Document:

exv10w8

 

Exhibit 10.8

EMPLOYMENT AGREEMENT

     This Agreement is made effective as of June 1, 2005 by and between Circuit Research
Labs, Inc., an Arizona Corporation (the “Corporation”), and Robert McMartin (the
“Employee”).

     WHEREAS, the Corporation desires to retain the services of the Employee in the capacity of its
 Executive Vice President and Chief Financial Officer; and

     WHEREAS, the Corporation wishes to prevent Employee from pursuing other employment
opportunities, which is only possible if the Corporation commits to employ Employee for an extended
term.

NOW THEREFORE, IT IS AGREED AS FOLLOWS:

Section 1. Employment. The Corporation agrees to employ the Employee and the Employee
agrees to accept the employment described in this Agreement.

1.1 Successors of Employer. The provisions of this Agreement shall bind any successor or
assign of Employer, which shall be obligated to employ Employee and to pay the compensation
provided herein.

1.2 Obligations of Employer. If Employer is a party to a merger or consolidation or sells
those assets and business for which Employee is employed, Employer will cause the purchaser or
other successor to assume the obligations of Employer set forth herein. Employer shall remain
liable hereunder unless and until the obligations of the Employer are assumed by a solvent
successor to Employer that will carry on the business for which Employee is employed.

Section 2. Duties. The Employee shall serve, as Executive Vice President and Chief
Financial Officer of the Corporation, with such duties as are customarily associated with such
position. The Employee shall have such additional duties, including performance of such duties and
holding such offices or positions with subsidiaries and affiliates of the Corporation, as shall be
reasonably requested of him from time to time by the President or Board of Directors of the
Corporation.

Section 3. Extent of Services. The Employee shall devote substantially all of his working
time, attention, and energies to the performance of his duties. The Employee shall at all times
faithfully and to the best of his ability perform his duties under this Agreement. The duties
shall be rendered at the Corporation’s offices in Tempe, Arizona and at such temporary locations as
assigned by the Board of Directors of the Corporation for the purpose of conducting company
business.

Section 4. Term. The term of this Agreement shall begin on June 1, 2005 and,
unless sooner terminated for cause as set forth elsewhere in the Agreement, shall continue

 

 

Employment Agreement

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ROBERT MCMARTIN

until
May 31, 2010. It shall thereafter continue until either Corporation or Employee terminates
this Agreement on 90 days notice to the other. This Agreement shall not give the Employee any
enforceable right to employment beyond this term.

Section 5. Compensation.

5.1 Base Compensation. The Employee will receive a base salary of not less than
$175,000.00 per year. The Employee’s base salary will be payable in accordance with the
Corporation’s standard payroll procedures. The Employee is eligible for bonuses, but there is no
assurance or expectation that bonuses will be paid. Bonuses will be paid, if at all, at the sole
discretion of the Board of Directors.

5.2 Benefits. The Employee shall receive medical, dental and vision and to the extent
provided to all employees of the Corporation, life and disability insurance. The Employee shall
also receive all other fringe benefits provided to full-time employees of the Corporation. The
Employee shall receive four (4) weeks of paid vacation per year.

5.3 Expenses. The Corporation shall reimburse the Employee for reasonable out-of-pocket
expenses incurred by the Employee in fulfilling his duties, including a housing allowance if the
Corporation requires Employee to perform his duties more than 50 miles from his home and an auto
allowance if the Corporation requires Employee to use his vehicle in the conduct of his duties.
The Corporation shall provide the employee with office facilities, equipment, supplies, and staff.

Section 6. Termination. 

6.1 For Cause. The Corporation may terminate the Employee’s employment at any time “for
cause” with immediate effect upon delivering written notice to the Employee. For purposes of this
Agreement, “for cause” shall be limited to: (a) embezzlement, theft, larceny, material fraud, or
other acts of dishonesty; (b) material violation by employee of any of his obligations under this
Agreement; (c) conviction of or entrance of a plea of guilty or nolo contendere to a felony or
other crime which has or may have a material adverse effect on the Employee’s ability to carry out
his duties under this Agreement or upon the reputation of the Corporation; (d) repeated
insubordination after written warning by the Board; or (e) material continuing failure by the
Employee to perform the duties described in Section 2 above in a quality and professional manner
for at least sixty days after written warning by the Board of Directors. Upon termination for
cause, the Corporation’s sole and exclusive obligation will be to pay the Employee his compensation
earned through the date of termination, and the Employee shall not be entitled to any compensation
after the date of termination.

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6.2 Upon Death. In the event of the Employee’s death during the term of this Agreement,
the Corporation’s sole and exclusive obligation will be to pay to the Employee’s estate the
Employee’s compensation earned through the term of this agreement.

