Document:

exv4w3

 

 EXHIBIT 4.3

 

		
	Rights Certificate No.:	Number of Rights:            

THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING
ARE SET FORTH IN THE COMPANY’S PROSPECTUS
DATED                     ,
2004 (THE “PROSPECTUS”) AND ARE INCORPORATED HEREIN BY
REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST
FROM GEORGESON SHAREHOLDER COMMUNICATIONS INC., THE INFORMATION
AGENT.

CRITICAL PATH, INC.

Incorporated under the laws of the State of
California

CUSIP
NO.:                     

SUBSCRIPTION RIGHTS CERTIFICATE

Evidencing Subscription Rights to
Purchase                     Shares
of

Series E Redeemable Convertible Preferred
Stock of Critical Path, Inc.

Subscription Price: $1.50 per share

The Subscription Rights Will Expire If Not
Exercised On or Before 5:00 P.M.,

New York City Time,
on                     ,
2004,

Unless Extended or the Rights Offering is
Terminated By the Company

REGISTERED OWNER:

     
THIS CERTIFIES THAT the registered owner whose
name is inscribed hereon is the owner of the number of
subscription rights (“Rights”) set forth above. Each
whole Right entitles the holder thereof, or its assigns, to
subscribe for and purchase, at the subscription price per share
of $1.50 (the “Subscription Price”), one share of the
Series E Convertible Preferred Stock, par value $0.001 per
share (“Series E Preferred Stock”) of Critical
Path, Inc., a California corporation (the “Company”)
(the “Basic Subscription Right”), pursuant to a rights
offering (the “Rights Offering”), on the terms and
subject to the conditions set forth in the Prospectus and the
“Instructions for Use of Critical Path Subscription Rights
Certificates” accompanying this Subscription Rights
Certificate.

     
If any shares of the Series E Preferred
Stock available for purchase in the Rights Offering are not
purchased by other holders of Rights pursuant to the exercise of
their Basic Subscription Right (the “Excess Shares”),
any Rights holder that exercises its Basic Subscription Rights
in full may subscribe for a number of Excess Shares pursuant to
the terms and conditions of the Rights Offering, subject to
proration, as described in the Prospectus (the
“Over-Subscription Right”). The Rights represented by
this Subscription Rights Certificate may be exercised by
completing Form-1 and any other appropriate forms on the reverse
side hereof and by returning the full payment of the
Subscription Price for each Right subscribed for in accordance
with the “Instructions for Use of Critical Path
Subscription Rights Certificates” that accompany this
Subscription Rights Certificate. The Rights evidenced by this
Subscription Rights Certificate may also be transferred or sold
by completing the appropriate forms on the reverse side hereof
in accordance with the “Instructions for use of Critical
Path Subscription Rights Certificates” that accompany this
Subscription Rights Certificate.

     
Transferable on the books of Critical Path, Inc.
in person or by duly authorized attorney upon surrender of this
Subscription Rights Certificate properly endorsed.

     
This Subscription Rights Certificate is not valid
unless countersigned by the transfer agent and registered by the
registrar.

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IN WITNESS WHEREOF, the Company has caused this
Subscription Rights Certificate to be duly executed under its
corporate seal.

Dated:                     ,
2004

		
	 	
    CRITICAL PATH, INC.
    

			
	 	By: 	
    

		
	 	
    Name:
    
	 	
    Title:
    

			
	 	By: 	
    

		
	 	
    Name:
    
	 	
    Title:
    

COUNTERSIGNED AND REGISTERED BY:

COMPUTERSHARE TRUST

COMPANY (Golden, CO)

Transfer Agent And Registrar

	 	 	 
	
    By: 
Name:

    Title:
    	 	 

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DELIVERY OPTIONS FOR SUBSCRIPTION RIGHTS
CERTIFICATE

For delivery by mail:

Computershare Trust Company

P.O. Box 1596

Denver, CO 80201-1596

By hand delivery or overnight
courier:

Computershare Trust Company

350 Indiana Street, Suite 800

Golden, Colorado 80401

Tel: (303) 262-0600 Ext. 4732

Delivery other than in the manner or to the
addresses listed above will

not constitute valid delivery.

