Document:

eqr-ex101_18.htm

 

Exhibit 10.1 

 

EQUITY RESIDENTIAL
2022 LONG-TERM INCENTIVE PLAN AWARD AGREEMENT

 

This 2022 Long-Term Incentive Plan Award Agreement (the “Award Agreement”) is made as of January 1, 2022 between Equity Residential (the “Company”) and _______________ (the “Grantee”).

 

RECITALS

 

A.The Company, acting pursuant to authorization from its Board of Trustees and its Compensation Committee (the “Compensation Committee”), hereby grants the Grantee a Long-Term Incentive Plan Award (“Award”) as of the date hereof and as more fully set forth on Schedule A.

 

B.The Grantee can be issued, or retain, as the case may be, from 0% to 200% of the target number of Restricted Shares and/or Restricted Units that comprise the Award based on the Company’s relative Total Shareholder Return (“TSR”) and achievement of Normalized Funds From Operations (“NFFO”) and Net Debt to Normalized EBITDAre (defined herein) relative to a target, as further described herein, for the period beginning January 1, 2022 and ending December 31, 2024 (the “Performance Period”).

 

C.Restricted Shares are unvested common shares of beneficial interest of the Company.  Restricted Units are a special class of interest in ERP Operating Limited Partnership (“ERP”), the Company’s operating partnership.  Both Restricted Shares and Restricted Units are subject to vesting and other tax considerations.  Each Restricted Unit is convertible, under certain conditions, into one OP Unit, which is a class of partnership interest in ERP that can be exchanged for a common share in the Company.  Any Restricted Units issued under the Award will be known as the Series 2022A Restricted Units and are issued subject to the terms and conditions contained in the Certificate of Designation of Series 2022A Restricted Units of ERP Operating Limited Partnership dated of even date herewith.

 

D.The Award, issued pursuant to the Company’s 2022 Long-Term Incentive Plan (“LTI Plan”) and its 2019 Share Incentive Plan (“2019 Share Plan”), references a target number of Restricted Shares and/or Restricted Units.  The Grantee previously made an election to have the Award settled after the end of the Performance Period in the form of either Restricted Shares and/or Restricted Units.  To the extent that the Grantee elected to receive Restricted Units, the Restricted Units are being issued as of the date hereof at the maximum 200% of the target amount, but the ultimate number of Restricted Units to be retained by Grantee is subject to final determination at the end of the Performance Period as provided in Section 1(f) hereof.  To the extent that the Grantee elected to receive Restricted Shares, such shares are not being issued as of the date hereof, but the Award will be settled after the end of the Performance Period in the form of Restricted Shares.

 

NOW, THEREFORE, the Company and the Grantee agree as follows:

 

 

 

 

	
1.
	
Performance Metrics

 

The following “Performance Metrics” will determine the actual number of Restricted Shares and/or Restricted Units the Grantee may earn pursuant to the Award at the end of the Performance Period:

 

a.Company TSR relative to Apartment Index Weighted Average TSR:  A percentage of 35% of the target Award will be earned based on the relative performance of the Company’s TSR to the weighted average of the TSR of the member companies comprising the FTSE Nareit Equity Apartments Index, as adjusted to exclude the Company from the index (the “Apartment Index”), for the Performance Period as follows:

 

		
	
Company TSR Performance relative to Apartment Index Weighted Average TSR
	
Percentage of

35% Earned

	
more than 400 basis points below average
	
0%

	
400 basis points below average (“threshold”)
	
50%

	
Equal to the average (“target”)
	
100%

	
400 basis points or more above average (“maximum”)
	
200%

 

b.Company TSR relative to Equity Index Weighted Average TSR:  A percentage of 20% of the target Award will be earned based on the relative performance of the Company’s TSR to the weighted average of the TSR of the member companies comprising the FTSE Nareit Equity REIT Index, including the Company (the “Equity Index”), for the Performance Period as follows:

 

		
	
Company TSR Performance relative to Equity Index Weighted Average TSR
	
Percentage of

20% Earned

	
more than 500 basis points below average
	
0%

	
500 basis points below average (“threshold”)
	
50%

	
Equal to the average (“target”)
	
100%

	
500 basis points or more above average (“maximum”)
	
200%

 

c.Net Debt to Normalized EBITDAre relative to a target established for each period:  A percentage of 22.5% of the target Award will be earned based on the Company’s achievement of Net Debt to Normalized EBITDAre relative to a target established by the Compensation Committee at the beginning of the Performance Period as follows:

 

		
	
Net Debt to Normalized EBITDAre relative to Company’s target Net Debt to Normalized EBITDAre expectations
	
Percentage of 22.5% Earned

	
More than 6.50x
	
0%

	
6.50x (“threshold”)
	
50%

	
5.30x to 5.70x (“target”)
	
100%

	
4.50x (“maximum”)
	
200%

 

The achievement of this metric shall be determined on a quarterly basis and the average of the twelve quarters of each quarterly computation in the Company’s quarterly earnings releases shall be used in the final determination of the Award.

 

 

 

 

d.NFFO relative to a target established for each calendar year:  A percentage of 22.5% of the target Award will be earned based on the Company’s achievement of NFFO relative to a target established by the Compensation Committee for each year of the three-year Performance Period.

 

No later than March 31 of each calendar year, the Compensation Committee shall establish the threshold, target and maximum NFFO performance level metrics for such calendar year.  In no event will target be less than the midpoint of the Company’s range of NFFO expectations for the year, provided that the Compensation Committee may specify a range above and below the midpoint to be paid at target and except as provided in Section 2(e).  The achievement of this metric shall be determined on an annual basis and the average of the three years shall be used in the final determination of the Award.

 

To the extent the Company is using a NFFO performance metric with threshold (50%) and maximum (200%) limits in its Annual Incentive Plan Corporate Goals for any calendar year, it shall use the same threshold and maximum metrics in the NFFO metric hereunder.