6.3 Upon Disability. The Corporation may terminate the Employee’s employment upon the
Employee’s total disability. The Employee shall be deemed to be totally disabled if he is unable
to perform his duties under this Agreement by reason of mental or physical illness or accident for
a period of three consecutive months (the date of finding of disability of Employee shall be three
months following the first day the Employee is unable to work). Upon termination by reason of the
Employee’s disability, the Corporation’s sole and exclusive obligation will be to pay the Employee
under the Corporation’s disability policy or his compensation for one year following such
termination, whichever is greater.

6.4 Without Cause. If the Corporation terminates Employee without cause, Employee shall
receive all compensation and benefits for the full term of this Agreement until May 31,
2010 as set forth in Section 4. Failure to pay such compensation and benefits shall relieve
Employee of his duties under section 7 of this Agreement, without limiting the rights of Employee
to recover all sums due under this section 6.4.

Section 7. Covenant Not to Compete.

7.1 Covenant. During the term of this Agreement, and for such period after the expiration
of the term as the Employee continues to be employed by the Corporation, and for a two year (2)
period after the Employee’s employment with the Corporation has been terminated by either party
(whichever constitutes the longer period), the Employee will not:

7.1.1 enter into or attempt to enter into the “Restricted Business” (as defined below)
worldwide:

7.1.2 use contracts, proprietary information, trade secrets, confidential information,
customer lists, mailing lists, goodwill, or other intangible property used or useful in connection
with the Corporation’s business.

7.2 Restricted Business. The term “Restricted Business” means the design and manufacture
of audio processing equipment and the design and manufacture of automation and PC based product and
equipment for the radio and television broadcast industry. Nevertheless, the Employee may own not
more than five percent of the outstanding equity securities of a corporation that is engaged in the
Restricted Business

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if the equity securities are listed for trading on a national stock exchange or are registered
under the Securities Exchange Act of 1934.

Section 8. Confidentiality. The Employee acknowledges that he will develop and be exposed
to information that is or will be confidential and proprietary to the Corporation. The information
includes customer lists, marketing plans, pricing data, product plans, software, and other
intangible information. Such information shall be deemed confidential to the extent not generally
known within the trade. The Employee agrees to make use of such information only in the
performance of his duties under this Agreement, to maintain such information only in the
performance of his duties under this Agreement, to maintain such information in confidence and to
disclose the information only to persons with a need to know.

Section 9. Waiver. The waiver by the Corporation of the breach of any provision of this
Agreement by the Employee shall not operate or be construed as a waiver of any subsequent breach by
the Employee.

Section 10. Notices. Any notices permitted or required under this Agreement shall be
deemed given upon the date of personal delivery or forty-eight (48) hours after deposit in the
United States mail, postage fully prepaid, return receipt requested, addressed to the Corporation
at:

1302 W. Drivers Way

Tempe, AZ 85284

Addressed to the Employee at:

24648 N. 72nd Place

Scottsdale, AZ 85255

or any other address as any party may, from time to time, designate by notice given in compliance
with this Section.

Section 11. Law Governing and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona, without the application of any law
of conflicts of laws that would require or permit the application of the laws of any other
jurisdiction. The parties hereto each hereby submit to the exclusive jurisdiction of the federal
and state courts for the state of Arizona and agree that venue shall be in such courts in Maricopa
County, Arizona.

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Section 12. Titles and Captions. All section titles or captions contained in this
Agreement are for convenience only and shall not be deemed part of the context nor effect the
interpretation of this Agreement.

Section 13. Entire Agreement. This Agreement contains the entire understanding between
and among the parties with respect to the subject matter hereof and supersedes any other prior
understandings and agreements among them respecting the subject matter of this Agreement.

Section 14. Attorney Fees. In the event an arbitration, suit or action is brought by any
party under this Agreement to enforce any of its terms, or in any appeal therefrom, it is agreed
that the prevailing party shall be entitled to reasonable attorneys fees to be fixed by the
arbitrator, trial court, and or appellate court.

Section 15. Pronouns and Plurals. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular, or plural as the identity of the person or
persons may require.

Section 16. Arbitration. If at any time during the term of this Agreement any dispute,
difference, or disagreement shall arise upon or in respect of the Agreement, and the meaning and
construction hereof, every such dispute, difference, and disagreement shall be referred to a single
arbiter agreed upon by the parties, or if no single arbiter can be agreed upon, an arbiter or
arbiters shall be selected in accordance with the rules of the American Arbitration Association and
such dispute, difference, or disagreement shall be settled by arbitration in accordance with the
then prevailing commercial rules of the American Arbitration Association, and judgment upon the
award rendered by the arbiter may be entered in any court having jurisdiction thereof.

Section 17. Presumption. This Agreement or any section thereof shall not be construed
against any party due to the fact that said Agreement or any section thereof was drafted by such
party.

Section 18. Further Action. The parties hereto shall execute and deliver all documents,
provide all information and take or forbear from all such action as may be necessary or appropriate
to achieve the purposes of the Agreement.

Section 19. Parties in Interest. Nothing herein shall be construed to be to the benefit
of any third party, nor is it intended that any provision shall be for the benefit of any third
party.

