Exhibit 10.1

 

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CHIEF FINANCIAL OFFICER

EMPLOYMENT AGREEMENT

 

This Chief Financial Officer Employment Release Agreement (this "Agreement") is
entered into as of July 27, 2018 (the "Effective Date"), by and among the
Company, as defined herein, and Charles Njuguna (the "Executive").

 

WITNESSETH:

 

WHEREAS, the Company has determined that it is in its best interests and those
of its shareholders to retain the Executive;

 

WHEREAS, the Company desires to employ the Executive on the terms set forth
below to provide services to the Company and its affiliated companies, and the
Executive is willing to accept such employment and provide such services on the
terms set forth in this Agreement;

 

WHEREAS, the Company and the Executive desire to enter into this Agreement,
which has been drafted to comply with or be exempt from Section 409A of the
Internal Revenue Code of 1986, as amended; and

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties hereto do hereby agree as follows:

 

1.       Certain Definitions.

 

1.1       "Accrued Obligation" means the sum of (x) the Executive's Annual Base
Salary through the Date of Termination for periods through but not following his
Separation From Service and (y) any accrued vacation pay earned by the Executive
subject to any applicable Company policies on carryover of accrued vacation pay,
and in each case, to the extent not theretofore paid.

 

1.2       "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act.

 

1.3       "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.

 

1.4       "Benefit Obligation" shall mean all benefits to which the Executive
(or his designated beneficiary or legal representative, as applicable) is
entitled or has become vested (or becomes entitled or vested as a result of
termination) under the terms of all employee benefit and compensation plans,
agreements and arrangements (collectively, "Benefit Plans") in which the
Executive is a participant as of the Date of Termination.

 

1.5       "Board" shall mean the Board of Directors of the Company.

 

1.6       "Cause" shall mean:

 

1.6.1       the Executive seeking federal bankruptcy protection, and, in the
view of the Board such action reflects negatively upon the reputation and
standing of the Company;

 

1.6.2       the Executive commits an action which may subject Company to legal
liability, including but not limited to commission of acts which violate: (a)
the Americans with Disabilities Act of 1990, as amended; (b) Title VII of the
Civil Rights Act of 1964, as amended and including 42 U.S.C. Sec 2000(e) et
seq.; (c) the Civil Rights Act of 1991; (d) The Civil Rights Acts of 1866, 1871
and 1964, as amended; (e) 42 U.S.C. Sec 1981; (f) the Age Discrimination in
Employment Act of 1967, as amended; (g) the Texas Commission on Human Rights Act
of 1983, as amended; or other law;

 

1.6.3       the Executive develops a drug or alcohol problem which the Company
deems to materially affect its reputation or which the Executive fails or
refuses to treat and end within a reasonable period of time upon request of the
Board;

 

1.6.4       the continued failure of the Executive to substantially perform the
Executive's duties with the Company (other than any such failure resulting from
incapacity due to physical or mental illness), which such failure continues or
remains uncorrected for 30 days after a written Notice of Termination; or

 

 

 

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1.6.5       engaging in conduct amounting to fraud, dishonesty, gross
negligence, willful misconduct or conduct that is unprofessional, unethical, or
detrimental to the reputation, character and standing of Company;

 

1.6.6       failure to abide by the terms of this Agreement or any policy,
procedure or directive of Company as established and revised from time to time;

 

1.6.7       a judicial determination that Executive has engaged in illegal
conduct or gross misconduct which is materially and demonstrably injurious to
the Company; or

 

1.6.8       any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or upon the instructions of the Chief
Executive Officer or of a more senior officer of the Company to Executive or
based upon the advice of counsel for the Company (which may be counsel employed
by the Company or its subsidiaries).

 

1.7       "Change of Control" shall be deemed to have occurred if any event set
forth in any one of the following Sections shall have occurred:

 

1.7.1       any Person is or becomes the Beneficial Owner, directly or
indirectly, of 30% or more of either (a) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Shares") or (b) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"), excluding any Person who becomes such a Beneficial
Owner in connection with the issuance of equity securities directly by Company
to such Person in a Board approved equity financing or otherwise in connection
with a transaction that complies with clauses (a) and (b) of Section 1.7.3
below;

 

1.7.2       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, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the Incumbent
Board (including in connection with an equity financing by the Company or in
connection with preparing for a listing of Company equity securities on a
national stock exchange) shall be considered as though such individual was 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 any other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board;

 

1.7.3       the consummation of a reorganization, merger, amalgamation,
consolidation, scheme of arrangement, exchange offer or similar transaction of
the Company or any of its subsidiaries or the sale, transfer or other
disposition of all or substantially all of the Company's Assets (each, a
"Business Combination"), unless, following such Business Transaction or series
of related Business Transactions, as the case may be, (a) individuals and
entities (which, for purposes of this Agreement, shall include, without
limitation, any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business
entity) who were the beneficial owners, respectively, of more than 50% of,
respectively, the Outstanding Company Common Shares and Outstanding Company
Voting Securities immediately prior to such Business Transaction beneficially
own, directly or indirectly, more than 50% of, respectively, the then
outstanding common shares and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors (or
other governing body), as the case may be, of the entity resulting from such
Business Transaction (including, without limitation, an entity which as a result
of such transaction owns the Company or all or substantially all of the
Company's Assets either directly or through one or more subsidiaries or
entities), as the case may be, (b) no person (excluding any entity resulting
from such Business Transaction or any employee benefit plan (or related trust)
of the Company or such entity resulting from such Business Transaction)
beneficially owns, directly or indirectly, 25% or more of, respectively, then
the outstanding shares of common stock of the entity resulting from such
Business Transaction or the combined voting power of the then outstanding voting
securities of such entity except to the extent that such ownership existed prior
to the Business Transaction, and (c) at least a majority of the members of the
board of directors (or other governing body) of the entity resulting from such
Business Transaction were members of the Incumbent Board at the time of the
approval of such Business Transaction; or

 

1.7.4       approval or adoption by the Board of Directors or the shareholders
of the Company of a plan or proposal which would result directly or indirectly
in the liquidation, transfer, sale or other disposal of all or substantially all
of the Company's Assets or the dissolution of the Company.

 

 

 

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1.8       "Company" shall mean Deep Down, Inc., a Nevada corporation, or any
successor thereto, including (but not limited to) any Entity into which Deep
Down, Inc. is merged, consolidated or amalgamated, or any Entity otherwise
resulting from a Business Transaction.

 

1.9       "Company's Assets" shall mean the assets (of any kind) owned by the
Company, including (but not limited to) the securities of the Company's
Subsidiaries and any of the assets owned by the Company's Subsidiaries.

 

1.10       “Competition” shall mean engaging in, or otherwise directly or
indirectly being employed by or acting as a consultant or lender to, or being a
director, officer, employee, principal, agent, stockholder, member, owner or
partner of, or permitting his name to be used in connection with the activities
of any other business or organization which competes, directly or indirectly,
with the business of the Company as the same shall be constituted at any time
during the Term.

 

1.11       “Confidential Information” shall mean Company’s or Company’s
affiliate’s information which is used in the Company’s business and is (a)
proprietary to, about or created by the Company; (b) gives Company some
competitive business advantage or the opportunity of obtaining such advantage or
the disclosure of which could be detrimental to the interests of Company; (c)
designated as Confidential Information by Company, or from all the relevant
circumstances should reasonably be assumed by the Executive to be confidential
and proprietary to Company; or (d) not generally known by persons or businesses
outside of Company. Such Confidential Information includes, but is not limited
to, the following types of information and other information of a similar nature
(whether or not reduced to writing or designated as confidential):

 

1.11.1       Work Product. Means product or information resulting from or
related to work or projects performed or to be performed for Company;

 

1.11.2       Other Proprietary Information. Executive is aware of and
acknowledges that Company has developed special competence and knowledge in the
subsea oilfield service industry and has accumulated information not generally
known to others in the field which is of unique value in the conduct and growth
of Company’s business and which Company treats as proprietary. This information
includes data relating to Company’s proprietary rights prior to any public
disclosure thereof, including but not limited to the nature of the proprietary
rights, production data, the status and details of research and development of
products and services, and information regarding acquiring, protecting,
enforcing and licensing proprietary rights (including patents, copyrights and
trade secrets);

 

1.11.3       Third-Party Information. Confidential or proprietary information
from third parties subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes;

 

1.11.4       Business Operations. Internal personnel and financial information,
vendor names and other vendor information (including vendor characteristics,
services and agreements), purchasing and internal cost information, internal
services and operational manuals, and the manner and methods of conducting
Company’s business;

 

1.11.5       Marketing and Development Operations. Marketing and development
plans, price and cost data, price and fee amounts, pricing and billing policies,
quoting procedures, marketing techniques and methods of obtaining business,
forecasts and forecast assumptions and volumes, and future plans and potential
strategies of Company which have been or are being discussed; and

 

1.11.6       Clients. Names of Company clients and their representatives,
contracts and their contents and parties, customer services, and data provided
by clients.

 

1.12           "Date of Termination" shall mean the date of last employment for
Executive as identified in the Notice of Termination which shall be in
compliance with the applicable provision of Section 4 setting the minimum
required notice period for termination of the Agreement by Executive or Company.

 

1.13           "Disability" shall mean the absence of the Executive from
performance of the Executive's duties with the Company on a substantial basis
for 120 consecutive or non-consecutive calendar days or more within any 12-month
period as a result of incapacity due to mental or physical illness.