PLEASE PRINT ALL INFORMATION CLEARLY AND
LEGIBLY.

FORM 1 — EXERCISE OF SUBSCRIPTION
RIGHTS

     
To subscribe for shares pursuant to your Basic
Subscription Right, please complete lines (a) and (c) and
sign under Form 4 below. To subscribe for shares pursuant
to your Over-subscription Right, please also complete
line (b) and sign under Form 4 below.

(a) I apply for
            Shares          ×          $1.50       =
$            

                                   (No.
of new
Shares)               (subscription
price)            (Payment)

     
If you have exercised your Basic Subscription
Right in full and wish to subscribe for additional shares
pursuant to your Over-Subscription Right:

(b) I apply for
            Shares          ×          $1.50       =
$            

                                   (No.
of new
Shares)               (subscription
price)            (Payment)

(c) Total Amount of Payment
Enclosed = $

METHOD OF PAYMENT (CHECK ONE):

		
	o	
    Check or bank draft drawn on a U.S. bank, or
    postal, telegraphic or express money order payable to
    “Computershare Trust Company, as Subscription Agent for
    Critical Path, Inc.” Funds paid by an uncertified check may
    take at least five business days to clear.
    
	 
	o	
    Wire transfer of immediately available funds
    directly to the account maintained by Computershare Trust
    Company, as Subscription Agent for Critical Path, Inc., for
    purposes of accepting subscriptions in this Rights Offering
    Keybank at ABA #307070267, Computershare Trust Company
    Escrow Account No. 85-02961.
    

3

 

FORM 2 — SALE OR TRANSFER TO
DESIGNATED TRANSFEREE OR THROUGH BANK OR BROKER

     
To sell or transfer your subscription rights to
another person, complete this Form and have your signature
guaranteed under Form 5. To sell your subscription rights
through your bank or broker, sign below under this Form 2
and have your signature guaranteed under Form 5, but leave
the rest of this Form 2 blank.

     
For value received
                              
of the subscription rights represented by this Subscription
Rights Certificate are assigned to:

(Print Full Name of Assignee)

(Print Full Address)

Tax ID or Social Security No.

Signature(s)

IMPORTANT: The signature(s) must correspond with
the name(s) as printed on the reverse of this Subscription
Rights Certificate in every particular, without alteration or
enlargement, or any other change whatsoever.

FOR INSTRUCTIONS ON THE USE OF CRITICAL PATH,
INC. SUBSCRIPTION RIGHTS CERTIFICATES, CONSULT GEORGESON
SHAREHOLDER COMMUNICATIONS INC., THE INFORMATION AGENT.
SHAREHOLDERS PLEASE CALL TOLL-FREE (800) 843-1451. BANKS
AND BROKERAGE FIRMS PLEASE CALL (212) 440-9000.

FORM 3 — DELIVERY TO DIFFERENT
ADDRESS

     
If you wish for the Series E Preferred Stock
underlying your subscription rights to be delivered to an
address different from that shown on the face of this
Subscription Rights Certificate, please enter the alternate
address below, sign under Form 4 and have your signature
guaranteed under Form 5.

			
	 	
    
	 
	 
	 	
    
	 
	 
	 	
    
	 

FORM 4 — SIGNATURE

     
I acknowledge that I have received the Prospectus
for this Rights Offering and I hereby irrevocably subscribe for
the number of shares indicated above on the terms and conditions
specified in the Prospectus.

Signature(s)

IMPORTANT: The signature(s) must correspond with
the name(s) as printed on the reverse of this Subscription
Rights Certificate in every particular, without alteration or
enlargement, or any other change whatsoever.

4

 

FORM 5 — SIGNATURE
GUARANTEE

     
This form must be completed if you have completed
any portion of Forms 2 or 3.

Signature
Guaranteed: 

(Name of Bank or Firm)

By: 

(Signature of Officer)

IMPORTANT: The signature(s) should be guaranteed
by an eligible guarantor institution (bank, stock broker,
savings & loan association or credit union) with membership
in an approved signature guarantee medallion program pursuant to
Securities and Exchange Commission Rule 17Ad-15.