 

The following is an example of a sample NFFO performance metric:

 

		
	
 

NFFO relative to Company’s target NFFO expectations
	
Percentage of 22.5% Earned

	
Less than threshold
	
0%

	
$XXXX (“threshold”)
	
50%

	
$XXXX (“target”)
	
100%

	
$XXXX (“maximum”)
	
200%

 

e.For results between threshold and target, or between target and maximum, the appropriate percentage of the target Award earned shall be based on interpolation.  Performance against each metric is also measured separately of the others.  As an example:

 

				
	
TSR relative to 

Apartment Index Weighted Average TSR

(35% of Award)
	
TSR relative to 

Equity Index Weighted Average TSR

(20% of Award)
	
Net Debt to Normalized EBITDAre

(22.5% of Award)
	
NFFO relative to 

annual target

(22.5% of Award)

	
Result = Equal to the average

Equal to the average = 100% of target

Pct of 35% earned = 100%

35% x 100% = 35%
	
Result = 108 basis points above the average

108 basis points = 127% of target

Pct of 20% earned = 127%

20% x 127% = 25.4%
	
Result = 5.50x

5.50x = 100% of target

Pct of 22.5% earned = 100%

22.5% x 100% = 22.5%
	
Result = target (100%)

Pct of 22.5% earned = 100%

22.5% x 100% = 22.5%

	
Final Calculation of Award = 35% + 25.4% + 22.5% + 22.5% = 105.4% of Target

 

f.The Compensation Committee as promptly as practicable (but in no event later than 45 days) following the conclusion of the Performance Period shall (i) determine the performance of the Company’s TSR, Net Debt to Normalized EBITDAre and NFFO over the Performance Period as compared against the Performance Metrics established for the period; (ii) determine and issue to the Grantee the number of resulting Restricted Shares in settlement of the Award; (iii) determine the actual number of Restricted Units that are retained by the Grantee; and (iv) make any dividend equivalent payments and cash distributions required pursuant to Section 5(a) and 5(b) hereof.  Any Restricted Units the Grantee was awarded that are in excess of 

 

 

the actual resulting number at the end of the Performance Period, as determined by the Compensation Committee, shall be forfeited and become null and void.  Fractional shares and units will not be issued, with any securities issued as an Award rounded down to the nearest whole amount.

 

g.To the extent the Company changes or discontinues its use of any of the above Performance Metrics, or if any of such Performance Metrics become inapplicable for its intended purpose, the Compensation Committee retains the discretion to substitute alternate metrics, so long as the substitution is done in an equitable manner.

 

	
2.
	
Definitions of Performance Metrics; Adjustments

 

a.TSR.  The Company’s TSR represents the compounded annual return of an investment in one common share in the Company over the Performance Period, expressed as a percentage (and sometimes commonly referred to as the “compound annual growth rate”, or “CAGR”), assuming the following:

 

	
 
	
(i)
	
Beginning Share Price:  $88.03, which represents the average closing price of a common share in the Company over the last 20 trading days prior to the beginning of the Performance Period and is equal to the “Ending Share Price” under the 2019 LTI Plan.

 

	
 
	
(ii)
	
Ending Share Price:  average closing price of a common share in the Company over the last 20 trading days of the Performance Period, except as set forth in the Change in Control provisions of Section 3.

 

	
 
	
(iii)
	
Dividends are reinvested in additional common shares in the Company on the ex-dividend date for such dividend at the closing price of a common share in the Company.

 

The TSR of each of the member companies comprising the Apartment Index and Equity Index over the Performance Period shall be calculated using the methodologies analogous in all material respects to those used for the calculation of the Company’s TSR as described in Section 2(a) to provide a fair comparison of TSRs, and as is the case with the Company (see Section 2(e)), the Compensation Committee shall make equitable adjustments to the TSR of such member companies to take into account any extraordinary, unusual or non-recurring corporate events as described in Section 14 of the 2019 Share Plan affecting such member companies, such as spin-offs, stock splits, reverse splits, special dividends, recapitalizations, reclassifications and similar events.  The Compensation Committee has discretion in how the required adjustments are determined as long as they are done equitably.

 

The Company’s TSR will be compared to the Apartment Index using a same store approach (all constituents must be included in the index for all three years), while the comparison to the Equity Index will not use this same store approach.  In comparison to the Apartment Index, the Equity Index is much larger and weighted through daily rebalancing so no further adjustments are necessary for changes in the constituents who comprise the index.  Accordingly, for purposes of the Apartment Index, companies that are not public throughout the entire Performance Period will be excluded from the TSR calculations.  In addition, a member 

 

 

company of the Apartment Index will be excluded from the TSR calculations if on the last day of the Performance Period such company is under a definitive agreement to be acquired or merged out of existence during the next 12 months.  Also, any such member company of the Apartment Index that files for bankruptcy during the Performance Period shall have a minus 100% value assigned to its TSR for purposes of the TSR calculations.

 

The market capitalization of the companies in the Apartment Index shall be weighted 

based on the market capitalization weighting method used by FTSE one time at the beginning of the Performance Period (using the average of the last 20 trading days prior to the beginning of the Performance Period) to determine each company’s weighted share of the final results.  For example, if there are five companies in the index as of the beginning of the Performance Period with the identical market capitalization, each company’s share of the final results shall be 20%.  If one of the companies is excluded from the TSR calculations, as provided above, then each of the remaining company’s weighted share shall be 25%.

 

b.Net Debt.  “Net Debt” means the Company’s total debt less cash and cash equivalents and mortgage principal reserves/sinking funds as calculated in the Company’s quarterly earnings releases.

 

c.Normalized EBITDAre.  “Normalized EBITDAre” means the Company’s “Normalized Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate” as defined in the Company’s most recent quarterly earnings release at any given time, subject to adjustment as described in Section 1(g) hereof.

 

d.NFFO.  “NFFO” means the Company’s “Normalized Funds from Operations” as defined in the Company’s most recent Form 10-K or 10-Q at any given time, subject to adjustment as described in Section 1(g) hereof.

 

e.Adjustments.  The Compensation Committee shall make equitable adjustments to the Award granted hereunder and/or the Performance Metrics contained herein to take into account any extraordinary, unusual or non-recurring corporate events affecting the Company as described in Section 14 of the 2019 Share Plan (such as spin-offs, stock splits, reverse splits, special dividends, recapitalizations, reclassifications and similar events), so that the total value of the Award shall not be changed by such events.

