Document:

Exhibit 10.2

 

EMPLOYMENT AND SEVERANCE AGREEMENT

 

This Employment and Severance Agreement (“Agreement”), dated as of September 7, 2014 (the “Effective Date”), is entered into by and between Justin Garrity (“Executive”) and TigerLogic Corporation (the “Company”).

 

1.                                      Duties and Scope of Employment.

 

(a)                            Position and Duties.  The Company agrees to employ Executive as its President, with all duties and powers customarily associated with such positions.  As the President, Executive shall report directly to the Company’s Chief Executive Officer.  Executive shall have such duties and authority as may be assigned by the Chief Executive Officer or the Board of Directors of the Company (the “Board”).

 

(b)                            Obligations to the Company.  Executive shall devote sufficient time, attention and energies to fulfill his duties as the President of the Company.  During his employment with the Company, Executive shall not be engaged in any competitive business activity without the express written consent of the Board (which may be withheld or conditioned at the sole discretion of the Board).  Executive may (i) participate in the activities of professional trade organizations beneficial and related to the business of the Company, (ii) engage in personal investing activities and/or charitable activities consistent with any Company policy conditioning, limiting or otherwise regulating investments and/or charitable activities (which may change from time to time) or (iii) with the advance written consent of the Board, serve as a member of the board of directors or advisory board (or their equivalents in the case of a non-corporate entity) of businesses that are not competitors of the Company, as determined in good faith by the Board, and charitable organizations; provided that activities set forth in these clauses (i), (ii) or (iii) do not, either individually or in the aggregate, interfere or otherwise conflict with the services to be provided by the Executive hereunder (as determined in good faith by the Board).

 

(c)                             No Conflicting Obligations.  Executive represents and warrants to the Company that he has no confidential and/or trade secret information of any of his prior employers (other than such information, if any, which is contained in his unaided memory) and is under no obligations or commitments, whether contractual or otherwise, that are inconsistent with his obligations under this Agreement.  Executive represents and warrants that he will not use or disclose, in connection with his employment by the Company, any trade secrets or other proprietary information in which Executive has any right, title or interest and that his employment by the Company as contemplated by this Agreement shall not infringe or violate the rights of any other person or entity.

 

(d)                            Other Employment Agreements Superseded.  Except as otherwise provided herein, this Agreement supersedes all previous employment agreements and offer letters between Executive and the Company, except with respect to requirements for continued compliance with federal immigration laws and Executive’s obligation to comply with the Company’s rules and standards of conduct, including those set forth in employee Handbook or code of conduct applicable to employees, generally. If Executive’s employment terminates for any reason or for no reason, he shall not be entitled to any payments, benefits, damages, awards

 

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or compensation other than as provided by this Agreement, or as may otherwise be established under the Company’s then existing employee benefit plans as of the date of termination.

 

2.                                      At-Will Employment.  Executive’s employment with the Company constitutes “at-will” employment; accordingly, the Company or Executive may terminate Executive’s employment at any time for any reason (or no reason), and with Cause or Without Cause and with or without advance notice, except as specifically provided otherwise herein.  Executive’s employment shall terminate automatically in the event of his death.

 

3.                                      Compensation and Benefits.

 

(a)                                 Base Salary.  The Company shall pay Executive as compensation for his services an annualized base salary of Two Hundred Twenty Thousand dollars ($220,000.00) (the “Base Salary”), less applicable deductions and withholdings, payable in periodic installments in accordance with the Company’s regular payroll practices in effect from time to time.  The Base Salary shall be reviewed and shall be subject to increase from time to time at the sole discretion of the Board.

 

(b)                                 Vacation.  Executive shall be eligible to receive paid time-off each year, including up to three weeks of vacation time per year, in accordance with the standard procedures and policies established by the Company and as may be modified from time to time.

 

(c)                                  Discretionary Bonus.  Executive shall be eligible for a discretionary bonus to be awarded from time to time by the Compensation Committee with the target of up to 50% of the Base Salary.

 

(d)                                 Employee Benefits.  For so long as Executive is employed by the Company hereunder (and such other time periods referenced in Section 4), Executive shall be entitled to participate in any employee benefit plans and programs (including any and all health, dental, vision, insurance programs and 401(k) plans) which are maintained by the Company for and generally available to similarly-situated employees of the Company, all in accordance with the terms and subject to the conditions of such plans and programs as in effect from time to time.  Such benefit plans and programs may be modified from time to time at the sole discretion of the Board.