5Exhibit 10.13

 

EXHIBIT 10.13

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the” Agreement”), dated as of October 1, 1992,
is between BEI Electronics, Inc. (“BEI” or the “Company”), and Asad M. Madni,
(“Employee”).

RECITALS

     WHEREAS, Employee is currently employed by the Company; and

     WHEREAS, Employee and the Company desire that Employee continue in the
employ of the Company.

     NOW, THEREFORE, the parties agree as follows:

1. Period of Employment: Notice Period,

     The Company hereby employs Employee to render services to the Company in
the position, on the terms, and with the duties and responsibilities described
in Section 2 hereof (the “Period of Employment”), commencing on the date of
this Agreement, and, if applicable, commencing anew for a one (1) year period
on the date of any Change of Control of the Company pursuant to Section 7. The
initial Period of Employment shall be for a period of one year; provided,
however, that this Agreement shall automatically be renewed for an additional
one year period on each anniversary date of this Agreement unless: the Company
provides Employee with notice of nonrenewable on or prior to such anniversary
date, or unless the Agreement is earlier terminated pursuant to Section 4 or
Section 7 hereof.

2. Position. Duties. Responsibilities: Other Covenants.

     (a)  Employee agrees to continue employment with the Company in the
position set forth in Exhibit A, or in such other position(s) as the Board of
Directors of the Company (the “Board”) shall at any time designate, including a
position with a subsidiary or other affiliate of the Company. Employee shall
devote his best efforts and his full time and attention to the performance of
such services as may be reasonably requested by the Board. The Company shall
retain full direction and control of the means and methods by which the
Employee performs the above services and of the places at which such services
are to be rendered; provided, however, that Employee shall not be required to
relocate outside of the Los Angeles Area, unless both parties mutually agree to
the relocation. In the event of relocation, the Company shall reimburse
Employee (upon presentation of appropriate receipts) for reasonable expenses
incurred in such relocation, based on procedures typical in the industry with
respect to reimbursement for relocation.

     (b)  Except with the prior written consent of the Board, during the Period
of Employment, Employee shall not (i) accept any other employment, or (ii)
engage in any other business activity (whether or not pursued for pecuniary
advantage) that is or may be competitive with the Company or will interfere
with Employee’s performance of his duties to the Company.

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3. Salary. Benefits. Etc.

     (a)  Salary. In consideration of the services to be rendered hereunder,
Employee shall be paid an annual salary as set forth in Exhibit A hereto, as
may be amended from time to time. Employee’s salary shall be reviewed and may
be adjusted periodically in accordance with the Company’s regular
administrative practice for adjusting salaries of senior managers.

     So long as Employee is adequately performing his duties, his salary shall
not be reduced, nor shall his salary increase less rapidly than is commensurate
with his contributions, as deter- mined by the Board or the Compensation
Committee of the Board (the “Compensation Committee”) in its sole discretion,
unless in response to economic conditions at the Company, there is a reduction
in executive salaries generally at BEI.

     (b)  Executive Incentive Plan. Employee shall be entitled to participate in
the Company’s Management Incentive Bonus Plan, as amended from time to time
(the “Bonus Plan”) to the extent that employee achieves specific objectives as
described on Exhibit B.

     (c)  Restricted Stock Plan. Employee shall be entitled to participate in
the Company’s 1992 Restricted Stock Plan, as amended from time to time (the
“Plan”) to the extent that Employee and the Company achieve the specific
objectives set forth each year by the Compensation Committee as set forth in
the Plan document which is attached as Exhibit C.

     (d)  Benefits.

		
	 	     (i) To the extent Employee is eligible therefore, the Company shall
provide Employee with the right to life, accident, disability, medical,
dental, and retirement plans offered by the Company, and all other
similar benefits made available generally to senior managers of the
Company, as then in effect. The amount and extent of benefits to which
Employee is entitled shall be governed by each specific benefit plan, as
it may be amended from time to time.

		
	 	     (ii) The Company shall provide an executive supplement that provides
for the reimbursement (upon presentation of appropriate receipts) of
deductibles and other similar costs not otherwise covered under the usual
terms of the Company’s health and dental plans in an amount not to exceed
$3,000 per year.