 

Furthermore, the Compensation Committee shall make equitable adjustments to the Award granted hereunder and/or the Performance Metrics contained herein to take into account any other significant or unforeseen events which occur (as an example only, such as a purchase or sale of a significant number of assets which would justify a change in the NFFO Performance Metric), so that the total value of the Award shall not be changed by such events.

 

The Compensation Committee has discretion in how the required adjustments are determined as long as they are done equitably.

 

	
3.
	
Change in Control

 

If a Change in Control occurs at any time prior to the end of the Performance Period, the Award shall be valued as though the Performance Period had ended on the date of the Change in 

 

 

Control, and for purposes of calculating TSR, the Ending Share Price for the Company and the relevant index companies shall be the closing price of each company’s common shares on the date of the Change in Control (as opposed to a trailing average), which together with the Net Debt to Normalized EBITDAre and NFFO Performance Metrics (as appropriately prorated) shall determine the actual number of Restricted Shares issued and/or Restricted Units retained by the Grantee, which shall be a percentage (from zero to 200%) of the target Award.  While the valuation of the Award shall be fixed as set forth above in the event of a Change in Control, vesting of the Award upon a Change in Control is governed by the terms of the 2019 Share Plan.  Dividend equivalent payments and distributions payable pursuant to Section 5 hereof would be paid at the time of vesting of the Award based on the actual number of Restricted Shares issued and/or Restricted Units retained.  In the event of any conflict between the terms of this Section 3 and the terms set forth in the 2019 Share Plan and any “change in control” agreement between the Company and the Grantee entered into prior to or as of the date hereof, the terms of this Section 3 shall control; provided, however, that any Restricted Shares issued, Restricted Units retained, and other payments made pursuant to this Section 3 are expressly subject to “modified cutback” language contained in any “change in control” agreement between the Company and the Grantee.

 

	
4.
	
Vesting

 

a.Employees.  All Restricted Shares and/or Restricted Units that are the result of the settlement of an Award to a grantee who is an employee of the Company or any of its affiliates (an “Employee Grantee”) shall, subject to the proration provisions in Section 4(c) below, fully vest on the issuance date for Restricted Shares and on the date of the determination of the resulting number of retained Restricted Units, as provided in Section 1 hereof, subject to continued employment, and the other vesting provisions described below in Section 4(c)(i), provided that if the vesting date occurs within a trading lockout imposed by the Company, the vesting date for grantees subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), at the time of vesting will be automatically extended to the first business day after expiration of the lockout.

 

b.Chairman of the Board of Trustees.  All Restricted Shares and/or Restricted Units that are the result of the settlement of an Award to a grantee who is the Chairman of the Board of Trustees of the Company (the “Chairman”) at the time of the grant of an Award hereunder shall fully vest on the issuance date for Restricted Shares and on the date of the determination of the resulting number of retained Restricted Units, as provided in Section 1 hereof, subject to continued service as Chairman and the proration provisions in Section 4(c) below, provided that if the vesting date occurs within a trading lockout imposed by the Company, the vesting date for grantees subject to Section 16 of the Exchange Act at the time of vesting will be automatically extended to the first business day after expiration of the lockout.  Notwithstanding the foregoing, any unvested Restricted Shares and/or Restricted Units that comprise an Award to the Chairman shall fully accelerate and vest in advance of the vesting specified above upon the following events: (i) the death of the Chairman; (ii) the Chairman’s voluntary retirement from the Board of Trustees, or the Chairman’s decision not to stand for re-election to the Board of Trustees; (iii) the failure of the Chairman to be re-nominated to the Board of Trustees or named as Chairman of the Board of Trustees; or (iv) the failure of the Chairman to be re-elected to the Board of Trustees if the Chairman is re-nominated to the Board of Trustees.

 

 

 

 

c.Termination of Employment.  If a “Qualified Termination” of employment (or, in the case of the Chairman, in relation to service on the Board of Trustees) occurs during the first year of the Performance Period, the Grantee’s Award shall be prorated in the proportion that the number of days employed during such year bears to 365 (or 366 if such year is a leap year), as the award represents payment for services to be provided during the first year of the Performance Period.  For example, if the Grantee had a Qualified Termination of employment on October 1, 2022, Grantee’s prorated portion would be 9/12 of the Award, and 3/12 of the Award would be forfeited.  The number of resulting Restricted Shares and/or Restricted Units (based on the pro-rated Award) will continue to be determined at the end of the Performance Period.  All dividend equivalent payments and Partial Distributions described in Section 5 shall be based on the pro-rated Award from and after the date of the Qualified Termination.  Qualified Termination is defined as follows:

 

(i)For an Employee Grantee, a Qualified Termination is termination of employment due to:

 

	
 
	
(a)
	
Death,

	
 
	
(b)
	
Disability,

	
 
	
(c)
	
Retirement at or after age 62, provided that (i) the Employee Grantee’s service at the Company commenced prior to January 1, 2009 and (ii) the Employee Grantee was at least 59 years old as of February 1, 2019, or

	
 
	
(d)
	
Retirement in accordance with the Rule of 70.

 

Vesting is immediate for a Qualified Termination due to (i) the events described above in Section 4(c)(i)(a)-(b) and (ii) the event described above in Section 4(c)(i)(c), provided the Grantee signs a release in a form that is reasonably satisfactory to the Company releasing the Company from customary claims.  For a Qualified Termination due to the event described above in Section 4(c)(i)(d), vesting continues after retirement, provided the Grantee signs a release in a form that is reasonably satisfactory to the Company releasing the Company from customary claims and also containing non-competition and employee non-solicitation provisions and complies with such non-competition and employee non-solicitation provisions.

 

(ii)For the Chairman, a Qualified Termination means the events described above in Section 4(b)(i)-(iv).

 

(iii)If a Grantee’s employment (or service in the case of the Chairman) terminates prior to vesting of the Award for any reason other than pursuant to a Qualified Termination or Change in Control, any unvested Awards shall be forfeited, unless the Compensation Committee determines otherwise.

 

	
5.
	
