**Exhibit 10.45**

 

**SEPARATIONAGREEMENT AND RELEASE OF ALL CLAIMS**

 

This Separation Agreement and Release of All Claims (the “***Agreement***”) isbetween Francis Memole (“***Employee***”)and Iteris, Inc., a Delaware corporation (the “***Iteris***” or “***Company***”).  Employee and the Company are sometimescollectively referred to as the “***Parties***” or individually as a “***Party***.”

 

**RECITALS**

 

A.    Employee’s employment as a Senior VicePresident and General Manager of Iteris ended effective May 1, 2009(hereinafter “***SeparationDate***”); and

 

B.    Employee holds the following outstandingoptions to purchase an aggregate of 142,000 shares of the Company’s CommonStock (collectively the “***Options***”),which Options were granted under the Company’s 1998 Stock Incentive Plan (the “***1998 Plan***”) or the 1997 StockIncentive Plan (the “***1997 Plan***”):

 
| **Grant Date** | ** ** | **No. of Shares** | ** ** | **Exercise  Price** | ** ** | **Shares Vested as of  Separation Date** | ** ** | **Equity Plan  Covering Option** | ** **     |
|----------------|------------|------------------------|------------|---------------------|------------|------------------------------------------|------------|----------------------------------|----------------|
| **09/21/01**   | ** ** | **68,000**             | ** ** | **$**               | **1.19**   | ** **                               | **68,000** | ** **                       | **1998  Plan** | ** ** |
| **05/01/02**   | ** ** | **20,000**             | ** ** | **$**               | **1.40**   | ** **                               | **20,000** | ** **                       | **1998  Plan** | ** ** |
| **08/29/05**   | ** ** | **24,000**             | ** ** | **$**               | **3.21**   | ** **                               | **18,000** | ** **                       | **1997  Plan** | ** ** |
| **06/15/06**   | ** ** | **30,000**             | ** ** | **$**               | **2.21**   | ** **                               | **15,000** | ** **                       | **1997  Plan** | ** ** |

 

C.    Except as specifically set forth herein,Employee was obligated to return all Iteris property, including any files,records, electronic data, computers, laptops, PDAs, cell phones, printers,reports, customer information, disc, keys, vehicles, or any property of anykind to Iteris as of the Separation Date; and

 

D.    Employee and Iteris desire to end theirrelationship amicably and resolve any potential disagreements between them, andany matters pertaining to Employee’s employment with Iteris as specified inthis Agreement and the Company has elected to offer Employee compensation andbenefits to which he would not otherwise be entitled.

 

**AGREEMENTS**

 

Based upon the foregoing, and in consideration of the mutual promisescontained in this Agreement, Employee and the Company (for its benefit and thebenefit of the other Company Parties as defined below) agree, effective uponthe date of execution by Employee, as follows:

 

1.         Acknowledgements.

 

## (a)           Payments Received.  Employee represents that he has full powerand authority to enter into this Agreement. Employee further acknowledges and agrees that he****has been paid allamounts due and owing as of the date of execution of this Agreement, includingbut not limited to, all regular salary, accrued but unused vacation and PTO,expenses, commissions, distributions, bonuses, stock and any other Companybenefits due and owing as of the date of execution of this Agreement, lessappropriate withholdings and Employee confirms he is not 

 

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## owed any moniesallowed, including but not limited to those required under the California LaborCode, as of the date of execution of this Agreement.  Employee further understands, agrees andacknowledges that such amounts are not consideration for this Agreement.

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## (b)           Options.  The date of cessation of Service as definedin the Options shall be the Separation Date, and Employee agrees that nofurther vesting of any of the Options will take place after the Separation Datepursuant to the terms of the Options, the 1997 Plan, the 1998 Plan, theapplicable option documents or any other agreement.  Employee acknowledges and agrees that exceptas indicated above, Employee does not own any options, warrants or any otherrights to acquire any securities of the Company.

