Document:

emavexh101.htm

Exhibit 10.1

SEPARATION AND SETTLEMENT

AGREEMENT

WIL CASHEN and HUGHESDIETRICH, LLC

and

EMAV HOLDINGS, INC.

 

EFFECTIVE DATE:

14 NOVEMBER 2014

 

  

  

  

  

 

SEPARATION AND SETTLEMENT AGREEMENT

I

PARTIES

THIS SEPARATION AND SETTLEMENT AGREEMENT (the “Agreement”) is entered into with an effective date of the 14th day of November, 2014 (the “Effective Date”), by and between WIL CASHEN, an individual residing in the State of California (“Cashen”), and HUGHESDIETRICH, LLC, a Delaware limited liability company (the “LLC”); and, EMAV HOLDINGS, INC., a Delaware corporation (“EMAV”). Cashen and LLC are collectively referred to herein as the “Cashen Parties”. Cashen, LLC, and EMAV are sometimes referred to collectively herein as the “Parties”, and each individually as a “Party”.

 

 

II

RECITALS

A.           EMAV is the corporate parent of Electric Motors and Vehicles Company, a Delaware corporation (“EMAV Sub”). EMAV and EMAV Sub are collectively referred to herein as the “EMAV Companies”.

B.           Cashen previously provided services to and was at various times the controlling officer of Electric Motors Corporation (“EMC”).

C.           Cashen has at various times provided services to the EMAV Companies, it being the understanding of the Parties that Cashen was to devote substantially all of his productive time to and for the benefit of the EMAV Companies.

D.           At no time was Cashen an employee of the EMAV Companies, it being understood by all Parties that Cashen rendered all services in the capacity of an independent contractor, as the term is commonly defined.

E.           The books and records of EMAV reflect that the Cashen Parties have been issued shares of common stock of EMAV (“EMAV Stock”).

F.           The Parties mutually desire for Cashen to separate from the EMAV Companies and to have this Agreement provide the terms and conditions of Cashen’s severance of his relationship with the EMAV Companies and the EMAV Stock the Cashen Parties shall retain.

G.           This Agreement is to specifically encompass all of the claims and related factual and legal circumstances noted above (collectively referred to as the “Background Facts”). As such, it is the intent of the Parties that their respective rights and obligations to each other from this day forward shall be determined exclusively under the terms of this Agreement, and that this Agreement supersedes, amends, and restates any other agreements of any kind between the Parties.

H.           All Parties are desirous of settling any and all disputes and issues between them, and releasing each other from all future liability.

I.           NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

III

RELEASE

3.1           Exchange and Hold Harmless. In consideration of the execution of this Agreement, the stock issuance described below to be made by EMAV to Cashen, the satisfaction of the obligations of each of the respective Parties hereunder, and other good and valuable consideration, the receipt and value of which is hereby confirmed,  the Cashen Parties and their respective successors and assigns, and any and all controlled or affiliated entities on the one hand; and, each of the EMAV Companies and their controlled entities on the other hand (the “EMAV Parties”), shall hereby fully, finally, and forever settle and release each other and their respective executors, administrators, successors, assigns, directors, officers, members, managers, owners, affiliates, and attorneys from any and all known and unknown claims of every nature and kind whatsoever, losses, fines, penalties, damages, demands, judgments, debts, obligations, interests, liabilities, causes of action, breaches of duty, costs, expenses, and injunctions of any nature whatsoever, whether known or unknown, from all relationships between the Parties, specifically including, but not limited to, the Background Facts (cumulatively referred to as the “Released Claims”).

  

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3.2           Express Waiver of Certain Rights. Each of the Cashen Parties and the EMAV Parties, for himself, itself, their heirs, executors, administrators, successors, and assigns, hereby agree to release, discharge and hold harmless each other and their managers, officers, members, directors, affiliates, attorneys, and each of their successors and assigns from any and all known and unknown claims of every nature and kind whatsoever which they now or hereafter may have with respect to each other and/or the Background Facts, notwithstanding Section 1542 of the California Civil Code, which provides that:

  “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, AND WHICH IF KNOWN BY HIM, MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

All rights under §1542 of the California Civil Code are hereto expressly, fully, knowingly and intentionally forever waived and relinquished by the Parties.  All Parties hereby acknowledge that each understands the significance and consequences of such specific waiver under §1542 of the California Civil Code, and that each has had the opportunity to seek the advice of legal counsel of their choosing.

3.3           Scope of Cashen’s Release. Cashen further expressly understands that the rights being waived hereunder specifically include, but are not limited to, any and all claims under (as any of the same may be amended from time to time) Title VII of the Civil Rights Act of 1964; Sections 1981 and 1983 of the Civil Rights Act of 1866; Equal Pay Act; Americans with Disabilities Act; Age Discrimination in Employment Act; Employee Retirement Income Security Act; Fair Labor Standards Act; all claims of discrimination or harassment on account of race, sex, sexual orientation, national origin, religion, disability, age, veteran’s status, or any other protected status under any federal or state statute; any federal, state or local law enforcing express or implied employment contracts or covenants of good faith and fair dealing; any federal, state or local laws providing recourse for alleged wrongful discharge or constructive discharge; together with any claim under any other local, state or federal law or constitution governing employment, discrimination or harassment in employment, or the payment of wages or benefits, whether or not now known, suspected or claimed, which Cashen ever had, now has, or may claim to have as of the date of this Agreement.

 

3.4           After Acquired Information. The Parties acknowledge that they may hereafter discover information, facts, or circumstances different from or in addition to those which they now know or believe to be true. Except as otherwise provided herein to the contrary, this Agreement shall remain in full force and effect in all respects notwithstanding such discovery, and in accordance with the irrevocable waiver and relinquishment of provisions of California Civil Code Section 1542 or otherwise, the Parties expressly accept and assume the risk of such possible additions to or differences from those facts now known or believed to be true.

3.5           Enforceability. The enforceability of this Agreement is conditioned upon each respective Party satisfying its respective obligations hereunder.

3.6           No Prior Assignment of Released Claims. The Parties hereby covenant that none of the Released Claims has been assigned to any other person, and that no other person has any interest in any of the Released Claims. In the event any other person asserts any interest with respect to the Released Claims, then the Party breaching this covenant shall indemnify the Party against whom such claim is asserted for any and all damages, costs, and fees.

  

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 3.7           Specific Exclusion. It is expressly understood that the release contained in this Agreement does not encompass the promises and obligations of the Parties under this Agreement. This Agreement also does not contemplate or include within the release hereunder post-Effective Date intentionally willful, tortious, or criminal acts of either Party, such acts being expressly excluded from this Agreement.

3.8           No Admission of Liability. Notwithstanding the terms and conditions of this Agreement, execution hereof shall in no manner or form constitute the admission of liability or of responsibility by either Party in respect to the Background Facts or otherwise.

3.9           Independent Legal Counsel. The Parties to this Agreement warrant, represent, and agree that in executing this Agreement, they do so with full knowledge of the rights each may have with respect to the other Parties, and that each has received, or has had the opportunity to receive, independent legal advice as to these rights. Each of the Parties has executed this Agreement with full knowledge of these rights, and under no fraud, duress, or undue influence.

IV

WORKING RELATIONSHIP

4.1           Voluntary Separation. The Parties hereby agree that Cashen has voluntarily separated from the EMAV Companies and that he shall owe no further obligations to the EMAV Companies other than as provided for hereunder.

4.2           Resignation of All Positions. As of the Effective Date and as additional consideration hereunder, Cashen shall voluntarily resign any and all positions as an officer, director, and employee he may hold in and with any of the EMAV Companies.

4.3           Offsets and Express Waiver of All Other Amounts. Except as otherwise expressly provided for hereunder, the Parties hereby agree to cancel and eliminate any and all amounts which may be owed to the other, including though not limited to all amounts owed by Cashen to EMC. As such, (i) Cashen hereby acknowledges that the Cashen Parties are not entitled to receive, and will not claim, any further consideration, compensation, payments, reimbursements, damages, rights, benefits, or distributions of any kind (specifically including but not limited to wages and EMAV Stock) from the EMAV Parties, other than as expressly set forth in this Agreement; and, (ii) EMAV hereby acknowledges that the EMAV Parties are not entitled to receive, and will not claim, any further payment of any kind from Cashen, other than as expressly set forth in this Agreement.

4.4           Return of Materials. Within five (5) business days of the Effective Date Cashen shall promptly deliver to EMAV all equipment, notebooks, documents, memoranda, reports, files, samples, books, correspondence, lists, computer disks and data bases, computer programs and reports, computer software, and all other written, graphic and computer generated or stored records relating to the business of the EMAV Companies which are or have been in the possession or under the control of Cashen, in addition to all property owned by the EMAV Companies which is in the possession of or under the control of Cashen.

4.5           Consulting Relationship. During and through the twenty-four (24) months immediately following the Effective Date (the “Consulting Period”) Cashen shall make himself reasonably available to provide consulting services to EMAV (the “Consulting Relationship”). It is the express intention of the Parties that Cashen perform services during the Consulting Period as an independent contractor to EMAV. Nothing in this Agreement shall in any way be construed to constitute Cashen as an agent, employee, or representative of EMAV. Without limiting the generality of the foregoing, Cashen is not authorized to bind EMAV to any liability or obligation or to represent that Cashen has any such authority. During the Consulting Period, upon the request of EMAV, Cashen shall be reasonably available to consult with EMAV on all aspects of EMAV’s business and obligations whether arising prior to or after the Effective Date. EMAV shall compensate Cashen in an amount typically charged for similar services. In the event that Cashen is unable to perform any requested services because he obligated under another employment or working relationship, then Cashen shall not be deemed to be in violation of this Section 4.5.

 

  

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V

CONFIDENTIALITY AND BUSINESS RELATED COVENANTS

5.1           Non-Disclosure of Business Information. The Cashen Parties shall not at any time, either directly or indirectly, use, divulge, disclose or communicate to any person, firm, or corporation, in any manner whatsoever, any confidential information concerning any matters affecting or relating to the business of the EMAV Companies, including, without limitation, the names, buying habits or practices of any of its customers, its marketing methods and related data, the names of any of its vendors or suppliers, costs of materials, the prices it obtains or has obtained or at which it sells or has sold its products or services, manufacturing and sales, costs, lists or other written records used in the EMAV Companies’ business, compensation paid to employees and other terms of employment, business plans, financial projections and reports, business strategies, internal operating procedures and other confidential business information from which the EMAV Companies might derive an economic or competitive advantage, or any other confidential information of, about or concerning the business of the EMAV Companies, its manner of operation, or other confidential data of any kind, nature, or description, whether or not labeled “secret” or “confidential”. The Parties hereby stipulate that as between them, the foregoing matters are important, material, and confidential trade secrets and affect the successful conduct of the EMAV Companies’ business and its goodwill, and that any breach of any term of this paragraph is a material breach of this Agreement.