 

(e)                                  Business Expenses.  Executive shall be authorized to incur necessary and reasonable expenses in connection with his duties hereunder.  Expenses shall be incurred pursuant to, and consistent with, policies and procedures as established by the Company and as may be modified from time to time.  The Company shall reimburse Executive for such expenses upon presentation of an itemized accounting and appropriate supporting documentation, in accordance with Company policy and procedures.

 

(f)                                   Equity Awards.  Executive may from time to time be granted equity awards under the Company’s equity incentive plan as then in effect.  Such grants, if any, shall be at the discretion of the Compensation Committee; provided, however, that in connection with Executive’s appointment as the President, Executive shall be entitled to receive a an incentive and/or nonqualified stock option to purchase up to 500,000 shares of the Company’s common stock at such exercise price as will be determined by the Compensation Committee at the time of

 

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grant in accordance with the terms and conditions of the applicable equity incentive plan and all applicable laws and regulations, which stock option will be an incentive stock option to the maximum extent possible under applicable law.  Conforming with the Company’s recent practices, such stock option grant shall be subject to the Company’s standard vesting terms, as follows, subject to your continued employment with the Company and subject to Section 4(b) below: (i) twenty-five percent (25%) of the shares underlying the option will vest and become exercisable on the first anniversary of the vesting commencement date, which shall be the Effective Date, and (ii) the remaining shares will vest and become exercisable with respect to one forty-eighth (1/48th) thereof on each monthly anniversary of the vesting commencement date thereafter. Executive will be required to sign appropriate stock options agreements governing the terms of any grants under the equity incentive plan.

 

4.                                      Payments and Benefits Following Termination of Employment.

 

(a)                                 Termination by the Company Without Cause or by the Executive due to an Involuntary Termination: Severance Payment. This Agreement may be terminated at any time by the Company Without Cause or by the Executive due to an Involuntary Termination by written notice of termination to the other party setting forth the effective termination date and a reasonably detailed explanation of the basis of such termination.  If the Company elects to terminate Executive’s employment Without Cause, or if Executive resigns due to an Involuntary Termination, Executive shall receive all Accrued Obligations (as defined below).  In addition, and subject to Section 4(d) of this Agreement, if the Company terminates Executive’s employment Without Cause, or Executive resigns due to an Involuntary Termination, then Executive shall be eligible for a lump sum payment equal to six (6) months of Base Salary as in effect at the time of  termination, plus an additional one month of Base Salary for each full year of employment with the Company up to a maximum of 12 months, in the aggregate, of Base Salary less applicable withholding taxes (the “Severance Payment”).  The Severance Payment shall be subject to applicable withholdings and other deductions as may be required by law from time to time or otherwise authorized by the Executive.

 

(b)                                 Termination in Connection  with a Change of Control.  If the employment of Executive is terminated Without Cause or Executive resigns due to an Involuntary Termination within 12 months after a Change of Control (as defined below), then subject to Section 4(f) of this Agreement, Executive shall, in addition to the benefits set forth in Section 4(a) of this Agreement be entitled to acceleration of the vesting of all outstanding stock awards under any equity incentive plan of the Company to the extent permitted under the terms of any such plan at the time such awards are granted and under applicable laws and regulations.

 

(c)                                  Termination for Cause or Resignation Other than Due to An Involuntary Termination.  This Agreement may be terminated at any time by the Company with Cause or by the Executive for any reason other than due to an Involuntary Termination by written notice of termination to the other party setting forth the effective termination date. In the case of resignation without Involuntary Termination, Executive shall provide a 30-day notice to the Company.  In the case of termination by the Company for Cause, the notice of termination shall set forth a reasonably detailed explanation of the basis on which the Company claims Cause for the termination.  In the event that (i) Executive’s employment is terminated by the Company at any time for Cause or (ii) Executive terminates his employment at any time for any reason other

 

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than an Involuntary Termination, then, in any such case, upon the termination of Executive’s employment, the Executive shall be entitled to receive from the Company all Accrued Obligations.  Executive shall not be entitled to receive any other payments or benefits by or from the Company except as otherwise required pursuant to COBRA and the terms of any Company employee benefit plan, including, without limitation, any Company equity incentive plan.

 

(d)                                 Conditions to Receipt of Severance Payment.  As a prior condition to Executive receiving any Severance Payment under Section 4(a), as applicable, of this Agreement, Executive shall satisfy the following conditions.

