Exhibit 10.21

 

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RETENTION BONUS AGREEMENT

 

This Retention Bonus Agreement (this “Agreement”) is made this 4th day of June,
2019, by and between Iteris, Inc., a Delaware corporation (the “Company”), and
Jim Chambers (“Executive”).

 

WHEREAS, the Company wishes to recognize Executive’s contributions to the
Company and its business, and to incentivize Executive’s continued employment
with, and efforts on behalf of, the Company by offering Executive a special
retention bonus as an incentive for Executive to remain employed with the
Company through the date specified herein.

 

NOW, THEREFORE, in consideration of Executive’s services to the Company and the
mutual promises and covenants contained in this Agreement, Executive and the
Company agree as follows.

 

1.                                   Retention Bonus.  If Executive remains
employed by the Company through June 4, 2021, the Company will pay Executive a
bonus in the gross amount of $426,000 (the “Retention Bonus”) in a lump in the
Company’s first regularly-scheduled payday following such date.  Except as
provided in the next sentence, if Executive fails to remain employed by the
Company through June 4, 2021, Executive will not earn or receive any portion of
the Retention Bonus.  If Executive’s employment with the Company is terminated
by the Company without Cause or by the Executive for Good Reason, then Executive
will receive the Retention Bonus on the Company’s first regularly scheduled pay
day following the date of such termination, subject to the provisions of
Section 3(c) below.

 

2.                                   Definitions.  As used herein, the following
terms have the meanings provided below.

 

(a)                             “Board” means the Company’s board of directors.

 

(b)                            “Cause” means (i) Executive’s misappropriation of
the Company’s funds or property, or any attempt by Executive to secure any
personal  profit related to the business or business opportunities of the
Company without the informed, written approval of the Audit Committee of the
Board; (ii) any unauthorized use or disclosure by Executive of confidential
information or trade secrets of the Company (or any affiliate of the Company);
(iii) Executive’s gross negligence or reckless misconduct in the performance of
Executive’s duties; (iv) Executive’s willful failure to comply with any valid
and legal directive of the Board or the person to whom Executive reports;
(v) Executive’s conviction of, or plea of nolo contendre to, any felony or
misdemeanor involving moral turpitude or fraud, or of any other crime involving
material harm to the standing or reputation of the Company; (vi) any other
willful misconduct by Executive that the Board determines in good faith has had
a material adverse effect upon

 

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the business or reputation of the Company; or (vii) any other material breach or
violation by Executive of any employment agreement with the Company or any other
material written policy of the Company; provided, however, that the Company
shall have provided Executive with written notice that such breach or violation
has occurred, and Executive has been afforded at least ten (10) business days to
cure such breach or violation.  Notwithstanding the foregoing, (A) the cure
period shall not apply to violations of the Company’s code of conduct, code of
ethics or prohibition against unlawful harassment, and (B) such cure period
shall only apply to breaches, violations, failures or neglect that in the
Board’s sole judgment are capable of or amenable to such cure.  Notwithstanding
the foregoing, prong (ii) of this definition is not intended to, and shall be
interpreted in a manner that does not, limit or restrict Executive from
exercising any legally protected whistleblower rights (including pursuant to
Rule 21F under the Securities Exchange Act of 1934).

 

(c)                             “Code” means the Internal Revenue Code of 1986,
as the same may be amended from time to time.

 

(d)                            “Good Reason” shall mean Executive’s voluntary
resignation from the Company upon any of the following events without
Executive’s written consent: (i) a material reduction in Executive’s authority,
duties or responsibilities (and not simply a change in title or reporting
relationships); (ii) a material reduction in Executive’s base salary (for the
avoidance of doubt, a greater than ten (10%) percent reduction in the level of
base salary shall constitute a material reduction in Executive’s compensation,
unless the reduction is part of a Company-wide reduction that affects all
similarly situated employees in substantially the same proportion; (iii) a
relocation of Executive’s principal place of work to a location that would
increase Executive’s one-way commute from his or her personal residence to the
new principal place of work by more than fifty (50) miles; or (iv) any breach by
the Company of its obligations under any employment agreement with Executive
that results in a material negative change to Executive.  Notwithstanding the
foregoing, “Good Reason” shall only be found to exist if Executive provides
written notice (each, a “Good Reason Notice”) to the Company identifying and
describing the event resulting in Good Reason within ninety (90) days of the
initial existence of such event, the Company does not cure such event  within
thirty (30) days following receipt of the Good Reason Notice from Executive and
Executive terminates his or her employment during the ninety (90)-day period
after Executive’s delivery of the Good Reason Notice. If Executive does not
terminate his or her employment for Good Reason within 90 days after delivery of
the Good Reason Notice, then Executive will be deemed to have waived his or her
right to terminate for Good Reason with respect to such grounds.