5.2           Trade Secrets. The Cashen Parties shall not at any time, either directly or indirectly, use, divulge, disclose or communicate to any person, firm, or corporation, in any manner whatsoever, any of the EMAV Companies’ trade secrets, including without limitation, confidential information; customer lists; information concerning current or any future and proposed work, services or products; the fact that any such work, services or products are planned, under consideration, or in production, as well as any description thereof, computer programs or computer software. The Cashen Parties agree that these restrictions shall also apply to (i) trade secrets belonging to third parties in the possession of the EMAV Companies; and, (ii) trade secrets conceived, originated, discovered, or developed by the EMAV Companies.

5.3           Non-Solicitation of Agents and Employees. During and throughout the forty-eight (48) months immediately following the Effective Date the Cashen Parties shall not, directly or indirectly, cause or induce, or attempt to cause or induce, any agent, consultant, or employee of the EMAV Companies to terminate his or her relationship with the EMAV Companies, as such employment exists at any time following the Effective Date.

5.4           Non-Solicitation of Business. During and throughout the forty-eight (48) months immediately following the Effective Date the Cashen Parties shall not, directly or indirectly, (i) solicit business from any customer of the EMAV parties, to the extent such business relates to a product or service competitive with a product or service of the EMAV Companies; or, (ii) otherwise attempt to induce any such customer of the EMAV Companies to cease doing business with, or to decrease the amount of business such customer does with, the EMAV Companies.

5.5           Intellectual Property. The Parties agree that all trade secrets, inventions, domain names, ownership rights, developments, and all ideas, techniques, inventions, systems, formulas, discoveries, technical information, programs, prototypes and similar developments (collectively, the “Developments”) developed, created, discovered, made, written, or obtained by Cashen in the course of or as a result, directly or indirectly, of performance of his duties to the EMAV Companies, and all related intellectual property, copyrights, patent rights, trade secrets and other forms of protection thereof, shall be and remain the property of the EMAV Companies (collectively, the “Intellectual Property”). Cashen agrees to execute or cause to be executed such assignments and applications, registrations and other documents and to take such other action as may be requested by the EMAV Companies to enable EMAV to protect its rights in and to any such Intellectual Property and Developments. Under the Consulting Relationship, Cashen further agrees to provide ongoing access to all of Cashen’s knowledge including, but not limited to, research and development, manufacturing, marketing, finance, general management, legal, regulatory, and corporate history and circumstances related to the Intellectual Property.

  

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5.6           Press Release. The Parties hereby agree that the EMAV Companies may issue a press release as soon as practicable after the Effective Date. The press release shall contain (i) an affirmation by Cashen of his continued support for the business of the EMAV Companies and its management team; and, (ii) a statement of appreciation by EMAV regarding Cashen’s efforts on behalf of the EMAV Companies.

5.7           E-Mail. As of the Effective Date Cashen will (i) cease all use of his EMAVCO E-Mail; and, (ii) deliver to EMAV his password access code to his EMAVCO E-Mail. EMAV will then assume all control over said E-Mail account. For a period of sixty (60) days from the Effective Date all personal E-Mails will be forwarded to Cashen at the E-Mail so designated in writing by Cashen.

5.8           Mutual Non-Disparagement. Following the Effective Date: (i) the Cashen Parties will not make or cause to be made any statements or remarks (including, without limitation, the repetition or distribution of disparaging, derogatory or damaging rumors, allegations, negative reports or comments), whether written, electronic or oral, that are directly or indirectly disparaging, derogatory, or damaging to the EMAV Companies or any of their respective past, current, or future affiliates, officers, directors, stockholders, employees, consultants, advisors, representatives, trustees, subsidiaries, divisions, parent companies, attorneys, clients, or customers or their policies and procedures, business, practices or financial condition; and, (ii) the EMAV Companies will not make or cause to be made any statements or remarks (including, without limitation, the repetition or distribution of disparaging, derogatory or damaging rumors, allegations, negative reports or comments), whether written, electronic or oral, that are directly or indirectly disparaging, derogatory or damaging to the Cashen Parties or any of their past, current or future affiliates, officers, directors, shareholders, employees, consultants, advisors, representatives, trustees, subsidiaries, divisions, parent companies, attorneys, clients or customers or their policies and procedures, business, practices or financial condition. However, the foregoing restrictions shall not apply to any statements by either Party that are made truthfully in response to a subpoena or as otherwise required by applicable law or other legal process, or those made in the context of a confidential professional relationship such as between a Party and legal counsel, accountant, and/or financial advisor.

VI

STOCK PROVISIONS

6.1           Issuance of Settlement Shares. As soon as practicable after the Effective Date though in no event more than ten (10) business days after the Effective Date, EMAV shall issue to Cashen one million (1,000,000) shares of EMAV Stock (the “Settlement Shares”).

6.2           Lock-Up. The Settlement Shares shall be subject to “lock up”, as that term in commonly defined in a securities context, with Cashen not being able to sell any of the Settlement Shares during the fourteen (14) months after the Effective Date. Thereafter, Cashen shall not sell during any thirty (30) day period a total of Settlement Shares in excess of ten thousand (10,000) shares. However, Cashen may participate in any transaction offered to all other stockholders of EMAV.

 

6.3           Status of Other EMAV Stock. Any and all other shares of EMAV Stock which may have been, in some manner or form, allocated to or held for the benefit of Cashen, will be disposed of in the sole discretion of EMAV. However, no portion of such shares shall be allocated to or for the benefit of Keith A. Rosenbaum (“Rosenbaum”), Spectrum law Group, LLP, or any of their respective controlled entities or affiliated parties.

6.4           General Stock Provisions. The following provisions shall apply to the Settlement Shares:

(a)           The Settlement Shares will be free and clear of all liens and encumbrances, and EMAV confirms that it has full and unrestricted power to issue and deliver the Settlement Shares pursuant to the provisions of this Agreement.

  

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(b)           The Settlement Shares are being acquired by Cashen for Cashen’s own personal account, for investment purposes only, and not with a view to the distribution, resale, or other disposition thereof.

(c)           Cashen is an “accredited investor”, as that term is defined under Rule 501(a) of Regulation D under the Securities Act of 1933, and Cashen shall execute and deliver all documentation prepared and reasonably requested by EMAV in order to confirm such status as an accredited investor.

(d)           Each time Cashen seek to sell a block of at least seven thousand five hundred (7,500) of the Settlement Shares, Cashen shall provide EMAV with a written notice and a right of first refusal to acquire the subject shares. The right of first refusal may be exercised by EMAV within one (1) business day of Cashen’s notice by providing written notice to Cashen.

6.5           Tax Reporting. The Parties agree that the Settlement Shares shall be treated as being issued upon the formation of EMAV Sub. As such, the Settlement Shares shall be treated as having been issued to Cashen in a tax-free transaction under applicable provisions of the Internal Revenue Code o 1986, as amended from time-to-time.

VII

ADDITIONAL REPRESENTATIONS AND OBLIGATIONS

7.1           Independent Legal Counsel. The Parties to this Agreement warrant, represent, and agree that in executing this Agreement, they do so with full knowledge of the rights each may have with respect to the other Parties, and that each has received, or has had the opportunity to receive, independent legal advice as to these rights. Each of the Parties has executed this Agreement with full knowledge of these rights, and under no fraud, duress, or undue influence.

7.2           Disclosure and Waiver of Conflicts.  In connection with the preparation of this Agreement, each of the Parties hereby acknowledge and agree that: (i) SPECTRUM LAW GROUP, LLP, the law firm that prepared this Agreement (“Spectrum”) acted as legal counsel to EMAV; (ii) Cashen has been advised by Spectrum that the interests of the Cashen Parties may be opposed to the interests of the EMAV Companies, and, accordingly, Spectrum’s representation of EMAV may not be in the best interests of the Cashen Parties; and, (iii) Cashen has been advised by Spectrum to retain separate legal counsel. Notwithstanding the foregoing, Cashen expressly (i) consents to Spectrum representing EMAV; (ii) acknowledges that he has been advised to retain separate counsel, and as to any issues as to which he has not done so, has waived his right to do so; and, (iii) forever waives any claim that Spectrum’s representation and continued representation of EMAV constitutes a conflict of interest.

7.3           Execution and Effect of Agreement.

7.3.1.           By the EMAV Companies. Each of the EMAV Companies hereby warrants and represents to Cashen the following:

(a)           Each has the requisite power and authority to enter into and carry out the terms and conditions of this Agreement, as well as all transactions contemplated hereunder. All proceedings have been taken and all authorizations have been secured which are necessary to authorize the execution, delivery, and performance of this Agreement. This Agreement has been duly and validly executed and delivered by the EMAV Companies and constitutes the valid and binding obligations of the EMAV Companies, enforceable in accordance with the respective terms.

(b)           The consummation of the transactions herein contemplated, including the execution, delivery and consummation of this Agreement, will not violate (i) any judgment, statute, law, code, act, order, writ, rule, ordinance, regulation, governmental consent or governmental requirement, or determination or decree of any arbitrator, court, or other governmental agency or administrative body, which now or at any time hereafter may be applicable to and enforceable against the relevant party, work, or activity in question or any part thereof (collectively, “Requirement of Law”) applicable to or binding upon the EMAV Companies; (ii) the terms of the Certificate of Incorporation or Bylaws of the EMAV Companies; or, (iii) any material agreement, contract, mortgage, indenture, bond, bill, note, or other material instrument or writing binding upon the EMAV Companies or to which the EMAV Companies are subject.

                     

  

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 7.3.2.           By the Cashen Parties. Each of the Cashen Parties hereby warrants and represents to EMAV the following:

(a)           Each has the requisite power and authority to enter into and carry out the terms and conditions of this Agreement, as well as all transactions contemplated hereunder. All proceedings have been taken and all authorizations have been secured which are necessary to authorize the execution, delivery, and performance by Cashen of this Agreement. This Agreement has been duly and validly executed and delivered by the Cashen Parties and constitutes the valid and binding obligations of the Cashen Parties, enforceable in accordance with the respective terms.

(b)           The consummation by the Cashen Parties of the transactions herein contemplated, including the execution, delivery, and consummation of this Agreement, will not violate any Requirement of Law applicable to or binding upon the Cashen Parties.

7.4           No Adverse Cooperation. Cashen will not act in any manner that might damage the business of the EMAV Companies. Cashen will not counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against the EMAV Companies and/or any officer, director, employee, agent, representative, stockholder or attorney of the EMAV Companies, unless under a subpoena or other court order to do so or upon the express written consent of EMAV. Cashen further agrees both to immediately notify EMAV upon receipt of any court order, subpoena, or any legal discovery device that seeks or might require the disclosure or production of the existence or terms of this Agreement, and to furnish, within two (2) business days of its receipt, a copy of such subpoena or legal discovery device to EMAV.

7.5           Expenses. Each Party shall pay the fees and expenses of such Party’s advisers, counsel, accountants, and other experts, if any, and all other expenses incurred by such Party incident to the negotiation, preparation, execution, delivery and performance of this Agreement, and shall hold the other Party hereto harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim for such fees and expenses.