 

(i)                                     Release.  Executive shall execute a Separation Agreement and Release (the “Release”) within such period as is specified in the Release and this Section 4(d) after termination of Executive’s employment (whether by the Company or by Executive) and not later revoke such Release.  The form of Release shall be provided to Executive within five days following the termination of Executive’s employment.  Executive shall forfeit all rights to the Severance Payment unless such Release is signed and delivered and no longer subject to revocation (if applicable) within 45 days following the date of Executive’s termination; provided that the foregoing requirements of this Section 4(d) are met, the Severance Payments shall be made on the 60th day following the date of Executive’s termination.

 

(ii)                              Other Conditions and Agreements.  Executive shall comply with the nonsolicitation obligations set forth in Section 9 of this Agreement and with his obligations under the Company’s At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement.

 

(e)                                  Termination Due to Death or Disability.  This Agreement shall terminate immediately upon the death or Disability of the Executive.  In any such case, the Executive, or Executive’s estate, shall be entitled to receive from the Company all Accrued Obligations and shall be entitled to no other payments or benefits by the Company except as otherwise required for a direct family dependents pursuant to COBRA and the terms of any Company employee benefit plan, including, without limitation, any Company equity incentive plan or disability insurance plans.

 

(f)                                   Parachute Payments.  If any payment or benefit Executive would receive in connection with a Change of Control from the Company or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be either delivered in full, or delivered as to such lesser extent which would result in no portion of such Payment being subject to the Excise Tax, whichever of the foregoing amounts, taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax, results in the Executive’s receipt, on an after-tax basis, of the greater amount of the Payment, notwithstanding that all or some portion of the Payment may be subject to the Excise Tax.  If a reduction in payments or benefits constituting a “parachute payment” is necessary, reduction shall occur in the following order:  reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of employee benefits.  In the event the acceleration of vesting of stock award compensation is to be reduced, such acceleration of

 

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vesting shall be cancelled in reverse order of the date of grant of Executive’s stock awards.   Unless Company and the grantee otherwise agree in writing, any determination required under this Section shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes.  For purposes of making the calculations required by this Section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable good faith interpretations concerning the application of Section 280G and 4999 of the Code.  The Company and Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section.  The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section.

 

(g)                                  Definitions.

 

(i)                                “Accrued Obligations” shall mean: (A) Executive’s full Base Salary accrued as of the last day of Executive’s employment with the Company; (B) a cash payment covering all accrued and unused paid time off (if any) earned through the last day of Executive’s employment with the Company; and (C) any unreimbursed business expenses under Section 3(e).

 

(ii)                             “Involuntary Termination” except as provided below, for all purposes under this Agreement, “Involuntary Termination” means Executive’s resignation or other termination of employment due to the occurrence of any of the following events: (A) without Executive’s express written consent, the substantial reduction of Executive’s duties or responsibilities relative to Executive’s duties or responsibilities in effect immediately prior to such reduction; provided, however, that a reduction in duties or responsibilities solely by virtue of the Company being acquired and made part of a larger entity (as, for example, when the Vice President of the Company remains as such following a Change of Control and is not made the Vice President of the acquiring corporation) shall not constitute “Involuntary Termination”; (B) without Executive’s express written consent, a material reduction by the Company in Executive’s base compensation as in effect immediately prior to such reduction; (C) without Executive’s express written consent, a material reduction by the Company in the kind or level of employee benefits package is significantly reduced; (D) Executive’s relocation to a facility or a location more than 50 miles from Executive’s then present location, without Executive’s express written consent; (E) any purported termination of Executive by the Company which is not for death, Disability or for Cause; or (F) the failure of the Company to obtain the assumption of this Agreement by any successors.  Moreover, a resignation by Executive shall not be considered to be a resignation due to an Involuntary Termination unless (A) Executive notifies the Company of the event constituting the Involuntary Termination within 30 days of the occurrence of such event, (B) the Company fails to remedy such event within 30 days after receiving such notice and (C) Executive resigns more than 31 days, but not more than 60 days, after the Company receives such notice and before the Company remedies the event.