 

(e)                             “Section 409A” means section 409A of the Code
and the regulations and other guidance promulgated thereunder and any state law
of similar effect.

 

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3.                                   Tax Matters.

 

(a)                             The Company may withhold from any amounts
payable under this Agreement, such federal, state and local taxes as the Company
determines are required to be withheld pursuant to any applicable law. 
Executive agrees that he/she will be solely responsible for any taxes that may
be due and owing by Executive as a result of any payment of monies under this
Agreement.  Executive has not relied on any no representations of the Company
regarding the tax treatment of any payments provided pursuant to this Agreement
and is encouraged to seek his or her own personal tax advice.

 

(b)                            The parties acknowledge and agree that all
benefits or payments provided by the Company to Executive pursuant to this
Agreement are intended either to be exempt from the provisions of Section 409A,
or to be in compliance with Section 409A, and the Agreement shall be interpreted
to the greatest extent possible to be so exempt or in compliance.  Without
limiting the generality of the preceding sentence, the parties intend that
payments set forth in this Agreement satisfy, to the greatest extent possible,
the exemption from the application of Section 409A provided under Treasury
Regulation Section 1.409A-1(b)(4).  If there is an ambiguity in the language of
the Agreement, or if Section 409A guidance indicates that a change to the
Agreement is required or desirable to achieve exemption or compliance with
Section 409A, Company and Executive agree to renegotiate in good faith to
clarify the ambiguity or make such change.  Notwithstanding the foregoing, the
Company makes no representations that the payments and benefits provided under
this Agreement comply with Section 409A and in no event shall the Company be
liable for all or any portion of any taxes, penalties, interest, or other
expenses that may be incurred by the Executive on account of non-compliance with
Section 409A.

 

(c)                             To the extent any payment hereunder due upon the
occurrence of Executive’s termination of employment constitutes deferred
compensation that is subject to Section 409A, and is not otherwise exempt from
complying with the provisions of Section 409A, then such payment(s) will not
commence unless and until Executive has also incurred a “separation from
service” as such term is defined in Treasury Regulation Section 1.409A-1(h).  If
the Company determines that to the extent any payment hereunder constitutes
“deferred compensation” under Section 409A and Executive is, on the termination
of his or her employment, a “specified employee” of the Company or any successor
entity thereto, as such term is defined in Section 409A, then, solely to the
extent necessary to avoid the incurrence of the adverse personal tax
consequences under Section 409A, the timing of such payment will be delayed
until the earlier to occur of: (i) the date that is six months and one day after
Executive’s separation from service, or (ii) the date of Executive’s death.

 

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(d)                            Notwithstanding any other provision of this
Agreement to the contrary, if any payment or benefit provided or to be provided
by the Company to Executive or for Executive’s benefit pursuant to the terms of
this Agreement or otherwise (“Covered Payments”) constitute parachute payments
(“Parachute Payments”) within the meaning of the Code and would, but for this
Section 3(d) be subject to the excise tax imposed under Section 4999 of the Code
(or any successor provision thereto) or any similar tax imposed by state or
local law or any interest or penalties with respect to such taxes (collectively,
the “Excise Tax”), then prior to making the Covered Payments, a calculation
shall be made comparing (i) the Net Benefit (as defined below) to the Executive
of the Covered Payments after payment of the Excise Tax to (ii) the Net Benefit
to the Executive if the Covered Payments are limited to the extent necessary to
avoid being subject to the Excise Tax. Only if the amount calculated under
clause (i) above is less than the amount under clause (ii) above will the
Covered Payments be reduced to the minimum extent necessary to ensure that no
portion of the Covered Payments is subject to the Excise Tax (that amount, the
“Reduced Amount”).  As used herein, “Net Benefit” shall mean the present value
of the Covered Payments net of all federal, state, local, foreign income,
employment and excise taxes.  Any such reduction shall be made in accordance
with Section 409A.  Any determination required under this Section 3(d) shall be
made in writing in good faith by the accounting firm that was the Company’s
independent auditor immediately before the Divestiture (the “Accountants”) which
shall provide detailed supporting calculations to the Company and the Executive
as requested by the Company or the Executive.  The Company and the Executive
shall provide the Accountants with such information and documents as the
Accountants may reasonably request in order to make a determination under this
Section 3(d). For purposes of making the calculations and determinations
required by this Section 3(d), the Accountants may rely on reasonable, good
faith assumptions and approximations concerning the application of Section 280G
and Section 4999 of the Code.  The Accountants’ determinations shall be final
and binding on the Company and the Executive.

