Exhibit 10.23

 

Private and Confidential

 

 

October 5, 2001

 

Sandra Escher

 

 

Dear Sandra,

 

SGI will provide you with a $280,000 forgiveable loan.  The loan will be funded
in October 2001, within five business days of signature of this letter, and will
be forgiven over a two year period at the rate of $35,000 at the end of each
three month period starting with the three months ended December 31, 2001,
provided you are actively employed by SGI   at those dates. You will be
responsible for any taxation that results from  the forgiveness of the principal
amount of the loan.  Should you voluntarily terminate your employment prior to
the loan being fully forgiven, you agree to repay SGI within 30 days, on a
pro-rated basis, the portion of the loan that has not been forgiven. This loan
will also be forgiven in full if you die or your employment with  SGI is
terminated due to your becoming physically or mentally disabled.  The unpaid
principal amount of the loan shall not bear interest.  To the extent you are
subject to income tax as a result of the interest-free nature of the loan, SGI
will pay you an amount (the “Gross Up Amount”) such that after payment by you of
all federal, state and local taxes (including any interest or penalties imposed
with respect to such taxes) on the Gross Up Amount will equal the amount of
income tax attributable to the imputed interest in accordance with Section 7872
of the Internal Revenue Code of 1986, as amended, and any relevant state or
local taxes.  SGI will require any successor or assignee, in connection with any
sale, transfer or other disposition of all or substantially all of SGI’s assets
or business, whether by purchase, merger, consolidation or otherwise, expressly
to assume and agree to perform SGI’s obligation with respect to the forgiveable
loan in the same manner and to the same extent that SGI would be required to
perform if no such succession or assignment had taken place.  The loan will be
forgiven in full if it is not assumed as provided in this paragraph.

 

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The loan will also be forgiven in full if: (i) a receiver, trustee, liquidator
or custodian is appointed on behalf of SGI or a substantial part of its
property, (ii) SGI makes a general assignment for the benefit of its creditors,
(iii) SGI is dissolved or liquidated in full or in part, or (iv) a case or other
proceeding seeking liquidation, reorganization or other relief with respect to
SGI or its debts is commenced under any bankruptcy, insolvency or other similar
law now or hereafter in effect; provided that in connection with a voluntary or
involuntary SGI Chapter 11 Case, the loan will be forgiven in full if (x) you
resign not less than 6 months following the commencement of such Chapter 11 Case
and not more than 6 months after a plan of reorganization is confirmed by the
Bankruptcy Court or (y) SGI or any designated responsible person or entity
acting on behalf of SGI or its assets terminates your employment for any reason
other than Cause (defined below).

 

“Cause” means that you are terminated for one of the following reasons: (i)
willfully refusing or failing to carry out specific directions of the Board of
Directors or the Chief Executive Officer of SGI; (ii) for acting fraudulently or
with willful dishonesty in your relations with SGI; (iii) for committing
larceny, embezzlement, conversion or any act involving the misappropriation of
funds from SGI in the course of your employment; (iv) for having been convicted
of a crime involving an act of moral turpitude, fraud or misrepresentation; or
(v) for willfully engaging in misconduct which materially injured the
reputation, business or business relationship of SGI.  No act, or failure to
act, by you will be considered “willful” if done, or omitted to be done, by you
in good faith and in your reasonable belief that your act or omission was in the
best interests of SGI or required by applicable law.

 

In the event of any dispute, claim, question, or disagreement arising out of or
relating to the loan, we agree to first use our best efforts to settle such
matters in an amicable manner.  Initially, we will consult and negotiate with
each other, in good faith and, recognizing our mutual interests, attempt to
reach a just and equitable solution satisfactory to both of us.  If we do not
reach a resolution within sixty days, either of us may notify the other in
writing that the unresolved dispute, claim or differences are being submitted to
confidential mediation in Santa Clara County, CA by a mutually agreed upon
mediator.  Either one of us may apply to any court having jurisdiction over this
agreement to seek injunctive relief to maintain the status quo until the
mediation is concluded or the controversy

 

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is otherwise resolved.  Each of us will each bear its own costs and expenses and
an equal share of the mediators’ and any similar administrative fees.

 

If any dispute is finally determined in your favor through a judicial
proceeding, SGI will reimburse all reasonable fees and expenses, including
attorneys’ and consultants’ fees, that you incur in good faith in connection
therewith.  If the dispute involves an amount to be paid, SGI will reimburse
such fees to the extent you received half or more of the amount in dispute.

 

This letter agreement will be governed by and construed in accordance with the
laws of the State of California applicable to agreements made and to be
performed entirely within such state.

 

Sincerely,

 

 

/s/  BOB BISHOP

 

Bob Bishop

Chief Executive Officer

 

 

Accepted:

 

 

 

 

 

/s/  SANDRA ESCHER

 

 

 

Sandra Escher

 

Today’s Date

 

 

Please return signed letter to Larry Hicks

 

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