Section 20. Separate Counsel. The parties acknowledge that the Corporation has been
represented in this transaction that any attorneys have not represented the

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Employee in this transaction, and the Employee has been advised that it is important for the
Employee to seek separate legal advice and representation in this matter.

Section 21. Severability. In the event that any of the provisions of this Agreement or
the application of any such provisions to the parties hereto with respect to their obligations
hereunder shall be held by a court or other tribunal of competent jurisdiction to be unlawful or
unenforceable, the remaining provisions of this Agreement shall remain in full force and effect and
shall be construed so as to give the fullest effect to the intent of the parties expressed herein.

Circuit Research Labs, Inc.

An Arizona Corporation

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	Name:

	 	 	 	Robert McMartin, Employee
	 

	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 

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Exhibit 10.10

EMPLOYMENT AGREEMENT

     This Employment Agreement (the “Agreement”) is entered into effective as of May 31,
2005, (the “Effective Date”) by and between CIRCUIT RESEARCH LABS, INC., an Arizona
corporation (the “Company”), and ROBERT A. ORBAN (“Orban”).

R E C I T A L S

     A. Orban is employed by the Company pursuant to an Employment Agreement dated May 31, 2000
(the “Expired Employment Agreement”), which will expire on the Effective Date of this
Agreement.

     B. The Company desires to retain the services of Orban, on its own behalf and on behalf of all
existing and future corporations or other business entities that directly or indirectly control,
are controlled by, or are under common control with the Company (“Affiliated Companies”),
and Orban desires to render such services, under the terms and conditions set forth herein.

     Accordingly, the parties agree as follows as of the Effective Date:

     1. Employment.

          (a) The Company hereby employs Orban as an employee of the Company to render services to the
Company in the position and with the duties and responsibilities described in Section 2 hereof for
the period (the “Period of Employment”) commencing on the date of this Agreement and ending
on the date this Agreement is terminated in accordance with the terms hereof (the “Termination
Date”). The Expired Employment Agreement will not be renewed upon expiration and has no
further force and effect, being completely replaced and superceded by this Agreement.

          (b)  Retirement. Orban may retire at any time on 60 days notice to the Company. If
Orban elects retirement, the Company will pay to Orban the compensation, including without
limitation any accrued bonus amount, to which he would have been entitled pursuant to Section 3
hereof, as accrued through the date of his retirement, and any previously unreimbursed expenses
(subject to presentation by Orban of such supporting documentation as he may have with respect
thereto). Following the date of retirement, Orban shall remain available for consultation with the
Company at reasonable times and places from time to time as requested by the Company, but need not
be available on a full time basis.

     2. Position, Duties, Reporting; Location; Other Activities.

          (a) Position, Duties, Reporting. Orban will be employed by the Company as Chief
Engineer, Orban Division (or in such other position(s) as the Company will designate to him in
writing). Orban will devote his best efforts and his full time and attention to the performance of
the services customarily incident to such office and to such other services to the Company, and/or
to one or more services to any Affiliated Companies, as may be reasonably requested by the Company.
The Company will retain full direction and control of the means and methods by which Orban
performs such services and, subject to the provisions of Section 2(b) hereof, as to the place(s) at which such services are to be rendered. Orban will
report to

Robert Orban Employment Agreement

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the President of the Company, or to such other person as the Company may direct, provided
that if such person is not an executive officer (Vice President or above) of the Company, Orban
will not be required to report to such person unless Orban has so agreed in writing, which
agreement he will not unreasonably withhold.

          (b) Location. The office of the Company to which Orban will report will be located
not more than thirty-five (35) miles from Orban’s residence in Belmont, California, except that the
Company may direct Orban to perform his duties while physically located at his residence if the
Company does not maintain an office within thirty-five (35) miles from such residence location. If
the Company does maintain an office in the San Francisco Bay area, it may, subject to such 35-mile
maximum limitation, require Orban to be physically present at such office no more than three (3)
days per week, with the remainder of his duties to be performed at his residence.

          (c) Other Activities. Without the prior written consent of the Company, which will
not be unreasonably withheld, during the Period of Employment (including the time following Orban’s
retirement pursuant to Section 1(b), so long as the retirement benefit provided for in Section 3(a)
is paid) Orban will not (i) accept any other employment, or (ii) engage, directly or indirectly, in
any other business activity (whether or not pursued for pecuniary advantage) other than passive
investment activity, and reasonable and incidental commercial activity (including such activities
as are permitted by Section 3(f) hereof) that are not in derogation or violation of any of his
obligations hereunder; provided, however, that “passive investment activity,” as used herein, will
not include investment in any company engaged in any business activity that is in the reasonable
and good faith judgment of the Board of Directors of the Company, after reasonable consultation
with Orban, competitive with the business engaged in by the Company, which business is described on
Exhibit A attached hereto, which Exhibit is incorporated herein by reference, and provided
that Orban may purchase up to five percent (5%) of the stock of any company whose shares are traded
on a national securities exchange or trading system.