 

 

 

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1.14          "Employment Period" shall mean the period commencing on the
Effective Date and ending on October 1, 2020; provided, however, that commencing
on October 1, 2020, and on each annual anniversary of such date (such date and
each annual anniversary thereof shall be hereinafter referred to as the "Renewal
Date"), unless previously terminated, the Employment Period shall be
automatically extended for an additional annual period(s) (until the next annual
anniversary of October 1 of the following year), unless, at least 90 days prior
to the applicable Renewal Date, the Company or Executive shall give notice to
the other that the Employment Period shall not be so extended.

 

1.15          "Entity" shall mean any corporation, partnership, association,
joint-stock company, limited-liability company, trust, unincorporated
organization or other business entity.

 

1.16          "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

 

1.17           "Good Reason" shall mean the occurrence of any of the following:

 

1.17.1      except as provided herein regarding a Change of Control, the
assignment to the Executive of any position, authority, duties or
responsibilities that are not materially consistent with the Executive's
position (including status, offices and titles), authority, duties or
responsibilities as contemplated by Section 3.1 of this Agreement, or any other
action by the Company which results in a material diminution in such position,
authority, duties or responsibilities, excluding for this purpose any action not
taken in bad faith and which is remedied by the Company after receipt of notice
thereof given by the Executive;

 

1.17.2      any material failure by the Company to comply with any of the
material provisions of this Agreement (including, without limitation, its
obligations under Section 3.1) or any other agreements between the Executive and
the Company, which is not cured within 30 days of the Notice of Termination
provided by Executive;

 

1.17.3       any material reduction to Executive's Annual Base Salary (as such
term is defined in Section 3.2) or Executive's bonus, retirement, pension,
savings, life insurance, medical, health and accident, or disability plans,
which is not cured within 30 days of the Notice of Termination provided by
Executive;

 

1.17.4      the Company's requiring the Executive to be based at any office or
location other than as provided in Section 3.1 hereof; and

 

1.17.5      the failure of Executive and Company to mutually agree to the
criteria, terms and conditions for calculation of the Annual Bonus (as defined
in Section 3.2.2) within 30 days after the date such criteria are communicated
to Executive.

 

In the event of a Change of Control or other Business Transaction, following the
Change of Control or the consummation of such other Business Transaction, "Good
Reason" shall be deemed to exist in the event Executive is assigned to any
position, authority, duties or responsibilities that are (a) not at or with the
ultimate parent company of the successor to the Company or the Entity surviving
or resulting from such Business Transaction, or (b) materially inconsistent with
the Executive's position (including status, offices, titles and excluding
Executive's reporting requirements), authority, duties or responsibilities as
contemplated by Section 3.1.

 

1.18          “Intellectual Property” shall mean all inventions, original works
of authorship, developments, concepts, know-how, formulae, methods, and
trademarks of any kind whatsoever, individually or jointly created, conceived,
developed or reduced to practice, which are original creations or improvements
upon existing inventions, works, or marks, regardless of whether patentable or
registerable under any law, that Executive creates, conceives, develops or
reduces to practice after entering this Agreement (whether or not created,
conceived, developed, or reduced to practice during work hours) that: (a) are
developed using equipment, supplies, facilities, or trade secrets of the
Company; (b) result at least in part from work performed by Executive for
Company or know-how obtained working for the Company; or (c) relate to the
Company’s current or anticipated research and development. Intellectual Property
specifically does not include Prior Intellectual Property.

 

 

 

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1.19          "IRS" shall mean the Internal Revenue Service.

 

1.20           "Notice of Termination" shall mean a written notice which: (a)
indicates the specific termination provision in this Agreement relied upon, (b)
to the extent applicable, sets 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, (c) the Date of Termination, and
(d) whether the Company invokes Section 4.6 for all or a portion of the
remainder of Executive’s employment in the event of termination by Executive.

 

1.21           "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (a) the Company or any of its Subsidiaries,
(b) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its Affiliates, (c) an underwriter temporarily
holding securities pursuant to an offering by the Company of such securities, or
(d) a corporation or other Entity owned, directly or indirectly, by the
shareholders of the Company in the same proportions as their ownership of
Outstanding Company Common Shares.

 

1.22           “Prior Intellectual Property” shall mean all inventions, original
works of authorship and trademarks of any kind whatsoever, which Executive
created, owned or had any right to, or currently owns or has any right
whatsoever to prior to entering this Agreement.

 

1.23        "Restricted Period" shall mean the period of Executive’s employment
and a period of 24 months following the Date of Termination of Executive’s
employment with Company.

 

1.24        "Section 409A" means Section 409A of the Internal Revenue Code of
1986, as amended.

 

1.25        "Section 409A Amounts" means those amounts that are deferred
compensation subject to Section 409A.

 

1.26        "Separation From Service" shall have the meaning ascribed to such
term in Section 409A.

 

1.27        "Specified Executive" means a person who is a "specified employee"
within the meaning of Section 409A.

 

1.28        "Subsidiary" shall mean any majority-owned subsidiary of the Company
or any majority-owned subsidiary thereof, or any other Entity in which the
Company owns, directly or indirectly, a majority of the economic interest
therein.

 

1.29        "Waiting Period" shall mean the six-month period commencing on the
date after the Executive's Separation From Service.

 

2.       Employment Period. The Company and Executive hereby agree that unless
this Agreement is earlier terminated as provided for herein, the Company will
continue to employ Executive throughout the Employment Period.

 

3.       Terms of Employment.

 

3.1            Position and Duties.

 

3.1.1         During the Employment Period, the Executive's position (including
status, offices, titles, authority, duties and responsibilities) shall be Chief
Financial Officer of the Company. The Executive’s services shall be performed at
the location where the Company operates.

 

3.1.2         During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote Executive’s full attention and time during normal business hours for a
similarly situated executive to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it shall not be
a violation of this Agreement for the Executive to (a) serve on corporate, civic
or charitable boards or committees, (b) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (c) manage personal
investments, so long as such activities in clause (a), (b), and (c) together do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this Agreement
or otherwise negatively impact the good will of the Company as viewed in the
eyes of the Board. It is expressly understood and agreed that to the extent that
such activities have been conducted by the Executive prior to the date hereof,
and are listed on Exhibit “A”, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
date hereof shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company.

 

 

 

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3.2            Compensation.

 

3.2.1         Base Salary. During the Employment Period, the Executive shall
receive an annualized base salary (the "Annual Base Salary") of $250,000.00
during the first year of the Agreement, and not less than the base salary the
Executive earned during the prior 12-month period at any time thereafter,
including any portion of the salary paid to Executive which was earned but
deferred. Such Annual Base Salary shall be paid in not less than 12 monthly
installments according to the regular payroll practices of the Company. During
the Employment Period, the Annual Base Salary shall be reviewed for possible
increase at least once every 12 months. Any increase in the Annual Base Salary
may not serve to limit or reduce any other obligation to the Executive under
this Agreement. The Annual Base Salary shall not be reduced after any such
increase and the Annual Base Salary as utilized in this Agreement shall refer to
the Annual Base Salary as so increased.

 

3.2.2         Annual Bonus. Beginning in 2018, the Executive shall be eligible
to earn a cash bonus payment each fiscal year under this Agreement the (“Annual
Bonus Payment”). The Annual Bonus Payment shall be calculated based upon
achievement of a target financial objective set by the Board’s Compensation
Committee within three months of the beginning of each fiscal year thereafter.
Such Annual Bonus Payment shall be based upon the target financial objective for
the Company as compared to EBITDA for the prior fiscal year.

 

3.2.2.1       If the Board subsequently determines the financial statements of
the Company must be materially restated for any fiscal year involved in the
determination of the Annual Bonus Payment, the Executive may be required to
repay any portion of the Annual Bonus Payment in excess of what Executive’s
Annual Bonus Payment would be under the restated financial statements.
Conversely, if Executive would be entitled to a larger Annual Bonus Payment
under the restated financial statements, the Company shall pay to Executive the
difference between what the Executive has previously been paid and what the
Executive would have earned under the restated financial statements.

 

3.2.2.2       For purposes of the determination of the Annual Bonus Payment,
EBITDA shall be defined as follows: The net income (loss) of the Company plus
interest expense-net, income taxes, depreciation and amortization (including
amortization of purchased receivables). The determination of EBITDA, for
purposes of the Annual Bonus Payment, shall be made by the Board in accordance
with generally accepted accounting principles in effect in the United States,
applied on a consistent basis (“GAAP”). EBITDA shall be adjusted for the
following purposes: (a) to exclude net gains and losses on the disposal of
assets and other non-operating income or expense items; (b) to exclude EBITDA
generated from acquisitions of new businesses or companies during the year (an
acquisition of a new office would not be deemed to be a material acquisition);
(c) to exclude capitalized costs that would otherwise be expenses of the period;
and (d) for other items in the discretion of the Board, provided, however that
as to Executive Officers, the Board may not exercise discretion to increase
EBITDA for purposes of the Annual Bonus Payment.

 

3.2.2.3       The Annual Bonus Payment, if earned, will be paid in cash no later
than 30 days after the completion of the annual audit of the Company’s
consolidated financial statements, unless the Executive shall elect to defer the
receipt of such Annual Bonus Payment pursuant to an arrangement which meets the
requirements of Section 409A. In any event, for purposes of Section 409A, the
Annual Bonus Payment will not be considered earned by the Executive until the
completion of the annual audit of the Company’s consolidated financial
statements.

 

3.2.3         Stock Award. The Executive shall receive a restricted common stock
award as provided in the attached Restricted Stock Agreement (Exhibit “B”) upon
the Effective Date of the Agreement. From Time to time Company may provide
Executive additional restricted stock offers in the same general form as that
identified in the Restricted Stock Agreement.

