Document:

Exhibit 10.5

 

AGREEMENT

 

AGREEMENT, dated as of April 15, 2015 (this "Agreement"), among CollabRx, Inc., a Delaware corporation (the "Company"), Clifford Baron (the "Employee"), and Medytox Solutions, Inc., a Nevada corporation ("Medytox").

 

WHEREAS, the Company and the Employee are parties to an Employment Agreement, dated as of March 5, 2014 (the "Employment Agreement");

 

WHEREAS, the Company, CollabRx Merger Sub, Inc., a Nevada corporation ("Merger Sub"), and Medytox are parties to the Agreement and Plan of Merger, dated as of April 15, 2015, as it may be amended in accordance with its terms (the "Merger Agreement");

 

WHEREAS, the Merger Agreement provides, subject to the terms and conditions thereof, for the merger  (the "Merger") of Merger Sub with and into Medytox, with Medytox being the surviving corporation;

 

WHEREAS, the Merger Agreement further provides that, prior to the effectiveness of the Merger, the Company shall form a Delaware subsidiary ("New Sub") and that the Company shall thereupon effect the Asset Contribution (as defined in the Merger Agreement);

 

WHEREAS, the parties contemplate that immediately prior to the effectiveness of the Merger, the Employee and the Company shall terminate the Employment Agreement and the Employee, the Company and New Sub shall enter into a new employment agreement in the form of Exhibit A attached hereto (the "New Employment Agreement"); and

 

WHEREAS, the termination of the Employment Agreement and the entering into of the New Employment Agreement are conditions to the consummation of the Merger.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

Signature Page to the Agreement re Employment Agreement Termination

 

1.            Employment Agreement.  The parties hereto agree that none of the Merger Agreement, the consummation of the Merger pursuant to the Merger Agreement or any of the transactions contemplated by the Merger Agreement shall constitute a Change of Control (as defined in the Employment Agreement) or constitute or give rise to Good Reason (as defined in the Employment Agreement) for the Employee to resign from or otherwise terminate his employment relationship with the Company prior to the Effective Time (as defined in the Merger Agreement).  Concurrently with the execution and effectiveness of the New Employment Agreement, which shall occur concurrently with and contingent upon the Effective Time of the Merger, the Employment Agreement shall automatically terminate and the Employee’s resignation from all of his officer positions with the Company shall automatically become effective.  For purposes of the Employment Agreement, the termination shall be treated as a termination by the Employee without Good Reason pursuant to Section 8(f) of the Employment Agreement.  The parties agree that there shall be no acceleration of vesting with respect to any equity awards in connection with the Merger to the extent that such acceleration of vesting would result in the Employee being subject to an excise tax imposed under Section 4999 of the Code (as defined in the Merger Agreement).  Notwithstanding anything herein to the contrary, the parties hereto agree that the Employment Agreement shall remain in full force and effect in the event the Merger is not consummated pursuant to the Merger Agreement.

 

2.            Representations and Warranties.  Each party represents and warrants to the other parties that (i) this Agreement has been duly authorized, executed and delivered by such party and (ii) this Agreement constitutes a valid and binding agreement of such party, enforceable against such party in accordance with its terms, subject to the Bankruptcy and Equity Exceptions (as defined in the Merger Agreement).

 

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3.            Further Assurances.  From time to time, at any other party's request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further action as may be reasonably necessary or desirable to consummate and make effective the transactions contemplated by this Agreement.

 

4.            Termination.  This Agreement shall terminate upon the earlier to occur of (a) a valid termination of the Merger Agreement in accordance with its terms or (b) a Parent Adverse Recommendation Change or a Company Adverse Recommendation Change (as such terms are defined in the Merger Agreement).  Nothing in this Section 4 shall relieve any party of liability for breach of this Agreement prior to the termination of this Agreement pursuant to its terms.

 

5.            Amendment and Modification; No Waiver.  This Agreement may be amended, modified and supplemented in any aspect only by a written agreement executed and delivered by all parties hereto.  No provision of this Agreement may be waived, discharged or terminated other than by an instrument in writing signed by the party against which or whom the enforcement of such waiver, discharge or termination is sought except for a termination as provided in Section 4.  The failure of any party to exercise any right, power or remedy provided under this Agreement, or to insist upon compliance by any other party with its obligations under this Agreement, shall not constitute a waiver of such party's right to exercise any such right, power or remedy or to demand such compliance.