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2.         Consideration and Effective Date.  The Parties recognize that, apart from thisAgreement, the Company is not obligated to provide employees with any of thebenefits set forth hereunder. The Company agrees to provide the Employee thefollowing consideration beginning no later than five (5) business daysafter the expiration of the seven (7) day revocation period described inParagraph 10 below (“***EffectiveDate***”), provided Employee has not revoked this Agreement asdescribed in that Paragraph.  The Company’sobligations are not triggered before the Effective Date.  Subject to Employee’s compliance with theterms and conditions of this Agreement, the Company agrees to provide Employeethe following consideration for agreeing to the obligations specified in thisAgreement as follows:

 

## (a)           Total SeverancePayment. Payment of four and one half months (780 hours) salary in theaggregate amount of Seventy-One Thousand Nine Hundred and Ninety-Four Dollars($71,994), less standard employee withholding taxes and other lawful deductionsthe Company deems appropriate, in eight (8) bi-weekly payments of$7,384.00 and one (1) final bi-weekly payment of $12,922.00 in accordancewith the Company’s regular payroll practices (the “***SeverancePayment***”).

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## (b)           COBRA.  Employee is advised that he may be an “assistanceeligible individual” as that term is used in American Recovery and ReinvestmentAct (the “***Act***”).  Employee will receive COBRA paperwork fromdirectly the Company’s COBRA administrator, Conexis, and must sign and returnthe form directly to Conexis to elect COBRA coverage.  Upon Employee’s timely election of COBRAcontinuation coverage under the Company’s health plan and the Company’s receiptfrom Employee of a copy of such election and proof of his timely payment of 35%of the first month of COBRA premiums, the Company will pay to Employee a lumpsum equal to 35% of the first month of COBRA premiums and the Company willcomply with its’ obligations under the Act and pay the remaining 65% of theCOBRA premiums through December 31, 2009 or until such time as Employeesubsequently becomes covered by another group health plan, whichever isearlier.  Employee agrees to notify theCompany immediately if he becomes covered by another group health plan.  Employee understands and assumes the riskthat the Employee may become ineligible for the subsidy by virtue of hismodified adjusted gross income or other facts and that there may be additionaltax liability as a result of the Company’s payment of this subsidy.  Employee is advised that he may waive hisright to the subsidy by contacting Conexis and hereby releases the Company fromany and all liability connected with his election or waiver of the subsidy.

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## (c)           OtherProperty.  Employee shall be allowedto take ownership of the laptop computer that has been assigned to him andprovided for his use, provided however, prior to the delivery to Employee ofsuch laptop computer, the Company shall remove from such laptop computer (i) anyinformation, documents, data or other proprietary information of, or relatedto, the Company or its business; and (ii) any software which is notproperly licensed for Employee’s personal use.

 

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3.         No Rights to Additional Benefit; No Admissionof Liability.Employee acknowledges and agrees that, apart from this Agreement, the Companyis not obligated to provide employees with any of the benefits set forth hereunder,including the Severance Payments and other consideration referenced inParagraph 2 and that such consideration is in exchange for entering into thisAgreement.  Employee will not at any timeseek additional consideration in any form from the Company except as expresslyset forth in this Agreement.  Employee further agrees and acknowledgesthat nothing contained in this Agreement shall constitute or be treated as anadmission of liability or wrongdoing by the Company, which liability or wrongdoingthe Company expressly denies.

 

4.             Taxes.  Notwithstanding the tax deductions set forthin Paragraph 2 above, Employee shall pay in full when due, and shall be solelyresponsible for, any and all federal, state or local income taxes that are ormay be assessed against him relating to the consideration provided, includingthe Severance Payment or other consideration received pursuant to thisAgreement, as well as all interest or penalties that may be owed in connectionwith such taxes.  Employee is not relyingon any representations or conduct of the Company with respect to the adequacyof the withholdings.

