October 16, 1996
Mr. James W. Ward
c/o Advanced Photonix, Inc.
1240 Avenida Acaso
Camarillo, California 93012
Dear James:
This letter sets forth the terms and conditions of our agreement (the
"Agreement") regarding the termination of your employment with Advanced
Photonix, Inc. (the "Company"). This Agreement is made and entered into as of
October 16, 1996 (the "Effective Date"). You and the Company hereby agree as
follows:
1. You will no longer be Chairman of the Board, Chief Executive Officer and
President of the Company effective as of October 16, 1996. You and the Company
agree that you shall remain a transition employee of the Company until the
earlier to occur of (the "Separation Date"): (i) July 16, 1997; (ii) such time
as you secure employment outside the Company which provides you with annual
compensation in an amount equal to or greater than your current base salary; or
(iii) such time as you secure employment outside the Company which presents a
conflict of interest with the Company.
a) You may submit, at any time prior to the Separation Date, written request to
the Company for a determination as to whether any particular employment would
present a conflict of interest with the Company. Such request shall be delivered
to the Chief Executive Officer of the Company and shall set forth in reasonable
detail all relevant facts regarding such employment, including but not limited
to the name of the employer, the type of business engaged in by such employer
and the specific duties to be performed by you for such employer.
b) Should the Company determine that such employment would present a conflict of
interest with the Company, it shall inform you of such determination within
seven (7) business days of the date the Company receives any request submitted
in accordance with subparagraph (a) above, and shall set forth with reasonable
detail the basis for its determination.
c) Any failure by the Company to respond to a request submitted in accordance
with subparagraph (a) above within seven (7) business days of the date such
request is received shall be deemed to be, for the purposes of this Agreement, a
determination by the Company that such employment would not present a conflict
of interest with the Company.
2. During the period commencing as of the Effective Date hereof and ending as of
the Separation Date (the "Transition Period"), we will facilitate the transition
of your employment as follows:
a) During the Transition Period, you shall be responsible for such transition
activities as may be reasonably assigned by the Company's President and/or Chief
Executive Officer ("CEO"). Any such activities shall be appropriately suited for
an individual of your education, employment history and business experience. You
shall not be required to perform any activities that would interfere with your
efforts to secure other employment and you shall not be required to perform any
activities that would interfere with any other employment you secure. You agree
that, throughout the Transition Period, you will continue to be bound by the
Company's policies, procedures and practices, to the extent such policies,
procedures and practices do not conflict with the provisions of this Agreement.
You shall report to the CEO throughout the Transition Period.
James W. Ward
October 16, 1996
Page 2
b) During the period commencing on October 16, 1996 and ending as of the
Separation Date, the Company will continue to pay you your base salary in effect
as of the Effective Date, such payments to be paid on the Company's current
payroll dates and subject to withholding of any and all applicable state and
federal taxes and any and all applicable payroll withholding taxes and
obligations; provided that
i) After April 16, 1997, the salary paid to you in accordance with this
subparagraph (b) shall be reduced by any and all compensation earned
or received by you during the Transition Period from sources other
than the Company, including but not limited to any and all wages,
salaries, bonuses, commissions and/or consulting fees, but excluding
any interest, dividends, investment income and income from other
non-employment activities. You agree to notify the Company of such
compensation within five (5) business days of the earlier of (i) the
receipt of such compensation, or (ii) the date on which you become
entitled to receive such compensation.
ii) In the event the Separation Date occurs prior to April 16, 1997, the
Company shall pay you severance benefits equal to (i) your monthly
base salary multiplied by (ii) the number of months (or portions
thereof) remaining between the Separation Date and April 16, 1997,
such benefits to be paid in equal payments coincident with the
Company's current payroll dates and subject to withholding of any and
all applicable state and federal taxes and any and all applicable
withholding taxes and obligations.
c) In the event the Separation Date occurs prior to May 10, 1997, the Company
shall take all necessary action to accelerate the vesting of the stock options
granted to you prior to the Effective Date, such that the number of shares of
the Company's common stock you are entitled to purchase pursuant to such options
as of the Termination Date equals the number of shares of common stock you would
have been entitled to purchase pursuant to such options as of May 10, 1997.
d) If you become unable to perform activities pursuant to this Agreement due to
partial or total disability or incapacity resulting from a mental or physical
illness, injury or other cause, the Company will continue the payment of your
base salary, as such may be reduced by subparagraph (b) above, through the
Separation Date. If you die before the Separation Date, all payments hereunder
shall cease at the end of the calendar month in which your death occurs or at
the Separation Date, whichever is earlier, and the Company shall have no further
obligations or liabilities hereunder to your estate or legal representative or
otherwise.