Dividend Equivalent Payments/Cash Distributions

 

a.With respect to an Award granted to the Grantee which will be settled in the form of Restricted Shares after the end of the Performance Period, the Company shall not pay the Grantee any dividends on such Award.  Once the number of resulting Restricted Shares has been determined by the Compensation Committee after the end of the Performance Period pursuant to 

 

 

Section 1(f) hereof, the Company shall make a payment without interest to the Grantee, as required under Section 1, in an amount equal to the amount of any and all dividends that would have been paid on those Restricted Shares had they been outstanding and entitled to dividends during the period from the grant date of the Award to the date of issuance, except to the extent such dividends have already been taken into account in adjustments made to the target number of Restricted Shares as required by Section 2(e) for purposes of ensuring that the total value of the Award has not changed, and except as set forth in Section 5(c).  This payment will be considered compensation for all purposes, and will be received by the Grantee in its capacity as an employee, or as the Chairman of the Board, and not in such person’s capacity as a shareholder.

 

b.With respect to any Restricted Units granted to the Grantee, the Company shall cause ERP to pay the Grantee a distribution in the amount of 10 percent of any and all cash distributions (“Partial Distributions”) paid on OP Units during the period from the grant date to the date of final determination of resulting Restricted Units except as set forth in Section 5(c).  Partial Distributions are non-forfeitable when paid, whether or not the underlying Restricted Units are eventually retained pursuant to the terms of this Award Agreement.  Once the number of resulting Restricted Units has been determined by the Compensation Committee at the end of the Performance Period pursuant to Section 1(f) hereof, ERP shall promptly make a payment in cash without interest to the Grantee, as required under Section 1, in the amount of any and all cash distributions that would have been paid on those resulting Restricted Units had they been outstanding and entitled to full distributions during the period from the grant date of the Award to such determination, less any previously paid Partial Distributions, except to the extent any such distributions have already been taken into account in adjustments made to the target number of Restricted Units as required by Section 2(e) for purposes of ensuring that the total value of the Award has not changed, and except as set forth in Section 5(c).

 

c.Notwithstanding the foregoing, for purposes of this Award Agreement the Grantee shall not be entitled to any dividend equivalent payments or distributions (including, without limitation, any Partial Distributions) that relate to the dividends and/or distributions declared by the Company on December 16, 2021.

 

d.It is the intention of this Award Agreement, subject to the discretion of the Compensation Committee to make equitable adjustments, that the dividend equivalent payments and distributions payable to grantees under Section 5 should normally take into account dividends and distributions that have been or would have been typically and customarily paid on issued Restricted Shares and retained Restricted Units had the determination of the number of Restricted Shares issued and Restricted Units retained hereunder been finalized as of close of business on December 31, 2024.

 

	
6.
	
Notices

 

Any notice to be given under the terms of this Award Agreement to the Company shall be addressed to the Company in care of its Secretary, and any notice to be given to the Grantee shall be addressed to the address as set forth in the Company’s records.  Either party may hereafter designate a different address for notices to be given to it or him or her.

 

 

 

 

	
7.
	
Titles; Interpretation

 

Titles and captions are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Award Agreement.  Capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the 2019 Share Plan or as the context otherwise reasonably indicates.  The Compensation Committee shall have the exclusive discretion and authority to conclusively construe and interpret this Award Agreement and the LTI Plan, and to decide any and all questions of fact, interpretation, definition, computation or administration.  The determinations of the Compensation Committee shall be binding on all parties.

 

	
8.
	
Amendment

 

This Award Agreement may be amended only by a writing executed by the parties hereto which specifically states that it is amending this Award Agreement.

 

	
9.
	
Governing Law

 

The laws of the State of Maryland shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Award Agreement regardless of the law that might be applied under principles of conflicts of laws.

 

[Signature Page Follows]

 

 

 

IN WITNESS WHEREOF, the undersigned have caused this Award Agreement to be executed as of the aforesaid date.

 

EQUITY RESIDENTIAL 

 

By:  

 

 

 

The foregoing Award Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned.  

 

GRANTEE

 

 

 

 

 

 

 

SCHEDULE A

 

 

		
	
Name of Grantee
	
 

 

	
Target number of Restricted Units
	
_______

 

200% of this target number, or _______ Restricted Units, will be issued to the Grantee, subject to the Compensation Committee’s determination of the Company’s performance results for the Performance Period and the determination of the resulting number of retained Restricted Units.

 

	
Target number of Restricted Shares
	
________

 

 

	
Performance Period 
	
January 1, 2022 to December 31, 2024ex_363747.htm

Exhibit 10.1

 

COHU, INC.

SEVERANCE AGREEMENT

 

 

THIS SEVERANCE AGREEMENT (the “Agreement”) is made and entered into as of September 8, 2020, by and between Ian Lawee (“Executive”) and Cohu, Inc., a Delaware corporation (the “Company”).

 

WHEREAS, although the Company anticipates the continuation of a mutually rewarding employment relationship with Executive, the Compensation Committee (the “Committee”) of the Board of Directors of the Company (the “Board”) believes that it is in the best interests of the Company and its stockholders to provide Executive with certain assurances in the event of the occurrence of a Qualifying Termination of Executive’s employment with the Company;

 

WHEREAS, the Committee anticipates that such assurances will provide Executive with an incentive to continue employment and to motivate Executive to maximize the value of the Company for the benefit of its stockholders; and

 

WHEREAS, certain capitalized terms used in this Agreement are defined in Section 3.7 below;

 

NOW, THEREFORE, in consideration of the mutual covenants, promises and obligations set forth herein, the parties agree as follows:

 

	
			1. 

				
			Term.

			

 

This Agreement shall have a term commencing as of September 8, 2020 (the “Effective Date”) and continuing until the third (3rd) anniversary thereof (the “Initial Term”). The Initial Term shall be automatically extended for successive two (2) year periods (each a “Renewal Term” and, together with the Initial Term and each such Renewal Term, the “Term”), unless either party has delivered written notice to the other party no later than six (6) months prior to the completion of the then effective Term that this Agreement will not be extended. For the avoidance of doubt, neither the lapse of this Agreement by its terms nor non-renewal of this Agreement will by itself constitute termination of employment. Notwithstanding anything herein to the contrary, if, during the then effective Term, Executive’s employment with the Company has terminated as a result of a Qualifying Termination, this Agreement shall not terminate until all payments and benefits, if any, have been provided to Executive in accordance with this Agreement.