     3. Salary; Bonus; Benefits; Expenses; Parking; Personal Purchases Of Company Products;
Personal Use Of Company Equipment; Profit-Sharing; Certain Assets.

          (a) Salary and Bonus. In consideration of the services rendered hereunder by Orban,
including, without limitation, services to any Affiliated Company, Orban will be paid by the
Company an annual gross salary of $300,000.00 (the “Base Salary”), less any deductions and
withholding required by law, payable in equal monthly installments at the time and pursuant to the
procedures regularly established, and as they may be amended, by the Company during the course of
this Agreement as to payment of payroll for its officers. After the date of Orban’s retirement, as
defined in Section 1(b), Orban shall be paid a retirement benefit of $150,000.00 per year, but
shall not be entitled to any other benefits set forth in this Section 3 except as set forth herein
or allowed from time to time by the Board of Directors of the Company.

          (b) Bonus. In consideration of the amount of base salary set forth herein, Orban
agrees that he is and will not be eligible for any bonus or increase in salary during the term
hereof.

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          (c) Benefits. The Company will provide Orban (and to his family, if and when family
coverage is provided by the Company generally to employees of the Company’s Orban Division, which
coverage the Company will not withhold if it is providing such coverage to any other division of
the Company and/or to persons having a position and/or responsibilities within the Company
commensurate with those of Orban hereunder), with benefits from all present and future life,
accident and medical benefits made available generally to similarly situated management-level
employees of the Company. The amount and extent of benefits to which Orban is entitled will be
governed by the specific benefit plans, as they may be amended from time to time. Orban will be
entitled to (i) three (3) weeks of paid vacation per year (exclusive of Company holidays) which
will be taken with the prior approval of the person within the Company to whom Orban reports, which
approval will not be unreasonably or untimely withheld, and (ii) such long-term disability
insurance coverage as is provided to executive level (Vice President or higher) personnel of the
Company. Other than the compensation, benefits and vacation leave specified in this Section 3,
Orban will not be entitled to any direct or indirect compensation for services performed hereunder.

          (d) Expenses; Flight Class. The Company will reimburse Orban for reasonable business
travel and other business expenses incurred by Orban in the performance of his duties hereunder;
provided, however, that (i) all such expenses will be subject to Company policies as promulgated to
be generally applicable from time to time, and that expenses exceeding $1,000.00 will be approved
beforehand by the Company, and (ii) Orban will be entitled to travel business class (or first
class, if business class is not available) on any domestic airline flight and first class on
international flights.

          (e) Parking. For so long as Orban is employed hereunder, and has use for a parking
space, the Company will provide him with a private, designated parking place (on-site so long as it
is practicable and lawful; or a reasonably convenient place if an on-site parking place is not
practicable or lawful).

          (f) Personal Purchases of Company’s Products. Orban may purchase reasonable
quantities of products of the Company at dealer cost (or best employee cost, whichever is lower)
while he is employed hereunder and for two (2) years thereafter, provided that such purchases will
be for Orban’s personal use (only as permitted by Section 2(b) hereof and not for resale) and only
to the extent that any such sale to Orban does not violate any contractual obligation of the
Company to a third party.

          (g) Personal Use of Company Equipment. The Company acknowledges and agrees that,
subject to his obligations hereunder, Orban may engage in certain activities with Company equipment
either on or off the premises of the Company that may not relate to the business of the Company.
Any work done by Orban during the Period of Employment entirely on his own time but using
reasonable kinds and quantities of the Company’s equipment, supplies or facilities, whether at his
residence or on the premises of the Company, that is not in violation of his obligations under this
Agreement, and the results of any such work, to the extent that they are not Invention Ideas, as
described in Section 7 hereof, will belong to Orban; provided, however, that the provisions of this
Section 3(g) will in no way affect the provisions of Section 7 hereof as to all other work by
Orban. Orban hereby waives irrevocably any right to indemnity or reimbursement from the Company
for any injury, whether physical or economic,

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suffered by Orban in the course of his work described in this Section 3(g),
wherever or by whomever performed, and from the use by Orban of any of the intellectual property
licensed to him by the Company under Section 5(c) hereof. Orban will indemnify the Company for any
loss, cost or expenses to the Company from claims arising out of such work or use.

          (h) Accrued Bonus on Effective Date. Orban and the Company agree that as of the
Effective Date, the Company will owe Orban approximately $258,000.00 for accrued but unpaid bonuses
under the Expired Employment Agreement. In consideration of the Company executing this Agreement,
Orban agrees to accept $158,000 as payment in full of all accrued and unpaid bonuses due to him as
of May 31, 2005 and the Company agrees to pay that amount to Orban in installments of $5,000 plus
interest at a rate of eight percent per annum until paid in full. These payments will be made at
the same time as normal salary payments to Orban and will be subject to normal withholding and
taxes as part of Orban’s compensation. This obligation is payable whether or not Orban remains
employed by the Company and whether Orban is terminated for any reason. Any unpaid amounts due
under this Section 3 (h) at the time of the death of Orban shall be payable to his estate. If the
Company fails to pay three or more installments of accrued bonuses in a timely manner in accordance
with the provisions set forth herein, the restrictions of Section 2(c) (non-compete) shall cease to
apply.