 

3.2.4         Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be eligible to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company, but in no event shall such plans,
practices, policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is applicable),
savings opportunities and retirement benefit opportunities, in each case, less
favorable, in the whole, than the most favorable of those provided by the
Company for the Executive under such plans, practices, policies and programs as
in effect at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company,
subject to the terms and conditions of the applicable plans, practices, policies
and programs.

 

 

 

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3.2.5         Welfare Benefit Plans. During the Employment Period, the Executive
and/or the Executive's family, as the case may be, shall be eligible to
participate in all welfare benefit plans, practices, policies and programs
provided by the Company; including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs (the “Plans”) from time
to time to the extent applicable generally to, and no less favorable than those
provided to other peer executives at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
those provided generally at any time after the Effective Date to other peer
executives of the Company. The Company shall pay 100% of all premiums with
respect to such Plans.

 

3.2.6         Fringe Benefits. During the Employment Period, the Executive shall
be entitled to such fringe benefits (including, without limitation, payment of
cellular telephone, vehicle allowance, payment of professional fees and taxes
and related expenses, as appropriate) in accordance with the plans, practices,
programs and policies of the Company for other peer executives at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company. Notwithstanding the
foregoing, any amounts payable under Section 3.2 that are Section 409A Amounts
shall be paid in a manner and at such times so as to be compliant with or exempt
from Section 409A.

 

3.2.7         Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable business expenses
incurred by the Executive subject to the terms of the Company's applicable
expense reimbursement policies applicable to other peer executives at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company. Notwithstanding the
foregoing, any amounts payable under Section 3.2 that are Section 409A Amounts
shall be paid in a manner and at such times so as to be compliant with or exempt
from Section 409A.

 

3.2.8         Vacation and Sick Time. During the Employment Period, the
Executive shall be entitled to up to three weeks paid vacation per calendar
year. To the extent not used in any fiscal year, Executive may carry over up to
eight weeks of paid vacation to a subsequent calendar year. Executive may not
take more than 10 consecutive days without consulting management. Additionally,
during the Employment Period, the Executive shall be entitled to up to five days
paid time off per year for illness. To the extent not used in any fiscal year,
Executive may not carry over paid time off days to a subsequent calendar year.

 

3.3            Certain Additional Payments by the Company.

 

3.3.1       Anything in this Agreement to the contrary notwithstanding, if it
shall be determined that any payment or distribution by the Company or any of
its affiliated companies to or for the benefit of the Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement,
any other plan, agreement or contract or otherwise, but determined without
regard to any additional payments required under Section 3.3) (a “Payment”)
would be subject to any additional tax or excise tax imposed by sections 409A,
457A or 4999 of the Code (and any successor provisions or sections to sections
409A, 457A and 4999) or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the “Excise
Tax”), then the Executive shall be entitled to promptly receive from the Company
an additional payment (a “Gross-Up Payment”) in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Any Gross-Up
Payment shall be made by the Company at least 10 days prior to the date that the
Executive is required to remit to the relevant taxing authority any federal,
state and local taxes imposed upon the Executive, including the amount of
additional taxes imposed upon the Executive due to the Company’s payment of the
initial taxes on such amounts. Notwithstanding any provision of this Agreement
to the contrary, any amounts to which the Executive would otherwise be entitled
under this Section 3.3.1 during the first six months following the date of the
Executive’s Separation From Service shall be accumulated and paid to the
Executive on the date that is six months following the date of his Separation
From Service. All reimbursements by the Company under this Section 3.3.1 shall
be paid no later than the earlier of (a) the time periods described above and
(b) the last day of the Executive’s taxable year next following the taxable year
in which the expense was incurred.

 

 

 

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3.3.2         Subject to the provisions of Section 3.3.3, all determinations
required to be made under this Section 3.3, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination shall be made by
PricewaterhouseCoopers or, as provided below, such other certified public
accounting firm as may be designated by the Executive (the “Accounting Firm”)
which shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days after the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting a Change of Control, the
Executive shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 3.3, shall be paid by the Company to the
Executive within five days after the receipt of the Accounting Firm’s
determination. Any determination by the Accounting Firm, absent manifest error,
shall be binding upon the Company and the Executive, subject to the last
sentence of Section 3.3.1, and in no event later than the payment deadline
specified in Section 3.3.1. As a result of the uncertainty in the application of
section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made (“Underpayment”), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 3.3.3 and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive, subject to the last sentence of Section 3.3.1, and in no event later
than the payment deadline specified in Section 3.3.1.

 

3.3.3         The Executive shall notify the Company in writing of any claim by
the IRS that, if successful, would require the payment by the Company of the
Gross-Up Payment (or an additional Gross-Up Payment in the event the IRS seeks
higher payment). Such notification shall be given as soon as practicable, but no
later than 10 business days after the Executive is informed in writing of such
claim, and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which he
gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall:

 

3.3.3.1     give the Company any information reasonably requested by the Company
relating to such claim,

 

3.3.3.2     take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,

 

3.3.3.3     cooperate with the Company in good faith in order to effectively
contest such claim, and

 

3.3.3.4     permit the Company to participate in any proceedings relating to
such claims; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred at any
time during the period that ends 10 years following the lifetime of the
Executive in connection with such proceedings and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of Section 3.3.3, the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
forego any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to determination before any administrative tribunal, in a
court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. The Company shall not direct the
Executive to pay such a claim and sue for a refund if, due to the prohibitions
of section 402 of the Sarbanes-Oxley Act of 2002, the Company may not advance to
the Executive the amount necessary to pay such claim. All such costs and
expenses shall be made by the Company at least 10 days prior to the date that
the Executive is required to pay or incur such costs and expenses. The costs and
expenses that are subject to be paid by the Company pursuant to Section 3.3.3
shall not be limited as a result of when the costs or expenses are incurred. The
amounts of costs or expenses that are eligible for payment pursuant to this
Section 3.3.3.4 during a given taxable year of the Executive shall not affect
the amount of costs or expenses eligible for payment in any other taxable year
of the Executive. The right to payment of costs and expenses pursuant to this
Section 3.3.3.4 is not subject to liquidation or exchange for another benefit.
Notwithstanding any provision of this Agreement to the contrary, any amounts to
which the Executive would otherwise be entitled under this Section 3.3.3.4
during the first six months following the date of the Executive’s Separation
From Service shall be accumulated and paid to the Executive on the date that is
six months following the date of his Separation From Service. All reimbursements
by the Company under this Section 3.3.3.4 shall be paid no later than the
earlier of (a) the time periods described above and (b) the last day of the
Executive’s taxable year next following the taxable year in which the expense
was incurred.

 

 

 

 8 

 

3.4   If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 3.3.3, the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company’s
complying with the requirements of Section 3.3.3 promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 3.3.3 a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall not be required to be repaid.

 

3.5   Any provision in this Agreement or any other plan or agreement to the
contrary notwithstanding, if the Company is required to pay a Gross-Up Payment
pursuant to the provisions of this Agreement and pursuant to the provisions of
another plan or agreement, then the Company shall pay the total of the amounts
determined pursuant to this Agreement and the provisions of such other plan or
agreement.

 

4.       Termination of Employment.

 

4.1       Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period without
necessity of Notice of Termination. If the Company determines in good faith
belief that the Executive has a Disability, the Company may terminate the
Agreement upon not less than 30 days written notice.

 

4.2.  By the Company with Cause. Subject to the limitations of Section 1.6
regarding notice and cure, the Company may terminate the Executive's employment
immediately during the Employment Period for Cause by providing a Notice of
Termination.

 

4.3   By the Executive with Good Reason. Subject to the limitations of Section
1.17 regarding notice and cure, the Executive's employment may be terminated
immediately by the Executive at any time during the Employment Period for Good
Reason by providing a Notice of Termination.

 

4.4   By the Company without Cause. The Executive's employment may be terminated
by the Company at any time during the Employment Period without Cause at any
time by providing a Notice of Termination and upon not less than 60 days written
notice.

 

4.5   By the Executive without Good Reason. The Executive's employment may be
terminated by the Executive at any time during the Employment Period without
good Reason by providing a Notice of Termination and upon not less than 60 days
written notice.

 

4.6   Garden Leave. In the event of termination by Executive with or without
Good Reason, the Company may elect to relieve Executive of any and all duties
under this Agreement and deny Executive access to Company property so long as
Company makes any and all payments otherwise due under the Agreement during the
Notice of Termination period. The Company may elect to place Executive on Garden
Leave at any time during the remainder of Executive’s employment identified in
the Notice of Termination. Such leave shall not prejudice either Company or
Executive to any other rights or payments due under this Agreement.

 

5.Obligations of the Company Upon Termination.

 

5.1       Death or Disability. If, during the Employment Period, the Executive's
employment is terminated by reason of the Executive's death or Disability:

 

5.1.1       the Company shall pay to the Executive (or Executive's heirs,
beneficiaries or representatives, as applicable) in a lump sum in cash, within
30 days after the Date of Termination, the Accrued Obligation; and

 

5.1.2       the Company shall pay or cause the Executive (or Executive's heirs,
beneficiaries or representative, as applicable) to be paid the Benefit
Obligation at the times specified in and in accordance with the terms of the
applicable Benefit Plans.