 

6.            Counterparts.  This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile transaction or by email of a pdf attachment shall be effective as delivery of a manually executed counterpart of this Agreement.

 

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7.            Specific Performance.

 

(a)            The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to seek the remedy of specific performance of the terms hereof, without the requirement of posting or furnishing any bond or similar instrument, in addition to any other remedy at law or equity.

 

(b)            All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party.

 

8.            Governing Law.  This Agreement shall be governed and construed in accordance with the laws of the State of New York without giving effect to the principles of conflicts of law thereof.  Each of Section 9.9 and Section 9.11 of the Merger Agreement is hereby incorporated by reference as if fully set forth herein and shall be binding on the parties hereto and that references to "this Agreement" contained therein shall apply to this Agreement.

 

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

 

	 	
COLLABRX, INC.

	 	
	 	
By:

	
/s/ Thomas R. Mika

	 		
	 	
/s/ Clifford Baron

	 	
Clifford Baron

	 	
MEDYTOX SOLUTIONS, INC.

	 	
	 	
By:

	/s/ Seamus Lagan
	 	Name: 	
Seamus Lagan

	 	Title: 	
Chief Executive Officer

 

Signature Page to the Agreement re Employment Agreement TerminationExhibit 10.6

 

Exhibit F

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this "Agreement"), dated as of _____________, 2015, is entered into among [New Sub], a Delaware corporation (the "Company"), [ _____________ ] (f/k/a CollabRx, Inc.), a Delaware corporation ("Parent"), and Thomas R. Mika ("Employee").

 

WHEREAS, Employee is the President and Chief Executive Officer of the Company;

 

WHEREAS, the Company is a wholly owned subsidiary of Parent; and

 

WHEREAS, the Company desires to employ and retain the services of Employee, and Employee wishes to be employed by the Company, on the terms set forth in this Agreement;

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants set forth in this Agreement, the undersigned agree as follows:

 

1.            Term of Employment. Subject to the termination provisions hereinafter set forth, the Company will employ Employee, and Employee accepts employment with the Company, for a period of one year from the date of this Agreement (the "Initial Term"). The Initial Term shall be automatically renewed for successive one year periods ("Successive Terms") unless either party gives ninety (90) calendar days written notice of nonrenewal prior to the expiration of the then-current term (the Initial Term and any Successive Term are jointly referred to herein as the "Term").  Notwithstanding the above, or anything else provided herein, Employee shall be an at-will employee, serving at the pleasure and direction of the Board of Directors (as defined below). Accordingly, either party may terminate the employment relationship at any time for any reason, subject, however, to the notice and any payment requirements set forth herein.

 

2.            Duties. During the Term, Employee will serve as President and Chief Executive Officer of the Company, reporting to the Parent’s Board of Directors (the "Board of Directors"). Employee will discharge such duties and responsibilities as are customary for such position or are prescribed from time to time by Parent.  Employee will devote his full time and attention to the affairs of the Company and will not enter the employ of or serve as a consultant to, or in any way perform any services for, with or without compensation, any other person, business or organization without the prior approval of the Board of Directors; provided, however, that the Company and Parent acknowledge and agree to Employee’s continued service as a member of the board of directors of NanoVibronix Inc.  In no event may any such service be inconsistent with, or prevent Employee from carrying out, his duties under this Agreement, as determined at the sole discretion of the Board of Directors. During the Term, Employee shall serve as a member and the Chairman of the Board of Directors of the Company and Parent, subject to the conditions and requirements set forth in the Company's bylaws and the Parent’s bylaw, as applicable.

 

3.            Maintaining Confidential Information/Property Rights. Employee agrees to sign and abide by all Company and Parent policies regarding confidential information and ethics including, but not limited to the Confidential & Proprietary Information and Intellectual Property/Property Rights policy, as attached hereto as Exhibit A.