		
	 	     (iii) The Company shall also reimburse Employee (upon presentation
of appropriate receipts) for expenses incurred for financial tax and
estate planning services for Employee in an amount not to exceed
$3,000.00 per year.

		
	 	     (iv) The Company will provide Employee with an automobile allowance
of a sufficient amount for the employee to lease, maintain and insure an
automobile appropriate, in the Company’s discretion, to Employee’s job
position and duties with the Company. The Company shall reimburse
employee for all reasonable operational expenses and automobile
maintenance costs; provided, however, that Employee’s personal use of the
automobile shall be at his own expense. Imputed income will be calculated
in accordance

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	 	with Internal Revenue Service requirements and payments of any
income tax on the imputed income will be the responsibility of Employee.

		
	 	     (v) In the event of Employee’s retirement from BEI, the Company
shall provide him with medical, dental and life insurance coverage as
prescribed by the Systron Donner Executive Retirement Benefit Plan, as
well as the executive supplement benefits described in Sections 3(d)(ii)
and (iii) of this Agreement; provided, however, that the Company shall
have no obligation under this paragraph if the Period of Employment is
terminated for any reason under Section 4 (except Section 4(t)) or 7
hereof or employee resigns prior to normal retirement age (as defined in
BEI’s Retirement Savings Plan).

		
	 	     (e) Expenses. The Company shall reimburse Employee for reasonable
travel and other business expenses incurred by Employee in the
performance of his duties hereunder in accordance with the Company’s
general policies, as may be amended from time to time.

4.     Termination of Employment During Period of Employment. Each of the following
methods of termination of Employee’s employment (including. any such
termination within the scope of Section 7 hereof and to the extent specified
herein) shall cause the Period of Employment and this Agreement to terminate.
Upon termination of employment under Section 4 or Section 7 of this Agreement,
and exchange for and in consideration of Employee’s execution, at the time of
termination of employment, of a general release substantially in the form of
Exhibit E hereto, the corresponding benefits shall accrue to Employee as
follows:

     (a)  At Will Termination By Company. The Company may, at any time and upon
giving 10 business days’ written notice to Employee, terminate Employee’s
employment without Cause (“At Will Termination”) and thereby terminate the
Period of Employment. Employee agrees that the Company may dismiss him pursuant
to this Section 4(a) without regard to any general or specific policies
(whether written or oral) of the Company relating to the employment or
termination of its employees and without regard to any statements made by the
Company (whether written or oral) pertaining to Employee’s relationship with
the Company. Upon the occurrence of any such At Will Termination, the Company
shall:

		
	 	     (i) pay to Employee a proration of the amount (prorated to the date
of termination) payable under the Bonus Plan for the fiscal year in which
termination occurs (which amount shall be payable in accordance with
Exhibit B);

		
	 	     (ii) permit Employee to exercise all vested options in accordance
with the terms thereof;

		
	 	     (iii) continue to pay Employee his then current base salary for a
period of 12 months following termination;

		
	 	     (iv) pay to Employee an amount equal to the average of Employee’s
Bonus Plan award for the three fiscal years ending on or before the date
of termination. Such amount shall be paid in 24 equal installments
semi-monthly over a period of 12 months following the date of termination
of employment; and

3

 

		
	 	     (v) provide Employee (and his covered dependents) continued coverage
in the Company’s group term life insurance, group medical/dental plans,
and executive supplement as defined in Section 3(d) for a period of 12
months following termination.

     (b)  By Death. If Employee dies, the Company shall pay to Employee’s
beneficiaries or estate, as appropriate, the salary to which he is entitled
pursuant to Section 3(a) through the end of the month in which death occurs. At
the end of the Company’s fiscal year in which Employee’s death occurs, the
Company shall pay to Employee’s beneficiaries or estate, as appropriate, a
proration of the amount (pro-rated to the date of death) payable under the
Bonus Plan to which Employee would otherwise have been entitled under Section
3(b) had he continued employment through the end of such fiscal year.
Employee’s beneficiaries or estate, as appropriate, shall be entitled to
exercise all vested stock options granted to Employee in accordance with the
terms thereof. This Section shall not affect entitlement of Employee’s estate
or beneficiaries to death benefits under any benefit plan of the Company.