 

 

 

 

 

	
			2. 

				
			At-Will Employment.

			

 

Executive acknowledges and agrees that nothing in this Agreement shall be construed to imply that Executive’s employment is guaranteed for any period of time. Unless stated in a written agreement authorized by the Committee or the Board and signed by an officer of the Company and Executive, Executive’s employment is at-will, and either the Company or Executive may terminate the employment relationship at any time with or without cause and with or without notice.

 

	
			3. 

				
			Termination of Employment.

			

 

3.1      Qualifying Termination. In the event of Executive’s Qualifying Termination, Executive shall be entitled to receive the Accrued Amounts. In addition, provided that Executive complies with the provisions of Section 5 and executes a full general release of all claims, known or unknown, that Executive may have against the Company, its affiliates and their respective officers and directors in a form provided by the Company (the “Release”) which becomes effective and irrevocable within sixty (60) days following the Termination Date (such 60-day period, the “Release Execution Period”), Executive shall be entitled to receive the following severance payments and benefits:

 

(a)    Base Salary Severance Benefit. An amount equal to 100% of Executive’s Base Salary shall be paid in cash in a single lump sum on the next regular payroll date following the expiration of the Release Execution Period (but in no event later than the lapsing of the Short-Term Deferral Period).

 

(b)    Health Care Benefit. Payment by the Company of the premiums required to continue Executive’s group health care coverage for the same level of health coverage and benefits as in effect for Executive on the day immediately preceding the Termination Date for a period of twelve (12) months following the Termination Date (the “Premium Payment Period”) under the applicable provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), provided that Executive elects to continue and remains eligible for these benefits under COBRA and does not become eligible for health coverage through another employer during this period. Notwithstanding the foregoing, if the Company determines, in its reasonable discretion, that the payment of the premiums would result in a violation of the nondiscrimination rules of Section 105(h)(2) of the Internal Revenue Code of 1986, as amended (the “Code”) or any statute or regulation of similar effect (including but not limited to the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then, in lieu of paying such premiums, the Company, in its sole discretion, may elect to instead pay Executive on the first day of each month during the Premium Payment Period, a fully taxable cash payment (the “Special Separation Payment”) equal to the premiums for that month, grossed up to cover all applicable withholdings, so that the net benefit to Executive equals the monthly premiums, for the remainder of the Premium Payment Period. The Special Separation Payments will cease should Executive elect to cease, or become ineligible for, continued health care coverage under COBRA.

 

2

 

 

(c)    Equity Award Treatment. The treatment of any outstanding equity award held by Executive shall be determined in accordance with the terms of the applicable equity incentive plan and the applicable equity award agreement.

 

3.2      Non-Qualifying Termination. In the event of Executive’s Non-Qualifying Termination, Executive shall be entitled to receive only the Accrued Amounts. However, in the event that Executive’s employment terminates due to Executive’s death, and subject to execution by Executive’s personal representative on behalf of Executive’s estate of a Release which becomes effective and irrevocable during the Release Execution Period, the Company shall pay to the Executive’s estate a Prorated Bonus for the year in which the Executive dies in a single lump sum as soon as reasonably practicable following the expiration of the Release Execution Period (but in no event later than the lapsing of the Short-Term Deferral Period).

 

3.3      Notice of Termination. Any termination of Executive’s employment hereunder by the Company or by Executive during the Term (other than termination on account of Executive’s death) shall be communicated by written notice of termination (“Notice of Termination”) to the other party hereto in accordance with Section 10.7. The Notice of Termination shall specify:

 

(a)    the facts and circumstances claimed to provide a basis for termination of Executive’s employment; and

 

(b)    the applicable Termination Date.

 

3.4      Resignation of All Other Positions. The termination of Executive’s employment for any reason will be deemed to constitute, without further required action by Executive, voluntary resignation by Executive, effective on the Termination Date, from all positions that Executive holds as an officer or member of the board of directors (or a committee thereof) of the Company or any of its affiliates. At the Board’s request, Executive will execute any documents reasonably necessary to reflect such resignation.

 

3.5      Mitigation. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and, except as provided in Section 3.1(b) (providing for health care continuation benefits under COBRA), any amounts payable pursuant to this Section 3 shall not be reduced by compensation Executive earns on account of employment with another employer.

 

3

 

 

3.6      Section 280G.

 

(a)    If any payments and other benefits provided for in this Agreement or otherwise (collectively, the “Payments”) would, either separately or in the aggregate, constitute “parachute payments” within the meaning of Section 280G of the Code and, but for this Section 3.6, would be subject to the excise tax imposed by Section 4999 of the Code, then the Payments will be payable to Executive either in full or in such lesser amounts as would result, after taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, in Executive’s receipt on an after-tax basis of the greatest amount of Payments. If a reduction in Payments is required pursuant to this Section 3.6, Payments shall be reduced in the following order: (i) reduction or elimination of cash severance benefits that are subject to Section 409A of the Code; (ii) reduction or elimination of cash severance benefits that are not subject to Section 409A of the Code; (iii) cancellation or reduction of accelerated vesting of equity awards that are not stock options or stock appreciation rights; (iv) cancellation or reduction of accelerated vesting of stock options and stock appreciation rights; and (v) reduction or elimination of other Payments. Any reduction of cash severance benefits or other cash Payments shall be made in reverse chronological order such that the cash payment owed on the latest date following the occurrence of the event triggering such excise tax will be the first cash payment to be reduced. Any reduction of accelerated vesting of equity award compensation shall be made in the reverse order of the date of grant so that the accelerated vesting of the most recently granted equity award will be reduced first. In no event shall Executive have any discretion with respect to the ordering of payment or benefits reductions. Executive will be solely responsible for the payment of all personal tax liability incurred as a result of the payments and benefits received under this Agreement, and Executive will not be reimbursed by the Company for any such tax liability.

