufficient available cash to pay such amount on such date,
the Board of Directors may defer, without interest, payment of any
or all of such amount, to not later than December 31 of the Fiscal
Year following the Fiscal Year in which the Incentive Compensation
was earned; provided , however , that payments to the
Executive may only be deferred if and to the extent
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