 

4.            Non-Competition; Non-Solicitation. During the Term, and for one (1) year following the termination of Employee's employment with the Company for any reason, Employee shall not, directly or indirectly:

 

(a)            own, manage, operate, advise, consult, join, control or participate in the ownership, management, operation or control of, be employed by, perform services for, or be connected in any manner with, any enterprise which is engaged in utilizing an expert-based content aggregate strategy to create and distribute (through web-based or mobile applications or other means) high-value information (including, without limitation, information relating to diagnostic tests, clinical trials, drugs, and other therapies that may be correlated to genetic profiles, individually or by population) to patients, physicians and researchers for the purpose of assisting decision-making or planning therapies to treat diseases in the United States, Europe and Asia; provided, however, that such restriction shall not apply to Employee's ownership of any passive investment representing an interest of less than five percent (5%) of an outstanding class of publicly traded securities; or

 

(b)            recruit, encourage or solicit any person who is an employee or contractor of the Company or any entity affiliated with the Company (each, an "Affiliated Entity") to leave the Company's or Affiliated Entity's employ or service for any reason, or interfere in any material manner with employment or service relationships at the time existing between the Company or Affiliated Entity and the subject employee or contractor (except as may be required in any bona fide termination decision during the Term regarding any Company or Affiliated Entity employee) in order to induce such employee or contractor of the Company or any Affiliated Entity to accept other employment or a consulting agreement with any other person or entity.

 

Employee acknowledges that the services that he shall provide to the Company under this Agreement are unique and that irreparable harm shall be suffered by the Company in the event of the breach by Employee of any of his obligations under this Section 4, and that the Company shall be entitled, in addition to its other rights and remedies, whether legal or equitable, to enforce such obligations by an injunction or decree of specific performance. If any restriction set forth in this non-competition section is found by a court to be unreasonable, then Employee agrees, and hereby submits, to the reduction and limitation of such prohibition to such area or period as shall be deemed reasonable by such court. In addition, if Employee breaches this Section 4 at any time after the Term, the Company's obligation to continue to make payments to Employee pursuant to Sections 8(a) or (b) shall cease immediately.

 

5.            Salary and Incentives.

 

(a)            Salary. During the Term, the Company will pay Employee an annual salary of $310,000 (the "Base Salary"), subject to applicable tax withholding and payable in accordance with the Company's normal payroll practices; provided that Employee's Base Salary may be reduced to the extent that Employee elects to defer any portion thereof under the terms of any deferred compensation or savings plan maintained by the Company. During the Term, the Board of Directors shall review Employee's Base Salary on an annual basis and, in its discretion, may award merit increases of Employee's Base Salary in accordance with Parent policy. Employee's Base Salary may also be reduced during the Term, provided that such reduction must be consistent with across-the-board salary reductions made with respect to similarly situated employees of the Company, Parent and any other controlled subsidiaries of Parent.

 

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(b)            Incentive Payments. Employee will be eligible to receive incentive bonus payments from time to time in accordance with any incentive bonus program of the Company or Parent that may then be in effect and will be eligible to receive an annual cash incentive bonus under any such program upon the achievement of targets and other objectives for each fiscal year as may be approved annually on behalf of the Company by the Board of Directors (the "Annual Bonus"). Such a program will be administered on the Company's fiscal year basis.  In the event that an incentive payment is earned by Employee under such a program for any fiscal year, such payment shall be made to Employee in a lump sum all-cash amount within sixty (60) days following the date the Company determines the amount (if any) of the Annual Bonus, provided that Employee has remained continuously employed in the Company's service through the date the Company determines the amount of the Annual Bonus.

 

(c)            Expenses. The Company will reimburse Employee for all reasonable travel, entertainment and miscellaneous expenses actually and necessarily incurred in connection with the performance of his duties under this Agreement, provided that Employee's expenses are in accordance with the Company's current practices and that Employee properly accounts for such expenses. Any amounts payable under this Section 5(c) shall be made in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv) and shall be paid on or before the last day of Employee's taxable year following the taxable year in which Employee incurred the expenses. The amounts provided under this Section 5(c) during any taxable year of Employee's will not affect such amounts provided in any other taxable year of Employee's, and Employee's right to reimbursement for such amounts shall not be subject to liquidation or exchange for any other benefit.

 

6.            Benefits. Employee will be entitled during the Term to participate in any vacation, health, pension, insurance or other benefit plan that is maintained by the Company or Parent for its (or its subsidiaries’) employees and/or executives to the extent and in the manner prescribed by the applicable plan documents.