 

# 5.             Release.

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## (a)           Employee, on behalfof himself, his spouse, successors, heirs, and assigns, hereby foreverrelieves, releases, and discharges the Company as well as its past, present andfuture officers, directors, administrators, stockholders, employees, agents,attorneys, successors, subsidiaries, parents, assigns, representatives,brother/sister corporations, and all other affiliated or related corporations,all benefit plans sponsored by the Company, and entities, and each of theirrespective present and former agents, employees, or representatives, insurers,partners, associates, successors, and assigns, and any entity owned by oraffiliated with any of the above (all of the foregoing are collectivelyreferred to as the “***Company Parties***”) from anyand all claims, debts, liabilities, demands, obligations, liens, promises,acts, agreements, costs and expenses (including but not limited to attorneys’ fees), damages, actions, andcauses of action, of whatever kind or nature, including but not limited to anystatutory, civil, administrative, or common law claims, whether known orunknown, suspected or unsuspected, fixed or contingent, arising out of any actor omission occurring before Employee’s execution of this Agreement, includingbut not limited to any claims based on, arising out of, or related to Employee’semployment with, or the ending of Employee’s employment with the Company, anyclaims arising from rights under federal, state, and local laws relating to theregulation of federal or state tax payments or accounting; federal, state orlocal laws that prohibit harassment or discrimination on the basis of race,national origin, religion, sex, gender, age, marital status, bankruptcy status,disability, perceived disability, ancestry, sexual orientation, family andmedical leave, or any other form of harassment or discrimination or relatedcause of action (including but not limited to failure to maintain anenvironment free from harassment and retaliation, inappropriate comments ortouching and/or “off-duty” conduct of other Company employees); statutory orcommon law claims of any kind, including but not limited to, any allegedviolation of Title VII of the Civil Rights Act of 1964, The Civil Rights Act of1991, Sections 1981 through 1988 of Title 42 of the United States Code, asamended; The Employee Retirement Income Security Act of 1971, as amended, TheAmericans with Disability Act of 1990, as amended, the Workers Adjustment andRetraining Notification Act, as amended; the

 

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## OccupationalSafety and Health Act, as amended, the Sarbanes-Oxley Act of 2002, theCalifornia Family Rights Act (Cal. Govt. Code § 12945.2 et seq.), theCalifornia Fair Employment and Housing Act (Cal. Govt. Code § 12900 et.seq.), statutory provision regarding retaliation/discrimination for filing aworkers’ compensation claim under Cal. Labor Code § 132a, California UnruhCivil Rights Act, California Sexual Orientation Bias Law (Cal. Lab. Code§ 1101 et. seq.), California AIDS Testing and Confidentiality Law,California Confidentiality of Medical Information (Cal. Civ. Code § 56 et.seq.), contract, tort, and property rights, breach of contract, breach ofimplied-in-fact contract, breach of the implied covenant of good faith and fairdealing, tortious interference with contract or current or prospective economicadvantage, fraud, deceit, invasion of privacy, unfair competition, misrepresentation,defamation, wrongful termination, tortious infliction of emotional distress(whether intentional or negligent), breach of fiduciary duty, violation ofpublic policy, or any other common law claim of any kind whatsoever; any claimsfor severance pay, sick leave, family leave, liability pay, overtime pay,vacation, life insurance, health insurance, continuation of health benefits,disability or medical insurance, or Employee’s 401(k) rights or any otherfringe benefit or compensation, including but not limited to stock options; anyclaim for damages or declaratory or injunctive relief of any kind.  The Parties agree and acknowledge that therelease contained in this Paragraph 5 does not apply to any vested rightsEmployee may have under any 401(k) Savings Plan with the Company.  Employee represents that at the time of theexecution of this Agreement, he suffers from no work-related injuries and hasno disability or medical condition as defined by the Family Medical LeaveAct.  Employee represents that he has noworkers’ compensation claims that he intends to bring against the Company.  Employee understands that nothing containedin this Agreement, including, but not limited to, this Paragraph 5, will beinterpreted to prevent him from filing a charge with a governmental agency orparticipating in or cooperating with an investigation conducted by agovernmental agency.  However, Employeeagrees that he is waiving the right to monetary damages or other individuallegal or equitable relief awarded as a result of any such proceeding.