          (i) Benefits After Retirement Date. Following Orban’s retirement, as defined in
Section 1(b), if Orban so elects, Orban shall continue to be covered under the Company’s Medical
and Dental Plans to the same extent and at the same cost as all other executive employees; however,
Orban shall reimburse the Company for its actual expenses incurred in providing such coverage for
Orban.

     4. Termination of Employment.

          (a) By Death. The Period of Employment will terminate automatically upon the death of
Orban. The Company will pay to Orban’s beneficiaries or estate, as appropriate, the compensation,
including without limitation any accrued bonus amount, to which he would have been entitled
pursuant to Section 3 hereof, as accrued through the end of the month after the month in which his
death occurs, and any previously unreimbursed expenses (subject to presentation by his survivors or
agents of such supporting documentation as they may have with respect thereto). After such
payments, the Company’s obligations hereunder will terminate. Nothing in this Section 4(a) will
affect, or be set off by, any entitlement of Orban’s heirs to the benefits of any life insurance
plan to which he may be entitled as a Company benefit. Neither Orban’s heirs or estate shall have
any claim to the proceeds of any life insurance on his life purchased and paid for by the Company
in which the Company is the named beneficiary.

          (b) By Disability. If Orban is prevented from properly performing his duties
hereunder at the office of the Company by reason of any physical or mental incapacity for a period
of more than sixty (60) days in the aggregate in any twelve (12) month period or sixty (60)
consecutive days, or if a physician selected by Company will determine that Orban may be expected
to be prevented from properly performing his duties hereunder at the office of the Company by
reason of any physical or mental incapacity for a period of more than sixty (60)

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days in the aggregate in any twelve-month period or sixty (60) consecutive days, then, to the
extent permitted by law, the Company may terminate the Period of Employment, and the compensation
to which Orban is entitled pursuant to Section 3(a) hereof will be paid up through the last day of
the month in which the 60th day of incapacity occurs or would occur or in such later
month in which the Company terminates him, and thereafter the Company’s obligations hereunder will
terminate. Upon the recurrence of a disability within twelve (12) months following a return to
employment after a period of disability, such recurrence will be deemed to be a continuation of the
original disability for purposes of determining whether the disability has prevented, or may be
expected to prevent, Orban from properly performing his duties hereunder for a period of sixty (60)
days in the aggregate. Nothing in this Section will affect Orban’s rights under any disability
insurance plan in which he is a participant.

          (c) By Company For Cause. For purposes of this Section 4(c), any determination of
Cause made by the Company will mean that such determination will have been made by the President of
the Company and at least one other officer of the Company with a rank of Vice President or above
who will have, after discussing the matter, determined unanimously that such termination will be
for cause. The Company may terminate, without liability, the Period of Employment for Cause (as
defined below) upon ten (10) days’ advance written notice to Orban following any failure by him to
correct the Cause within the opportunity to cure period described below. The Company will pay
Orban the compensation to which he is entitled pursuant to Section 3(a) through the end of the day
which is the Termination Date and thereafter the Company’s obligations hereunder will terminate.
Termination will be for Cause if: (i) because of any act or failure to act by Orban which, in the
sole, good faith opinion of the Company, is in bad faith and to the detriment of the Company or any
Affiliated Company; (ii) Orban exhibits, in the sole, good faith opinion of the Company,
unsatisfactory performance, misconduct, dishonesty, habitual neglect, or incompetence in the
performance of services for the benefit of the Company or any Affiliated Company; or (iii) because
Orban, in the sole, good faith opinion of the Company, breaches any of the covenants contained in
Sections 5, 6 or 7 of this Agreement. If the Company will propose to discharge Orban for Cause, it
will afford him written notice of the proposed action specifying in reasonable detail the basis for
such proposed action and allowing him thirty (30) days to correct the identified Cause. Orban will
be provided with only one such opportunity to cure identified causes for termination in any six (6)
month period.

          (d) [Intentionally Deleted].

          (e) Other Causes for Termination. If the Company becomes a debtor in bankruptcy
proceedings, Orban may terminate this Agreement effective as of the date of institution of the
bankruptcy proceedings. In such event, the obligation of the Company to pay Orban shall cease as
of that date and the restrictions of Section 2(c) (non-compete) shall cease to apply. If Orban
does not terminate this Agreement within one week of the date of institution of the bankruptcy
proceedings, this Agreement shall remain in full force and effect and all provisions herein shall
continue to be effective. Orban may also terminate this Agreement if the Company fails to pay
three or more installments of Salary in a timely manner in accordance with the provisions of
Section 3(a), in which case the obligation of the Company to pay Orban

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shall cease as of that date and the restrictions of Section 2(c) (non-compete) shall cease to apply.

          (f) Termination Obligations.