     (c)  By Disability. The Company may terminate Employee’s employment if
Employee becomes eligible to receive benefits under the Company’s Long-Term
Disability (“LTD”) Plan. Upon such termination, the Company shall pay to
Employee a proration of the amount payable under the Bonus Plan (prorated
through the date LTD benefits begin) to which Employee would otherwise be
entitled had he continued employment through the end of the fiscal year in
which such disability occurred. Employee shall be entitled to exercise all
vested options granted to Employee in accordance with the terms thereof.

     (d)  By Company For Cause. The Company may terminate, without liability,
Employee’s employment For Cause at any time and without notice. Upon such
termination, the Company shall pay Employee the salary to which he is entitled
pursuant to Section 3(a) through the end of the day upon which such termination
occurs. Employee shall not be entitled to any amounts under the Bonus Plan.
Stock options will be governed by the terms of the respective stock option
grants. Termination shall be For Cause if:

		
	 	     (i) Employee willfully breaches or habitually neglects significant
and material duties he is required to perform and fails to fully remedy
his performance within 30 days after written notice by the Company;

		
	 	     (ii) Employee commits a material act of dishonesty, fraud,
misrepresentation or other act of moral turpitude;

		
	 	     (iii) Employee exhibits habitual gross negligence in the course of
performing his duties and fails to fully remedy his performance within 30
days after written notice by the Company; or

		
	 	     (iv) Employee willfully fails to obey a lawful direction of the
Board of Directors.

     (e)  Voluntary Termination by Employee. Employee may, upon giving 10
business days’ written notice to the Company, voluntarily terminate his
employment. Upon such voluntary termination of employment by Employee, the
Company shall pay Employee the salary to which he

4

 

is entitled pursuant to Section 3(a) hereof through the end of the 10-day
notice period. Thereafter, Employee shall not be entitled to any salary, Bonus
Plan amount or to any other termination benefits, other than COBRA benefits and
any rights existing under outstanding stock options.

     (f)  Termination as a Result of Nonrenewable. If at any time the Company
elects not to renew this Agreement beyond the next anniversary date of the
Agreement, the Company shall give Employee written notice of its intent not to
renew prior to the anniversary date. Employee and the Company agree that
Employee shall remain employed through September 30 of the year in which notice
of nonrenewable is given and that Employee shall continue to receive his salary
and benefits through that date. Thereafter, the Company shall have no further
obligation to Employee, other than to pay Employee the benefits set forth in
Section 3(d)(v) hereof and any other benefits required by law.

5. Termination Obligations.

     (a)  Employee hereby acknowledges and agrees that all personal property and
equipment furnished to or prepared by Employee in the course of or incident to
his employment belongs to the Company and shall be promptly returned to the
Company upon termination of Employee’s employment. “Personal property”
includes, without limitation, all books, manuals, records, reports, notes,
contracts, lists, blueprints, and other documents, or materials, or copies
thereof, and Proprietary Information (as defined below). Following termination,
Employee will not retain any written or other tangible material containing any
Proprietary Information.

     (b)  Upon termination of Employee’s employment, Employee shall be deemed to
have resigned from all offices and directorships then held with the Company or
any of its affiliates.

     (c)  Employee agrees that for a period of two years after termination of
the Period of Employment, he shall not, directly or indirectly, (i) divert or
attempt to divert from the Company any business of any kind in which it is
engaged, including without limitation diversion through the solicitation of
customers of the Company and interference with any of the Company’s suppliers
or customers, (ii) employ or solicit for employment any person employed by the
Company, or (iii) engage in any business activity that is or may be competitive
with the Company or any affiliated company, unless such activity is performed
without the use in any way of Company Proprietary Information.

6. Proprietary Information.

     (a)  Defined. “Proprietary Information” is all information and any idea in
whatever form, tangible or intangible, pertaining in any manner to the business
of the Company or any affiliated company, or to its clients, consultants, or
business associates, unless Employee can establish that:

		
	 	     (i) the information is or becomes publicly known through lawful
means and without any breach of confidentiality;

		
	 	     (ii) the information was rightfully in Employee’s possession or part
of his general knowledge prior to his employment by the Company; or

5

 

		
	 	     (iii) the information is disclosed to Employee 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 or its affiliates.