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## (b)          Mistakesin Fact; Voluntary Consent.  Employeeexpressly and knowingly acknowledges that, after the execution of thisAgreement, he may discover facts different from or in addition to those that henow knows or believes to be true with respect to the claims released in thisAgreement.  Nonetheless, this Agreementshall be and remain in full force and effect in all respects, notwithstandingsuch different or additional facts and Employee intends to fully, finally, andforever settle and release those claims released in this Agreement.  In furtherance of such intention, the releasegiven in this Agreement shall be and remain in effect as a full and completerelease of such claims, notwithstanding the discovery and existence of anyadditional different claims and Employee assumes the risk of mistakes, and ifEmployee should subsequently discover that any fact relied upon in enteringinto this Agreement was untrue or that his understanding of the facts or lawwas incorrect, he shall not be entitled to set aside this Agreement or thesettlement reflected in this Agreement or be entitled to recover any damages onthat account.

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## (c)           Section 1542of the California Civil Code. Employee expressly waives any and all rights and benefits conferred uponhim by Section 1542 of the California Civil Code, which states as follows:

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A GENERAL RELEASE DOESNOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST INHIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM ORHER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

 

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Accordingly, Employeeknowingly, voluntarily and expressly waives and relinquishes any rights andbenefits arising under Section 1542 of the California Civil Code and anyother statute or principle of similar effect.

 

6.             NoLawsuits.  Employee represents thathe has not filed any claims, charges, complaints or actions against the Companyor any Company Parties, or assigned to anyone any charges, complaints, claimsor actions against the Company or any Company Parties.  Employee agrees to take any and all stepsnecessary to insure that no lawsuit arising out of any claim released hereinshall ever be prosecuted by Employee or on his behalf in any forum, and herebywarrants and covenants that no such action has been filed or shall ever befiled or prosecuted.  Employee alsoagrees that if any claim is prosecuted in his name before any court oradministrative agency that he waives and agrees not to take any award or otherdamages from such suit to the extent permissible under applicable law.  Employeefurther agrees to cooperate fully with the Company in the event of a lawsuit orthreat of lawsuit arising out of acts and events occurred during Employee’semployment with the Company.

 

7.             Confidentiality/ Nondisparagment.  Employee agreesthat Employee will not disclose to others, except to the extent required bylaw, subpoena or by the Company’s independent auditors, (i) the fact orterms of this Agreement, (ii) the amounts referenced in this Agreement, (iii) thefact of the payment of these amounts,or (iv) anydisparaging information pertaining to or relating to Employee’s employmentwith, the Company’s employees or agents, or the ending of Employee’s employmentwith, the Company, except that he may disclose such facts to his attorneys,accountants, insurers or other professional advisors to whom the disclosure isnecessary to effect the purpose for which the professional has been consulted,provided that the professional agrees to be bound by his confidentialityprovision. Except as otherwise specifically provided herein, Employee agreesthat if ever asked to disclose any fact covered by this Paragraph he must statewords to the effect of “I cannot comment” until such time when the informationbecomes available in the public domain through no fault of Employee***.***

 

Nothing contained in thisParagraph shall preclude Employee from revealing or describing his****employmentwith the Company to prospective employers; provided however, such disclosureshall be limited to the fact that he was employed by the Company, the dates ofhis employment and the nature and depth of his job responsibilities andaccomplishments while employed by the Company. Employee agrees to direct all requests for references to Cathy Steger,Human Resources Director, c/o Iteris, Inc., 1700 Carnegie Avenue, Suite 100,Santa Ana, CA  92705 (Phone: (949)270-9679).  The Company acknowledges thatin describing Employee’s employment with the Company to his prospectiveemployer, any such disclosure shall be limited to the Company’s regularpractice of disclosure only of the last job title Employee held, dates ofemployment and any other information the Company has been required to discloseby the state or federal securities laws and filings.