 

(b)    All calculations and determinations under this Section 3.6 shall be made by an independent accounting firm or independent tax counsel appointed by the Company (the “Tax Counsel”) whose determinations shall be conclusive and binding on the Company and Executive for all purposes. For purposes of making the calculations and determinations required by this Section 3.6, the Tax Counsel may rely on reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Company and Executive shall furnish the Tax Counsel with such information and documents as the Tax Counsel may reasonably request in order to make its determinations under this Section 3.6. The Company shall bear all costs the Tax Counsel may reasonably incur in connection with its services hereunder. The Company will have no liability to Executive for the determinations of the Tax Counsel.

 

3.7      Definitions of Certain Terms. Certain capitalized terms not otherwise defined by this Agreement shall have the following meanings:

 

(a)    “Accrued Amounts” mean, collectively:

 

	 	
			(i)

				
			any accrued but unpaid Base Salary prorated to the Termination Date and accrued but unused vacation, both of which shall be paid on the Termination Date in accordance with the Company’s customary payroll procedures;

			

 

4

 

 

	 	
			(ii)

				
			reimbursement of unreimbursed business expenses properly incurred by Executive, which shall be subject to, and paid in accordance with, the Company’s expense reimbursement policy; and

			

 

	 	
			(iii)

				
			such employee benefits (including equity compensation), if any, to which Executive may be entitled under the Company’s employee benefit plans as of the Termination Date.

			

 

(b)    “Base Salary” means Executive’s annual base salary at the rate in effect immediately prior to the Termination Date.

 

(c)    “Cause” means:

 

	 	
			(i)

				
			Executive’s willful and continued failure to perform the duties and responsibilities of his/her position (other than as a result of Executive’s illness or injury) after there has been delivered to Executive a written demand for performance from the Chief Executive Officer which describes the basis for the Chief Executive Officer’s belief that Executive has not substantially performed his/her duties and provides Executive with thirty (30) days to take corrective action;

			

 

	 	
			(ii)

				
			Any material act of personal dishonesty taken by Executive in connection with his/her responsibilities as an employee of the Company with the intention that such action may result in the substantial personal enrichment of Executive;

			

 

	 	
			(iii)

				
			Executive’s conviction of, or plea of nolo contendere to, a felony that the Board reasonably believes has had or will have a material detrimental effect on the Company’s reputation or business;

			

 

	 	
			(iv)

				
			A willful breach of any fiduciary duty owed to the Company by Executive that the Board reasonably believes has had, or will have, a material detrimental effect on the Company’s reputation or business;

			

 

	 	
			(v)

				
			Executive being found liable in any Securities and Exchange Commission or other civil or criminal securities law action (regardless of whether or not Executive admits or denies liability), which the Board determines, in its reasonable discretion, has had, or will have, a material detrimental effect on the Company’s reputation or business;

			

 

5

 

 

	 	
			(vi)

				
			Executive entering any cease and desist order with respect to any action which would bar Executive from service as an executive officer or member of a board of directors of any publicly-traded company (regardless of whether or not Executive admits or denies liability);

			

 

	 	
			(vii)

				
			Executive (A) obstructing or impeding; (B) endeavoring to obstruct or impede, or (C) failing to materially cooperate with, any investigation authorized by the Board or any governmental or self-regulatory entity. However, Executive’s failure to waive attorney-client privilege relating to communications with Executive’s own attorney in connection with any such investigation will not constitute “Cause”;

			

 

	 	
			(viii)

				
			Executive’s disqualification or bar by any governmental or self-regulatory authority from serving in the capacity in which Executive is then employed by the Company, if (A) the disqualification or bar continues for more than thirty (30) days, and (B) during the initial thirty (30) day period (“Initial Bar Period”) the Company uses its commercially reasonable efforts to cause the disqualification or bar to be lifted. During the Initial Bar Period, the Board may have Executive serve in his/her then-current capacity with the Company to whatever extent legally permissible or Executive will be placed on paid administrative leave, at the discretion of the Board. If the bar is not lifted within or immediately following the Initial Bar Period, Executive’s employment shall terminate for Cause;

			

 

	 	
			(ix)

				
			any material failure by Executive to comply with the Company’s written policies or rules, as they may be in effect from time to time during the Term, if such failure has caused, or will cause, material reputational or financial harm to the Company; or

			

 

	 	
			(x)

				
			Executive’s material breach of this Agreement or the Company’s Confidentiality and Inventions Agreement.

			

 

For purposes of this provision, no act or failure to act on the part of Executive shall be considered “willful” unless it is done, or omitted to be done, by Executive in bad faith or without reasonable belief that Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company.

 

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(d)    “Change in Control Agreement” means the Change in Control Agreement between Executive and the Company, dated as of September 8, 2020 and as amended from time to time.

 

(e)    Reserved.

 

(f)    “Non-Qualifying Termination” means any termination of Executive’s employment with the Company which is not a Qualifying Termination.

 

(g)    “Notice Period” means a period of thirty (30) days commencing on the date of delivery of a Notice of Termination.

 

(h)    “Prorated Bonus” means an amount equal to a prorated portion of Executive’s Target Bonus for the fiscal year in which the date of Executive’s death occurs. Such prorated portion shall be determined by multiplying the foregoing Target Bonus by a fraction, the numerator of which is equal to the number of days between the start of such fiscal year and the date of Executive’s death and the denominator of which is equal to 365. The actual annual incentive bonus for the fiscal year of Executive’s termination of employment due to death shall be forfeited, and Executive’s estate shall not be entitled to any payment thereof.

 

(i)   “Qualifying Termination” means termination by the Company of Executive’s employment with the Company for any reason other than Cause; provided, however that a Qualifying Termination shall not include any termination of Executive’s employment on account of Executive’s death or disability.

 

(j)    “Severance Benefit Period” means a period of twelve (12) months following the Termination Date.

 

(k)    “Short-Term Deferral Period” means a period determined in accordance with Treasury Regulation Section 1.409A-1(b)(4) beginning on the Termination Date with respect to a Qualifying Termination of Executive and ending on the 15th day of the third month following the later of (i) the last day of the calendar year or (ii) the last day of the Company’s taxable year in which, in either case, the Termination Date occurs.