 

(iii)                          “Cause” shall mean a termination of Executive’s employment for any of the following reasons:  (A) gross and willful failure to perform services; (B) conviction of, or a plea of “guilty” or “no contest” to, a felony under the laws of the United States or any state thereof, if such felony either is work-related or materially impairs Executive’s ability to

 

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perform services for the Company; (C) a material breach of fiduciary duty, including fraud, embezzlement, dishonesty or any intentional action that materially injures the Company as determined in good faith by the Company’s Board of Directors; or (D) a material breach of the At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement.  In all of the foregoing cases, the Company shall provide written notice to Executive indicating in reasonable detail the event or circumstances that constitute Cause under this Agreement and the Company will provide Executive 45 days to cure such breach or failure prior to termination for Cause.  During such 45-day cure period, the Company may place Executive on unpaid leave.  A termination of Executive’s employment by the Company in any other circumstance or for any other reason will be a termination “Without Cause.”

 

(iv)                         “Disability” shall mean Executive is physically or mentally unable regularly to perform his duties hereunder for a period in excess of 60 consecutive days or more than 90 days in any consecutive 12 month period.  The Company shall make a good faith determination of whether Executive is physically or mentally unable to regularly perform his duties subject to its review and consideration of any physical and/or mental health information provided to it by Executive.

 

(v)                            “Change of Control” shall mean:  (A) any “person” (a such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) who becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities, provided, however, that Change in Control shall not include any change resulting from any capital financings of the Company; or (B) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or (C) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least (50% of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

 

5.                                      Successors.

 

(a)                            Company’s Successors.  This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets.  The Company shall require any successor, by agreement in form and substance reasonably satisfactory to the Executive, to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets that becomes bound by this Agreement.

 

(b)                            Executive’s Successors.  This Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

 

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6.                                      Arbitration.  In the event of any dispute or claim relating to or arising out of Executive’s employment relationship or its termination, Executive and the Company agree that (a) any and all disputes between Executive and the Company (or any of its agents, officers, directors, or employees, each of whom is an intended beneficiary of this agreement to arbitrate) must be resolved exclusively through final and binding arbitration, (b) as a result of this mutual agreement to arbitrate, both Executive and the Company are waiving any and all rights to a trial before a court and/or jury, but all remedies that would be available in court will be available in arbitration, (iii) all disputes shall be resolved by a neutral arbitrator who shall issue a written opinion, (iv) the arbitration shall provide for adequate discovery and (v) the Company shall pay all arbitration forum fees, but each party shall be responsible for its own attorney fees and legal costs except as otherwise provided by law.  This agreement to arbitrate does not apply to claims that may be brought before the National Labor Relations Board.

 

7.                                      WAIVER OF RIGHT TO JURY.  EXECUTIVE AND THE COMPANY UNDERSTAND AND AGREE THAT THE ARBITRATION OF DISPUTES AND CLAIMS UNDER THIS AGREEMENT SHALL BE INSTEAD OF A TRIAL BEFORE A COURT OR JURY.

 

8.                                      Confidential Information.  Executive shall abide by the Company’s rules and regulations.  Executive agrees to maintain the confidentiality of all confidential, proprietary, and trade secret information of the Company.  Executive shall abide by the terms of the At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement.

 

9.                                      Nonsolicitation.  For a period of one (1) year following the termination of Executive’s employment for any reason, Executive agrees that he shall not, directly or indirectly, (a) divert or attempt to divert from the Company (or any subsidiary of, or another entity controlled by, the Company) any business of any kind in which it is engaged, including, without limitation, the solicitation of or interference with any of it suppliers or customers or (b) solicit, hire, recruit, or employ any person or entity who is employed by or has a contractual relationship with the Company, or encourage any person or entity who is employed by or has a contractual relationship with the Company to terminate their employment or contractual relationship with the Company.

 

10.                               Miscellaneous Provisions.

 

(a)                            Notice.  Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by overnight courier, U.S. registered or certified mail, return receipt requested and postage prepaid.  Mailed notices shall be addressed to Executive at the home address which he most recently communicated to the Company in writing.  In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

 

(b)                            Modifications and Waivers.  No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive).  No waiver by either party of any breach of, or of compliance with, any condition or

 

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provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

 

(c)                             Entire Agreement. No other agreements, representations or understandings (whether oral or written) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject matter of this Agreement.  This Agreement, the At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement, and applicable equity incentive plans (and related agreements) contain the entire understanding of the parties with respect to the subject matter hereof.

 

(d)                            Taxes.  All payments made under this Agreement shall be subject to reduction to reflect taxes or other charges that are required to be withheld by applicable law.

 

(e)                             Choice of Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California.

 

(f)                              Severability.  The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

 

(g)                             No Assignment.  This Agreement and all rights and obligations of Executive hereunder are personal to Executive and may not be transferred or assigned by Executive.