 

 

 

 9 

 

5.2       Good Reason or Other Than for Cause. If, during the Employment Period,
the Agreement is terminated by the Executive for Good Reason or by the Company
for any reason other than for Cause, then:

 

5.2.1       The Company shall pay to the Executive, at the times specified in
Section 5.2.2 below, the following amounts:

 

5.2.1.1       the Accrued Obligation,

 

5.2.1.2       the Benefit Obligation,

 

5.2.1.3       a lump sum in cash equal to one time the Executive's Annual Base
Salary (at the rate in effect as of the Date of Termination); provided, however,
that if such termination occurs prior to the date that is 12 months following a
Change of Control, then the amount of such lump sum cash payment shall be equal
to three times the Executive's Annual Base Salary (at the rate in effect as of
the Date of Termination),

 

5.2.1.4       a lump sum in cash equal to the average annual bonus paid to the
Executive for the prior two full fiscal years preceding the Date of Termination;
provided, however, that if such termination occurs prior to the date that is 12
months following a Change of Control, then the amount of such lump sum cash
payment shall be equal to three times the average Annual Bonus paid to the
Executive for the prior two full fiscal years preceding the Date of Termination,

 

5.2.1.5       a lump sum in cash equal to a pro rata portion of the Annual Bonus
payable for the period in which the Date of Termination occurs based on actual
performance under the Company's annual incentive bonus arrangement; provided,
however, that such pro rata portion shall be calculated based on Executive's
Annual Bonus for the previous fiscal year; provided, further that if no previous
Annual Bonus has been paid to Executive, then the lump-sum cash payment shall be
no less than 50% of Executive’s Annual Base Salary, and

 

5.2.1.6       if such termination occurs prior to the date that is 12 months
following a Change of Control, then each and every share option, restricted
share award and other equity-based award that is outstanding and held by the
Executive shall immediately vest and become exercisable.

 

5.2.2       The Company shall pay the Executive the Benefit Obligation at the
times specified in and in accordance with the terms of the applicable Benefit
Plans. The Company shall pay the Executive the amounts described under Section
5.2.1.1 within 30 days after the Date of Termination. The Company shall pay to
the Executive the amounts or benefits described in Sections 5.2.1.3 and 5.2.1.4
within 90 days following the date of Executive's Separation From Service if he
is not a Specified Executive or on the date that is six months following the
date of his Separation From Service if he is a Specified Executive. Amounts
payable pursuant to Section 5.2.1.5 will be paid at time payment is made to
employees generally pursuant to the terms of the Company's annual incentive
bonus arrangement or, if Executive is a Specified Executive, on the date that is
six months following the date of his Separation From Service, if later.

 

5.2.3       Payments to the Executive under this Section 5.2 (other than the
Accrued Obligation and the Benefit Obligation) are contingent upon the
Executive's execution (and non-revocation) of a release substantially in the
form of Exhibit “C” hereto no later than 60 days following Executive's
Separation From Service.

 

5.3       Cause. If the Executive's employment is terminated by the Company for
Cause during the Employment Period, this Agreement shall terminate without
further obligations to the Executive, other than the obligation to pay to the
Executive (a) the Accrued Obligation and (b) the Benefit Obligation in
accordance with the terms of the applicable Benefit Plans. In such case, the
Accrued Obligation shall be paid to the Executive in a lump sum in cash within
30 days after the Date of Termination and the Benefit Obligation shall be paid
in accordance with the terms of the applicable Benefit Plans.

 

 

 

 10 

 

5.4       Termination by Executive Other Than for Good Reason. If the Executive
voluntarily terminates his employment during the Employment Period for any
reason other than for Good Reason, the Executive's employment shall terminate
without further obligations to the Executive, other than for payment of the
Accrued Obligation and the Benefit Obligation and the rights provided in Section
6. In such case, the Accrued Obligation shall be paid to the Executive in a lump
sum in cash within 30 days after the Date of Termination and the Benefit
Obligation shall be paid in accordance with the terms of the applicable Benefit
Plans.

 

5.5       General. Notwithstanding anything herein to the contrary, if the
Executive is a Specified Executive on the date of his Separation From Service,
any payments or benefits hereunder that are deferred compensation subject to
Section 409A, are payable upon his Separation From Service, and are not
otherwise exempt from Section 409A, shall not be paid during the Waiting Period,
and on the first business day following the expiration of the Waiting Period all
payment and benefits that were payable during the Waiting Period will be paid to
the Executive in a cash lump sum payment, without interest, and thereafter
payments and benefits will be paid as provided herein.

 

6.      Other Rights. Except as provided herein, nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company and for which the Executive
may qualify, nor shall anything herein limit or otherwise affect such rights as
the Executive may have under any contract or agreement with the Company. Except
as otherwise provided herein, amounts which are vested benefits, which vest
according to the terms of this Agreement or which the Executive is otherwise
entitled to receive under any of the Benefit Plans or any other plan, policy,
practice or program of or any contract or agreement with the Company or any of
its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement.

 

7.       Full Settlement.

 

7.1   No Rights of Offset. The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others.

 

7.2   No Mitigation Required. The Company agrees that, if the Executive’s
employment with the Company terminates, the Executive is not required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to this Agreement. Further, the amount of any
payment or benefit provided for in this Agreement shall not be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.

 

8.       Competition, Disclosure, Ownership, and Solicitation.

 

8.1   Non-Disclosure. Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process,
communicate, use, disclose or divulge any Confidential Information of the
Company or its affiliates at any time. Any termination of the Executive's
employment or of this Agreement shall have no effect on the continuing operation
of this Section 8.1.

 

8.2   Return of Confidential Information. The Executive agrees to return all
Confidential Information, including all photocopies, extracts and summaries
thereof, and any such information stored electronically on tapes, computer disks
or in any other manner to the Company at any time upon request by the Company
and upon the termination of his employment hereunder for any reason without
request of the Company. In no event shall an asserted violation of the provision
of this Section 8.2 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

 

8.3   Non-Competition. In exchange for the provision of Confidential Information
and training by the Company, the Executive shall not engage in Competition
during the Restricted Period, provided, that it shall not be a violation of this
Section 8.3 for the Executive to become the registered or beneficial owner of up
to five percent of any class of the capital stock of a corporation registered
under the Securities Exchange Act of 1934, as amended, provided that the
Executive does not actively participate in the business of such corporation
until such time as this covenant expires.

 

 

 

 11 

 

8.4       Non-Solicitation; Non-Interference. During the Restricted Period, the
Executive agrees that the Executive will not, directly or indirectly, for his
benefit or for the benefit of any other person, firm or Entity, do any of the
following:

 

8.4.1         solicit from any customer doing business with the Company or any
of its Subsidiaries, as of the Date of Termination, business of the same or of a
similar nature to the business of the Company or any of its Subsidiaries with
such customer;

 

8.4.2         solicit from any potential customer (that is known to the
Executive) of the Company or any of its Subsidiaries business of the same or of
a similar nature to that which has been the subject of a known written or oral
bid, offer or proposal by the Company or any of its Subsidiaries, or of
substantial preparation with a view to making such a bid, proposal or offer,
within six months prior to such Date of Termination;

 

8.4.3                   solicit the employment or services of any person
employed by or a consultant to the Company upon the Date of Termination, or
within six months prior thereto (provided, however, that the provisions hereof
shall be deemed not to prohibit the Executive, on the Executive's behalf or on
behalf of other persons, firms or Entities, from placing advertisements in
newspapers or other media of general circulation advertising employment
opportunities and offering employment to individuals responding to those
advertisements); or

 

8.4.4         otherwise knowingly interfere with the business or accounts of the
Company or any of its Subsidiaries.

 

8.5 Reformation. Should any provision within this Section 8 of this Agreement be
determined too broad under any law or statute, the parties expressly request the
agreement be reformed to provide the maximum possible protection to Company.

 

8.6   Extension Due to Breach. For any period of time during which Executive is
in breach of the covenant not to compete set out in this Section 8, Executive
agrees the non-competition and non-solicitation obligations shall be extended
for an equal period.

 

8.7   Incorporation of Prior Agreements. This Agreement incorporates all
non-competition, non-disclosure, and non-solicitation obligations of Executive
to Company from any prior agreements between Executive and Company which were in
effect immediately preceding entry into this Agreement. Such incorporated
obligations shall remain in force and effect until such time, if any, as
sufficient consideration for the provisions of Section 8 above has been imparted
to Executive.

 

8.8   Good Will. The Executive and the Company agree and acknowledge that the
Company has a substantial and legitimate interest in protecting the Company's
and its Subsidiaries' Confidential Information and goodwill. The Executive and
the Company further agree and acknowledge that the provisions of this Section 8
are necessary to protect the Company's legitimate business interests and are
designed to protect the Company's and its Subsidiaries' Confidential Information
and goodwill. The Executive agrees that the scope of the restrictions as to
time, geographic area, and scope of activity in this Section 8 are necessary for
the protection of the Company's legitimate business interests and are not
oppressive or injurious to the public interest. The Executive agrees that in the
event of a breach or threatened breach of any of the provisions of this Section
8 the Company shall be entitled to injunctive relief against the Executive's
activities to the extent allowed by law, and the Executive waives any
requirement for the posting of any bond by the Company in connection with such
action. The Executive further agrees that any breach or threatened breach of any
of the provisions of Section 8 would cause injury to the Company for which
monetary damages alone would not be a sufficient remedy. The Executive hereby
agrees that the period during which the agreements and covenants of the
Executive made in Section 8 shall be effective shall be computed by excluding
from such computation any time during which the Executive is in violation of any
provision of Section 8.