7.6           Public Disclosures. The Parties agree that with regard to the public disclosure of the transactions envisioned hereunder: (i) if EMAV issues a press release it will be in accordance with Section 5.6; and, (ii) if EMAV files a Form 8-K it will be approved by Cashen prior to filing, with approval not to be unreasonably withheld and which must be issued within 24-hours of sending the draft to Cashen.

7.7           Turbo Chargers.

7.7.1.           General Info. Cashen and other parties were at various times owners of and involved in that certain business known as Turbo Chargers Inc., an Indiana corporation (“Turbo Chargers”). A judgment was obtained against Cashen and Rosenbaum for obligations arising out of Turbo Chargers (the “Rodino Judgment”). Monies were also loaned to Turbo Chargers by Lawrence D. Miller, with collection action being threatened for repayment of the loan (the “Miller Loan”).

7.7.2.           Rodino Judgment. Rosenbaum hereby represents and warrants that the Rodino Judgment has been satisfied or otherwise vacated in full. The EMAV Companies hereby agree to indemnify Cashen and his brother, James Cashen (“James”), against and in respect of all demands, judgments, debts, obligations, interests, liabilities, causes of action, costs, expenses, and injunctions of any nature whatsoever, arising under the Rodino Judgment.

7.7.3.           Miller Loan. Rosenbaum hereby represents and warrants that no further action whatsoever will be taken against Cashen or James related to or arising under the Miller Loan. The EMAV Companies hereby agree to indemnify Cashen and James against and in respect of all demands, judgments, debts, obligations, interests, liabilities, causes of action, costs, expenses, and injunctions of any nature whatsoever, arising under or related to the Miller Loan.

 

  

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VIII

ADDITIONAL PROVISIONS

8.1           Executed Counterparts. This Agreement may be executed in any number of counterparts, all of which when taken together shall be considered one and the same agreement, it being understood that all Parties need not sign the same counterpart. In the event that any signature is delivered by Fax or by E-Mail, such signature shall create a valid and binding obligation of that Party (or on whose behalf such signature is executed) with the same force and effect as an original thereof. Any photographic, photocopy, or similar reproduction copy of this Agreement, with all signatures reproduced on one or more sets of signature pages, shall be considered for all purposes as if it were an executed counterpart of this Agreement.

8.2           Entire Agreement. This Agreement, and all references, documents, or instruments referred to herein, contains the entire agreement and understanding of the Parties in respect to the subject matter contained herein. The Parties have expressly not relied upon any promises, representations, warranties, agreements, covenants, or undertakings, other than those expressly set forth or referred to herein. This Agreement supersedes (i) any and all prior written or oral agreements, understandings, and negotiations between the Parties with respect to the subject matter contained herein; and, (ii) any course of performance and/or usage of the trade inconsistent with any of the terms hereof.

8.3           Severability. Each and every provision of this Agreement is severable and independent of any other term or provision of this Agreement. If any term or provision hereof is held void or invalid for any reason by a court of competent jurisdiction, such invalidity shall not affect the remainder of this Agreement.

8.4           Governing Law. This Agreement shall be governed by the laws of the State of California, without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California. If any court action is necessary to enforce the terms and conditions of this Agreement, the Parties hereby agree that the Superior Court of California, County of Orange, shall be the sole jurisdiction and venue for the bringing of such action.

8.5           Enforcement. The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, it is agreed that the Parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which they are entitled at law or in equity. The remedies of the Parties under this Agreement are cumulative and shall not exclude any other remedies to which any person may be lawfully entitled.

8.6           Waiver. No failure by any Party to insist on the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy on a breach shall constitute a waiver of any such breach or of any other covenant, duty, agreement, or condition.

8.7           Recovery of Fees by Prevailing Party. In the event of any legal action (including arbitration) to enforce or interpret the provisions of this Agreement, the non-prevailing Party shall pay the reasonable attorneys’ fees and other costs and expenses including expert witness fees of the prevailing Party in such amount as the court shall determine. In addition, such non-prevailing Party shall pay reasonable attorneys’ fees incurred by the prevailing Party in enforcing, or on appeal from, a judgment in favor of the prevailing Party. The preceding sentence is intended by the Parties to be severable from the other provisions of this Agreement and to survive and not be merged into such judgment.

  

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8.8             Recitals. The facts recited in Article II, above, are hereby conclusively presumed to be true as between and affecting the Parties.

8.9             Amendment. This Agreement may be amended or modified only by a writing signed by all Parties.

 

8.10           Successors and Assigns. Except as expressly provided in this Agreement, each and all of the covenants, terms, provisions, conditions, and agreements herein contained shall be binding upon and shall inure to the benefit of the successors and assigns of the Parties.

8.11           Assignability. This Agreement is not assignable by either Party without the expressed written consent of all Parties.

8.12           Time. All Parties agree that time is of the essence as to this Agreement.

8.13           Provision Not Construed Against Party Drafting Agreement. This Agreement is the result of negotiations by and between the Parties, and each Party has had the opportunity to be represented by independent legal counsel of its choice. This Agreement is the product of the work and efforts of all Parties, and shall be deemed to have been drafted by all Parties. In the event of a dispute, no Party shall be entitled to claim that any provision should be construed against any other Party by reason of the fact that it was drafted by one particular Party.

8.14           Agreement Provisions, Exhibits, and Schedules. When a reference is made in this Agreement to an Article, Section, Subsection, Exhibit, or Schedule, such reference shall be to said item of this Agreement unless otherwise indicated. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof as if set out in full herein.

8.15           Further Assurances. Each Party agrees (i) to furnish upon request to each other Party such further information; (ii) to execute and deliver to each other Party such other documents; and, (iii) to do such other acts and things, all as another Party may reasonably request for the purpose of carrying out the intent of this Agreement and the transactions envisioned hereunder. However, this provision shall not require that any additional representations or warranties be made and no Party shall be required to incur any material expense or potential exposure to legal liability pursuant to this Section 8.15.

8.16           Notices.

8.16.1.                      Method and Delivery. All notices, requests and demands hereunder shall be in writing and delivered by hand, by Electronic Transmission, by mail, or by recognized commercial over-night delivery service (such as Federal Express or UPS), and shall be deemed given (a) if by hand delivery, upon such delivery; (b) if by Electronic Transmission, upon telephone confirmation of receipt of same; (c) if by mail, forty-eight (48) hours after deposit in the United States mail, first class, registered or certified mail, postage prepaid; or, (d) if by recognized commercial over-night delivery service, upon such delivery.

8.16.2.                      Consent to Electronic Transmission. Each Party hereby expressly consents to the use of Electronic Transmission for communications and notices under this Agreement. For purposes of this Agreement, “Electronic Transmission” means a communication (i) delivered by Fax or E-Mail when directed to the Fax number or E-Mail address, respectively, for that recipient on record with the sending Party; and, (ii) that creates a record that is capable of retention, retrieval, and review, and that may thereafter be rendered into clearly legible tangible form.

8.16.3.                      Address Changes. Any party may alter the Fax number, E-Mail address, physical address, or postage address to which communications or copies are to be sent by giving notice of such change of address to the other Parties in accordance with the provisions of this Section 8.16.

  

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8.17           Best Efforts. Each Party shall cooperate in good faith with the other Parties generally, and in particular, the Parties shall use and exercise their best efforts, taking all reasonable, ordinary and necessary measures to ensure an orderly and smooth relationship under this Agreement, and further agree to work together and negotiate in good faith to resolve any differences or problems which may arise in the future. However, the obligations under this Section 8.20 shall not include any obligation to incur substantial expense or liability.

8.18           Definitional Provisions. For purposes of this Agreement, (i) those words, names, or terms which are specifically defined herein shall have the meaning specifically ascribed to them; (ii) wherever from the context it appears appropriate, each term stated either in the singular or plural shall include the singular and plural; (iii) wherever from the context it appears appropriate, the masculine, feminine, or neuter gender, shall each include the others; (iv) the words “hereof”, “herein”, “hereunder”, and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, and not to any particular provision of this Agreement; (v) all references to “Dollars” or “$” shall be construed as being United States Dollars; (vi) the term “including” is not limiting and means “including without limitation”; and, (vii) all references to all statutes, statutory provisions, regulations, or similar administrative provisions shall be construed as a reference to such statute, statutory provision, regulation, or similar administrative provision as in force at the date of this Agreement and as may be subsequently amended.

IX

EXECUTION

IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties, and shall be effective as of and on the Effective Date set forth in Article I, above.

THE PARTIES HAVE CAREFULLY READ THIS ENTIRE AGREEMENT. ITS CONTENTS AND THE RELEASE CONTAINED HEREIN HAVE BEEN FULLY EXPLAINED TO THEM BY THEIR ATTORNEYS, OR THEY HAVE VOLUNTARILY ELECTED NOT TO SEEK THE ADVICE OF AN ATTORNEY. THE PARTIES FULLY UNDERSTAND THE FINAL AND BINDING EFFECT OF THIS AGREEMENT. THE ONLY PROMISES OR REPRESENTATIONS MADE TO EACH OF THE PARTIES ABOUT THIS AGREEMENT, OR TO INDUCE THEM TO SIGN THIS AGREEMENT, ARE CONTAINED IN THIS AGREEMENT. THE PARTIES ARE SIGNING THIS AGREEMENT KNOWINGLY AND VOLUNTARILY.

	
CASHEN:

	EMAV:
	  	  
	  	EMAV HOLDINGS, INC.,
	
/s/ Wil Cashen

	a Delaware corporation
	
WIL CASHEN

	  
	  	  
	
DATED:  11-12-2014

	BY:  /s/ Keith A. Rosenbaum
	  	  
	
LLC:

	NAME:  Keith A. Rosenbaum
	  	  
	
HUGHESDIETRICH, LLC,

	
TITLE: CEO

	
a Delaware limited liability company

	  
	  	DATED:  11-14-2014
	  	  
	
BY:  /s/ Wil Cashen

	  
	  	AS TO SECTION 7.7 ONLY:
	
NAME:  Wil Cashen

	  
	  	  
	
TITLE: Manager/Member

	
/s/ Keith A. Rosenbaum

	  	KEITH A. ROSENBAUM
	
DATED:  11-12-2014

	  
	  	DATED:  11-14-2014

 

 

10Exhibit 10.1

 

AMENDED AND RESTATED
 EXECUTIVE SEVERANCE AGREEMENT

 

This Amended and Restated Executive Severance Agreement (“Agreement”) is entered into, effective as of November 17, 2014 (the “Effective Date”), by and between Andrew A. Krakauer (“Executive”) and Cantel Medical Corp. (“Company”).

 

Background

 

A.                                    The Company considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its shareholders.  The Company believes that, to attract and retain experienced and valuable key executive employees, it is important and prudent to provide such executives with fair compensation should their employment be terminated under certain circumstances, including but not limited to change in control situations.

 

B.                                    The Company wishes to encourage the Executive to devote his full time and attention to the performance of his management responsibilities and to assist the Board and other management employees in evaluating business options and pursuing the best interests of the Company’s shareholders without being influenced by the uncertainty of his own employment situation.