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

     (c)  Nothing in these Sections 5 and 6 is intended to limit any remedy
available to the Company under the California Uniform Trade Secrets Act
(California Civil Code Section 3426 et seq.) or otherwise available under law,
including without limitation the ability of the Company to seek injunctive and
equitable relief to enforce the provisions of this Agreement.

7. Change of Control: Termination After Change of Control.

     (a)  A “Change of Control” will have occurred if, after the date of this
Agreement:

		
	 	     (i) the Company consolidates or merges with any Person and, as a
result of such consolidation or merger, the Company is not the surviving
entity and less than 50% of the outstanding voting securities of the
surviving or resulting entity are owned by the Company or its affiliates
or subsidiaries or former shareholders of the Company;

		
	 	     (ii) the Company sells, exchanges or otherwise transfers more than
50% of its assets to any Person in a single transaction or series of
transactions; or

		
	 	     (iii) any Person becomes the beneficial owner, directly or
indirectly, of more than 50% of the outstanding voting securities of the
Company.

     For purposes of this Section 7(a), “Person” shall mean any individual,
firm, partnership, corporation, or other entity, and any other “Person” as such
term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934,
and shall include any successor of such entity and all affiliates, associates,
and subsidiaries of such Person other than BEI or any affiliate thereof.

     (b)  If, during the Period of Employment following a Change of Control,
Employee’s employment is terminated under any of the methods of termination set
forth in Section 4 hereof, the benefits corresponding to each method of
termination will accrue to Employee. However, during the Period of Employment
following a Change of Control only, if an At Will Termination pursuant to
Section 4(a) occurs, or if Employee terminates his employment for Good Reason
(as defined below) upon 10 business days’ written notice to the Company, upon
Employee’s execution of a general release substantially in the form of Exhibit
E hereto, the Company shall be obligated to:

6

 

		
	 	     (i) pay to Employee a proration of the amount (pro-rated to the date
of termination) otherwise payable under the Bonus Plan following the
completion of the fiscal year in which termination occurs (which amount
shall be payable in accordance with Exhibit B);

		
	 	     (ii) permit Employee to exercise all vested options in accordance
with the terms thereof;

		
	 	     (iii) continue to pay Employee the greater of his then current base
salary or his base salary in effect immediately prior to the Change of
Control, for a period of 12 months following the At Will or Good Reason
termination;

		
	 	     (iv) pay to employee an amount equal to the average of Employee’s
Bonus Plan awards for the three fiscal years ending on or before the date
of termination. Such amount shall be paid in 24 equal installments
semi-monthly over a period of 12 months following the At Will or Good
Reason termination.

		
	 	     (v) continue Employee’s participation in all of the Company’s
employee welfare benefit plans (as defined by Section 3(1) of the
Employee Retirement Income Security Act of 1974 and any amendments
thereto) and all group term life insurance plans maintained by the
Company, including under any Company retirement plan, and other benefits
as defined in Section 3(d) hereof, on the same terms and conditions as in
effect immediately prior to the Change of Control for a period of 12
months following the At Will or Good Reason termination.

     The benefits accruing to Employee after an At Will Termination or Good
Reason Termination following a Change of Control shall be exclusive of, and
shall preclude any claim by Employee under, the termination benefits set forth
in Section 4 hereof.

     (c)  Nothing in Section 7(b) shall prevent the Company from exercising its
right under Section 4(d) to terminate Employee’s employment For Cause.