 

7.            Long-term Incentives. Employee will be eligible to receive annual long-term equity incentive awards from time to time in accordance with the terms and conditions of long-term equity incentive compensation plans and programs as in effect from time to time as approved by the Board of Directors. The Board of Directors shall have discretion to determine both the target levels and the actual grants made, and shall have discretion to change from an annual grant program to a multi-year grant program. Any long-term incentive grants shall be subject to the terms and conditions, including any vesting conditions, as determined by the Board of Directors in its sole discretion.

 

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8.            Termination.

 

(a)           Termination by the Company Without Cause. The Company may terminate Employee's employment under this Agreement without Cause at any time with ninety (90) calendar days’ prior written notice.  However, in the event of Employee's Separation from Service (as defined in Section 9(a) below) as a result of Employee's termination by the Company without Cause at any time during the Term, then, subject to the provisions of Section 9 below, the Company agrees that it will provide Employee with all accrued compensation, wages and benefits through the effective date of termination and pay and/or provide to Employee the following:

 

(i)          (A) if such termination occurs during the Initial Term, an amount equal to two (2) times Employee's then-prevailing Base Salary, and (B) if such termination occurs after the Initial Term, an amount equal to one (1) times Employee’s then-prevailing Base Salary; plus

 

(ii)         if such termination occurs during the Initial Term, $266,667; plus

 

(iii)      (A) if such termination occurs during the Initial Term, twenty-four months of COBRA premiums for Employee, and (B) if such termination occurs after the Initial Term, twelve (12) months of COBRA premiums for Employee, in each case paid for by the Company or Parent (with any such payments to be treated as taxable compensation to the extent necessary to comply with Section 105(h) of the Internal Revenue Code) pursuant to the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), provided that Employee is eligible for COBRA benefits and timely completes all documentation necessary to receive COBRA benefits; plus

 

(iv)       if Employee holds any outstanding long-term incentive awards (including, without limitation, stock options, stock appreciation rights, phantom shares, restricted stock or similar awards with respect to the securities of Parent) that are not fully vested and, if applicable, exercisable with respect to all the shares subject thereto effective immediately prior to the date of termination, then Parent shall cause all such outstanding and unvested long-term incentive awards to become fully vested and, if applicable, exercisable effective immediately prior to the date of termination, and Employee shall have one hundred and twenty (120) days to exercise any stock options that vest pursuant to this Section. In all other respects, such awards will continue to be subject to the terms and conditions of the plans, if any, under which they were granted and any applicable agreements between Parent and Employee.

 

The amounts described in paragraphs (i) and (ii) shall be paid in two equal lump sum installments, subject to applicable tax withholding, with the first installment to be made within sixty (60) days following the date of Employee's Separation from Service and the second installment to be made on the first anniversary of Employee's Separation from Service.  For purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code") (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), Employee's right to receive the foregoing installment payments shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment shall at all times be considered a separate and distinct payment. Notwithstanding any provision to the contrary in this Agreement, no amount shall be paid pursuant to this Section 8(a) unless, on or prior to the fifty-fifth (55th) day following the date of Employee's Separation from Service, Employee has executed an effective waiver and release of claims agreement (the "Release") in form and substance acceptable to the Company and any applicable revocation period has expired.

 

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(b)           Termination by Employee for Good Reason.  Employee may voluntarily elect to resign his employment with the Company prior to the end of the Initial Term or any Successive Term for Good Reason (as hereinafter defined).  In the event of Employee's Separation from Service for Good Reason at any time during the Initial Term or any Successive Term, then, subject to the provisions of Section 9 below, Employee shall be entitled to receive the payments or benefits set forth in Section 8(a) as if such Separation from Service was as a result of Employee's termination by the Company without Cause during the Initial Term or thereafter (as applicable). "Good Reason" shall mean any of the following that are undertaken without Employee's express written consent: (i) the assignment to Employee of principal duties or responsibilities, or the substantial reduction of Employee's duties and responsibilities, either of which is materially inconsistent with Employee's position as President and Chief Executive Officer of the Company; (ii) a material reduction by the Company in Employee's annual Base Salary, except to the extent the salaries of other executive employees of the Company, Parent and any other controlled subsidiary of Parent are similarly reduced; (iii) Employee’s principal place of business is, without his consent, relocated by a distance of more than forty (40) miles from the center of San Francisco; or (iv) any material breach by the Company or Parent of any provision of this Agreement.  For avoidance of doubt, any notice of non-renewal provided by the Company to Employee pursuant to Section 1 of this Agreement shall not constitute or give rise to Good Reason under this Section 8(b).