               (i) By The Company. Except as provided in Sections 4(a), (b), (c) or (d) hereof, upon
termination the Company will pay Orban the compensation to which he is entitled under Section 3(a)
hereof through the Termination Date, and any accrued bonus due pursuant to Section 3(h), and
thereafter the Company’s obligations hereunder will end other than with respect to the payment by
the Company to Orban thereafter of reimbursed expenses for which he submits to the Company, within
ninety (90) days after the Termination Date, commercially customary supporting documentation
therefor.

               (ii) By Orban. All personal property, including, without limitation, all books,
manuals, records, reports, notes, contracts, lists, blueprints, sketches, schematics, flowsheets,
flow diagrams, magnetic media such as audio tapes, computer tapes and diskettes, optical media such
as compact disks, micromedia such as microfilm and microfiche, and other documents, or materials,
or copies thereof, Proprietary Information (as defined in Section 5 hereof), and equipment
furnished to or prepared by Orban in the course of or incident to his Employment hereunder,
including without limitation records and any other materials pertaining to Invention Ideas (as
defined in Section 5 hereof), belong to the Company and will be promptly returned to the Company by
Orban upon termination, for any reason, of the Period of Employment. Following any such
termination, Orban will not retain any written or other tangible material containing any
Proprietary Information or information pertaining to any Invention Idea.

               (iii) Automatic Resignation. Upon termination of the Period of Employment for any
reason, Orban will be deemed to have resigned automatically, as of the date of such termination,
from all offices and Director positions then held by him with the Company and/or with any
Affiliated Company.

               (iv) Certain Uses Of Orban Name. Other than his rendering of services as set forth in
Section 2(a), during and after the Period of Employment, Orban will not commence, engage in, or
otherwise participate in, any business or other enterprise in the field of audio sound equipment,
broadcast industry equipment, computers or electronic equipment, which enterprise has a name or
designation including “Orban”, “RAO”, or any name similar to or likely to cause confusion with
“Orban” or “RAO”, nor will Orban give his consent to any third party to conduct any such enterprise
under such names or designations.

               (v) Survival. The representations and warranties contained herein and Orban’s
obligations under Sections 5, 6, and 8 hereof will survive termination of the Period of Employment
and the expiration of this Agreement.

               (vi) Certain Purchases By Orban. Upon termination of the Period of Employment for any
reason, Orban will be entitled to purchase from the Company the electronic, sound engineering and
recording equipment of the Company located at Orban’s residence at its then fair-market value (as
determined by the parties; or, if they cannot agree, by

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an independent appraiser selected jointly by the parties, such appraiser’s fees being paid fifty percent (50%) by each party).

     5. Proprietary Information.

          (a) Definition. “Proprietary Information” means all information and ideas in
whatever form, tangible or intangible, pertaining in any manner to the business of the Company or
any Affiliated Company, or to their respective clients, consultants, or business associates
(including, without limitation, customer lists and sales information), unless: (i) the information
is or becomes publicly known through lawful means; or (ii) the information is disclosed to Orban
without confidential or proprietary restriction by a third party who rightfully possesses the
information without confidential or proprietary restriction and did not learn of it, directly or
indirectly, from the Company.

          (b) General Restrictions on Use. Orban will hold all Proprietary Information in
strict confidence and trust for the sole benefit of the Company and will not, directly or
indirectly, disclose, use, copy, publish, summarize, or remove from Company’s premises (including
his residence) any Proprietary Information (or remove from any such premises any other property of
the Company), except (i) during the Period of Employment to the extent necessary to carry out
Orban’s responsibilities under this Agreement, and (ii) after termination of the Period of
Employment as specifically authorized in writing by the Company.

          (c) License. The Company hereby grants to Orban a non-exclusive, fully-paid
nonassignable worldwide license to use intellectual property such as accounting, managerial and
troubleshooting software programs and general purpose mathematical, circuit designs, and analysis
software programs owned by it; provided, however, that the term “intellectual property,” as used
herein, will not include Proprietary Information or any information the licensing of which would
violate any agreement between the Company and a third party, or any other legal obligation of the
Company to any third party; provided further that such intellectual property will not be used in
derogation or violation of Orban’s obligations hereunder; and provided further that this license
shall expire if Orban is terminated for cause pursuant to section 4(c) or if Orban violates the
provisions of section 2(c) after retirement.

     6. Inventions Ideas.

          (a) Defined; Statutory Notice. For purposes hereof, “Invention Idea” means
any and all ideas, processes, trademarks, service marks, inventions, technology, computer programs,
original works of authorship, designs, formulae, discoveries, patents, copyrights, and all
improvements, rights, and claims related to the foregoing that are conceived, developed, or reduced
to practice by Orban alone or with others, which relate to or are connected with the Business or
the products developed or manufactured by Seller or by the Company, except to the extent that
California Labor Code Section 2870 lawfully prohibits the assignment of rights in such ideas,
processes, inventions, and the like, such Section 2870(a) providing as follows:

“Any provision in an employment agreement which provides that an
employee will assign, or offer to assign, any of his or her rights
in an invention to his or her employer will not apply to an
invention that the employee developed entirely on his or her own

Robert Orban Employment Agreement

Page 7

 

 

time without using the employer’s equipment, supplies, facilities,
or trade secret information except for those inventions that
either:

(1) Relate at the time of conception or reduction to practice of
the invention to the employer’s business, or actual or demonstrably
anticipated research or development of the employer.