 

(l)    “Target Bonus” means the target amount of Executive’s annual incentive bonus, assuming achievement of all Company performance goals and individual performance goals at their target levels in accordance with the Company’s annual bonus plan and as established by the Committee.

 

7

 

 

(m)    “Termination Date” means:

 

	 	
			(i)

				
			if the Company terminates Executive’s employment without Cause, the date specified in the Notice of Termination, which shall be the day immediately following completion of the Notice Period commencing on the date on which the Notice of Termination is delivered to Executive; provided that the Company shall have the option to relieve Executive of all job duties, positions and responsibilities for all or any part of the Notice Period and provide Executive with payment of Executive’s then current Base Salary in lieu of any portion of the Notice Period for which Executive is so relieved of duty, which amount shall be paid in a lump sum on Executive’s Termination Date, and, in such case, for all purposes of this Agreement, Executive’s Termination Date shall be the date on which such Notice of Termination is delivered; and

			

 

	 	
			(ii)

				
			if Executive terminates his/her employment, the date specified in Executive’s Notice of Termination, which shall be the day immediately following completion of the Notice Period commencing on the date on which the Notice of Termination is delivered to the Company; provided that the Company may waive all or any part of the Notice Period by giving written notice of such waiver to Executive and paying Executive’s then current Base Salary in lieu of the portion of the Notice Period waived, which amount shall be paid in a lump sum on Executive’s Termination Date, and, in such case, for all purposes of this Agreement, Executive’s Termination Date shall be the date determined by the Company.

			

 

Notwithstanding anything contained herein to the contrary, the Termination Date shall not occur until the date on which Executive incurs a “separation from service” within the meaning of Section 409A of the Code.

 

	
			4. 

				
			Exclusive Remedy.

			

 

Except for any additional payments and benefits pursuant to the Change in Control Agreement, the provisions of Section 3 of this Agreement are intended to be and are exclusive and in lieu of any other rights or remedies to which Executive may otherwise be entitled in the event of Executive’s Qualifying Termination. In such circumstances, Executive shall be entitled to no benefits, compensation or other payments or rights upon termination of employment other than those benefits expressly set forth in Section 3.1. For the avoidance of doubt, in the event Executive becomes entitled to receive benefits under the Change in Control Agreement, if applicable, that agreement shall govern, and Executive shall be paid benefits solely under that agreement and in lieu of any benefits under this Agreement.

 

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			5. 

				
			Conditions to Receipt of Severance Benefits.

			

 

In addition to Executive’s Release becoming effective and irrevocable no later than the expiration of the Release Execution Period, Executive’s entitlement to the severance payments and benefits set forth in Section 3.1 shall be subject to Executive’s compliance with all of the following:

 

5.1      Confidentiality and Proprietary Rights. Executive is party to a certain Confidentiality and Inventions Agreement dated March 16, 2019. Executive shall continue to abide by his/her obligations under the Confidentiality and Inventions Agreement, which is attached as Exhibit A hereto and incorporated herein by reference.

 

5.2      Non-Solicitation of Employees. Executive agrees that during the Severance Benefit Period, Executive will not, either directly or indirectly, separately or in association with others, interfere with, impair, disrupt or damage Company’s business by soliciting, encouraging or recruiting any of Company’s employees or causing others to solicit or encourage any of Company’s employees to discontinue their employment with Company.

 

5.3      Non-Disparagement. Executive agrees and covenants that Executive will not at any time during the Severance Benefit Period make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning the Company or its businesses, or any of its employees, officers, and existing and prospective customers, suppliers, investors and other associated third parties.

 

This Section 5.3 does not, in any way, restrict or impede Executive from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation or order. Executive shall promptly provide written notice of any such order to the chief legal officer of the Company.

 

5.4      Remedies. In the event of a breach or threatened breach by Executive of the covenants contained in this Section 5, Executive hereby consents and agrees that the Company shall be entitled to seek, in addition to other available remedies, a temporary or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned equitable relief shall be in addition to, not in lieu of, legal remedies, monetary damages or other available forms of relief.

 

9

 

 

5.5      Survival of Provisions. The provisions of this Section 5 shall survive the termination or expiration of Executive’s employment with the Company and shall be fully enforceable thereafter. If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 5 is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.

 

	
			6. 

				
			Recoupment.

			

 

Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or any other compensation, paid to Executive pursuant to this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and recoupment as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement). Executive specifically authorizes the Company to withhold from his/her future wages or amounts otherwise payable under this Agreement any amounts that may become due under this provision. This Section 6 shall survive the termination of this Agreement for a period equal to the greater of (a) three (3) years and (b) such longer period required by the applicable law, government regulation, order or stock exchange listing requirement.

 

	
			7. 

				
			Successors.

			

 

7.1      Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets (a “Successor”) shall assume the Company’s obligations under this Agreement and agree expressly to perform the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any Successor which executes and delivers the assumption agreement described in this Section 7.1 or which becomes bound by the terms of this Agreement by operation of law.

 

7.2      Executive’s Successors. The terms of 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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			8. 

				
			Arbitration.

			

 

The Company and Executive each agree that any and all disputes arising out of the terms of this Agreement, Executive’s employment by the Company, Executive’s service as an officer or director of the Company, or Executive’s compensation and benefits, their interpretation and any of the matters herein released, will be subject to binding arbitration. In the event of a dispute, the parties (or their legal representatives) will promptly confer to select a single arbitrator mutually acceptable to both parties. If the parties cannot agree on an arbitrator, then the moving party may file a demand for arbitration with the American Arbitration Association (“AAA”) in San Diego County, California, who will be selected and appointed consistent with the AAA-Employment Dispute Resolution Rules, except that such arbitrator must have the qualifications set forth in this paragraph. Any arbitration will be conducted in a manner consistent with AAA National Rules for the Resolution of Employment Disputes, supplemented by the California Rules of Civil Procedure. The parties further agree that the prevailing party in any arbitration will be entitled to injunctive relief in any court of competent jurisdiction to enforce the arbitration award. The parties hereby agree to waive their right to have any dispute between them resolved in a court of law by a judge or jury. This paragraph will not prevent either party from seeking injunctive relief (or any other provisional remedy) from any court having jurisdiction over the parties and the subject matter of their dispute relating to Executive’s obligations under Section 5 of this Agreement and the Company’s form of Confidentiality and Inventions Agreement.