 

Employee must provide written notice to the Company of the occurrence of any of the foregoing events or conditions without Employee's written consent within ninety (90) days of the occurrence of such event. The Company or any surviving entity shall have a period of thirty (30) days to cure such event or condition after receipt of written notice of such event from Employee. Any Separation from Service by reason of Employee's resignation for Good Reason following such thirty (30) day cure period must occur no later than the date that is six (6) months following the initial occurrence of one of the foregoing events or conditions without Employee's written consent. Employee's Separation from Service by reason of his resignation for Good Reason shall be treated as involuntary.  For avoidance of doubt, in the event Employee provides the foregoing notice to the Company prior to the expiration of the Initial Term but the ensuing cure period of the Company expires following the end of the Initial Term and during any Successive Term and (the applicable event or condition constituting or giving rise to Good Reason having not been cured by the Company during the applicable cure period) Employee subsequently resigns for Good Reason pursuant to this Section 8(b), such resignation shall be treated for all purposes of this Section 8(b) as having occurred during the Initial Term.

 

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(c)            Termination by the Company for Cause. Subject to the forty-five (45) day cure period, if applicable, set forth below in this Section 8(c), the Company may immediately terminate Employee's employment at any time for Cause by giving written notice to Employee specifying in reasonable detail the reason for such termination. Upon any such termination for Cause, Employee shall be entitled to payment of all accrued and unpaid compensation and wages, but Employee shall have no right to compensation or benefits for any period subsequent to the effective date of termination. For the purposes of this Agreement, "Cause" shall mean: Employee willfully engages in an act or omission which is in bad faith and to the detriment of the Company, engages in misconduct, gross negligence, or willful malfeasance, in each case that causes material harm to the Company, breaches this Agreement in any material respect, habitually neglects or materially fails to perform his duties (other than any such failure resulting solely from Employee's physical or mental disability or incapacity) after a written demand for substantial performance is delivered to Employee which identifies the manner in which the Company believes that Employee has not performed Employee's duties, commits or is convicted of a felony or any crime involving moral turpitude, uses drugs or alcohol in a way that either interferes with the performance of his duties or compromises the integrity or reputation of the Company, or engages in any act of dishonesty involving the Company, disclosure of Company confidential information not required by the duties of Employee, commercial bribery, or perpetration of fraud; provided, however, that Employee shall have at least forty-five (45) calendar days to cure, if curable, any of the events which could lead to Employee's termination for Cause.

 

(d)            Termination by Death or Disability. In the event that Employee dies or becomes completely disabled from performing his duties during the Initial Term or any Successive Term, the Company shall be relieved of all obligations under this Agreement, except for payment to Employee or Employee's heirs as if the Employee had been terminated without Cause in accordance with Section 8(a) herein during the Initial Term or thereafter (as applicable). For clarification purposes, the parties agree that the Company may satisfy its obligations pursuant to this Section 8(d) through life and/or disability insurance coverage with respect to Employee.

 

(e)            Termination by Employee Without Good Reason. Employee may terminate his employment under this Agreement without Good Reason at any time by giving written notice to the Company. Such termination will become effective upon the date specified in such notice, provided that such date is at least ninety (90) calendar days after the date of delivery of the notice. Upon any such termination, the Company shall be relieved of all of its obligations under this Agreement, except for payment of all accrued compensation and wages and the provision of benefits through the effective date of termination, and the Company may, in its sole discretion, cause the termination to become effective sooner than such ninety (90) day notice period.

 

(f)            Notice of Non-Renewal.  For the avoidance of doubt, any notice of nonrenewal of a Successive Term provided by the Company pursuant to Section 1 of this Agreement shall constitute termination of Employee by the Company without Cause during a Successive Term.

 

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9.            Limitations on Payment.