e) Commencing as of the Effective Date, you shall have no power, right or
authority to execute contracts on behalf of the Company or otherwise represent
or purport to represent the Company in any manner whatsoever to any third party
unless expressly authorized to do so in writing by the CEO of the Company;
provided, however, that no provision of this Agreement shall be construed as
limiting or expanding your rights, or authority to act, as a member of the Board
of Directors of the Company.
f) The Company will pay you, within 20 business days of the Effective Date, the
128.45 hours of accrued and unused vacation time you earned through the
Effective Date, subject to standard payroll deductions and withholdings. You
shall not accrue, nor shall you be entitled to, any paid vacation time during
the Transition Period.
g) To the extent permitted by the Company's employee benefit plans, you will be
entitled to continue, until the Separation Date, your participation in all
employee benefit plans in which you are currently a participant.
h) During the Transition Period, you agree that you will use your reasonable
best efforts to secure employment for which you are suitably trained and
experienced.
James W. Ward
October 16, 1996
Page 3
3. You will be entitled to keep the personal computer provided to you by the
Company, provided that, within five (5) business days of the Separation Date,
you execute the Release attached hereto as Exhibit A. You agree that, if you do
not execute the Release attached hereto as Exhibit A within five (5) days of the
Separation Date, you shall return the personal computer provided to you by the
Company within ten (10) business days of the Separation Date.
4. You hereby acknowledge that, except as expressly provided in (i) this
Agreement, (ii) your Incentive Stock Option dated January 15, 1995, as amended
May 1, 1995, and (iii) your Non-Qualified Stock Option dated January 15, 1995,
as amended May 1, 1995, all benefits and compensation to which you may otherwise
be entitled pursuant to any other agreement, written or oral, entered into prior
to this Agreement shall cease as of the Effective Date.
5. You hereby agree that you will not, until January 17, 1997, without the prior
written consent of the Company, exercise any of the stock options granted to you
prior to the Effective Date.
6. You hereby represent and warrant to the Company that, to the best of your
actual, present knowledge, you have previously disclosed all material
transactions involving, arising from or relating to your employment with the
Company as Chairman of the Board, Chief Executive Officer and President.
7. You acknowledge and agree that you will continue to be bound by the
provisions of Section 11 of your employment Agreement dated January 15, 1995, a
copy of which is attached hereto as Exhibit B, which provisions are incorporated
herein by reference.
8. You agree not to disparage the Company or its officers, directors, employees,
stockholders, accountants, attorneys or agents in any manner likely to be
harmful to it or the business or personal reputation of its officers, directors,
employees, stockholders, accountants, attorneys or agents; provided that you
shall respond accurately and fully to any question, inquiry or request for
information when required by legal process. The Company agrees not to disparage
you in any manner likely to be harmful to your business or personal reputation;
provided that the Company shall respond accurately and fully to any question,
inquiry or request for information when required by legal process.
9. The Company hereby represents and warrants to you that, to the best of the
Company's actual, present knowledge, the Company does not have any claims or
causes of action against you arising from or relating to your employment with
the Company or any agreements, acts or conduct at any time prior to the date of
this Agreement. As used herein, the phrase "the Company's actual, present
knowledge" means the actual present knowledge of Robert Allison, Harry
Melkonian, Patrick Holmes and Robert King.
10. You hereby release, acquit, and forever discharge the Company, its officers,
directors, agents, servants, employees, shareholders, partners, successors,
assigns, affiliates, insurers, attorneys, customers, and clients of and from any
and all liabilities, demands, causes of action, costs, expenses, attorneys'
fees, damages, and obligations of every kind and nature, at law, in equity, or
otherwise, known and unknown, suspected and unsuspected, disclosed and
undisclosed, arising out of or in any way related to agreements, acts or conduct
at any time prior to the date of this Agreement, including, without limitation:
all such claims and demands directly or indirectly arising out of or in any
connected with the Company's employment of you, the termination of that
employment, and the Company's performances of its obligations as your former
employer; claims or demands related to salary, bonuses, commissions, stock,
stock options, vacation pay, fringe benefits, expense reimbursements or any form
of compensation; claims pursuant to any federal, state or local law or cause of
action including, but not limited to, the federal Civil Rights Act of 1964, as
amended; the Americans With Disabilities Act; fraud; wrongful discharge;
discrimination; defamation; emotional distress, and breach of the implied
covenant of good faith and fair dealing; provided, however, that the foregoing
release shall not include a release of any rights you may have to
indemnification by the Company with respect to claims brought against you by
third parties in connection with your performance within the course and scope of
your employment with the Company and/or your performance as a member of the
Board of Directors of the Company.