 

	
			9. 

				
			Section 409A.

			

 

9.1      General Compliance. The Company intends that all payments and benefits provided under this Agreement will be exempt from, or comply with, the requirements of Section 409A of the Code (“Section 409A”) so that none of the payments and benefits will be subject to the additional tax imposed by Section 409A, and this Agreement shall be construed and administered in accordance with such intent. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service described in Treasury Regulation Section 1.409A-1(b)(9)(iii) or as a short-term deferral described in Treasury Regulation Section 1.409A-1(b)(4) shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made upon a “separation from service” under Section 409A. The Company reserves the right to amend this Agreement as it considers necessary or advisable, in its sole discretion and without the consent of Executive or any other individual, to comply with any provision required to avoid the imposition of the additional tax imposed under Section 409A or to otherwise avoid income recognition under Section 409A prior to the actual payment of any benefits or imposition of any additional tax. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Executive on account of non-compliance with Section 409A.

 

11

 

 

9.2      Specified Employees. Notwithstanding any other provision of this Agreement, if any payment or benefit provided to Executive in connection with Executive’s termination of employment is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A and Executive is determined to be a “specified employee” as defined in Section 409A(a)(2)(b)(i), then such payment or benefit shall not be paid until the first payroll date to occur following the six-month anniversary of the Termination Date (the “Specified Employee Delay”) or, if earlier, on Executive’s death. The aggregate of any payments that would otherwise have been paid during the Specified Employee Delay shall be paid to Executive in a lump sum on completion of the Specified Employee Delay and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.

 

9.3      Reimbursements. To the extent required by Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following:

 

(a)    the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year;

 

(b)    any reimbursement of an eligible expense shall be paid to Executive on or before the last day of the calendar year following the calendar year in which the expense was incurred; and

 

(c)    any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.

 

	
			10. 

				
			General Provisions.

			

 

10.1     Modification and Waiver. No provision of this Agreement may be amended or modified unless such amendment or modification is agreed to in writing by Executive and the Compensation Committee of the Board of Directors of the Company. No waiver by either of the parties of any breach by the other party hereto of any condition or provision of this Agreement to be performed by the other party hereto shall be deemed a waiver of any similar or dissimilar provision or condition at the same or any prior or subsequent time, nor shall the failure of or delay by either of the parties in exercising any right, power or privilege hereunder operate as a waiver thereof to preclude any other or further exercise thereof or the exercise of any other such right, power or privilege.

 

10.2     Unfunded Obligation. Any amounts payable to Executive pursuant to this Agreement are unfunded obligations. The Company shall not be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations. The Company shall retain at all times beneficial ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance of any trust or any account shall not create or constitute a trust or fiduciary relationship between the Board or the Company and Executive, or otherwise create any vested or beneficial interest in Executive or Executive’s creditors in any assets of the Company.

 

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10.3     Attorneys’ Fees. Each party will bear its own attorneys’ fees in any dispute unless a statutory section at issue, if any, authorizes the award of attorneys’ fees to the prevailing party.

 

10.4     Severability. In the event any provision of this Agreement is found to be unenforceable by an arbitrator or court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefit contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such arbitrator or court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.

 

10.5     Interpretation; Construction. The headings set forth in this Agreement are for convenience only and shall not be used in interpreting this Agreement. This Agreement has been drafted by legal counsel representing the Company, but Executive has participated in the negotiation of its terms. Furthermore, Executive acknowledges that Executive has had an opportunity to review and revise the Agreement and have it reviewed by legal counsel, if desired, and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

 

10.6     Governing Law: Jurisdiction and Venue. This Agreement, for all purposes, shall be construed in accordance with the laws of the State of California without regard to its conflicts of law principles. Other than as required pursuant to Section 8, any action or proceeding by either of the parties to enforce this Agreement shall be brought only in a state or federal court located in the State of California, County of San Diego. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties pursuant to this Agreement that is not subject to arbitration pursuant to Section 8, the parties hereby irrevocably submit to the exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.

 

10.7     Notices. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (a) by personal delivery when delivered personally; (b) by overnight courier upon written verification of receipt; (c) by telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt. Notice shall be sent to the address as either party may specify in writing.

 

10.8     Withholding. The Company shall have the right to withhold from any amount payable hereunder any Federal, state and local taxes in order for the Company to satisfy any withholding tax obligation it may have under any applicable law or regulation.

 

13

 

 

10.9     Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

 

	
			11. 

				
			Entire Agreement.

			

 

This Agreement supersedes the Severance Agreement dated April 29, 2019 (the “Prior Agreement”), and such Prior Agreement is null and void. Unless specifically provided by Section 4 of this Agreement or otherwise provided herein, this Agreement contains all of the understandings and representations between Executive and the Company pertaining to the subject matter hereof and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter. The parties mutually agree that the Agreement can be specifically enforced in court and can be cited as evidence in legal proceedings alleging breach of the Agreement.

 

14

 

 

	
			12. 

				
			Acknowledgment of Full Understanding.

			

 

EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS AGREEMENT. EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF HIS/HER CHOICE BEFORE SIGNING THIS AGREEMENT.

 

 

 

[SIGNATURE PAGE FOLLOWS]

 

15

 

 

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

 

	 	EXECUTIVE
	 
	Dated: September 8, 2020	By:	 
	 	Name:	Ian Lawee
	 	Address:	12367 Crosthwaite Circle
	 	 	Poway, CA 92064

 

 

	 	COMPANY
	 
	 	Cohu, Inc.
	 	 	 
	Dated: September 8, 2020	By:	 
	 	Name:	Luis Müller
	 	Title:	CEO
	 	Address:	12367 Crosthwaite Circle
	 	 	Poway, CA 92064

 

16

 

 

EXHIBIT A

 

COHU, INC.

 

CONFIDENTIALITY AND INVENTIONS AGREEMENT

 

17

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