 

(h)                            Headings.  The headings of the sections contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement.

 

(i)                                Counterparts.  This Agreement may be executed in multiple counterparts (including facsimile and electronic “.pdf” copies thereof), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

(j)                               Compliance with Section 409A.  The parties intend that this Agreement (and all payments and other benefits provided under this Agreement) be exempt from the requirements of Section 409A of the Code and the regulations and ruling issued thereunder (collectively “Section 409A”), to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise.  To the extent Section 409A is applicable to such payments, the parties intend that this Agreement (and such payments and benefits) comply with the deferral, payout and other limitations and restrictions imposed under Section 409A.  Notwithstanding any other provision of this Agreement to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with such intentions.  Without limiting the generality of the foregoing, and notwithstanding any other provision of this Agreement to the contrary:

 

(i)                                     if at the time Executive’s employment terminates, Executive is a “specified employee,” as defined in Treasury Regulation Section 1.409A-1(i) and determined using the identification methodology selected by the Company from time to time, or if none, the

 

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default methodology, any and all amounts payable under this Agreement on account of such termination of employment that would (but for this provision) be payable within six (6) months following the date of termination, shall instead be paid in a lump sum on the first day of the seventh month following the date on which Executive’s employment terminates or, if earlier, upon Executive’s death, except (i) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treasury Regulation Section 1.409A-1(b) (including without limitation by reason of the safe harbor set forth in Treasury Regulation Section 1.409A1(b)(9)(iii), as determined by the Company in its reasonable good faith discretion); (ii) benefits which qualify as excepted welfare benefits pursuant to Treasury Regulation Section 1.409A 1(a)(5); and (iii) other amounts or benefits that are not subject to the requirements of Section 409A;

 

(ii)                             a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service,” as defined in Treasury Regulation Section 1.409A-1(h) after giving effect to the presumptions contained therein, and, for purposes of any such provision of this Agreement, references to a “terminate,” “termination,” “termination of employment,” “resignation,” “resign” and like terms shall mean separation from service;

 

(iii)                          each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement, including, without limitation, under Section 4(a), shall be treated as a right to a series of separate payments;

 

(iv)                         with regard to any provision in this Agreement, including, without limitation, Section 3(e), that provides for reimbursement of expenses or in-kind benefits, except for any expense, reimbursement or in-kind benefit provided pursuant to this Agreement that does not constitute a “deferral of compensation,” within the meaning of Treasury Regulation Section 1.409A-1(b) (including, without limitation, by reason of the safe harbor set forth in Treasury Regulation Section 1.409A-1(b)(9)(iii), as determined by the Company in its reasonable good faith discretion), (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year and (iii) such payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense occurred; and

 

(v)                            in no event shall the Company or any of its parents, subsidiaries or affiliates, be liable for any additional tax, interest or penalty that may be imposed on Executive by Section 409A or damages for failing to comply with, or be exempt from, Section 409A.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer or member of the Board, as of the day and year first above written.

 

 

	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Justin Garrity
    
	
 
    	
 
    	
Name:   Justin Garrity
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TIGERLOGIC   CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Brad Timchuk
    
	
 
    	
 
    	
Name:   Brad Timchuk
    
	
 
    	
 
    	
Title:   Chief Executive Officer
    

 

10Exhibit 10.3

 

 

September 7, 2014

 

Mr. Richard Koe

c/o TigerLogic Corporation

 

Dear Rick:

 

This letter sets forth the substance of the resignation and transition agreement (the “Agreement”) that TigerLogic Corporation (the “Company”) is offering to you.

 

1.                                      General.  Your mutually agreed employment termination date is March 7, 2016 (the “Target Resignation Date”).  For purposes of this Agreement, the date of your actual resignation, whether on or before the Target Resignation Date, shall be called the “Resignation Date,” and the period between your execution of this Agreement through the Resignation Date shall be called the “Transition Period.”

 

2.                                      Status of Other Agreements.  Your separation from employment on the Target Resignation Date (and on any other Resignation Date) will be considered a voluntary resignation for purposes of your Amended and Restated Employment and Severance Agreement dated January 17, 2013 (the “Employment Agreement”).  In addition, you agree that any termination of employment during the Transition Period shall not be subject to the provisions of Article 4 of the Employment Agreement, and that you shall not be eligible to receive any future severance, termination, notice, or like payments except as expressly provided in this Agreement.  All indemnification agreements and arrangements between you and the Company will remain in full force and effect and nothing in this Agreement will reduce or limit any of your rights to indemnification, insurance coverage, or other protection from liability related to your activities with respect to the Company under any of those agreements or otherwise.