 

C.                                    In furtherance of the foregoing, the Company and the Executive previously entered into an Amended and Restated Executive Severance Agreement which, among other things, sets forth the compensation and benefits arrangements payable in connection with a termination of employment of the Executive.  The Board has determined that it continues to be in the best interests of the Company and its stockholders that this Agreement and the Executive Severance Agreements of other executives of the Company be maintained in order to ensure that the Company will have the continued dedication of the executives throughout their tenure.  The Company and the Executive desire to amend and restate the Agreement as more fully set forth herein.

 

In consideration of the premises, the Executive’s employment by the Company on an at-will basis, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Executive and the Company agree as follows:

 

Agreement

 

1.                                      Defined Terms.  Throughout this Agreement, when the first letter of a word (or the first letter of each word in a phrase) is capitalized, the word or phrase shall have the meaning specified in Appendix A (beginning on page 16).

 

2.                                      Term.  This initial Term of this Agreement will continue through July 31, 2016; provided, however, that beginning on August 1, 2015, and on the first day of each following August, the Term of this Agreement shall automatically be extended by one year, unless either the Company or the Executive shall have provided notice to the other at least six (6) months before such date that the Term shall not be extended.  Notwithstanding the preceding provisions of this Section, (i) if a Change in Control occurs during the Term of this Agreement, such Term (other than with respect to the provisions of Section 4) shall not end before the second anniversary of the Change in Control; provided, however, this sentence shall apply only to the first Change of Control 

 

 

while this Agreement is in effect; and (ii) termination of this Agreement shall not affect the obligations of the Company hereunder on account of the Executive’s Termination of Employment during the Term.

 

3.                                      Termination of Employment; Resignation of Officer and Director Positions.  The Executive is an at-will employee.  The Company may Terminate the Executive’s Employment at any time, for any reason whatsoever or for no reason, subject to its payment obligations under this Section and, if applicable, Section 4 or 5.  The Executive may voluntarily Terminate his Employment at any time by providing at least twenty (20) days’ prior notice to the Company.  Regardless of whether the Executive’s Termination of Employment is voluntary or involuntary, the Executive shall resign from any and all of his director positions and offices with the Company and each Related Employer, effective as of his Termination Date.  Upon Termination of Employment, the Executive shall be entitled to the following, in addition to any benefits payable under Section 4 or 5:

 

(a)                                 Any earned but unpaid base salary through his Termination Date, plus any accrued and unused paid time off (PTO) due to the Executive under the Company’s PTO program through his Termination Date, which amounts shall be paid to the Executive not later than the payment date for the payroll period next following his Termination Date.

 

(b)                                 Provided that the Executive applies for reimbursement in accordance with the Company’s established reimbursement procedures (within the period required by such procedures but under no circumstances later than ninety (90) days after his Termination Date), the Company shall pay the Executive any reimbursements to which he is entitled under such procedures not later than the payment date for the payroll period next following the date on which the Executive applies for reimbursement.

 

(c)                                  Any benefits (other than severance) payable to the Executive under any of the Company’s cash or equity incentive compensation plans, employee benefit plans or programs, the Company’s 2006 Equity Incentive Plan and any successor thereto (the “Equity Plan”) and the agreements issued thereunder (collectively, “Benefit Plans”), to the extent not provided for herein, shall be payable in accordance with the provisions of those plans or programs. This Agreement and all such Benefit Plans that cover the Executive shall be construed in a consistent manner.  In the event of conflict between the terms and conditions of this Agreement and any of the Benefit Plans as they relate to the Executive and any particular payment or award, the order of precedence shall be as follows: (i) this Agreement; (ii) any Benefit Plan that constitutes an employment agreement; (iii) any Benefit Plan that constitutes an annual or long term incentive plan; (iv) the Equity Plan; and (v) any agreement issued under the Equity Plan; provided, however, that no effect shall be given to any provision of this Agreement over any provision of the Equity Plan if and to the extent such provision could not have been approved by the Board as an amendment to the Equity Plan pursuant to Section 14(a) of the Company’s 2006 Equity Incentive Plan (or any corresponding provision of any successor Equity Plan) without stockholder approval or the consent of the Executive, unless and until such approval or consent has been obtained.

 

4.                                      Non-Change of Control Severance and Other Benefits.

 

(a)                                 Subject to (i) the Executive’s timely filing of a duly executed Release in accordance with Section 19, (ii) such Release becoming effective and irrevocable in accordance 

 

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with its terms not later than sixty (60) days after the Executive’s Termination of Employment (the last day of such 60-day period being referred to as the “Release Effectiveness Date”), (iii) the provisions of this Section 4, and (iv) the limitations provided in Section 10, the Company shall provide the Executive with the payments and benefits set forth in this Section, if at any time during the Term other than during a Change in Control Coverage Period either (i) the Company Terminates the Executive’s Employment (other than a termination for Cause, Unacceptable Performance, Disability, or death pursuant to Section 7), or (ii) the Executive voluntarily Terminates his Employment for Adequate Reason pursuant to Section 9.  Notwithstanding the preceding provisions of this Subsection, the Executive shall not be entitled to benefits pursuant to this Section 4, if he is entitled to benefits pursuant to Section 5.

 

(b)                                 As soon as administratively feasible (and not more than ten (10) days) after the Company’s receipt of the duly executed Release and the Release becoming effective and irrevocable, the Company shall pay to the Executive a single lump sum payment equal to the product of two (2) times the sum of (A) the Executive’s Annual Base Salary at the rate in effect as of the Termination Date plus (B) 100%(1) of the Executive’s Annual Base Salary at the rate in effect as of the Termination Date.  For purposes of determining the Executive’s Annual Base Salary Rate pursuant to the preceding sentence, any reduction to the Executive’s salary during the six-month period preceding his Termination of Employment (other than in connection with an “across-the-board” reduction in salary of all senior executives of the Company with the approval of the Company’s CEO) shall be disregarded.  Notwithstanding the foregoing, if the Release Effectiveness Date falls in the calendar year next succeeding the calendar year of the Termination Date, the lump sum payment will be made no earlier than the first business day of such next succeeding calendar year.

 

(c)                                  If the Termination Date of the Executive occurs subsequent to the last day of a Fiscal Year for which the Executive has not been paid his Bonus, then the Executive shall be entitled to his full Bonus for such Fiscal Year to the extent otherwise earned under the terms of the Bonus Plan for such Fiscal Year (as if the Executive’s employment had not Terminated prior to the next Bonus payment date). Such amount shall be paid to the Executive not later than 2 1⁄2 months following the close of such Fiscal Year.  Amounts payable under this Subsection (c) will be deemed payments attributable to the Executive’s employment prior to or on the Termination Date and not as severance.

 

(d)                                 The Company shall pay to the Executive a pro-rated Bonus for the Fiscal Year in which the Termination Date occurs, determined by multiplying (i) the amount of the Executive’s full Bonus for such Fiscal Year that would have been earned under the terms of the Bonus Plan for such Fiscal Year (as in effect immediately prior to the Termination Date) if the Executive’s employment had continued through the next Bonus payment date, by (ii) a fraction, (A) the numerator of which is the number of full or partial months of such Fiscal Year in which the Executive was employed by the Company, and (B) the denominator of which is 12.  Such amount shall be paid to the Executive not later than 2 1⁄2 months following the close of such Fiscal 

 

(1)  This percentage represents the Executive’s bonus percentage in effect as of the date of this Agreement.  Such percentage shall increase automatically at any time the Executive’s bonus percentage is increased by the Company’s Compensation Committee of the Board (or by the Board itself).  Such increase shall be to the new approved bonus percentage as documented in resolutions of the Compensation Committee set forth in a written consent or minutes of proceedings of the Committee (or Board).

 

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Year.  Notwithstanding the foregoing, if no Bonus Plan has been finalized (i.e., approved by the Compensation Committee and disseminated to the Executive) for the Fiscal Year in which such Termination Date occurs either prior to the commencement of such Fiscal Year or within three months following the commencement of such Fiscal Year, then the Bonus for such Fiscal Year payable under this Subsection (d) will be determined in accordance with the first sentence of Section 5(b)(2) (as if the pro rata Bonus payment under that Section was required).  To the extent that a Bonus is payable to the Executive under Subsection (c) or (d) of this Section 4 for any Fiscal Year, the Executive shall not also be entitled to any Bonus payment for such Fiscal Year under the terms of the applicable Bonus Plan.  Amounts payable under this Subsection (d) will be deemed payments attributable to the Executive’s employment prior to or on the Termination Date and not as severance.

 

(e)                                  If the Executive is eligible for and properly elects Continuation Coverage for himself and/or one or more qualified beneficiaries (as defined in ERISA Section 607(3)) under the Company’s medical plan, the Company shall pay the premiums for such coverage (or reimburse the Executive for such premiums) for the eighteen (18) month period following the Executive’s Termination of Employment (or such shorter period during which such person is eligible for Continuation Coverage).  Such payments or reimbursements shall constitute taxable income of the Executive to the extent required by law.

 

(f)                                   The Company shall pay the cost of outplacement services incurred by the Executive during the twelve (12) month period following his Termination of Employment and provided by a firm of the Executive’s choice, up to a total of Twenty Thousand Dollars ($20,000).  Payment for outplacement expenses shall be made by the Company promptly following the Company’s receipt of appropriate invoices documenting such expenses.

 

(g)                                  Notwithstanding the preceding provisions or any other provisions herein to the contrary, if the Executive’s Employment is Terminated during a Change in Control Coverage Period, either by the Executive for Good Reason or by the Company for any reason other than for Cause or death, then the Executive shall be entitled to the payments and benefits that would have been provided to the Executive pursuant to Section 5 if the Company had Terminated his Employment without Cause during a Change in Control Coverage Period (reduced by any payments or benefits provided to him pursuant to this Section 4).  In such a case, the Executive shall not be required to execute an additional Release, and any Release requirement specified in Section 5 shall be deemed satisfied on the Change in Control Date.

 

(h)                                 Notwithstanding the preceding provisions of this Section, if the Executive is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i), the Company shall promptly deliver written notice to the Executive advising him of the application of such Code Section. Solely to the extent necessary to avoid adverse personal tax consequences to the Executive under Code Section 409A, payments otherwise required to be made to the Executive pursuant to this Section 4 shall be delayed to the earlier of (i) six months and one day after the Executive’s Termination Date, or (ii) the Executive’s death.  For purposes of this Subsection, the Executive’s Date of Termination shall be interpreted in a manner that is consistent with the term “separation from service” as defined in Code Section 409A and the Treasury Regulations thereunder. Interest shall accrue on unpaid amounts delayed under this subparagraph at the prime rate from time to time in effect at JP Morgan Chase Bank or any successor bank commencing from the date that such amounts would otherwise have been due under the applicable provision.

 

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5.                                      Change of Control Severance and Other Benefits.