 

8.9       Patents, Copyrights and Trademarks. Executive agrees that all
Intellectual Property shall become the sole property of Company as outlined
herein:

 

8.9.1       Disclosure and Assignment. Executive hereby agrees to disclose and
hold in trust for the sole benefit of Company any and all Intellectual Property.
Without any additional compensation, Executive hereby assigns to Company, or its
designee, all Executive’s right, title and interest throughout the world in and
to any and all Intellectual Property, including without limitation all patent,
trademark, trade secret, copyright, and other proprietary rights therein.
Executive further hereby waives and forever releases any moral rights or rights
of attribution with respect to any Intellectual Property.

 

 

 

 12 

 

8.9.2       Records. Executive agrees to keep and maintain adequate and current
written records of all Intellectual Property, including, but not limited to,
notes, sketches, drawings, flow charts, electronic data or recordings, and
laboratory notebooks at Company’s place of business. Executive agrees that such
records shall be the sole property of the Company and Executive agrees not to
remove such records from the Company's place of business except as expressly
permitted by Company.

 

8.9.3       Assistance. Executive agrees to assist Company, or its designee, at
Company's expense, in every way to secure Company's rights in the Intellectual
Property in any and all countries during Executive’s employment with Company at
any time necessary thereafter. To the extent Executive is unable or unwilling to
provide such assistance, Executive hereby irrevocably designates and appoints
Company and its duly authorized officers and agents as Executive’s agent and
attorney in fact, to act for and in Executive’s behalf and stead to execute and
file any such applications or records and to do all other lawfully permitted
acts to further Company’s rights in the Intellectual Property. Executive hereby
waives and irrevocably assigns to Company any and all claims, of any nature
whatsoever, which Executive now or hereafter has for past, present or future
infringement of any and all proprietary rights assigned to Company with respect
to any Intellectual Property.

 

8.9.4       Prior Intellectual Property. At the time of entering this Agreement,
Executive shall provide Company with a signed and dated list of all Prior
Intellectual Property. If Executive fails to provide Company with such a list
within 30 days of entering this Agreement, Executive agrees that no such Prior
Intellectual Property exist.

 

8.10       Non-Disparagement. Except as noted in this Section, the parties each
promise to refrain from making any disparaging remarks about the other following
the termination of the employment relationship between them. Company may,
however, offer a faithful account of Executive’s service to anyone seeking a
recommendation or account for future employment of Executive. Similarly,
Executive may make any appropriate good faith charge to any governmental agency
regarding the actions of Company, including but not limited to making a report
to the Securities and Exchange Commission regarding the actions of the Company.

 

8.11       Return of Materials. Executive agrees that upon termination of this
Agreement, Executive shall: (a) deliver to Company all Confidential Information
and all copies thereof, along with any and all other property belonging to
Company or any Client or supplier of Company, (b) return to Company all
equipment or devices, if any, (c) deliver all passwords and log in information
for social media profiles; and (d) return to Company all sales material and all
other documents, information or materials of whatever kind or nature and stored
on any type of media developed by or for Company and thereafter shall neither
use such documents, information materials or any similar materials, nor supply
or make available such documents, information or materials to any third party.

 

9.      Successors. This Agreement, and any rights and obligations hereunder, is
personal to the Executive and shall not be assignable by the Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

 

10.       Miscellaneous.

 

10.1 Waivers and Amendments. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms and conditions hereof may be
waived, only by a written instrument signed by the Executive and the Company or,
in the case of a waiver, by the party waiving compliance. No delay on the part
of any party in exercising any right, power or privilege hereunder will operate
as a waiver thereof, nor will any waiver on the part of any party of any such
right, power or privilege hereunder, nor any single or partial exercise of any
right, power or privilege hereunder, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.
Notwithstanding anything herein to the contrary, the Company may amend this
Agreement in writing in any manner so that payments or benefits hereunder comply
with or continue to be exempt from Section 409A, including, but not limited to,
(a) adding a requirement that no payment or benefits due on account of the
Executive's Separation From Service shall be paid during the six-month period
commencing on the Executive's Date of Termination and (b) making payment of any
amounts due to the Executive hereunder such that any such payment is exempt from
Section 409A (including making payment as soon as administratively practicable,
within the meaning of Section 409A, for such purpose).

 

10.2 Applicable Law, Forum, and Venue. This Agreement shall be governed and
construed exclusively in accordance with the laws of the State of Texas without
regard to the conflicts of laws or principles thereof. The parties agree that
Texas shall be the forum for any action or suit related to this Agreement,
including, but not limited to, any claim affecting its validity, construction,
effect, performance or termination. The parties further agree that the venue for
any such action or suit shall exclusively be the state or federal courts sitting
in Harris County, Texas.

 

 

 

 13 

 

10.3 Waiver of Trial by Jury. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY AND
VOLUNTARILY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED ON ANY
MATTER ARISING OUT OF, OR IN CONNECTION WITH, OR RELATING TO THIS AGREEMENT.

 

10.4 Headings. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.

 

10.5 Notices. All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:

Charles Njuguna

at the address set forth in his personnel file at Deep Down, Inc.

 

               If to the Company:

Deep Down, Inc.

8827 W. Sam Houston Pkwy N., Suite 100

Houston, Texas 77040

Attention: Chief Executive Officer

 

 

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.

 

10.6 Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

 

10.7 Withholding. The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

 

10.8 Entire Agreement. Except as set out in Section 8.7, this Agreement
constitutes the entire agreement and understanding between the parties relating
to the subject matter hereof and supersedes all prior agreements between the
parties relating to the subject matter hereof.

 

10.9 Deferred Compensation and Specified Executive. The Executive acknowledges
and understands that none of the Company, its Affiliates, nor any of their
officers, directors or employees are responsible or liable for and none of them
guarantee the tax consequences of any payments or benefits under this Agreement,
including, but not limited to, any excise taxes or interest that may be incurred
under Section 409A.

 

10.10 Assignment. This Agreement may be assigned by Company to any affiliated or
related company at any time without notice. This Agreement may not be assigned
by Executive for any reason without express written consent of Company.

 

10.11 Reformation. Should any provision within this Agreement be determined too
broad under any law or statute, the parties expressly request the Agreement be
reformed to provide the maximum possible protection to Company.

 

10.12 No Construction Against Drafter. Executive is encouraged to seek the
advice of legal counsel in reviewing this Agreement and has had an opportunity
to review and consider the Agreement before entering it. Therefore, in any
construction to be made of this Agreement, the Agreement shall not be construed
for or against either Party.

 

10.13.       Defend Trade Secrets Act Notice. An individual shall not be held
criminally or civilly liable under any Federal or State trade secret law for the
disclosure of a trade secret that is made in confidence to a Federal, State, or
local government official or to an attorney solely for the purpose of reporting
or investigating a suspected violation of law. An individual shall not be held
criminally or civilly liable under any Federal or State trade secret law for the
disclosure of a trade secret that is made in a complaint or other document filed
in a lawsuit or other proceeding, if such filing is made under seal. An
individual who files a lawsuit for retaliation by an employer for reporting a
suspected violation of law may disclose the trade secret to the attorney of the
individual and use the trade secret information in the court proceeding, if the
individual files any document containing the trade secret under seal; and does
not disclose the trade secret, except pursuant to court order.

 

 

 

 14 

 

11.   Indemnity.

 

11.1         Legal Fees. To the extent permitted by applicable law, and the
By-Laws of the Company, the Company agrees to defend, indemnify and hold
harmless the Executive from any and all claims, demands or causes of action,
including reasonable attorneys' fees and expenses, suffered or incurred by the
Executive as a result of the assertion or filing of any claim, demand,
litigation or other proceedings based, in whole or in part, upon statements,
acts or omissions made by or on behalf of the Executive pursuant to this
Agreement and/or in the course and scope of the Executive's employment by the
Company. Within 10 days after notice from the Executive of the filing or
assertion of any claim for which indemnification is provided (or sooner if
action is required sooner in order to properly defend the Executive), the
Company shall designate competent, experienced counsel to represent the
Executive, at the Company's expense, which counsel shall be subject to the
Executive's approval, which shall not be unreasonably withheld. Should the
Company fail to so designate or pay, or make arrangements for payment of, such
counsel, then Executive shall have the right to engage counsel of the
Executive's choosing, and the Company shall be obligated to pay or reimburse any
and all fees and expenses incurred by the Executive in defending himself in
connection with any such claim.

 

11.2          Insurance. During the entire employment period, and for a period
of not less than five years after termination of the Executive's employment, the
Company shall maintain, and pay all applicable premiums for, directors' and
officers' liability insurance, of which the Executive shall be an insured, which
shall provide full coverage for the defense and indemnification of the
Executive, to the fullest extent permitted by applicable law.

 

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

 

COMPANY:

 

DEEP DOWN, INC.

 

 

BY: /s/ Ronald E. Smith

Ronald E. Smith, President and CEO

 

EXECUTIVE:

 

CHARLES NJUGUNA

 

 

/s/ CHARLES NJUGUNA

Individually

 

 

 

 

 

 

 15 

 

EXHIBIT A

 

OUTSIDE ACTIVITIES (SECTION 3.1.2)

 

 

 

 

 

 

 

 16 

 

 

EXHIBIT B

 

RESTRICTED STOCK AGREEMENT

 

 

This Restricted Stock Agreement (“Agreement”) is made and entered into effective
as of the 27th day of July 2018 (“Date of Grant”), by and between DEEP DOWN,
INC., a Nevada corporation (the “Company”), and Charles Njuguna
(“Executive”).  The defined term “Employer” shall include, where applicable, the
Company and affiliates and entities in which the Company has an ownership
interest, directly or indirectly.