(2) Result from any work performed by the employee for the
employer.”

Orban hereby acknowledges that, to the extent such Section 2870 may be deemed applicable to this
Agreement, he understands the foregoing limitations created by such Section 2870. The Company
acknowledges that it does not have rights to inventions which do not relate to the Business, or to
the products developed by or manufactured by Seller or the Company, whether or not equipment and
supplies of the Company were used, so long as such inventions were developed solely on Orban’s own
time.

          (b) Disclosure. Orban will maintain adequate and current written records as to the
development of all Invention Ideas and will disclose promptly to the Company all Invention Ideas
and records relevant thereto, which records will remain the sole property of the Company.

          (c) Assignment. Orban will assign to the Company, without further consideration, his
entire right, title, and interest, throughout the United States and in all foreign countries, free
and clear of all liens and encumbrances, in and to each Invention Idea, which will be the sole
property of the Company, whether or not patentable. In the event any Invention Idea is deemed by
the Company to be patentable or otherwise registrable, Orban will assist the Company, at the
Company’s expense, in obtaining letters patent or other applicable registrations thereon and will
execute all documents, including, without limitation, all applications, continuations,
continuations-in-part, and divisionals, domestic and foreign, and do all other things, including
testifying at the Company’s expense, necessary or proper to obtain letters patent or other
applicable registrations thereon and to vest in the Company, or any Affiliated Company specified by
the Company, full title thereto. If the Company is unable to secure Orban’s signature on any
document necessary to apply for, prosecute, obtain, or enforce any patent, copyright, or other
right or protection relating to any Invention Idea, whether due to Orban’s mental or physical
incapacity or any other cause, Orban hereby irrevocably designates and appoints Company and each of
its duly authorized officers and agents as Orban’s agent and attorney in fact, to act for and in
Orban’s behalf and stead and to execute and file any such document, and to do all other lawfully
permitted acts to further the preparation, prosecution, issuance, and enforcement of patents,
copyrights, or other rights or protections with the same force and effect as if executed and
delivered by Orban.

          (d) Exclusions. Orban acknowledges that there is no Invention Idea that he desires to
or does exclude from the operation of this Agreement except those listed in Exhibit B
hereto, which Exhibit is incorporated herein by reference. To the best of Orban’s knowledge, there
is no existing contract in conflict with this Agreement or any other contract to assign the

Robert Orban Employment Agreement

Page 8

 

 

Intellectual Property that is now in existence or contemplated between Orban and any other person
or entity.

     7. Life Insurance. The Company may purchase and own life insurance insuring the life
of Orban in which the Company is named beneficiary. Orban agrees to comply with all reasonable requests of the Company to enable the Company to maintain the insurance at the lowest
possible premiums. Orban shall have no rights or interest in the cash value, if any, or proceeds
of any such insurance.

     8. Assignment; Successors and Assigns. Orban will not assign, sell, transfer,
delegate or otherwise dispose of, whether voluntarily or involuntarily, or by operation of law, nor
voluntarily subject to encumbrance or the claims of creditors, any rights or obligations of Orban
under this Agreement. Any purported such assignment, transfer, or delegation will be null and
void. Nothing in this Agreement will prevent the consolidation of the Company with, or its merger
into, any other corporation, or the sale by the Company of all or substantially all of its
properties or assets, or the assignment by the Company of this Agreement and the performance of its
obligations hereunder to any successor in interest or any Affiliated Company, provided that any
such successor will assume all of the Company’s obligations hereunder. Subject to the foregoing,
this Agreement will be binding upon and will inure to the benefit of the parties and their
respective successors and permitted assigns, and Orban’s heirs, executors, administrators and legal
representatives, and will not benefit any person or entity.

     9. Notices. All notices or other communications required or permitted hereunder will
be made in writing and will be deemed to have been duly given if delivered by hand or mailed,
postage prepaid, by certified or registered mail, return receipt requested, using a depository
maintained by the United States Postal Service, or by Federal Express, and addressed to the
Company, or by facsimile with confirmed answerback, in each case as follows:

Circuit Research Labs, Inc.

1302 West Drivers Way

Tempe, Arizona 85284

Attention: Jay Brentlinger, President

      Facsimile: 480.785.1031

or to Orban at:

Robert A. Orban

2413 Lincoln Avenue

Belmont, California 94002

      Facsimile: 650-595-4551

Notice of change of address will be effective only when delivered in accordance with this Section.