 

(a)                                 Subject to (i) the Executive’s timely filing of a duly executed Release in accordance with Section 19, (ii) such Release becoming effective and irrevocable in accordance with its terms not later than the Release Effectiveness Date (i.e., the sixtieth day after the Executive’s Termination of Employment), (iii) the provisions of this Section 5, and (iv) the limitations provided in Section 10, the Company shall provide the Executive with the payments and benefits set forth in this Section, if during a Change in Control Coverage Period, (A) the Company Terminates the Executive’s Employment (other than a termination for Cause or death pursuant to Section 7), or (B) the Executive voluntarily Terminates his Employment for Good Reason pursuant to Section 9.  Amounts payable pursuant to this Section shall be subject to the limitations and reimbursement expressly provided in this Agreement.

 

(b)                                 As soon as administratively feasible (and not more than five (5) business days) after the Company’s receipt of the duly executed Release and the Release becoming effective and irrevocable in accordance with its terms, the Company shall pay to the Executive a single lump sum payment in an amount equal to the sum of the following:

 

(1)                                 the product of (i) two (2) times (ii) the sum of (A) the Executive’s Annual Base Salary, at the greater of the rate in effect on the Change in Control Date or the Termination Date (disregarding any reduction in the rate of the Executive’s salary during the six-month period immediately preceding his Termination of Employment), plus (B) the greater of (I) 100%(2) of the amount determined under clause (A) of this Subsection (b)(1) or (II) the average of the annual Bonuses paid to the Executive for the two most recent Fiscal Years preceding the Fiscal Year in which the Executive’s Employment is Terminated for which an annual Bonus was paid to the Executive.  Amounts payable under this Subsection (b)(1) will be deemed severance; and

 

(2)                                 a pro-rata Bonus amount, determined by multiplying (i) the greater of (A) 100%(3) of the amount determined under clause (A) of the preceding Subsection (b)(1) or (B) the average of the annual Bonuses paid to the Executive for the two most recent Fiscal Years preceding the Fiscal Year in which the Executive’s Employment is Terminated for which an annual Bonus was paid to the Executive, by (ii) a fraction, (A) the numerator of which is the number of full or partial months since the end of the prior Fiscal Year in which the Executive has been employed by the Company, and (B) the denominator of which is 12.  However, if the Executive did not receive the annual Bonus he would have earned under the Bonus Plan for the Fiscal Year immediately preceding his Termination Date if his employment had continued through the Bonus payment date, then the numerator shall be the number of full or partial months in which the Executive was employed by the Company since the beginning of such immediately preceding Fiscal Year to the Termination Date. To the extent that a Bonus is payable to the Executive under this Subsection (b)(2) for the Fiscal Year in which the Termination Date occurs or such immediately preceding Fiscal Year, the Executive shall not also be entitled to any Bonus payment for such Fiscal Year under the terms of the applicable Bonus Plan. Amounts payable under this 

 

(2),(3)  This percentage represents the Executive’s bonus percentage in effect as of the date of this Agreement.  Such percentage shall increase automatically at any time the Executive’s bonus percentage is increased by the Company’s Compensation Committee of the Board (or by the Board itself).  Such increase shall be to the new approved bonus percentage as documented in resolutions of the Compensation Committee set forth in a written consent or minutes of proceedings of the Committee (or Board).

 

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Subsection (b)(2) will be deemed payments attributable to the Executive’s employment prior to or on the Termination Date and not as severance.

 

Notwithstanding the foregoing, if the Release Effectiveness Date falls in the calendar year next succeeding the calendar year of the Termination Date, the lump sum payment will be made no earlier than the first business day of such next succeeding calendar year.

 

(c)                                  If the Executive is eligible for and properly elects Continuation Coverage for himself and/or one or more qualified beneficiaries (as defined in ERISA Section 607(3)) under the Company’s medical plan, the Company shall pay the premiums for such coverage (or reimburse the Executive for such premiums) for the twenty-four (24) month period following the Executive’s Termination of Employment (or such shorter period during which such person is eligible for Continuation Coverage).  Such payments or reimbursements shall constitute taxable income of the Executive to the extent required by law.

 

(d)                                 For the twenty-four (24) month period following the Executive’s Termination of Employment, the Company shall continue to provide term life insurance coverage substantially the same as that provided for the Executive immediately before his Termination Date (if any).

 

(e)                                  The Company shall pay the cost of outplacement services incurred by the Executive during the twelve (12) month period following his Termination of Employment and provided by a firm of the Executives’ choice, up to a total of Twenty Thousand Dollars ($20,000).  Payment for outplacement expenses shall be paid directly by the Company promptly following the Company’s receipt of appropriate invoices documenting such expenses.

 

(f)                                   Notwithstanding the preceding provisions of this Section, if the Executive is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i), the Company shall promptly deliver written notice to the Executive advising him of the application of such Code Section. Solely to the extent necessary to avoid adverse personal tax consequences to the Executive under Code Section 409A, payments otherwise required to be made to the Executive pursuant to this Section 5 shall be delayed to the earlier of (i) six months and one day after the Executive’s Termination Date, or (ii) the Executive’s death.  For purposes of this Subparagraph, the Executive’s Termination Date shall be interpreted in a manner that is consistent with the term “separation from service” as defined in Code Section 409A and the Treasury Regulations thereunder. Interest shall accrue on unpaid amounts delayed under this subparagraph at the prime rate from time to time in effect at JP Morgan Chase Bank or any successor bank commencing from the date that such amounts would otherwise have been due under the applicable provision.

 

6.                                      Provisions Relating to Parachute Payments.

 

(a)                                 Anything in this Agreement to the contrary notwithstanding, if payments and benefits to or for the benefit of the Executive, whether pursuant to this Agreement or otherwise, would (in the determination of the independent nationally recognized certified accounting firm retained by the Company for this purpose (the “Accounting Firm”)) result in total Parachute Payments (as defined in Subsection (d)(i) below) to the Executive with a Present Value (as defined in Subsection (d)(ii) below) equal to or greater than one hundred percent (100%) of the Parachute Payment Limit, then the Company shall promptly give the Executive notice to that effect and a 

 

6

 

copy of the detailed calculation thereof.  The Executive may then elect, in his sole discretion, which and how much of the aggregate payments or benefits payable to (or for the benefit of) the Executive shall be eliminated or reduced as long as after such election the Present Value of the aggregate Parachute Payments is equal to or less than the Parachute Payment Limit minus One ($1.00) Dollar, provided that the Executive shall not be permitted to elect to reduce any payment or benefit that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A.  The Executive shall advise the Company in writing of his or her election within ten (10) days of receipt of such notice.  If no such election is made by the Executive within such ten (10) day period or if the election by the Executive does not sufficiently reduce the payments or benefits so that the Present Value of the aggregate Parachute Payments is equal to or less than the Parachute Payment Limit minus One (1.00) Dollar, the Company shall reduce the payments or benefits (or the remaining payments or benefits) in the following order so that after the Executive’s election (if timely made) and the Company’s reduction, the Present Value of the aggregate Parachute Payments is equal to the Parachute Payment Limit minus One ($1.00) Dollar: (1) by reducing amounts payable pursuant to Section 5 (e) of this Agreement, then (2) by reducing amounts payable pursuant to Section 5(b)(1) of this Agreement, then (3) by reducing amounts payable in respect of equity awards subject to performance-based vesting criteria, then (4) by reducing amounts payable pursuant to Section 5(d) of this Agreement, then (5) by reducing amounts payable pursuant to Section 5(c) of this Agreement, and then (6) by reducing amounts payable in respect of equity awards subject to time-based vesting criteria.  All determinations made by the Accounting Firm under this Section 6 shall be binding upon the Company and the Executive and shall be made within sixty (60) days of the Executive’s Termination Date.

 

(b)                                 As a result of the uncertainty in the application of Code Section 4999 at the time of the initial determination by the Accounting Firm hereunder, it is possible that Payments will have been made by the Company that should not have been made (“Overpayment”) or that additional payments that will not have been made by the Company could have been made (“Underpayment”), in each case consistent with a calculation for purposes of reducing the aggregate Parachute Payments to be equal to the Parachute Payment Limit less One ($1.00) Dollar. In the event that the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or the Executive that the Accounting Firm believes has a high probability of success, determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of the Executive shall be repaid by the Executive to the Company together with interest at the Applicable Federal Rate provided for in Code Section 7872(f)(2); provided, however, that no such repayment shall be required if and to the extent such payment would not either reduce the amount on which the Executive is subject to taxation under Code Section 4999 or generate a refund of such taxes.  In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive together with interest at the Applicable Federal Rate provided for in Code Section 7872(f)(2).

 

(c)                                  All fees and expenses of the Accounting Firm in implementing the provisions of this Section 6 shall be borne by the Company.

 

(d)                                 The following terms shall have the following meanings for purposes of this Section 6:

 

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(i)                                     A “Parachute Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Code Section 280G(b)(2)) to (or for the benefit of) the Executive, whether paid or payable pursuant to his Agreement or otherwise, which is contingent on a change (A) in the ownership or effective control of the Company, or (B) in the ownership of a substantial portion of the assets of the Company (within the meaning of Code Section 280G(b)(2)); and

 

(ii)                                  “Present Value” of a payment or benefit shall mean the present value as of the date of the Change in Control for purposes of Code Section 280G of the portion of such payment or benefit that constitutes a “parachute payment” under Code Section 280G (b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the excise tax under Code Section 4999 of the Code will apply with respect to such payment or benefit; and

 

(iii)                               “Parachute Payment Limit” means three (3) times the “base amount”, as defined by Code Section 280G(b)(3) and the Treasury Regulations thereunder.

 

7.                                      Termination of Employment by the Company for Cause, Unacceptable Performance, Disability, or Death.

 

(a)                                 The Company may cause a Termination of the Executive’s Employment for Disability at any time.  To do so, the Board must provide the Executive with a notice of termination specifying the Termination Date and the circumstances constituting Disability.

 

(b)                                 The Company may cause a Termination of the Executive’s Employment for Unacceptable Performance at any time during the Term other than during a Change in Control Coverage Period. To do so, the Executive must be provided with a notice of termination from either (i) the Board or (ii) the Chairman of the Board of the Company with approval of the Board, which in either case specifies the Termination Date and the specific act(s) or failure(s) constituting Unacceptable Performance.  If the notice identifies an act or failure constituting Unacceptable Performance, it shall be accompanied by a resolution duly adopted by a majority of the entire membership of the Board and, if the act or failure is subject to correction under the definition of Unacceptable Performance and related definitions in this Agreement, the notice shall also specify the period during which the act or failure must be corrected, which in no event shall be less than thirty (30) days.  If the Board reasonably determines that the Executive has not corrected the act or failure in all material respects within the required correction period, the Board or the Chairman of the Board must then provide a second notice of termination stating the reasons for the termination and the Termination Date, and the Executive’s Employment shall terminate on such Date.