 

3.                                      Economic Terms of Employment During the Transition Period.  You will continue to draw the same base salary during the Transition Period, but will not accrue any additional paid time off (“PTO”).  You will be eligible to continue your participation in the Company’s benefit plans on the same terms and conditions as those in effect immediately before signing this Agreement.  However, you will not be eligible for any bonuses, incentive payments, or like payments.

 

4.                                      Duties During Transition Period.  Effective immediately, you will no longer serve as the Company’s Chief Executive Officer and President, and you hereby resign from each of these positions, but will instead serve through the Transition Period as the Company’s non-executive Advisor.  In this role, you will be expected to provide advice to the Board of Directors (the “Board”), a committee thereof, or others specifically designated by the Board, on an as-needed basis, as requested by the Company in writing or via email (the “Transition Duties”), subject to your reasonable availability.  During the Transition Period: (i) you will not participate as an Advisor in Company activities, except as specifically requested by the Company’s Board or the Chief Executive Officer and (ii) you will have no management responsibilities and may

 

 

not delegate work or give work assignments to Company employees without the prior request or approval of the Company’s Board or the Chief Executive Officer.  You will continue to serve as a member of the Board until your resignation, replacement or removal.

 

5.                                      Termination.  Termination is governed by one of the following three provisions:

 

(a)                                 Early Termination By You.  Your employment is terminable by you at will.  Accordingly, you may terminate your employment at any time, with or without cause, and with or without advance notice.  In the event you do so, causing your Resignation Date to occur earlier than the Target Resignation Date, above, you will be entitled to receive only your salary earned through the Resignation Date, as well as any accrued but unused PTO (“Accrued Obligations”).  The Accrued Obligations will be paid on your termination date.

 

(b)                                 Early Termination by the Company.  Similarly, the Company may elect to terminate you at any time, with or without cause, and with or without advance notice.  In the event it does so, causing your termination date to occur earlier than the Target Resignation Date, the Company shall pay you the following amounts, on the following schedule: (a) the Accrued Obligations, on your termination date; and (b) “Severance Benefits” equal to (i) the amount of base salary you would have earned between the date of your employment termination and the Target Resignation Date and (ii) a lump sum equal to $35,000, in each case payable on the 60th day following your termination of employment, provided that before that date you have signed and not timely revoked a general release of known and unknown claims in substantially the form set forth on in Exhibit A hereto.  However, the Company shall not be responsible to pay you Severance Benefits if the reason for your termination is a willful material breach of this Agreement or the Employment Agreement.  For purposes of this Agreement, and for avoidance of doubt, the term “willful” in the context of a “willful material breach” shall mean an act (or an omission) that is done knowingly and intentionally, as distinguished from an act (or an omission) done carelessly, accidentally or inadvertently.

 

(c)                                  Termination on the Target Resignation Date.  If your employment terminates as planned on the Target Resignation Date, then the Company shall pay you the following amounts, on the following schedule: (a) the Accrued Obligations, on the Target Resignation Date; and (b) a lump sum of $5,000, payable on the 60th day following your termination of employment provided that before that date you have signed and not timely revoked a general release of known and unknown claims in substantially the form set forth on in Exhibit A hereto.

 

6.                                      Proprietary Information Obligations; Nonsolicitation.  You acknowledge and reaffirm your continuing obligations under your At-Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement between you and the Company and under Section 9 (“Nonsolicitation”) of the Employment Agreement.

 

7.                                      Cooperation and Assistance.  You agree that you will not bring, induce or encourage any person or entity to bring any claim or cause of action against the Company

 

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relating to your employment with the Company through the date of this Agreement or your resignation as CEO and President, or voluntarily provide assistance, information or advice, directly or indirectly (including through agents or attorneys), to any person or entity in connection with bringing such claims.  However, it will not violate this Agreement if you testify truthfully when required to do so by a valid subpoena or under similar compulsion of law.  Nothing in the foregoing shall affect your right to cooperate with the appropriate law enforcement authorities in the exercise of their duties.

 

8.                                      No Admissions.  You and the Company understand and agree that the promises and payments in consideration of this Agreement will not be construed to be an admission of any liability or obligation by the Company or you to the other or to any other person, and that neither the Company nor you makes any such admission.