     (d)  For purposes of Section 7(b), “Good Reason” for Employee to terminate
his employment shall exist if:

		
	 	     (i) there is a significant reduction in Employee’s authority or
duties from those he possessed immediately before the Change of Control;

		
	 	     (ii) the Company reduces the level of Employee’s base salary,
Employee’s participation in the Bonus Plan so that, in the aggregate, the
value of Employee’s compensation package as a whole falls materially
below the value in effect immediately before the Change of Control;

		
	 	     (iii) the Company eliminates or materially reduces the benefits
available to Employee before the Change of Control under the Company’s
employee benefit plans;

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	 	     (iv) the Company requires Employee after the Change of Control to
relocate the principal place at which he performs services for the
Company outside the San Francisco Bay Area without mutual agreement to
such relocation; or

		
	 	     (v) Reduces the Period of Employment as defined in Section 1 (a)
hereof, except as otherwise provided for herein.

8.     Assignment. This Agreement is not assignable by either Party. However,
nothing in this Agreement shall prevent the company from being merged,
consolidated, or sold, and the purchaser of or successor to the Company shall
be bound by the obligations of this Agreement.

9.     Notices. All notices or other required communications shall be made in
writing and addressed as follows:

	 	 	 	 	 
	 	 	
If to the Company:
	 	BEI Electronics, Inc.
	 	 	 	 	One Post Street, Suite 2500
	 	 	 	 	San Francisco, CA 94104
	 	 	 	 	 
	 	 	
If to Employee:
	 	Dr. Asad M. Madni
	 	 	 	 	[Address]
	 	 	 	 	 

10.     Amendments. This Agreement or any term or provision hereof may be changed,
waived, discharged, or terminated only by a written amendment signed by both
parties.

11.     Entire Agreement. This Agreement (and the Invention And Proprietary
Information Agreement previously signed by Employee) constitute the entire
agreement between the parties with respect to the employment of Employee by the
Company and supersedes any previous severance arrangements, except the
provisions of the Amendment relating to the Shared Venture Program, which
provisions shall continue in full force and effect.

12.     Severability; Survival. The provisions of this Agreement are severable and
if any one or more of such provisions are determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions and any partially
unenforceable provisions to the extent enforceable shall be binding and
enforceable. The provisions of Sections 5 and 6 hereof shall survive the
termination of this Agreement.

13.     Waiver. The failure of either party to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision
as to the future breaches or violations thereof, nor prevent such party
thereafter from enforcing each and every other provision of this Agreement. The
rights granted the parties hereunder are cumulative and the waiver of any
single remedy shall not constitute a waiver of such party’s rights to assert
all other legal remedies available to it pursuant to this Agreement.

8

 

14.     Governing Law: Arbitration.

     (a)  The validity, interpretation, enforceability, and performance of this
Agreement shall be governed by and construed in accordance with the laws of the
State of California. Venue for any action brought to enforce this Agreement or
as a result of a dispute hereunder shall lie in San Francisco, California.

     (b)  Any controversy between Employ and the Company involving the
construction or application of any of the terms, provisions or conditions of
this Agreement or otherwise arising out of or related to this Agreement, shall
be settled by arbitration in accordance with the then current arbitration rules
of the American Arbitration Association, and judgment on the award rendered by
the arbitrator may be entered by any court having jurisdiction thereof. The
location of the arbitration shall be San Francisco, California. If Employee is
located elsewhere, the arbitration would be held in the city having an office
of the American Arbitration Association that is nearest to Employee’s last
location of employment with the Company. The prevailing party in any such
arbitration or in any legal proceeding brought to enforce this Agreement or as
a result of a dispute hereunder shall be entitled to recover its reasonable
attorney’s fees and all other costs of such proceedings, in addition to any
other relief to which such party may be entitled only if the Arbitration finds
that the party against whom such fees and costs are sought has acted
unreasonably or in bad faith.

15.     Employee Acknowledgment. Employee acknowledges 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.
Employee also acknowledges that he has read and understands this Agreement and
has entered into it freely based on his own Judgment.