 

(c)                                        The Company may cause a Termination of the Executive’s Employment for Cause at any time.  To do so, the Executive must be provided with a notice of termination from either (i) the Board or (ii) the Chairman of the Board of the Company with approval of the Board, which in either case specifies the Termination Date and the specific act(s) or failure(s) constituting Cause.  If the notice identifies an act or failure constituting Cause, it shall be accompanied by a resolution duly adopted by not less than a majority of the entire membership of the Board (after reasonable notice to the Executive and an opportunity for the Executive, together with legal counsel, to be heard by the Board), finding, in the reasonable opinion of the Board, that one or more of the events of Cause has occurred and specifying in reasonable detail the acts or omissions 

 

8

 

constituting Cause.  If the act or failure constituting Cause is subject to correction under the definition of Cause and related definitions in this Agreement, the notice shall also specify the period during which the act or failure must be corrected, which in no event shall be less than thirty (30) days.  If the Board acting in good faith determines that the Executive has not corrected the act or failure in all material respects within the required correction period, the Board or the Chairman of the Board must then provide a second notice of termination stating the reasons for the termination and the Termination Date, and the Executive’s Employment shall terminate on such Date.

 

(d)                                       If the Executive dies before a Termination of Employment, his Employment shall terminate automatically on the date of his death.

 

(e)                                        In the case of a Termination of Employment for Cause or Unacceptable Performance pursuant to this Section, the Executive shall not be entitled to benefits or payments pursuant to Section 4 or 5; provided, however, if the Company causes a Termination of the Executive’s Employment for Unacceptable Performance and the Termination Date of such termination occurs during a Change in Control Coverage Period, then such termination shall be deemed a Termination of the Executive’s Employment “other than a termination for Cause” under Section 5(a) and thereby obligate the Company to provide the Executive with the payments and benefits set forth in Section 5.

 

(f)                                         In the case of a Termination of Employment due to Disability (at any time during the Term other than during a Change in Control Coverage Period) or death pursuant to this Section, the Company shall continue to pay to the Executive, if living, or other person or persons as the Executive may from time to time designate in writing as the beneficiary of such payments, the Annual Base Salary in effect at the time when such Disability or death occurred, during the three-month period following such Disability or death.  The Company shall also pay a pro rated Bonus for the Fiscal Year in which the Termination Date occurs, determined by multiplying (i) the amount of the Executive’s full Bonus for such Fiscal Year that would have been earned under the terms of the Bonus Plan for such Fiscal Year (as in effect immediately prior to the Termination Date) if the Executive’s employment had continued through the next Bonus payment date, by (ii) a fraction, (A) the numerator of which is the number of full or partial months in which the Executive was employed by the Company in such Fiscal Year, and (B) the denominator of which is 12.  Notwithstanding the foregoing, if no Bonus Plan has been finalized (i.e., approved by the Compensation Committee and disseminated to the Executive) for the Fiscal Year in which such Termination Date occurs either prior to the commencement of such Fiscal Year or within three months following the commencement of such Fiscal Year, then the Bonus for such Fiscal Year payable under this Subsection (f) will be determined in accordance with the first sentence of Section 5(b)(2) (as if the pro rata Bonus payment under that Section was required).  In addition, if the Termination Date occurs subsequent to the last day of a Fiscal Year for which the Executive has not been paid his Bonus, then the Executive shall be entitled to his Bonus for such Fiscal Year to the extent otherwise earned under the terms of the Bonus Plan for such Fiscal Year (as if the Executive’s employment had not Terminated prior to the next Bonus payment date).  Such Bonus amounts shall be paid to the Executive not later than 2 1⁄2 months following the close of the Fiscal Year in which the Termination Date occurs.  To the extent that a Bonus is payable to the Executive under this Section 7(f) for any Fiscal Year, the Executive will not also be entitled to a Bonus payment for such Fiscal Year under the terms of the applicable Bonus Plan.  Amounts payable 

 

9

 

under this Subsection (f) will be deemed payments attributable to the Executive’s employment prior to or on the Termination Date and not as severance.  Except for such Annual Base Salary and Bonus, the Company shall have no further obligation pursuant to this Section.

 

8.                                      Accelerated Vesting of Equity Awards upon Certain Events.

 

(a)                                 In the event of any termination described in Section 4(a) or 5(a) or in the event that the Executive terminates his Employment for Adequate Reason or Good Reason pursuant to Section 9, in any such case prior to the full vesting of stock options or restricted stock then held by the Executive (i.e., the options becoming exercisable in their entirety and the restricted stock ceasing to have any risks of forfeiture), then, effective as of the Termination Date, all such options and restricted stock then held by the Executive will become automatically fully exercisable and all restrictions of such options and restricted stock awards will automatically lapse.  In the event of any termination of the Executive’s Employment as a result of the Executive’s Retirement prior to the full vesting of stock options then held by the Executive, then effective as of the Termination Date, all such stock options will become automatically fully exercisable and all restrictions of such options will automatically lapse.

 

(b)                                 In the event of a termination of the Executive’s Employment pursuant to Section 7 due to death or Disability, in any such case prior to the full vesting of stock options and restricted stock then held by the Executive, all of the Executive’s stock options and restricted stock awards will automatically vest as of the Termination Date.

 

(c)                                  The accelerated vesting provided for in this Agreement in connection with certain Terminations following a Change in Control shall not be deemed to limit any acceleration of vesting that the Executive is entitled to upon a Change in Control under the Company’s Long Term Incentive Plan or any other benefit plan that the Executive is covered by as of the effective time of the Change in Control.

 

(d)                                 Nothing herein shall be deemed to cause the acceleration of the vesting of a Performance Award issued under the Equity Plan.

 

(e)                                  Notwithstanding anything set forth herein, the Company may in its discretion accelerate the vesting of any stock options or restricted stock held by the Executive in the event of a termination of the Executive’s Employment for any reason.

 

9.                                      Resignation by Executive for Adequate Reason or Good Reason.  If an event of Adequate Reason or Good Reason occurs during the Term, the Executive may, at any time within the ninety (90) day period following such event, provide the Company with a notice of termination under Section 4 (in the case of Adequate Reason) or Section 5, if applicable (in the case of Good Reason) specifying the event of Adequate Reason or Good Reason and notifying the Company of his intention to Terminate Employment upon the Company’s failure to correct the event of Adequate Reason or Good Reason (as applicable) within thirty (30) days following receipt of the Executive’s notice of termination.  If the Company fails to correct the event of Adequate Reason or Good Reason (as applicable) and provide the Executive with notice of such correction within such thirty (30) day period, the Executive’s Employment shall terminate as of the end of such period, and the Executive shall be entitled to benefits as provided in Section 3 and Section 4 or 5, as applicable.

 

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10.                               Limitation on Payments and Benefits.  Notwithstanding any other provision of this Agreement, payments pursuant to this Agreement shall be subject to the following limitations:

 

(a)                                 No payment (other than a payment pursuant to Section 3) shall be made pursuant to this Agreement until the Release has become effective according to its terms.

 

(b)                                 If the Executive intentionally and materially breaches any provision of the Confidentiality and Non-Competition Agreement, and fails to cure such breach (if curable) within thirty (30) days, he shall promptly repay to the Company any and all severance amounts previously paid to him pursuant to Section 4 and/or 5, and he shall have no further rights pursuant to this Agreement.

 

(c)                                  Payments hereunder shall be limited to the extent provided in Section 6.

 

11.                               No Obligation to Mitigate.  The Executive shall not be required to mitigate the amount of any payment or benefits provided for under Section 4 or 5 by seeking other employment or otherwise, and the amount of any payment or benefits provided for under Section 4 or 5 shall not be reduced by any payments or benefits received by the Executive as the result of employment by another employer after the Termination Date, or otherwise; provided, however, that the amount payable under Section 4 or 5 shall be reduced by the amount of any severance, termination, or notice pay (or any other similar amounts) required by law to be paid to the Executive by the Company or its subsidiaries and by any salary or other amounts paid to the Executive during any notice period that the Company or its subsidiaries is required by law to provide.

 

12.                               Withholding and Taxes.  The Company may withhold from any payment made hereunder (i) any taxes that the Company reasonably determines are required to be withheld under federal, state, or local tax laws or regulations, and (ii) any other amounts that the Company is authorized to withhold.  Except for employment taxes that are the obligation of the Company, the Executive shall pay all federal, state, local, and other taxes (including, without limitation, interest, fines, and penalties) imposed on him under applicable law by virtue of or relating to the payments and/or benefits contemplated by this Agreement, subject to any reimbursement provisions of this Agreement.

 

13.                               Indemnification.  The Executive shall continue to be entitled to any rights to insurance and indemnification under the Company’s or a Related Employer’s directors and officers liability insurance (“D&O Insurance”), Certificate of Incorporation, and Bylaws, as in effect before the earlier of the Executive’s Termination of Employment or a Change in Control (or rights to insurance and indemnification that are substantially the same thereto), with respect to any claims relating to the period before his Termination Date.  Additionally, any and all D&O Insurance policies obtained by the Company or a Related Employer following the Termination Date that are “claims made” polices shall cover the Executive to the same extent as other former officers of the Company.

 

14.                               Default in Payment.  Any payment not made within ten (10) days after it is due in accordance with this Agreement shall thereafter bear interest, compounded quarterly, at 5% above the prime rate from time to time in effect at JP Morgan Chase Bank or any successor bank.

 

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15.                               Effect on Other Plans, Agreements, and Benefits.  Except to the extent expressly set forth herein, any benefit or compensation to which the Executive is entitled under any agreement between the Executive and the Company or any of its subsidiaries or under any plan maintained by the Company or any of its subsidiaries in which the Executive participates or participated shall not be modified or lessened in any way, but shall be payable according to the terms of the applicable plan or agreement.  The terms of this Agreement shall supersede and terminate any prior change in control and/or severance agreement, and (except as expressly provided herein and other than pursuant to the Equity Plan or any predecessor equity plan under which awards are granted to the Executive) the provisions of any other agreement or plan providing benefits following a change in control or termination of employment, entered into between the Executive and the Company or any subsidiary thereof.  Notwithstanding the above, any severance benefits received by the Executive pursuant to this Agreement shall be in lieu of any severance benefits to which the Executive would otherwise be entitled under any general severance policy maintained by the Company or the relevant subsidiary for its management personnel or under any employment contract between the Executive and the Company or any subsidiary thereof provided that, for purposes of this sentence, the Long Term Incentive Plan and equity award plans shall not be deemed general severance policies of the Company.  Any and all employment agreements between the Company and the Executive, inclusive of provisions that in accordance with the terms of such agreements survive termination, are hereby terminated and void.

 

16.                               Unsecured Obligation.  All rights of the Executive or any beneficiary of the Executive who succeeds to the Executive’s rights to payments or benefits under this Agreement shall at all times be entirely unfunded and no provision shall at any time be made with respect to segregating any assets of the Company or payment of any amounts due hereunder.  Neither the Executive nor any such beneficiary shall have any interest in or rights against any specific assets of the Company or any of its subsidiaries, and the Executive and any such beneficiary shall have only the rights of a general unsecured creditor of the Company.

 

17.                               Prohibition Against Assignment.  The Executive may not assign, pledge, anticipate, or transfer any benefit or amount payable hereunder (other than benefits payable upon or following his death), and any attempt to assign, pledge, anticipate, or transfer such and benefit or amount hereunder, whether voluntary or involuntary, shall be null and void.