 

9.                                      Furniture Rental Payments.  For such time as the Company continues to make use of the personal furniture of Astoria Capital Management (“ACM”), an entity controlled by you, in its offices, the Company shall make payments to ACM in the monthly sum of $2,000 as rental fee for the furniture.  Such payments will be made within 30 days of the end of the rental month and will terminate upon a written notice from the Company that it no longer desires to continue to rent the furniture.  At the termination of the rental arrangements, the Company will pay for the costs of moving the furniture to a local location you designate.

 

10.                               Employee’s Acknowledgments. You acknowledge that you are responsible for paying any taxes that may be assessed or payable on amounts subject of this Agreement, and you agree that the Company is to withhold all taxes it determines it is legally required to withhold.

 

11.                               Publicity; Confidentiality.  You and the Company acknowledge that the Company will be required to disclose publicly the information about your resignation as the Company’s CEO and President and to file this Agreement with the Securities and Exchange Commission (“SEC”).  You may disclose this Agreement and its terms, prior to the Company’s filing of it with the SEC, to partners in Astoria Capital Partners, L.P., and their representatives, who have agreed to be bound by nondisclosure agreements previously entered into with the Company.  You will have the opportunity to review and approve any statement in the Company’s disclosures publicly filed with the SEC (including its press release, whether or not such press release is filed with the SEC) regarding this Agreement or your resignation as the Company’s CEO and President, which approval you will not unreasonably withhold or delay; provided, that it is understood that such review and approval is limited to the initial public disclosures of the foregoing and shall not apply to the repetition thereof in subsequent public filing or any other disclosures or statements not inconsistent with the initial public disclosures.

 

12.                               Section 409A.  The payments provided under this Agreement are intended to be exempt from, or alternatively, comply with, the requirements of Section 409A of the Internal Revenue Code (including the exceptions thereto, “Section 409A”), to the extent applicable, and the Company shall administer and interpret this Agreement in accordance with Section 409A and any regulations and guidance promulgated thereunder.  If any provision contained in the

 

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Agreement conflicts with the requirements of Section 409A (or the exemptions intended to apply under the Agreement), the Agreement shall be deemed to be reformed to comply with the requirements of Section 409A (or the applicable exemptions thereto) in a manner that provides you with the same or equivalent economic benefits to the maximum extent practicable.

 

13.                               Miscellaneous.  This Agreement constitutes the complete, final and exclusive embodiment of the entire agreement between you and the Company with regard to its subject matter.  It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations.  This Agreement may not be modified or amended except in a writing signed by both you and a duly authorized officer of the Company.  This Agreement will bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Company, their heirs, successors and assigns.  If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the provision in question will be modified so as to be rendered enforceable and, to the maximum extent practicable, to provide you with the economic benefits contemplated by this agreement.  This Agreement will be deemed to have been entered into and will be construed and enforced in accordance with the laws of the State of California without regard to conflict of laws principles.  Any ambiguity in this Agreement will not be construed against either party as the drafter.  Any waiver of a breach of this Agreement will be in writing and will not be deemed to be a waiver of any successive breach.  This Agreement may be executed in counterparts and facsimile signatures will suffice as original signatures.

 

[Signature page to Follow]

 

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If this Agreement is acceptable to you, please sign below and return the original to me.

 

We are looking forward to your continued contribution to the Company.

 

Sincerely,

 

	
TIGERLOGIC CORPORATION
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Philip D. Barrett
    	
 
    
	
 
    	
Philip   D. Barrett
    	
 
    
	
 
    	
Title:   Director, Chairman of Compensation Committee
    	
 
    

 

 

I HAVE READ, UNDERSTAND AND AGREE FULLY TO THE FOREGOING AGREEMENT:

 

	
/s/ Richard W. Koe
    	
 
    
	
Richard W. Koe
    	
 
    
	
 
    	
 
    
	
September   7, 2014
    	
 
    
	
Date:
    	
 
    

 

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EXHIBIT A

 

Form of General Release of Known and Unknown Claims

 