 

4.                                   Continued Services.  Nothing in this
Agreement confers on Executive any right to continue in the service of the
Company for any period of time or restricts in any way the right of the Company
or Executive to terminate Executive’s services relationship with the Company at
any time.

 

5.                                   Miscellaneous Provisions.

 

(a)                             Entire Agreement.  This Agreement constitutes
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements (whether written or oral and whether
express or implied) between the parties to the extent related to such subject
matter.

 

(b)                            Successors and Assigns.  This Agreement will be
binding upon and inure to the benefit of the parties and their respective
successors, permitted assigns and, in the case of Executive, heirs, executors,
and/or personal representatives.  Executive may not assign, delegate or
otherwise transfer any of Executive’s rights, interests or obligations in this
Agreement without the prior written approval of the Company.

 

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(c)                             Notices.  Any notice pursuant to this Agreement
must be in writing and will be deemed effectively given to the other party on
(i) the date it is actually delivered by personal delivery of such notice in
person; (ii) one business day after its deposit for overnight delivery in the
custody of a reputable overnight courier service (such as FedEx); or (iii) three
business days after the date it is mailed by certified mail, return receipt
requested, postage prepaid; in the case of Executive, to his/her most recent
address as shown in the records of the Company, and in the case of the Company,
to its then-current corporate headquarters, addressed to the attention of the
Chief Executive Officer.

 

(d)                            Severability.  Each provision of this Agreement
is severable from every other provision of this Agreement.  Any provision of
this Agreement that is determined by any court of competent jurisdiction to be
invalid or unenforceable will not affect the validity or enforceability of any
other provision hereof or the invalid or unenforceable provision in any other
situation or in any other jurisdiction.  Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.

 

(e)                             Governing Law.  This Agreement will be governed
by and construed in accordance with the laws of the State of California, without
regard to that body of law known as choice of law.

 

(f)                                 Amendments and Waivers.  No amendment of any
provision of this Agreement will be valid unless the amendment is in writing and
signed by the Company and Executive.  No waiver of any provision of this
Agreement will be valid unless the waiver is in writing and signed by the
waiving party.  The failure of a party at any time to require performance of any
provision of this Agreement will not affect such party’s rights at a later time
to enforce such provision.  No waiver by a party of any breach of this Agreement
will be deemed to extend to any other breach hereunder or affect in any way any
rights arising by virtue of any other breach.

 

(g)                            Construction.  The section headings in this
Agreement are inserted for convenience only and are not intended to affect the
interpretation of this Agreement.  The word “including” in this Agreement means
“including without limitation.”  All words in this Agreement will be construed
to be of such gender or number as the circumstances require.

 

(h)                            Counterparts.  This Agreement may be executed in
two or more counterparts, each of which will be deemed an original and all of
which will be part of the same Agreement.  Facsimile or PDF reproductions of
original signatures will be deemed binding for the purpose of the execution of
this Agreement.

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.

 

EXECUTIVE:

 

COMPANY:

 

 

 

 

 

Iteris, Inc.

 

 

 

 

 

 

 

 

 

/s/ Jim Chambers

 

By:

/s/ Jeff McDermott

Jim Chambers

 

 

Jeff McDermott

Sr. VP and GM, AWA

 

 

Sr. VP Human Resources

 

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