 

18.                               Successors.

 

(a)                                 The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  Failure of the Company to obtain such agreement before the effectiveness of any such succession shall be a material breach of this Agreement.  As used in this Agreement, “Company” shall mean the Company as hereinbefore defined, and any successor to its business and/or assets as aforesaid that executes and delivers the agreement provided for in this Subsection or otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

 

(b)                                 This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, 

 

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distributees, devisees, and legatees.  If the Executive should die while any amounts would still be payable to him hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other designee or, if there be no such designee, to the Executive’s estate.

 

19.                               Release.  In consideration of the Company’s promises and covenants and the performance thereof, the Executive agrees that the Company’s payment obligations under Sections 4 and 5 shall be conditioned on the Executive’s release of the Company and all other persons named in the Release from any and all causes of causes of action that the Executive has or may have against the Company or any such person before the effective date of the Release, other than a cause based on a breach hereof.  The Release shall be substantially in the form attached hereto as Exhibit I.  For the Release to be effective, the Executive (or his representative or agent) must have provided a signed version of the Release to the Company and such Release shall have become effective and irrevocable by its terms within sixty (60) days after the Executive’s Termination of Employment.

 

20.                               Disputes.

 

(a)                                 In any judicial or other proceedings in which the Executive’s right to, or the amount of, benefits hereunder is disputed, the ultimate burden of proof shall be on the Company.

 

(b)                                 Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Little Falls, New Jersey by three arbitrators, one of whom shall be appointed by the Company, one of whom shall be appointed by the Executive, and the third of whom shall be appointed by the first two arbitrators.  If either the Company or the Executive fails to appoint an arbitrator within 20 days of a request in writing by the other to do so, or if the first two arbitrators cannot agree on the appointment of a third arbitrator within 20 days after the second arbitrator is designated, then such arbitrator shall be appointed by the Chief Judge of the United States District Court located in the city of Newark, New Jersey, or upon his failure to act, by the American Arbitration Association so as to enable the arbitrators to render an award within 90 days after the three arbitrators have been appointed.  Following the selection of arbitrators as set forth above, the arbitration shall be conducted promptly and expeditiously and in accordance with the rules of the American Arbitration Association.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that the Executive shall be entitled to seek specific performance of his right to be paid during the pendency of any dispute or controversy arising under or in connection with this Agreement.

 

(c)                                  The Company shall pay all reasonable out-of-pocket expenses, including reasonable legal fees and legal expenses, incurred by the Executive in connection with any judicial or other proceeding, including any arbitration proceeding, to enforce this Agreement or to construe, determine, or defend the validity of this Agreement.  The Company shall pay (or reimburse the Executive) for any such expense as soon as administratively practicable after the Executive demonstrates evidence that such expense have been incurred and not later than thirty (30) days following the Executive’s submission of such expenses to the Company with a request for reimbursement.

 

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21.                               Miscellaneous Provisions.

 

(a)                                 Entire Agreement.  Except as expressly provided herein, this Agreement contains the entire agreement and understanding of the parties regarding the transactions contemplated herein and supersedes all prior agreements, arrangements, or understandings, whether written or oral, relating to the subject matter hereof, including, without limitation, any letters, agreements, or understandings between the Executive and the Company or any subsidiary thereof before the date hereof.  By entering into this Severance Agreement, the Executive waives any right that he may otherwise have to participate in any generally applicable severance plan of the Company or any Related Employer.  Notwithstanding the foregoing, nothing herein shall be deemed to limit any rights the Executive may have in connection with his equity awards under the Long Term Incentive Plan or the Company’s Equity Plan and the equity award agreements issued thereunder.

 

(b)                                 Amendment.  No provision of this Agreement may be amended or waived, except by written agreement signed by both the Company and the Executive.

 

(c)                                  Governing Law.  This Agreement is intended to comply with the requirements of Code Section 409A, and it shall be construed in accordance with such intent.  Subject to the preceding sentence, this Agreement shall be construed in accordance with, and governed by, the internal laws of the State of New Jersey without regard to principles of conflict of laws.

 

(d)                                 Headings.  The headings in this Agreement have been inserted solely for ease of reference and shall not be considered in the interpretation or enforcement of this Agreement.

 

(e)                                  Severability.  If any provision of the Agreement is held to be invalid, illegal, or unenforceable, the remainder of this Agreement shall not be affected thereby.  If any provision of this Agreement is held by a court of competent jurisdiction to conflict with any federal, state, or local law, such provision is hereby declared to be of such force and effect as is permissible in such jurisdiction.

 

(f)                                   Rights and Waivers.  All rights and remedies of the parties hereto are separate and cumulative, and no one of them, whether exercised or not, shall be deemed to exclude, limit, or prejudice any other right or remedy that either of the parties hereto may have.  No party to this Agreement shall be deemed to waive any right or remedy under this Agreement, unless such waiver is in writing and signed by such party.  No delay or omission on the part of either party in exercising any right or remedy shall operate as a waiver of such right or remedy or any other right or remedy.  A waiver on any one occasion shall not be construed as a bar to or a waiver of any right or remedy on any future occasion.

 

(g)                                  Notices.  All notices hereunder shall be in writing.  A notice by the Company shall be deemed to have been given only when delivered in person to the Executive or mailed by first class United States Mail, Return Receipt Requested, or sent by overnight delivery (or the fastest delivery available, if overnight delivery is not available) by means of an internationally recognized delivery service, to the Executive at his most recent address on the records of the Company.  A notice by the Executive to the Company shall be deemed to have been 

 

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given only when delivered in person to the Company’s General Counsel or mailed by first class United States Mail, Return Receipt Requested, or sent by overnight delivery (or the fastest delivery available, if overnight delivery is not available) by means of an internationally recognized delivery service, to the Company’s General Counsel at the Company’s headquarters.

 

(h)                                 Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same instrument, and may be delivered by facsimile or pdf.

 

22.                               No Reliance.  The Executive represents and acknowledges that in executing this Agreement, the Executive does not rely and has not relied upon any representation or statement by the Company or its agents, other than statements contained in this Agreement.

 

The parties hereto have caused this Agreement to be executed on the day and year first above written.

 

	
 
    	
 
    	
CANTEL MEDICAL CORP.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
Andrew A. Krakauer
    	
 
    	
 
    	
Eric W. Nodiff, Senior Vice President and
    
	
 
    	
 
    	
 
    	
General Counsel
    

 

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APPENDIX A

 

DEFINED TERMS

 

For purposes of this Agreement, the following terms shall have the meanings specified below:

 

“Adequate Reason” means any of the following without the express written consent of the Executive:

 

(i)                                     a material reduction in the Executive’s authority, duties, or responsibilities or the assignment to the Executive of duties of a substantial nature and on a continuous or regular basis that are materially inconsistent with the duties of the Executive;

 

(ii)                                  a reduction in the Executive’s base compensation (other than in connection with an “across-the-board” reduction in base compensation of the senior executives of the Company approved in advance by the Company’s CEO) or failure to include the Executive with other similarly situated employees in any incentive, bonus, or benefit plans as may be offered by the Company from time to time;

 

(iii)                               a change in the primary location at which the Executive is required to perform the duties of his employment to a location that is more than thirty (30) miles from the location at which his office is located on the Effective Date; or

 

(iv)                              the Company’s material breach of this Agreement.

 

“Annual Base Salary” means the annual base cash compensation payable to the Executive at the rate in effect as of the applicable date (excluding bonuses, incentive compensation, taxable fringe benefits, and any other type of special pay), before any reduction on account of salary reduction contributions pursuant to Code Section 125 or 401(k) or pursuant to a nonqualified deferred compensation plan.

 

“Board” means the Company’s Board of Directors.

 

“Bonus” means an annual cash bonus payable under any Bonus Plan.

 

“Bonus Plan” means any bonus plan, short term incentive compensation plan or other like benefit plan in which the Executive participates, whether or not awards thereunder are discretionary, including without limitation, the Annual Incentive Compensation Plan as in effect for the fiscal year ending July 31, 2015, as amended.

 

“Cause” means the Executive’s:

 

(i)                                     act of fraud, embezzlement, theft, or other intentional material violation of the law in connection with or in the course of his employment;

 

(ii)                                  willful gross misconduct that is likely to materially injure the reputation, business, or a business relationship of the Company; or

 

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(iii)                               willful material violation of the Confidentiality and Non-Competition Agreement.

 

For purposes of the definition of “Cause”, no act, or failure to act, on the part of the Executive shall be deemed “willful,” if it was done or omitted by the Executive in good faith or with a reasonable belief that the act or omission was not opposed to the best interests of the Company.

 

“Change in Control” means the occurrence of any of the following events: (i) at any time after the Effective Date at least a majority of the Board shall cease to consist of “Continuing Directors” (meaning directors of the Company who either were directors on the Effective Date or who subsequently became directors and whose election, or nomination for election by the Company’s stockholders, was approved by a majority of the then Continuing Directors); or (ii) any “person” or “group” (as determined for purposes of Section 13(d)(3) of the Exchange Act), except any majority-owned subsidiary of the Company or any employee benefit plan of the Company or any trust thereunder, shall have acquired “beneficial ownership” (as determined for purposes of Securities and Exchange Commission (“SEC”) Regulation 13d-3) of Shares having more than 50% of the voting power of all outstanding Shares; or (iii) a merger or consolidation occurs to which the Company is a party, in which outstanding Shares are converted into shares of another company (other than a conversion into shares of voting common stock of the successor corporation or a holding company thereof representing 80% of the voting power of all capital stock thereof outstanding immediately after the merger or consolidation) or other securities (of either the Company or another company) or cash or other property; or (iv) the sale of all, or substantially all, of the Company’s assets occurs; or (v) the stockholders of the Company approve a plan of complete liquidation of the Company.

 

“Change in Control Date” means the effective date of an event constituting a Change in Control.

 

“Change in Control Period” means the period beginning on the Change in Control Date and ending two years thereafter.

 

“Change in Control Coverage Period” means the period (A) commencing on the earlier to occur of (i) the Potential Change in Control Date, but only if a Change in Control actually occurs within 15 months after the Potential Change in Control Date, or (ii) the first day of the six (6) month period ending on the Change in Control Date and (B) ending on the last day of a Change in Control Period.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Company” means Cantel Medical Corp. and any successor, to the extent provided in Section 18.

 

“Confidentiality and Non-Competition Agreement” means the confidentiality and non-competition agreement between the Company and the Executive, as in effect from time to time.

 

“Continuation Coverage” means continuation coverage within the meaning of ERISA Sections 601 through 607.

 

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“Disability” means an illness or injury that qualifies the Executive for disability benefits under a long-term disability plan of the Company or a Related Employer in which the Executive is a participant; provided, however, that a Disability shall not be deemed to have occurred hereunder unless the Executive is absent from work or otherwise substantially unable to assume his normal duties for a period of ninety (90) successive days or an aggregate of one hundred twenty (120) days during any consecutive twelve-month period during the Term.