 

(1)Award. The Company hereby makes a grant of restricted stock subject to the
terms and conditions contained herein. The shares granted to Executive pursuant
to this Agreement are an aggregate of 300,000 shares (the “Restricted Shares”)
of common stock of the Company, $0.001 par value per share, which in turn are a
portion of the overall common stock of the Company (the “Stock”).

 

(2)Restricted Shares. Executive hereby accepts the grant of Restricted Shares
when issued and agrees to the limitations below:

 

(a)Transfer Restriction. The Restricted Shares granted hereunder may not be
sold, assigned, transferred, exchanged, pledged, hypothecated or encumbered by
Executive, and no such sale, assignment, transfer, exchange, pledge,
hypothecation or encumbrance, whether made or created by voluntary act of
Executive or any agent of Executive or by operation of law, shall be recognized
by, or be binding upon, or shall in any manner affect the rights of, the Company
or any agent or any custodian holding certificates for the Restricted Shares
until the Forfeiture Restriction explained below lapse (the “Transfer
Restriction”).

 

(b)Forfeiture Restriction. The Restricted Shares shall be forfeited and revert
to the Company upon the termination of Executive’s employment with the Company
for any reason (the “Forfeiture Restriction”, and together with the Transfer
Restriction, the “Restrictions”) effective upon the last date Executive performs
work for the Company, unless the Forfeiture Restriction lapses before such date
as described below.

 

(c)Lapse of Restrictions. The Restrictions with respect to each tranche of
Restricted Shares (as described below) shall lapse upon the first to occur of
any of the following events: (1) the Executive’s interest in the Restricted
Shares vests as herein stated; (2) Executive’s death; (3) Executive’s employment
with the Company terminates due to disability; (4) Executive retires after
attaining both 59 ½ years of age and five years of continuous full-time
employment with the Company; or (5) in the event of a Change of Control as
herein defined.

 

(i)Vesting. Upon vesting, the Restrictions shall lapse. Executive’s interest in
the Restricted Shares shall vest as follows:

 

 

 

Vesting Date

Restricted Shares
Released from
Restrictions October 1, 2018 100,000 October 1, 2019 100,000 October 1, 2020
100,000

 

(ii)Change in Control. Upon the occurrence of a “Change in Control” as defined
below, the Restrictions on the Restricted Shares shall be removed provided the
Executive remains employed by the Company immediately prior to the Change in
Control.

 

For purposes of this Agreement, “Change in Control” shall mean the occurrence of
any of the following events:

 

A.Any Person (meaning individual, trust or entity of any form) is or becomes the
Beneficial Owner (meaning a Person who, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise has or shares
voting power and\or investment power over more than thirty percent (30%) or more
of either (A) the then outstanding shares of common stock of the Company (the
“Outstanding Company Common Shares”) or (B) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Company Voting Securities”)),
excluding any Person who becomes such a Beneficial Owner in connection with the
issuance of equity securities directly by the Company to such Person in a Board
(meaning the Company’s Board of Directors) approved equity financing;

 

 

 17 

 

 

B.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, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the Incumbent
Board (including in connection with an equity financing by the Company or in
connection with preparing for a listing of Company equity securities on a
national stock exchange) shall be considered as though such individual was 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 any other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or

 

C.The consummation of a reorganization, merger, amalgamation, consolidation,
scheme of arrangement, exchange offer or similar transaction of the Company or
any of its subsidiaries or the sale, transfer or other disposition of all or
substantially all of the Company’s assets (each, a “Business Transaction”),
unless, following such Business Transaction or series of related Business
Transactions, as the case may be, (A) individuals and entities (which, for
purposes of this Agreement, shall include, without limitation, any corporation,
partnership, association, joint-stock company, limited liability company, trust,
unincorporated organization or other business entity) who were the beneficial
owners, respectively, of more than fifty percent (50%) of, respectively, the
Outstanding Company Common Shares and Outstanding Company Voting Securities
immediately prior to such Business Transaction beneficially own, directly or
indirectly, more than fifty percent (50%) of, respectively, the then outstanding
common shares and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors (or other
governing body), as the case may be, of the entity resulting from such Business
Transaction (including, without limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets
either directly or through one (1) or more subsidiaries or entities), as the
case may be, (B) no person (excluding any entity resulting from such Business
Transaction or any employee benefit plan (or related trust) of the Company or
such entity resulting from such Business Transaction) beneficially owns,
directly or indirectly, twenty-five percent (25%) or more of, respectively, the
then outstanding shares of common stock of the entity resulting from such
Business Transaction or the combined voting power of the then outstanding voting
securities of such entity except to the extent that such ownership existed prior
to the Business Transaction, and (C) at least a majority the members of the
board of directors (or other governing body) of the entity resulting from such
Business Transaction were members of the Incumbent Board at the time of the
approval of such Business Transaction; or

 

D.Approval or adoption by the Board of Directors or the shareholders of the
Company of a plan or proposal which would result directly or indirectly in the
liquidation, transfer, sale or other disposal of all or substantially all of the
Company’s assets or the dissolution of the Company.

 

(iii)Disability. A disability shall occur if the Employer reasonably determines
Executive cannot perform the essential functions of Executive’s job duties due
to a physical or mental impairment with or without reasonable accommodation and
terminates Executive’s employment. Under such circumstance, all Restrictions on
the Restricted Shares shall then be removed.

 

(iv)Removal of Restrictions. Restricted Shares with respect to which the
Restrictions have lapsed shall cease to be subject to any Restrictions, and the
Company, pending payment of corresponding taxes by Executive, shall provide the
Executive a certificate representing the Restricted Shares as to which the
Restrictions have lapsed.

 

(3)Dispute Regarding Restrictions. If the employment of Executive with the
Employer terminates prior to the lapse of the Restrictions, and there exists a
dispute between Executive and the Employer or the Company as to the satisfaction
of the conditions to the lapse of the Restrictions or the terms and conditions
of the grant, the Restricted Shares shall remain subject to the Restrictions
until the resolution of such dispute, except that any distributions that may be
payable to the holders of record of Stock as of a date during the period from
termination of Executive’s employment to the resolution of such dispute shall:

 

 

 

 18 

 

 

(a)to the extent to which such distributions would have been payable to
Executive on the Restricted Shares under the terms hereof, be held by the
Company as part of its general funds, and shall be paid to or for the account of
Executive only upon, and in the event of, a resolution of such dispute in a
manner favorable to Executive, and then only with respect to such of the
Restricted Shares as to which such resolution shall be so favorable, and

 

(b)be retained by the Company in the event of a resolution of such dispute in a
manner unfavorable to Executive only with respect to such of the Restricted
Shares as to which such resolution shall be so unfavorable.

 

(4)Certificates. Notwithstanding anything herein to the contrary, the Company
may, in its discretion, reflect ownership of the Shares through the issuance of
stock certificates, or in book-entry form, without stock certificates, on its
books and records.  If the Company elects to issue certificates, one or more
certificates evidencing the Restricted Shares shall be issued by the Company in
Executive’s name, or at the Company’s option, in the name of the Company’s
nominee, pursuant to which Executive shall have voting rights.  

 

The Company may cause the certificate or certificates to, upon issuance, be
delivered to the Secretary of the Company or to such other depository as may be
designated by the Company for safekeeping until the forfeiture thereof occurs or
the Restrictions applicable thereto lapse pursuant to the terms of this
Agreement. In request of the Company or its designee, Executive shall deliver to
the Company a stock power, endorsed in blank, relating to the Restricted Shares
then subject to the Restrictions.  Subject to the Company’s rights under this
Subsection (4) and the other provisions of this Agreement, upon the lapse of the
Restrictions without forfeiture, the Company shall deliver to Executive a
certificate evidencing the vested Restricted Shares with respect to which
Restrictions have lapsed, and shall retain a certificate representing unvested
Restricted Shares still subject to Restrictions. Notwithstanding any other
provisions of this Agreement, the issuance or delivery of any Stock (whether
subject to restrictions or unrestricted) may be postponed for such period as may
be required to comply with applicable requirements of any national securities
exchange or any requirements of any law or regulation applicable to the issuance
or delivery of such Stock.  The Company shall not be obligated to issue or
deliver any Stock if the issuance or delivery thereof shall constitute a
violation of any provision of any law or of any regulation of any governmental
authority or any national securities exchange.

 

(5)   Withholding of Tax.  To the extent that the receipt of the Restricted
Shares or the lapse of any Restrictions result in income to Executive for
federal, state, provincial or local income tax purposes, Executive shall pay to
the Employer or make arrangements satisfactory to the Company regarding payment
of any federal, state, provincial or local taxes of any kind required by law to
be withheld with respect to such income.  The Company may permit payment of such
taxes to be made through the tender of cash or shares of Stock, the withholding
of shares of Stock out of Stock otherwise distributable or any other arrangement
satisfactory to the Company.  The Company shall, to the extent permitted by law,
have the right to withhold delivery of a Stock certificate under Subsection (4)
above or to deduct any such taxes from any payment of any kind otherwise due to
the Executive.  If Executive does not pay the entire amount of such taxes to the
Employer within 30 days after the date on which the income subject to such taxes
is recognized, the Company shall withhold from the Shares to which Executive is
entitled a number of shares of Stock having an aggregate fair market value equal
to the amount of such taxes remaining to be paid by Executive and shall deliver
a certificate for the remaining Shares to the Executive in accordance with
Subsection (4).  If Executive makes the election authorized by Section 83(b) of
the Internal Revenue Code, Executive shall submit to the Company a copy of the
statement filed by Executive to make such election.