     10. Entire Agreement. The terms of this Agreement are the final expression of the
agreement of the parties as to the specific subject matter hereof, superceding in their entirety

Robert Orban Employment Agreement

Page 9

 

 

all other prior written or other agreements or understandings with respect thereto, and may not be
contradicted by evidence of any prior or contemporaneous agreement. This Agreement constitutes the
complete and exclusive statement of its terms and no extrinsic evidence whatsoever relating to this
Agreement may be introduced in any judicial, administrative, or other legal proceeding involving
this Agreement.

     11. Amendments; Waivers. This Agreement may not be modified, amended, or terminated
except by an instrument in writing, signed by Orban and by another authorized officer of the
Company. By an instrument in writing similarly executed, either party may waive compliance by the
other party with any provision of this Agreement that such other party was or is obligated to
comply with or perform, provided, however, that such waiver will not operate as a waiver of, or
estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in
exercising any right, remedy, or power hereunder will operate as a waiver thereof, nor will any
single or partial exercise of any right, remedy, or power hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, or power provided herein or by law or
in equity.

     12. Severability; Enforcement. If any provision of this Agreement, or the application
thereof to any person, place, or circumstance, will be held by a court of competent jurisdiction to
be invalid, unenforceable, or void, as written, in whole or in part, it will be deemed to be
amended to the extent necessary to be enforceable and applied by such court in the broadest
possible manner consistent with enforceability, and the remainder of this Agreement and such
provisions as applied to other persons, places, and circumstances will remain in full force and
effect.

     13. Governing Law. The validity, interpretation, enforceability, and performance of
this Agreement will be governed by and construed in accordance with the law of the State of
California; provided, however, that if any action relating to Section 6 or 7 hereof is commenced in
any jurisdiction other than California, the law of that jurisdiction will govern to the extent it
is more favorable to the Company than the law of California.

     14. Acknowledgment. Orban acknowledges (a) that he has consulted with or has had the
opportunity to consult with independent counsel of his own choice concerning this Agreement and has
been advised to do so by the Company, and (b) that he has read and understands the Agreement, is
fully aware of its legal effect, and has entered into it freely based on his own judgment.

     15. Remedies. The parties agree that in the event of any breach or threatened breach
of any of the covenants in Section 5, 6 or 8 hereof, the damage or imminent damage to the value and
the goodwill of the Company’s business will be irreparable and extremely difficult to estimate,
making any remedy at law or in damages inadequate. Accordingly, the parties agree that the Company
will be entitled to injunctive relief, including, without limitation, relief in the nature of a
temporary restraining order, against Orban in the event of any breach or threatened breach of any
such provisions by Orban, in addition to any other relief, including damages, available to the
Company under this Agreement or under law.

CIRCUIT RESEARCH LABS, INC.

Robert Orban Employment Agreement

Page 10

 

 

	 	 	 	 	 	 	 
	 	 	 	 	 
	By

	 	 	 	 	 	ROBERT A. ORBAN, individually
	 

	 	 	 	 	 	 
	 

	 	C. Jayson Brentlinger, President	 	 	 	 

Robert Orban Employment Agreement

Page 11

 

 

EXHIBIT A

DEFINITION OF BUSINESS

The business of Seller was, and that of the Company is, the invention, conception, design,
manufacture and sale of electronic audio processing equipment, and service of its products.

The customers of Seller were, and those of the Company are, professional individuals and
professional organizations, including profit, non-profit or governmental organizations, who use
Orban products for other than their own end-user personal use. Orban products are not intended
for, or expected to be sold to, ordinary consumers for hobby uses, personal entertainment, or any
use in household environs.

Typical customers of Seller included, and of the Company include, but are not limited to:

	 	 	 	 	 
	 

	 	Recording Studios
	 	Federal, State & Local Governments
	 

	 	TV and Radio Stations
	 	Colleges & Universities
	 

	 	Halls, Arenas and Theatres except Cinemas
	 	Professional Electronic Music Studios
	 

	 	Traveling Music Groups
	 	Dance Clubs
	 

	 	Webcasters
	 	Motion Picture Studios
	 

	 	Sound Contractors	 	 

The products of Orban are units that may be used individually or in combination with each other.
Any unit may perform one or more of the following primary operations on any audio signal.

	 	 	 
	 

	 	Reverberation
	 

	 	Equalization
	 

	 	Leveling
	 

	 	Compression
	 

	 	Limiting
	 

	 	Clipping
	 

	 	Loudness Control
	 

	 	Synthesis of pseudo-stereo from mono
	 

	 	Enhancement of the apparent width of a stereo signal
	 

	 	Harmonic Generation
	 

	 	Distortion Generation
	 

	 	Generation of a modulated subchannel for imposition on a carrier (such as the
	 

	 	multiplex stereo subchannel used in FM and TV, or the TV auxiliary “SAP”
	 

	 	channel).

Robert Orban Employment Agreement

Page 12

 

 

EXHIBIT B

CERTAIN EXCLUSIONS

Musical composition

Creative writing

Audio, video, and musical recording and production

Photography

[R.O. note: These are all potentially subject to copyright]

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