 

(a)            Payment Delay. Notwithstanding anything herein to the contrary, to the extent any payments to Employee pursuant to Section 8 are treated as non-qualified deferred compensation subject to Section 409A of the Code, then (i) no amount shall be payable pursuant to such section unless Employee's termination of employment constitutes a "'separation from service" with the Company (as such term is defined in Treasury Regulation Section 1.409A-1(h) and any successor provision thereto) (a "Separation from Service"), (ii) if any of the amounts described in Sections 8(a)(i)-(ii) above constitute non-qualified deferred compensation subject to Section 409A of the Code then any such amounts that become payable hereunder shall in all cases be paid in two installment payments pursuant to the terms described in the last paragraph of Section 8(a), provided that the first lump-sure payment shall be paid on the 60th day following Employee's Separation from Service subject to clause (iii) of this Section 9(a) and (iii) if Employee, at the time of his Separation from Service, is determined by the Company to be a "specified employee" for purposes of Section 409A(a)(2)(B)(i) of the Code and the Company determines that delayed commencement of any portion of the termination benefits payable to Employee pursuant to this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(1) of the Code (any such delayed commencement, a "Payment Delay"), then such portion of Employee's termination benefits described in Section 8 shall not be provided to Employee prior to the earlier of (A) the expiration of the six-month period measured from the date of Employee's Separation from Service, (B) the date of Employee's death or (C) such earlier date as is permitted under Section 409A. Upon the expiration of the applicable Code Section 409A(a)(2)(B)(i) deferral period, all payments deferred pursuant to a Payment Delay shall be paid in a lump sum to Employee within thirty (30) days following such expiration, and any remaining payments due under the Agreement shall be paid as otherwise provided herein. The determination of whether Employee is a "specified employee" for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of his Separation from Service shall be made by the Company in accordance with the terms of Section 409A of the Code and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto). 

 

(b)            Exceptions to Payment Delay. Notwithstanding Section 9(a), to the maximum extent permitted by applicable law, amounts payable to Employee pursuant to Section 8 shall be made in reliance upon Treasury Regulation Section 1.409A-1(b)(9) (with respect to separation pay plans) or Treasury Regulation Section 1.409A-1(b)(4) (with respect to short-term deferrals).  Accordingly, the severance payments provided for in Section 8 may not be intended to provide for any deferral of compensation subject to Section 409A of the Code to the extent (i) the severance payments payable pursuant to Section 8, by their terms and determined as of the date of Employee's Separation from Service, may not be made later than the fifteenth (15th) day of the third calendar month following the later of (A) the end of the Company's fiscal year in which Employee's Separation from Service occurs or (B) the end of the calendar year in which Employee's Separation from Service occurs, or (ii) (A) such severance payments do not exceed an amount equal to two times the lesser of (1) the amount of Employee's annualized compensation based upon Employee's annual rate of pay for the calendar year immediately preceding the calendar year in which Employee's Separation from Service occurs (adjusted for any increase during the calendar year in which such Separation from Service occurs that would be expected to continue indefinitely had Employee remained employed with the Company) or (2) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) for the calendar year in which Employee's Separation from Service occurs, and (B) such severance payments shall be completed no later than December 31 of the second calendar year following the calendar year in which Employee's Separation from Service occurs. Moreover, the COBRA premium payments contemplated under Section 8 are intended to be exempt from Section 409A of the Code pursuant to Treasury Regulation Section 1.409A-1(b)(9)(v) as direct service recipient payments for medical benefits.

 

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(c)            Interpretation. To the extent the payments and benefits under this Agreement are subject to Section 409A of the Code, this Agreement shall be interpreted, construed and administered in a manner that satisfies the requirements of Sections 409A(a)(2), (3) and (4) of the Code and the Treasury Regulations thereunder (and any applicable transition relief under Section 409A of the Code).