 

(6)  

Status of Shares. Executive agrees that, notwithstanding anything to the
contrary herein, the Shares may not be sold or otherwise disposed of in any
manner which would constitute a violation of any applicable federal or state
securities laws.  Executive also agrees (i) that certificates shall bear the
legend or legends as the Company deems appropriate in order to assure compliance
with applicable securities laws, (ii) that the Company may refuse to register
the transfer of the Shares on its transfer records if such proposed transfer
would in the opinion of counsel satisfactory to the Company constitute a
violation of any applicable securities law and (iii) that the Company may give
related instructions to its transfer agent, if any, to stop registration of the
transfer of the Shares.  Executive acknowledges that the issuance of the
Restricted Shares was not registered pursuant to a registration statement under
the Securities Act of 1933 (the “Securities Act”) or applicable state securities
laws and therefor are deemed to be “restricted securities” as contemplated by
Rule 144 under the Securities Act.  Executive is aware of the restrictions on
re-sale applicable to restricted securities under such laws, and agrees not to
dispose of such Shares in any manner that would constitute a violation of such
laws.

 

(7)   Changes in Capital Structure.  In the event that the outstanding shares of
Stock or other securities of the Company shall be changed in number or class by
reason of split-ups, spin-offs, combinations, mergers, consolidations or
recapitalizations, or by reason of Stock dividends, reverse stock splits or
other event (“Liquidation Event”), the number or class of securities comprising
the Restricted Shares shall be appropriately and equitably adjusted.

 

 

 

 19 

 

 

(8)  

Employment Relationship. For purposes of this Agreement, Executive shall be
considered to be in the employment of the Employer as long as Executive remains
an employee of the Employer, or any successor, whether a corporation or other
legal entity.  Any question as to whether and when there has been a termination
of such employment, and the nature or cause of such termination, shall be
determined by the Company in its sole discretion, and its determination shall be
final. Nothing contained herein shall be construed as conferring upon Executive
the right to continue in the employ of the Employer, nor shall anything
contained herein be construed or interpreted to limit the “employment at will”
relationship between Executive and the Employer.

 

  (9)  

Non-Disclosure of Confidential Matters.  Pursuant to this Agreement and through
Executive’s continued employment with the Employer, the Employer agrees to
provide Executive with access to certain confidential information, intellectual
property, and/or other trade secret information that belongs to the Employer
(hereinafter “Confidential Information”).  Executive expressly acknowledges that
Executive will receive access to certain Confidential Information belonging to
the Employer pursuant to this Agreement and through Executive’s continued
employment with the Employer. In consideration for the Employer’s agreement to
provide Executive with access to certain Confidential Information, the
Employer’s agreements as it relates to the Shares as provided herein, and other
good and valuable consideration, Executive agrees not to make, at any time
hereafter, including after the termination of employment for any reason, any
unauthorized use, publication, or disclosure, during or subsequent to his/her
employment by the Employer, of any Confidential Information generated or
acquired by him/her during the course of his/her employment, except to the
extent that the disclosure of Confidential Information is necessary to fulfill
his/her responsibilities as an employee of the Employer. Executive understands
that Confidential Information includes information not generally known by or
available to the public about or belonging to the Employer, or belonging to
other companies to whom the Employer may have an obligation to maintain
information in confidence, and that authorization for public disclosure may only
be obtained through the Employer’s written consent.  Executive also understands
and agrees that the information protected by this provision includes, but is not
limited to, information of a technical and a business nature such as ideas,
discoveries, designs, inventions, improvements, trade secrets, know-how,
manufacturing processes, product formulae, design specifications, writings and
other works of authorship, computer programs, financial figures, marketing
plans, customer lists and data, business plans or methods and the like, which
relate in any manner to the actual or anticipated business of the Employer, or
related to its actual or anticipated areas of research and development.
Executive further agrees not to disclose to the Employer, nor induce any
personnel of the Employer to use, any confidential information, trade secret, or
confidential material belonging to others.

 

   (10)  

Company’s Powers.  No provision contained in this Agreement shall in any way
terminate, modify or alter, or be construed or interpreted as terminating,
modifying or altering, any of the powers, rights or authority vested in the
Company.

 

(11)   Resolution of Disputes.  As a condition of the granting of the Shares
hereby, Executive and Executive’s heirs, personal representatives and successors
agree that any dispute or disagreement which may arise hereunder shall be
determined by the Company in its sole discretion and judgment, and that any such
determination and any interpretation by the Company of this Agreement shall be
final and shall be binding and conclusive, for all purposes, upon the Company,
Executive, Executive’s heirs, personal representatives and successors or any
person or entity claiming through any of them.

 

(12)   Binding Effect.  The terms and conditions of this Agreement shall, in
accordance with their terms, be binding upon, and inure to the benefit of, all
successors of Executive, including, without limitation, Executive’s estate and
the executors, administrators, or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy, or representative of creditors of
Executive.  This Agreement shall be binding upon and inure to the benefit of any
successors to the Company.

 

(13)   Non-Solicitation.  Executive agrees that during his/her employment with
the Employer and for a period of one year after the termination of Executive’s
employment relationship with the Employer, Executive will not directly or
indirectly solicit, induce, recruit, encourage, or persuade any employee of the
Employer to leave the Employer.

 

(14)   Non-Disparagement.  Executive agrees not to engage in any act or make any
comments (written or oral), which are intended, or reasonably may be expected,
to harm the business, prospects, or operations of the Employer, or to disparage
the reputation of the Employer;  provided, however, that Executive shall not be
held in breach of this provision should Executive be required to testify
pursuant to subpoena under oath or as otherwise required by law, provided
additionally that Executive testifies truthfully and that, prior to providing
such testimony, Executive promptly notifies Employer that his or her testimony
is being sought in sufficient time so as to permit Employer to seek to prevent
or limit such testimony or otherwise seek to obtain a protective order.

 

 

 

 20 

 

 

(15)  

Irreparable Harm. The Executive acknowledges that a breach of the obligations
set forth in Sections 9, 13 and 14 of this Agreement shall cause irreparable
harm to the Employer and that monetary damages would be an inadequate remedy for
such a breach.  The Executive agrees that the Employer shall be entitled to
equitable relief by way of injunction or otherwise, as well as any other remedy
available at law, if the Executive breaches or threatens to breach the
provisions of this Agreement.  Further, in the event that the Employer
determines in good faith that Executive has breached any of said provisions of
this Agreement, the Employer shall, to the extent the Restrictions have not
lapsed, be entitled, at its election, to immediately stop making any payments
hereunder and/or to terminate the vesting of, or otherwise cancel, terminate or
require to be relinquished to the Company the Shares awarded to Executive and/or
to enforce the specific performance of this Agreement by Executive and/or to
enjoin Executive from activities in breach of said provisions of this Agreement
without having to show that there are no other adequate remedies available. The
parties stipulate and agree that the terms, covenants, commitments and
agreements contained Sections 9, 13 and 14 of this Agreement are fair and
reasonable in all respects, including the time period and geographical coverage,
and that these restrictions are necessary for the reasonable protection of the
legitimate business interests of the Employer. If, at the time of enforcement of
any of these provisions, a court holds that the restrictions stated herein are
unreasonable under the circumstances then existing, the parties hereto agree
that the maximum period, scope or geographical area reasonable under such
circumstances will be substituted for the stated period, scope or area.  In such
event, but only in such event, the parties hereto hereby specifically request a
trial court or other tribunal presented with this Agreement for enforcement to
reform it as to time, geographic area or scope of activities prohibited to the
fullest extent allowed by law and to enforce this Agreement as so reformed.

 

(16)  

Notices. Every notice hereunder shall be in writing and shall be given by
registered or certified mail or by any other method accepted by the Company or
the Company’s designee. All notices to the Company shall be directed to Deep
Down, Inc., 8827 W. Sam Houston Pkwy North, Suite 100, Houston, Texas 77040
Attention:  Secretary.  Any notice given by the Company to Executive directed to
Executive at the address on file with the Company shall be effective to bind
Executive and any other person who shall acquire rights hereunder.  The Company
shall be under no obligation whatsoever to advise Executive of the existence,
maturity or termination of any of Executive’s rights hereunder and Executive
shall be deemed to have familiarized himself or herself with all matters
contained herein that may affect any of Executive’s rights or privileges
hereunder.

 

(17)   Modification and Severability.  If a court of competent jurisdiction
declares that any provision of this Agreement is illegal, invalid or
unenforceable, then such provision shall be modified automatically to the extent
necessary to make such provision fully enforceable.  If such court does not
modify any such provision as contemplated herein, but instead declares it to be
wholly illegal, invalid or unenforceable, then such provision shall be severed
from this Agreement, as applicable, and such declaration shall in no way affect
the legality, validity and enforceability of the other provisions of this
Agreement to which such declaration does not relate. In this event, this
Agreement shall be construed as if it did not contain the particular provision
held to be illegal, invalid or unenforceable, the rights and obligations of the
parties hereto shall be construed and enforced accordingly, and this Agreement
otherwise shall remain in full force and effect. If any provision of this
Agreement is capable of two constructions, one of which would render the
provision void and the other would render the provision valid, then the
provision shall have the construction which renders it valid.

 

(18)   Governing Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas and applicable federal law.

 

[Remainder of page intentionally blank]

 

 

 

 

 

 21 

 

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by
an officer thereunto duly authorized, and Executive has executed this Agreement,
all effective as of the date of first above written.