 

The confidentialityobligations contained in this Paragraph shall be in addition to the IterisAssociate Agreement between the Company and Employee dated November 24,2003 (the “***Associate Agreement***”) anyother confidentiality agreements between the Parties.  Notwithstanding the foregoing**,** nothing in this Agreement shall be construed as precludingdisclosure where such disclosure is required and compelled by law.  In the event that Employee is required andcompelled by law to disclose any such matters, he will first give fifteen (15)days

 

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advance written notice(or, in the event that it is not possible to provide fifteen (15) days writtennotice, as much written notice as is possible under the circumstances) to theCompany so that the Company may present and preserve any objections that it mayhave to such disclosure and/or seek an appropriate protective order.  Employee acknowledges and agrees that thisParagraph is a material inducement to the Company’s entering into thisAgreement, and further acknowledges and agrees that any breach of thisParagraph by Employee shall be subject him to a claim for damages or equitablerelief (or both), including but not limited to injunctive relief.

 

8.         Proprietary Information and Return of Company Property.  Employee agrees to continue to abide by theterms and provisions of the Associate Agreement, a copy of which is attached asExhibit A to this Agreement.  Employee understands, acknowledges and agrees that whether or notEmployee signs this Agreement, he has both a contractual and common lawobligation to protect the confidentiality of the Company’s trade secretinformation after the termination of Employee’s employment for so long as theinformation remains confidential.   Employee further agrees to immediatelyreturn all Company property in his possession, including but not limited todocuments, all materials, documents, photographs, handbooks, manuals,electronic records, files, cellular telephones, keys and access cards, prior tothe Effective Date, provided however, Employee may retain his laptop computersubject to the provisions of Paragraph 2(c) above and may continue to usehis cellular phone until May 31, 2009 but shall immediately thereafterreturn such cellular phone to the Company..

 

9.         ADEA Waiver.  Employee specifically agrees andacknowledges:  (a) that his waiver of rights under this Agreement isknowing and voluntary as required under the Age Discrimination in EmploymentAct, 29 U.S.C. § 621 et. seq. and the Older Workers Benefit Protection Act; (b) thathe understands the terms of this Agreement; (c) that the Company advisesEmployee to consult with an attorney prior to executing this Agreement; (d) thatthe Company has given him a period of up to twenty-one (21) days within whichto consider this Agreement; (e) that, following his execution of thisAgreement, he has seven (7) days in which to revoke his agreement to thisAgreement as specified in Paragraph 10, and that, if he chooses not to sorevoke, the Agreement shall then become effective and enforceable and thepayment and extension of benefits listed above shall then be made to him inaccordance with the terms of this Agreement; and (f) nothing in thisAgreement shall be construed to prohibit him from filing a charge or complaint,including a challenge to the validity of the waiver provision of thisAgreement, with a government agency or the Equal Employment OpportunityCommission or participating in any investigation conducted by the EqualEmployment Opportunity Commission.  However, Employee agrees he is waivingthe right to monetary damages or other equitable or monetary relief as a resultof such proceedings.

 

10.       Revocation Period.  Employee may revoke this Agreement and hisrelease of claims, insofar as it extends to potential claims under the AgeDiscrimination in Employment Act, by informing Iteris of his intent to revoke his releasewithin seven (7) calendar days following his execution of thisAgreement.  Employee understands that anysuch revocation must be in writing and delivered by hand or by certified mail -return receipt requested - within the applicable seven (7) day period toCathy Steger, Human Resources Director, c/o Iteris, Inc. 1700 CarnegieAvenue, Suite 100, Santa Ana, CA 92705.  Employee understands thatif Employee exercises his right to revoke, then Iteris will have no obligationsunder this Agreement to Employee or to others whose rights derive from him.  The Agreement shall not become effective orenforceable, until the seven (7) day revocation period identified abovehas expired.  The terms of this Agreementshall be open for acceptance by Employee for a period of twenty-one (21)  calendar days, and Employee understands thathe should and the Company hereby advises him to, consult with legal counselregarding the releases contained herein and to consider whether to accept theCompany’s offer and sign the Agreement.