1.                                      General Release of Claims. In exchange for [the “Severance Benefits” described in Section 5(b) or the “lump sum” described in Section 5(c)] of the Resignation and Transition Agreement between TigerLogic Corporation (the “Company”) and me of September 7, 2014 (“Agreement”), I hereby release the Company, its parents, subsidiaries and other affiliated entities, and their officers, directors, employees, attorneys, stockholders, successors, assigns and affiliates, of and from any and all claims, liabilities, and causes of action of every kind and nature, whether known or unknown, suspected or unsuspected, based upon or arising out of my employment with the Company or the termination of that employment and any agreements, events, acts, omissions or conduct at any time prior to and including the execution date of this Release related thereto, to the maximum extent permitted by law, but excluding those matters limited in Section 4 below.  The claims I am releasing include, but are not limited to: all claims pursuant to any federal, state or local law, statute, or cause of action relating to my employment with the Company or the termination of that employment, including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Americans with Disabilities Act of 1990; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the California Fair Employment and Housing Act, as amended; the Oregon Civil Rights Act; the Oregon Family Leave Act; the Oregon Private Whistleblower Act; tort law; contract law; wrongful discharge; race, sex, age or other discrimination or harassment; fraud; defamation; emotional distress; breach of the Employment Agreement; and breach of the implied covenant of good faith and fair dealing.

 

2.                                      Release Extends to Claims Under the ADEA. I am knowingly, willingly and voluntarily releasing any claims I may have under the ADEA. I acknowledge that the consideration given for the release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (a) this Release does not apply to any rights or claims that may arise after I sign it; (b) I have the right to consult with an attorney prior to signing this Release; (c) I have twenty-one (21) days to consider this Release (although I may choose to voluntarily sign this Release earlier); (d) I have seven (7) days after I sign this Release to revoke it; and (e) this Release shall not be effective until the eighth day after it is signed by me.

 

3.                                      Release Extends to Unknown or Unsuspected Claims. In giving this release, which includes claims that I do not know or suspect to exist, I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” I hereby waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any

 

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unknown claims I may have, and I affirm that it is my intention to release all known and unknown claims that I have or may have against the parties released above.

 

4.                                      Limitations of Release. Notwithstanding any other provision of this Release to the contrary, this Release is subject to the following limitations:

 

4.1                                                  This Release does not release or waive compensation due to me as Accrued Obligations under the Agreement.

 

4.2                                                  This Release does not release or waive any right that may not lawfully be released or waived by private agreement, including the right of indemnification or employee expense reimbursement under Section 2802 of the California Labor Code.

 

4.3                                                  This Release does not release or waive any rights to indemnification under any contract, document or arrangement to the extent it provides me with indemnification rights, or any vested benefits under an employee benefit plan.

 

4.4                                                  This Release does not waive my right to file a charge with or participate in the proceedings of government agencies that enforce employment laws, such as the U.S. Equal Employment Opportunity Commission. I agree, however, that this Release will bar me from recovering any damages or other remedy that inures to my personal benefit as a result of any such government proceeding.

 

5.                                      Non-Admission.  Nothing in this Release shall be construed as an admission by the Company or me of any wrongdoing by it or its affiliates or of any liability arising from the subjects covered in this Release.

 

6.                                      Confidentiality Provision. I acknowledge that the Company will be required to disclose publicly the information about my resignation as the Company’s CEO and President and to file the Agreement with the Securities and Exchange Commission (“SEC”).  I understand that I may disclose the Agreement and its terms, prior to the Company’s filing of it with the SEC, to partners in Astoria Capital Partners, L.P., and their representatives, who have agreed to be bound by nondisclosure agreements previously entered into with the Company.  I understand that I will have had the opportunity to review and approve any statement in the Company’s disclosures publicly filed with the SEC (including its press release, whether or not such press release is filed with the SEC) regarding this Agreement or my resignation as the Company’s CEO and President, which approval you would not unreasonably withhold or delay; provided, that it is understood that such review and approval is limited to the initial public disclosures of the foregoing and shall not apply to the repetition thereof in subsequent public filing or any other disclosures or statements not inconsistent with the initial public disclosures.

 

7.                                      Miscellaneous. Except to the extent governed by federal law, this Release is governed by California law without regard to its conflicts of law principals. This Release contains the entire agreement between the Company and me regarding the subjects above, and it cannot be modified except by a document signed by me and an authorized representative of the

 

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Company. Any dispute under this Release shall be resolved in accordance with Article 6 (“Arbitration”) of the Employment Agreement.

 

Notice to Employee: This Release includes a general release of known and unknown claims.  Please read it carefully.  You are encouraged to review this Release with an attorney of your choice before signing it.

 

 

	
 
    	
RICHARD   W. KOE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Signature
    

 

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