 

  DEEP DOWN, INC.           By: /s/ Ronald E. Smith          Ronald E. Smith  
       President & Chief Executive Officer               /s/ Charles Njuguna  
Charles Njuguna

 

 

 

 

 

 22 

 

 

EXHIBIT C

 

SEPARATION AND RELEASE AGREEMENT

 

This Separation and Release Agreement (the “Release Agreement”) is entered
between Executive and the Company. All defined terms hereunder shall have the
same meaning ascribed to them under that certain Chief Financial Officer
Employment Agreement (defined therein as the “Agreement”) entered between
Executive and Company.

 

1.       Executive acknowledges and represents Executive was employed by the
Company under the Agreement, which provides Executive certain benefits upon
termination of the Agreement, but which benefits are contingent upon Executive
releasing the Company from all liabilities.

 

2.       In exchange for the benefits ascribed to Executive under the Agreement,
the receipt of which Executive hereby acknowledges, Executive releases the
Company as provided herein. Executive represents that Company has remitted to
Executive any and all sums due to Executive arising from Executive’s employment
with Company and that Executive is not due or entitled to any additional sums
from Company save possibly under a retirement benefit program or insurance
program.

 

3.       Executive hereby releases the Company and its principals, owners,
directors, officers, parent companies, subsidiaries, affiliates, employees,
agents and other persons acting on behalf of the Company (collectively referred
to as “the Released Parties”) from all claims of whatsoever nature that
Executive may have against the Released Parties arising from or in any way
related to Executive’s employment with the Company. Executive also releases the
Released Parties from all claims of whatsoever nature that Executive may have
against the Released Parties arising from or in any way related to the
termination of Executive’s employment with the Company, and from any and all
claims that Executive may have against any of the Released Parties arising from
any act occurring prior to the execution of this Release Agreement, including,
without limitation, any claim, demand, action, cause of action or right,
including claims for attorney's fees, based on but not limited to: (a) the
Americans with Disabilities Act of 1990, as amended; (b) Tex. Hum. Res. Code §
121.001, et seq.; (c) Title VII of the Civil Rights Act of 1964, as amended and
including 42 U.S.C. Sec 2000(e) et seq.; (d) the Civil Rights Act of 1991; (e)
The Civil Rights Acts of 1866, 1871 and 1964, as amended; (f) 42 U.S.C. Sec
1981; (g) the Equal Pay Act of 1963; (h) the Fair Labor Standards Act, as
amended; (i) the Rehabilitation Act of 1973, as amended; (j) the Age
Discrimination in Employment Act of 1967, as amended; (k) the Older Workers
Benefit Protection Act of 1990; (l) Chapter 21 of the Texas Labor Code (also
known as the Texas Commission on Human Rights Act of 1983), as amended
(including, but not limited to, Tex. Lab. Code §§21.051 – 21.055 and 21.401 –
21.405); (m) the Family Medical Leave Act of 1993, codified as 29 U.S.C. §§
2601, et seq., as amended; (n) the Texas Workers’ Compensation Act, as amended,
including, but not limited to, Texas Labor Code §§ 451.001, et seq.; (o) the
National Labor Relations Act; (p) the Uniformed Services Employment and
Reemployment Rights Act of 1994, as amended; (q) the Executive Retirement Income
Security Act, as amended; (r) the Internal Revenue Code of 1986, as amended,
including but not limited to, any claim for taxes, interest, or penalties under
IRC 409A; (s) the Sarbanes Oxley Act of 2002, including 15 U.S.C. § 1514A; (t)
Immigration Reform and Control Act, as amended; (u) the Occupational Safety and
Health Act, as amended; (v) Genetic Nondiscrimination Act of 2008, as amended;
(w) any existing employment agreement or potential entitlement under any Company
program or plan; (x) Tex. Health & Safety Code §81.101, et seq. (the Texas
communicable disease law); and (y) any other statute or law, including all suits
in tort or contract, including wrongful termination and claims for
reimbursement, bonus, incentives, commissions, compensation and benefits,
defamation, damage to business reputation, impairment of economic opportunity,
and any other claims for compensatory, statutory, or punitive damages. Executive
expressly acknowledges and agrees that the sum referred to in Paragraph 2 above
is reasonable consideration for granting this release.

 

Executive understands this release is not intended to interfere with Executive’s
right to file a charge with, or provide information regarding the activities of
Company to, the Securities and Exchange Commission, Equal Employment Opportunity
Commission, National Labor Relations Board, Department of Labor, Texas
Commission on Human Rights or any other governmental agency (collectively
“Governmental Agency”) in connection with any claim Executive believes Executive
may have against the Released Parties. However, by executing this Release
Agreement, Executive hereby waives the right to recover in any proceeding
Executive may bring before any Governmental Agency, in any proceeding brought by
any Governmental Agency on Executive’s behalf.

 

4.       Executive understands that nothing in this Release Agreement is
intended to waive claims: (a) that arise under any state’s workers’ compensation
or unemployment laws; (b) for reimbursement of business expenses incurred on
behalf of the Company under the Company’s expense reimbursement policies; (c)
for vested rights Executive may have under any ERISA-covered employee benefit
plans as of the date Executive signs this Release Agreement, including, but not
limited to COBRA benefits; (d) that may arise after Executive signs this Release
Agreement; (e) to enforce or challenge the validity of this Release Agreement;
or (f) which cannot be released.

 

 

 

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5.       In accordance with the Older Worker’s Benefit Protection Act of 1990,
Executive is aware of and acknowledges the following: (a) Executive is waiving
all rights and claims that Executive has or may have under the federal Age
Discrimination in Employment Act, as well as any rights or claims that Executive
has under other federal, state, or local laws with regard to age and other
employment discrimination; (b) Executive has been advised by the Company to
consult with an attorney prior to executing this Release Agreement; (c)
Executive has a period of 21 days in which to consider this Release Agreement
before signing it; (d) for a period of 7 days following the signing of this
Release Agreement, Executive may revoke this Release Agreement (solely as to any
claims under the federal Age Discrimination in Employment Act) and this Release
Agreement shall not become effective and enforceable as to any claims under the
federal Age Discrimination in Employment Act until that 7-day revocation period
has expired; (e) Executive has carefully read and fully understands all of the
provisions of this Release Agreement; (f) Executive knowingly and voluntarily
agrees to all the terms set forth in this Release Agreement; and (g) Executive
knowingly and voluntarily intends to be legally bound by this Release Agreement.
Executive further agrees that, in the event Executive decides to revoke this
Release Agreement as provided for by this section, Executive will deliver
written notice to the Company’s Chief Executive Officer by mail (postmarked no
later than the 7th day), facsimile, or email.

 

EXECUTIVE ACKNOWLEDGES THAT THE SEVEN DAY RIGHT TO RESCIND THIS AGREEMENT, AS
NOTED IN THIS PARAGRAPH, SHALL EXTEND ONLY TO EXECUTIVE’S POTENTIAL AGE
DISCRIMINATION CLAIMS. EXECUTIVE ACKNOWLEDGES AND AGREES THAT THE REMAINDER OF
THE RELEASES ENUMERATED IN PARAGRAPH 3 OF THIS AGREEMENT SHALL REMAIN IN FULL
FORCE AND EFFECT EVEN IF EXECUTIVE RESCINDS THE AGREEMENT AS PROVIDED BY THIS
SECTION.

 

6.       Executive hereby relinquishes any right to re-employment with Company
after Executive executes this Release Agreement. Executive agrees that Executive
no longer desires employment with Company, and that Executive shall not seek,
apply for, accept or otherwise pursue employment with Company. Executive
acknowledges that if Executive re-applies for or seeks employment with Company,
Company’s refusal to hire Executive based on this provision will provide a
complete defense to any claims arising from any attempt by Executive to apply
for employment.

 

7.       Executive agrees this release does not invalidate or otherwise
interfere with any obligation created under the Agreement which survives the
termination of the Agreement, specifically including, but not limited to,
Section 8 of the Agreement.

 

8.       Executive agrees, upon the request of any of the Released Parties, to
cooperate fully, execute any required documents, and participate as required
(including as a witness), in any legal proceedings in which the Company or any
of the Released Parties is, or may become, involved.  These legal proceedings
include, but are not limited to grievance proceedings, audits, investigations,
arbitration hearings, and lawsuits (“Proceeding”).  Executive agrees to devote
as much time as is reasonably necessary to prepare for any Proceeding and to
work with Company to provide any information or assistance the Company finds
reasonably necessary to protect Company’s interest in any Proceeding.  Executive
will be reimbursed to the extent permitted by any applicable law for any
out-of-pocket expenses including but not limited to travel expenses in
connection with any Proceeding in which Executive participates in pursuant to
this Section.  Executive will not receive compensation in addition to that which
is provided by this Release Agreement for fulfilling Executive’s obligations
under this Section.  Nothing contained in this Section or this Release Agreement
is intended to or shall be construed to in any way prohibit or impede Executive
from providing truthful testimony or statements in any Proceeding or before any
Governmental Agency.

 

9.       Executive represents and warrants that Executive has no knowledge that
the Company or any of the Released Parties has committed or is suspected of
committing any act which is or may be in violation of any federal or state law
or regulation or has acted in a manner which requires corrective action of any
kind. 

 

IF THIS AGREEMENT IS NOT RECEIVED BY THE COMPANY ON OR BEFORE THE 25TH DAY AFTER
DELIVERY, THIS OFFER IS WITHDRAWN WITHOUT FURTHER NOTICE.

 

 

 

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SIGNED this ____ day of __________, 20___.

 

 

   

Executive:

 

 

_________________________________________

Charles Njuguna

 

 

 

 

 

 

 

 

 

 

 

 

 

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