 

(d)            Parachute Payments. Notwithstanding anything contained in this Agreement to the contrary, to the extent that payments and benefits provided under this Agreement or otherwise (including the acceleration of vesting of equity awards) to Employee (such payments or benefits are collectively referred to as the "Payments") would be subject to the excise tax (the "Excise Tax") imposed under Section 4999 of the Code, the Payments shall be reduced (but not below zero) to the extent necessary so that no Payment to be made or benefit to be provided to Employee shall be subject to the Excise Tax, but only if, by reason of such reduction, the net after-tax benefit received by Employee shall exceed the net after-tax benefit received by him if no such reduction was made. For purposes of this Section 9(d), "net after-tax benefit" shall mean (i) the Payments which Employee receives or is then entitled to receive from the Company or Parent that would constitute "parachute payments" within the meaning of Section 280G of the Code, less (ii) the amount of all federal, state and local income taxes payable with respect to the foregoing calculated at the maximum marginal income tax rate for each year in which the foregoing shall be paid to Employee (based on the rate in effect for such year as set forth in the Code as in effect at the time of the first payment of the foregoing), less (iii) the amount of excise taxes imposed with respect to the payments and benefits described in (i) above by Section 4999 of the Code. The foregoing determination will be made by a nationally recognized accounting firm (the "Accounting Firm") selected by Employee and reasonably acceptable to the Company (which may be, but will not be required to be, the Company's or Parent’s independent auditors). The Company will direct the Accounting Firm to submit its determination and detailed supporting calculations to both the affected Employee and the Company within fifteen (15) calendar days after Employee's date of Separation from Service. If the Accounting Firm determines that such reduction is required by this Section 9(d) and no Payment constitutes non-qualified deferred compensation that is subject to Section 409A of the Code, Employee, in Employee's sole and absolute discretion, may determine which Payments shall be reduced to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by Section 4999 of the Code, and the Company shall pay such reduced amount to him. If the Accounting Firm determines that a reduction is required by this Section 9(d), and any Payment constitutes a "deferral of compensation" within the meaning of Section 409A of the Code, then the Payments shall be reduced in the following order; (a) reduction in the cash severance payments described herein (with such reduction being applied to the payments in the reverse order in which they would otherwise be made, that is, later payments shall be reduced before earlier payments); (b) reduction in any other cash payments payable to Employee (with such reduction being applied to the payments in the reverse order in which they would otherwise be made, that is, later payments shall be reduced before earlier payments); (c) cancellation of acceleration of vesting on any equity awards for which the exercise price exceeds the then fair market value of the underlying equity; and (d) cancellation of acceleration of vesting of equity awards not covered under (c) above; provided, however that in the event that acceleration of vesting of equity awards is to be cancelled, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of such equity awards, that is, later equity awards shall be canceled before earlier equity awards.

 

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10.            Arbitration.  Employee, Parent and the Company agree to submit any and all disputes, controversies, or claims between them based upon, relating to, or arising from Employee's employment by the Company or the terms of this Agreement (other than workers' compensation claims) to final and binding arbitration before a single neutral arbitrator in San Francisco, California. Subject to the terms of this paragraph, the arbitration proceedings shall be initiated in accordance with, and governed by, the National Rules for the Resolution of Employment Disputes ("Rules") of the American Arbitration Association ("AAA"). The arbitrator shall be appointed by agreement of the parties hereto or, if no agreement can be reached, by the AAA pursuant to its Rules. Notwithstanding the Rules, the parties may take discovery in accordance with Sections 1283.05(a)-(d) of the California Code of Civil Procedure (but not subject to the restrictions of Section 1283.05(e)), and prior to the arbitration hearing the parties may file, and the arbitrator shall rule on, pre-trial motions such as demurrers and motions for summary judgment (applying the procedural standard embodied in Rule 56 of the Federal Rules of Civil Procedure). The time for filing such motions shall be determined by the arbitrator. The arbitrator will rule on all pre-trial motions at least ten (10) business days prior to the scheduled hearing date. Arbitration may be compelled, the arbitration award shall be enforced, and judgment thereon shall be entered, pursuant to the California Arbitration Act (Code of Civil Procedure §§ 1280 et seq.). The prevailing party in any such arbitration shall be entitled to recover from the other, and the arbitrator is instructed to award to the prevailing party, an amount equal to the reasonable attorneys' fees and costs (including expert witness fees) incurred in connection with the arbitration, except that the Company shall bear AAA's administrative fees and the arbitrator's fees and costs. If any party is required to compel arbitration of a dispute governed by this paragraph, the party prevailing in that proceeding shall be entitled to recover from the other party its reasonable costs and attorneys' fees and expenses incurred to compel arbitration; provided, however, that the prevailing party shall be reimbursed for such fees, costs and expenses within forty-five (45) days following any such award, but in no event later than the last day of Employee's taxable year following the taxable year in which the fees, costs and expenses were incurred; provided, further, that the parties' obligations pursuant to this sentence shall terminate on the tenth (10th) anniversary of the date of Employee's termination of employment. This paragraph is intended to be the exclusive method for resolving any and all claims by the parties against each other for payment of damages under this Agreement or relating to Employee's employment; provided, however, that neither this Agreement nor the submission to arbitration shall limit the parties' right to seek provisional relief, including without limitation injunctive relief, in any court of competent jurisdiction. Employee, Parent and the Company expressly waive their right to a jury trial. This paragraph shall survive the expiration or termination of this Agreement. If any part of this paragraph is found to be void as a matter of law or public policy, the remainder of the paragraph will continue to be in full force and effect.