James W. Ward
October 16, 1996
Page 4
You further acknowledge that you are knowingly and voluntarily waiving and
releasing any rights you may have under the Age Discrimination in Employment Act
of 1967 ("ADEA"). You also acknowledge that the consideration given for the
waiver and release in the preceding paragraphs hereof is in addition to anything
of value to which you were already entitled. If you are more than forty (40)
years of age or older when this release is signed, you hereby provide the
further acknowledgment that you are advised by this writing, as required by the
Older Workers Benefit Protection Act, that: (a) your waiver and release do not
apply to any rights or claims that may arise after the effective date of this
release; (b) you should consult with an attorney prior to executing this release
(although you may voluntarily choose not to do so); (c) you may have at least
twenty-one (21) days to consider this Agreement (although you may by your own
choice execute this release earlier); (d) you have seven (7) days following the
execution of this release to revoke this release; and (e) this Agreement shall
not be effective until the date upon which the revocation period has expired,
therefore making the Effective Date the eighth day after this release is signed
by you.
11. You acknowledge that you have read and understand, and that your attorney
has explained to you, Section 1542 of the Civil Code of the State of California
which reads as follows:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor.
You hereby expressly waive and relinquish all rights and benefits under this
section and any law or legal principle of similar effect in any jurisdiction
with respect to the release granted in this Agreement.
12. The parties hereto each hereby agree and acknowledge that they will keep the
terms, amount and existence of this Agreement completely confidential, and that
neither party will hereafter disclose any such information to anyone other than
the party's accountants and legal representatives and, in your case, your
immediate family, future employers and/or investors, which persons shall be
informed of and bound by this confidentiality clause, unless otherwise legally
required to do so.
13. Any controversy, dispute or claim arising out of, in connection with or in
relation to the interpretation or performance of this Agreement shall be
resolved through binding and nonappealable arbitration administered by the
Judicial Arbitration and Medication Services, Inc. ("JAMS") in San Diego County,
California. Any such arbitration shall be conducted before a single arbitrator
to be appointed by the parties from JAMS' roster. If the parties fail to agree
as to the identity of the single arbitrator, JAMS shall have the right to make
such appointment. Discovery prior to the arbitration hearing shall be limited to
the exchange of witness lists and copies of documentary evidence and documents
relating to or arising out of the issues to be arbitrated. The nonprevailing
party shall pay the prevailing party's costs and expenses (including attorneys'
fees) of any such arbitration. Other than as specified herein, the arbitration
shall be governed by the standard rules governing JAMS arbitrations.
14. The parties acknowledge that the drafting and negotiation of this Agreement
has been participated in by each of the parties and their respective attorneys
and, for purposes of interpreting this Agreement, it shall be deemed to have
been jointly drafted by the parties. The parties expressly warrant and represent
that they have been given the opportunity to consult with an attorney with
respect to the terms of this Agreement.
15. The parties hereto hereby acknowledge that this is a compromise settlement
of various matters, and that the promised payments in consideration of this
Agreement shall not be construed to be an admission of any liability or
obligation by either party to the other party or to any other person whomsoever.
16. This Agreement shall bind the heirs, personal representatives, successors
and assigns of each party, and inure to the benefit of each party, its agents,
directors, officers, employees, servants, successors and assigns.
17. If a court of competent jurisdiction determines that any term or provision
of this Agreement is invalid or unenforceable, in whole or in part, then the
remaining terms and provisions hereof shall be unimpaired. Such court will have
the authority to modify or replace the invalid or unenforceable term or
provision with a valid and enforceable term or provision that most accurately
represents the parties' intentions with respect to the invalid or enforceable
term or provision.
James W. Ward
October 16, 1996
Page 5
18. This Agreement shall be deemed to have been entered into and shall be
construed and enforced in accordance with the laws of the State of California as
such laws are applied to contracts among California residents made and to be
performed entirely within California.
19. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
20. This Agreement constitutes the complete, final and exclusive embodiment of
the entire Agreement between you and the Company with regard to the subject
matter hereof. It is entered into without reliance on any promise or
representation, written or oral, other than those expressly contained herein. It
may not be modified except in a writing signed by you and duly authorized
officer of the Company. Each part has carefully read this Agreement, has been
afforded the opportunity to be advised of its meaning and consequences by his or
its respective attorneys, and signed the same of his or its free will.