9

 

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

	 	 	 	 	 
	BEI ELECTRONICS, INC.	 	EMPLOYEE
	 	 	 	 	 
	By	 	
/s/ Peter G. Paraskos
	 	/s/ Asad M. Madni
	 	 	

	 	

	 	 	
Peter G. Paraskos
	 	Asad M. Madni
	 	 	
President and Chief Executive Officer	 	 

10

 

EXHIBIT A

	 	 	 
	1) Position:	 	
President, BEI Sensors and Controls Group
	 	 	 
	2) Annual Salary:	 	
$170,000

1

 

EXHIBIT B

INCENTIVE BONUS

     For fiscal 1993 and 1994, the specific proportion of each bonus award
allocable to the achievement of each objective shall be as set forth on the Key
Employee Incentive Bonus Plan attached as Appendix 1 hereto. Bonuses allocable
to each objective shall be determined by multiplying the proportion allocated
to each objective by the percentage of objective achieved, as determined by the
Company consistent with the generally accepted accounting principles and as
approved by the Company’s independent auditors. Payment of bonus amounts shall
be made following final approval by such auditors of the audited financial
statements for the applicable fiscal year.

2

 

EXHIBIT E

GENERAL RELEASE AND COVENANT NOT TO SUE

     For and in consideration of the commitments set forth in the Employment
Agreement (“Employment Agreement”) dated as of October 1, 1992, Asad M. Madni
(“Madni”) and BEI Electronics, Inc. (“BEI”) agree as follows:

     1.     Except for the obligations set forth in the Employment Agreement,
Madni, on behalf of himself and his representatives, heirs, successors, and
assigns does hereby completely release and forever discharge, BEI, its parent,
subsidiary, and affiliated corporations, and its and their present and former
shareholders, officers, directors, agents, employees, attorneys, successors,
and assigns from all claims, rights, demands, actions, obligations,
liabilities, and causes of action arising from or in any way related to his
termination by BEI or its parent, subsidiary or affiliated corporations, if
applicable.

     2.     Madni shall not sue or initiate against BEI or any person or
corporation covered by the Release herein any compliance review, action, or
preceding, or participate in same (unless required to do so by law),
individually or as a member of a class, under any contract (express or
implied), law, or regulation, federal, state or local, pertaining in any manner
whatsoever to his termination by BEI.

     3.     It is understood and agreed that this Agreement and each and every
provision thereof shall be confidential and shall not be disclosed by Madni to
any person, firm, organization, or entity, of any and every type, public or
private (other than to professional advisors of Madni, such as attorneys and
accountants, who are subject to obligations of confidentiality), for any
reason, at any time, without the prior written consent of BEI unless required
by law.

     4.     Madni acknowledges that he is waiving and releasing any rights he may
have under the Age Discrimination in Employment Act of 1967 (“ ADEA”) and that
this waiver and release is knowing and voluntary. Madni and BEI agree that this
waiver and release does not apply to any rights or claims that may arise under
ADEA after the effective date of this Agreement. Madni acknowledges that the
consideration given for this waiver and release Agreement is in addition to
anything of value to which Madni was already entitled. Madni further
acknowledges that he has been advised by this writing that (a) he should
consult with an attorney prior to executing this Agreement; (b) he has at least
twenty-one (21) days within which to consider this Section 4 of this Agreement;
(c) he has at least seven (7) days following the execution of this Agreement by
the parties to revoke this Section 4 of this Agreement; and (d) this Section 4
of this Agreement shall not be effective until the revocation period has
expired.

3

 

     5.     Madni represents that he is not aware of any claim other than the
claims that are released by this Agreement. Madni acknowledges that he has been
advised by legal counsel and is familiar with the provisions of California
Civil Code Section 1542, which provides as follows:

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

     Madni being aware of said code section, agrees to expressly waive any
rights he may have thereunder, as well asunder any other statute or common law
principles of similar effect.

     6.     The undersigned parties acknowledge that they have had the opportunity
to be represented by counsel in the negotiation and preparation of this
Agreement, that they have read the Agreement, that they are fully aware of its
contents and of its legal effect, that all agreements and understandings
between the parties are embodied and expressed herein, and that each party
enters into this Agreement freely, without coercion, based on the party’s own
judgment and not in reliance upon any representations or promises made by the
other party, other than those contained herein.

     7.     This Agreement shall be construed and governed by the laws of the State
of California.

	 	 	 	 	 
	Dated:	 	 	 	 
	 	 	

	 	

	 	 	 	 	Employee
	 	 	 	 	 
	Dated:	 	 	 	 
	 	 	

	 	

	 	 	 	 	BEI Electronics, Inc.

4

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