 

11.            Miscellaneous.

 

(a)            Assignment. The rights and obligations of the parties under this Agreement shall inure to the benefit of and be binding upon their respective successors and assigns. Employee agrees that the Company may assign its rights and obligations under this Agreement to any successor-in-interest or Parent. Employee may assign his rights and obligations hereunder only with the express written consent of the Company, except that the rights under this Agreement shall inure to the benefit of Employee's heirs or assigns in the event of his death. Except as expressly provided in this paragraph, no party may assign its/his rights and obligations hereunder; and any attempt to do so will be void.

 

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(b)            Severability. If any provision of this Agreement otherwise is deemed to be invalid or unenforceable or is prohibited by the laws of the state or jurisdiction where it is to be performed, this Agreement shall be considered divisible as to such provision, such provision shall be replaced by a provision that is valid and enforceable and that as closely as possible reflects the parties' intent with respect to such provision and such provision shall be inoperative in such state or jurisdiction and shall not be part of the consideration moving from any of the parties to any other. The remaining provisions of this Agreement shall be valid and binding and of like effect as though such provision was not included.

 

(c)            Notice. Notices given pursuant to the provisions of this Agreement shall be delivered personally or sent by certified mail, postage pre-paid, or by overnight courier, or by fax, if to the Company or Parent, to the Company's then-current business address or, in the event the notice is to Employee, to the address that Employee has represented to the Company as current.

 

(d)            Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California, without giving effect to the conflict of laws rules thereof.

 

(e)            Waiver, Amendment. The waiver by any party to this Agreement of a breach of any provision hereof by any other party shall not be construed as a waiver of any subsequent breach. No provision of this Agreement may be terminated, amended, supplemented, waived or modified other than by an instrument in writing, signed by the party against whom the enforcement of the termination, amendment, supplement, waiver or modification is sought. If Employee and the Company determine that any payments or benefits payable under this Agreement intended to comply with Sections 409A(a)(2), (3) and (4) of the Code do not comply with Section 409A of the Code, the parties agree to amend this Agreement, or take such other actions as the parties deem reasonably necessary or appropriate, to comply with the requirements of Section 409A of the Code, the Treasury Regulations thereunder (and any applicable transition relief) while preserving the economic agreement of the parties. If any provision of the Agreement would cause such payments or benefits to fail to so comply, such provision shall not be effective and shall be null and void with respect to such payments or benefits, and such provision shall otherwise remain in full force and effect.

 

(f)            Entire Agreement. This Agreement represents the entire agreement among the parties with respect to the subject matter of this Agreement and supersedes any previous agreement or understanding, including, without limitation, the Employment Agreement, dated as of February 17, 2013, between the Employee and Parent.

 

(g)            Execution in Counterparts. This Agreement may be executed in counterparts with the same force and effectiveness as though executed as a single document.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.

 

[NEW SUB]

	
By:

		 
	 		
	
Name:

		 
	 		
	
Title:

		 

	
EMPLOYEE

	 
	 	 
	 	 
	 	
	
Thomas R. Mika

	 

 

[ _____________ ]

 

	
By:

		 
	 		
	
Name:

		 
	 		
	
Title:

		 

11

EXHIBIT A

CONFIDENTIAL & PROPRIETARY INFORMATION AND INTELLECTUAL PROPERTY/PROPERTY RIGHTS POLICY

 

[ATTACHED]

 

 

12

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