 

“Equity Plan” means that Cantel Medical Corp. 2006 Equity Incentive Plan, as amended and any successor equity plan thereto.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“Exchange Act” means the Securities Exchange Act of 1934, as in effect on the date of this Agreement.

 

“Fiscal Year” means the fiscal year of the Company.

 

“Good Reason” means any of the following during a Change in Control Coverage Period without the Executive’s express written consent:

 

(i)                                     a material reduction in the Executive’s authority, duties, or responsibilities or the assignment to the Executive of duties of a substantial nature and on a continuous or regular basis that are materially inconsistent with the duties of the Executive;

 

(ii)                                  a reduction in the Executive’s base compensation or failure to include the Executive with other similarly situated employees in any incentive, bonus, or benefit plans as may be offered by the Company from time to time;

 

(iii)                               a change in the primary location at which the Executive is required to perform the duties of his employment to a location that is more than thirty (30) miles from the location at which his office is located on the Change in Control Date;

 

(iv)                              the Company’s material breach of this Agreement;

 

(v)                                 a material reduction in the authority, duties, or responsibilities of the supervisor to whom the Executive is required to report; or

 

(vi)                              a material reduction in the scope of the budget over which the Executive retains authority or responsibility.

 

“Long Term Incentive Plan” means the Company’s Long Term Incentive Plan as in effect for the Company’s fiscal year ending July 31, 2015, as amended, and any successor plan thereto.

 

“Monthly Base Salary” means Annual Base Salary, divided by twelve (12).

 

“Potential Change in Control” means that:

 

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(i)                                     the Company has entered into an agreement with any person or persons, the consummation of which would constitute or result in a Change in Control; or

 

(ii)                                  any person has publicly announced its intention to take or consider taking actions that, if consummated, would constitute or result in a Change in Control; or

 

(iii)                               any person has begun a solicitation (as defined in Rule 14a-1 of the Securities Exchange Act) of proxies or consents that has the purpose of effecting or would (if successful) result in a Change in Control; or

 

(iv)                              any person has initiated a tender offer or exchange offer that would, if consummated, result in a Change in Control; or

 

(v)                                 the Board has adopted a resolution to the effect that any person has begun actions that, if consummated, would result a Change in Control.

 

“Potential Change in Control Date” means the date on which any of the events constituting a “Potential Change in Control” occurs.

 

“Related Employer” means the Company and any other employer that is required to be aggregated with the Company pursuant to Code Section 414(b), (c), or (m).

 

“Release” means a Release of All Claims, in substantially the same form as set out in Exhibit A hereto.

 

“Retirement” means the Executive’s termination of his employment with the Company or its subsidiary (other than as a result of death or Disability) on or after (A) the Executive’s 65th birthday if the Executive has completed at least ten years of employment with the Company or any of its subsidiaries, or (B) the Executive’s 60th birthday if the Executive has completed at least 15 years of employment with the Company or any of its subsidiaries.

 

“Shares” means shares of common stock of the Company.

 

“Term” means the term of this Agreement, as determined pursuant to Section 2.

 

“Terminates Employment”, “Terminate(s) the Executive’s Employment”, “Termination of Employment,” or any other variation of such term means a “separation from service” within the meaning of Code Section 409A(a)(2)(A).

 

“Termination Date” means the effective date of the Executive’s Termination of Employment.

 

“Unacceptable Performance” means any of the following:

 

(i)                                     the Executive’s act or failure to act constituting willful misconduct or gross negligence that is materially injurious to the Company or its reputation;

 

(ii)                                  the Executive’s material failure to perform the duties of his employment (except in the case of a Termination of Employment for Good Reason or Adequate Reason or on

 

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account of the Executive’s physical or mental inability to perform such duties) and the failure to correct such failure within a reasonable period after receiving written notice from the Board describing such failure in detail; provided, however, that the quality of the Executive’s performance (determined by achievement of Company or personal targets or otherwise) shall not be a factor in determining whether Executive has performed his duties.

 

(iii)                               the Executive’s violation of any code of ethics or business conduct or written harassment policies of the Company that continues after the Board has provided notice to the Executive that the continuation of such conduct will result in the Termination of the Executive’s Employment;

 

(iv)                              willful material violation of the Confidentiality and Non-Competition Agreement;

 

(v)                                 the Executive’s arrest or indictment for (i) a felony or (ii) lesser criminal offense involving dishonesty, breach of trust, or moral turpitude; or

 

(vi)                              the Executive’s breach of a material term, condition, or covenant of this Agreement and the failure to correct such breach promptly following receipt of written notice from the Board describing such breach in detail.

 

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EXHIBIT I
 RELEASE OF ALL CLAIMS

 

This Release of All Claims (“Release”) has been signed by Andrew A. Krakauer (“Executive”) on the date indicated below.

 

Background

 

A.                                    The Executive and Cantel Medical Corp. (“Company”) entered into an Amended and Restated Executive Severance Agreement, effective as of November 17, 2014 (“Agreement”), which provides for the payment of benefits to the Executive under certain circumstances following his Termination of Employment.

 

B.                                    The Executive’s Employment with the Company Terminated/will Terminate on               , under circumstances that entitle him to payments under the Agreement, subject to the terms thereof.

 

C.                                    The Company’s obligations under the Agreement are contingent on the Executive signing and providing this Release to the Company within 60 days after receiving it and allowing this Release to become effective as provided herein.

 

D.                                    As a condition of receiving benefits under the Agreement, the Executive wishes to sign this Release.

 

In consideration of the premises and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Executive agrees as follows:

 

Release

 

1.                                      If the Executive (i) signs and dates this Release and submits it to the Company not later than 60 days after it is provided to the Executive, (ii) complies with the other requirements of this Release and the Agreement, and (iii) and does not provide written revocation of this Agreement to the Company within the seven-day revocation period referred to in Paragraph 8, the Company shall make the payments and pay the benefits required by the Agreement.

 

2.                                      In consideration of the Company’s payment obligations under this Agreement, the Executive releases and discharges the Company, all of its past and/or present divisions, affiliates, officers, directors, shareholders, partners, trustees, employees, agents, representatives, administrators, attorneys, insurers, fiduciaries, successors, and assigns, in their individual and/or representative capacities (hereinafter collectively referred to as “Released Persons”), from any and all causes of action, suits, agreements, promises, damages, disputes, controversies, contentions, differences, judgments, claims, and demands of any kind whatsoever (“Claims”) that the Executive and/or his heirs, executors, administrators, successors, and assigns ever had, now have, or may have against any Released Person by reason of his employment and/or cessation of employment with the Company or a Related Employer, or otherwise involving facts that occurred on or before the date on which the Executive signed this Release, other than (i) a Claim that the Company has failed to pay the Executive a payment described in or contemplated by the Agreement or has

 

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otherwise breached the terms of the Agreement, or (ii) a Claim that the Company has failed to pay the Executive any vested benefits to which he is entitled under a plan or program of the Company or a Related Employer (collectively, “Excluded Claims”).  Claims, other than Excluded Claims, are hereafter referred to a “Released Claims.”  The Executive gives this Release regardless of whether the Released Claims are known or unknown.  Such Released Claims include, without limitation, any and all Claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Civil Rights Act of 1871, the Civil Rights Act of 1991, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, and any and all other federal, state or local laws, statutes, rules, and regulations pertaining to employment, as well as any and all claims under state contract or tort law including, but not limited, to those based on allegations of wrongful discharge, breach of contract, promissory estoppel, defamation, and infliction of emotional distress.

 

3.                                      The Executive hereby covenants not to sue or commence or maintain any action or proceeding against any Released Person, none of whom admit any liability, as to any Released Claim.  The Executive hereby agrees that if he hereafter institutes or maintains an action against any Released Person with respect to a Released Claim, and it is determined in such action that a claim or claims brought by the Executive in such action is barred by this Release, he will pay the Released Person for all costs and expenses, including attorneys’ fees, incurred in defending against such claims.  The Executive understands that this Release is final and binding, except as expressly provided herein.  Nothing herein shall (i) prevent the Executive from filing a charge or complaint, including a challenge to the validity of this Agreement, with the Equal Employment Opportunity Commission (“EEOC”), (ii) prevent the Executive from participating in any investigation or proceeding conducted by the EEOC, or (iii) establish a condition precedent or other barrier to exercising the aforesaid rights.  While the Executive has a right to participate in any such investigation, he understands that he is waiving his right to any monetary recovery arising from any investigation or pursuit of a claim on his behalf.  The Executive acknowledges that he has the right to file a charge alleging a violation of the ADEA with any administrative agency and/or to challenge the validity of the waiver and release of any claim that he may have under the ADEA without either (i) repaying the Company the amounts paid to him as a result of this Release or (ii) paying the Company any other monetary amounts (such as attorneys’ fees and damages).

 

4.                                      The Executive agrees that if this Release is ever held to be invalid or unenforceable (in whole or in part) as to any particular type of claim or as to any particular circumstance, it shall remain fully valid and enforceable as to all other claims and circumstances.

 

5.                                      Except as permitted by paragraph 3, the Executive represents that he has not filed, and will not hereafter file, any lawsuit against any Released Person relating to his employment and/or cessation of employment with the Company or any Related Employer, or otherwise involving facts that occurred on or before the date on which he signed this Release, other than with respect to any Excluded Claim.  The Executive further understands and agrees that, other than as provided under paragraph 3, if he commences, continues, joins in, or in any other manner attempts to assert any lawsuit released herein against a Released Person with regard to a Released Claim, or otherwise violates the terms of this Release, he shall be required to return all severance payments paid to him by the Company pursuant to the Executive Severance Agreement (together with interest thereon), and he agrees to reimburse the Released Person for all attorneys’ fees and

 

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expenses incurred by it in defending against such a lawsuit, provided that the right to receive such payments is without prejudice to the Released Person’s other rights hereunder.

 

6.                                      The Executive understands and agrees that the Company’s payments to him and the signing of this Release do not in any way indicate that he has any viable Claims against the a Released Person or that any Released Person admits any liability to him whatsoever.

 

7.                                      The Executive has read this Release carefully, has been given at least 21 days to consider all of its terms and any modifications, material or otherwise, made to this Agreement do not restart or affect in any manner the original 21 calendar day consideration period.  The Executive has been advised to consult with an attorney and any other advisors of his choice and fully understands that by signing below he is giving up any right that he may have to sue or bring any Claims (other than the Excluded Claims) against a Released Person.  The Executive has not been forced or pressured in any manner whatsoever to sign this Release, and he agrees to all of its terms voluntarily.

 

8.                                      The Executive understands that he has 7 days from the date on which he signed this Release below to revoke this Release by notifying the Company of his revocation, that this Release will not become effective until the eighth day following the date on which he has signed this Release, and that if he revokes this Release within such period, the Executive Severance Agreement shall be void.

 

9.                                      The Executive understands and agrees that this Release will be governed by the internal laws of the State of New Jersey, without regard to conflict of law principles, to the extent not preempted by federal law.

 

 

	
 
    	
 
    	
 
    
	
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