 

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11.           Nonassignment.  Employee represents and warrants that he hasnot assigned or transferred any portion of any claim or rights he has or mayhave to any other person, firm, corporation or any other entity, and that noother person, firm, corporation, or other entity has any lien or interest inany such claim.

 

12.           MiscellaneousProvisions.

 

## (a)          Integration.  This Agreement and documents and exhibitsreferenced and attached to this Agreement, constitute a single, integratedwritten contract expressing the entire Agreement of the Parties concerning thesubject matter referred to in this Agreement. No covenants, agreements, representations, or warranties of any kindwhatsoever, whether express or implied in law or fact, have been made by anyParty to this Agreement, except as specifically set forth in thisAgreement.  All prior and contemporaneousdiscussions, negotiations, and agreements have been and are merged andintegrated into, and are superseded by, this Agreement.

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## (b)          Modifications.  No modification, amendment, or waiver of anyof the provisions contained in this Agreement shall be binding upon any Partyto this Agreement unless made in writing and signed by both Parties, nor shallbe asserted by any Party based upon any act or performance unless evidenced bya specific writing acknowledging the same by the Party to be charged.

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## (c)          Severability.  Whenever possible, each provision of thisAgreement shall be interpreted in such a manner as to be effective and validunder applicable law and to carry out each provision herein to the greatestextent possible, but if any provision of this Agreement is held to be void,voidable, invalid, illegal or for any other reason unenforceable, the validity,legality and enforceability of the other provisions of this Agreement will notbe affected or impaired thereby, and will be interpreted so as to effect, asclosely as possible, the intent of the Parties hereto.

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## (d)          Non-Relianceon Other Parties.  Except forstatements expressly set forth in this Agreement, neither of the Parties hasmade any statement or representation to any other Party regarding a fact reliedon by the other Party in entering into this Agreement, and no Party has reliedon any statement, representation, or promise of any other Party, or of anyrepresentative or attorney for any other Party, in executing this Agreement orin making the settlement provided for in this Agreement.

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## (e)          NegotiatedAgreement.  The terms of thisAgreement are contractual, not a mere recital, and are the result ofnegotiations between the Parties. Accordingly, no Party shall be deemed to be the drafter of thisAgreement.

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## (f)           Successors andAssigns.  This Agreement shall inureto the benefit of and shall be binding upon the heirs, successors, and assignsof the Parties hereto and each of them. In the case of the Company, this Agreement is intended to release andinure to the benefit of the Company and the Company Parties.

 

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## (g)          Applicable Law.  This Agreement shall be construed inaccordance with, and governed by, the laws of the State of California withouttaking into account conflict of law principles.

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## (h)          Facsimile andCounterpart. This Agreement may be executed via facsimile and in one ormore counterparts, each of which shall be deemed an original, but all of whichtogether constitute one and the same instrument, binding on the Parties.

 

**EMPLOYEEACKNOWLEDGES AND AGREES THAT EMPLOYEE HAS CAREFULLY READ AND VOLUNTARILY SIGNEDTHIS AGREEMENT, THAT EMPLOYEE HAS HAD AT LEAST 21 DAYS IN WHICH TO CONSIDER ANDREVIEW THE AGREEMENT, THAT EMPLOYEE HAS HAD AN OPPORTUNITY TO CONSULT WITH ANATTORNEY OF EMPLOYEE’S CHOICE, AND THAT EMPLOYEE SIGNS THIS AGREEMENT WITH THEINTENT OF RELEASING THE COMPANY AND THE COMPANY PARTIES FROM ANY AND ALLCLAIMS.**

 
| **ACCEPTED  AND AGREED TO:** |                     |
|------------------------------|--------------------------|
|                         |                     |
| May 20, 2009            | May 20, 2009        |
| **ITERIS  SYSTEMS, INC.**    | EMPLOYEE:                |
| ** **                   |                     |
|                         |                     |
| By:                          | /s/ Abbas  Mohaddes      |   | /s/ Francis Memole |
|                         | Abbas Mohaddes,          |   | Name:Francis Memole |
|                         | Chief Executive  Officer |   | Address: |
|                         |                     |   |   |

 

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