Please confirm your assent to the foregoing terms and conditions of our
Agreement by signing both of the enclosed copies of this letter and returning
one of those signed copies to me.
Sincerely,
ADVANCED PHOTONIX, INC.
/s/ Robert G. Allison
Chief Executive Officer
Having read and reviewed the foregoing, I hereby agree to and accept the terms
and conditions as stated above.
/s/ James W. Ward
EXHIBIT A
RELEASE
In consideration for the provision by the Company of a personal computer, as set
forth under paragraph 3 of the foregoing letter, a benefit to which you are not
otherwise entitled, you hereby release and forever discharge the Company, its
officers, directors, agents, attorneys, employees, stockholders, successors,
assigns and affiliates, of and from any and all claims, liabilities, demands,
causes of action, costs, expenses, attorneys' fees, damages, indemnities and
obligations of every kind and nature, in law, equity, or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or
in any way related to agreement, events, acts or conduct through the Separation
Date, including, but not limited to: all such claims or demands directly or
indirectly arising out of my employment or the termination of my employment,
claims or demands related to salary, bonuses, commissions, stock, stock options,
or any other ownership interests in the Company, vacation pay, fringe benefits,
expense reimbursements, severance pay, sabbatical benefits or any other form of
compensation; claims pursuant to any federal, state or local law or cause of
action including, but not limited to, the federal civil Rights Act of 1964, as
amended; the California Fair Employment and Housing Act, as amended; the federal
Americans with Disabilities Act of 1990; the federal Age Discrimination in
Employment Act of 1967, as amended; other discrimination claims; tort law;
contract law; wrongful discharge; emotional distress; and breach of the implied
covenant of good faith and fair dealing; provided, however, that the foregoing
release shall not include a release of any rights you may have to
indemnification by the Company with respect to claims brought against you by
third parties in connection with your performance within the course and scope of
your employment with the Company and/or your performance as a member of the
Board of Directors of the Company.
You further acknowledge that you are knowingly and voluntarily waiving and
releasing any rights you may have under the Age Discrimination in Employment Act
of 1967 ("ADEA"). You also acknowledge that the consideration given for the
waiver and release in the preceding paragraphs hereof is in addition to anything
of value to which you were already entitled. If you are more than forty (40)
years of age or older when this release is signed, you hereby provide the
further acknowledgment that you are advised by this writing, as required by the
Older Workers Benefit Protection Act, that: (a) your waiver and release do not
apply to any rights or claims that may arise after the effective date of this
release; (b) you should consult with an attorney prior to executing this release
(although you may voluntarily choose not to do so); (c) you may have at least
twenty-one (21) days to consider this Agreement (although you may by your own
choice execute this release earlier); (d) you have seven (7) days following the
execution of this release to revoke this release; and (e) this release shall not
be effective until the date upon which the revocation period has expired,
therefore making the effective date of this release the eighth day after this
release is signed by you.
You acknowledge that you have read and understand section 1542 of the Civil Code
of the State of California which reads as follows:
A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.
You hereby expressly waive and relinquish all rights and benefits under that
section and any similar law of any jurisdiction with respect to the release you
are granting in this Release.
Date:___________________
NOT SIGNED AS OF 6/23/97
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JAMES W. WARD
EXHIBIT B
EMPLOYMENT AGREEMENT
See Item 14(a)(3) Exhibit No. 10.8 of this Form 10-K.
February 10th, 1997
Mr. James W. Ward
28 Beaconsfield
Dove Canyon, CA 92679
Dear Jim,
This letter serves to amend your separation agreement with Advanced Photonix,
Inc. as follows:
Whereas, Mr. Ward has been asked by the Board of Directors to take an active
role in the further validation and development of the Large Area Avalanche
Photodiode and Large Area Array Photodiode and;
Whereas, Mr. Ward has agreed to provide the effort necessary to assist in this
process and;
Whereas, the Company recognizes that such activity will deter Mr. Ward from his
continuing job search and;
Whereas, the Company would like to provide fair compensation to Mr. Ward in
exchange for the efforts required to support the validation process;
Now, Therefore, it is hereby agreed by and between the parties hereto as
follows:
1. The Transition Period shall be extended from April 16th, 1997 to June
16th, 1997.
2. The Separation Date shall be extended from July 16th, 1997 to September
16th, 1997.
Pursuant to this amendment, the Company will change thearticles as described
under items 1, 2, and 4 to match the dates as set forth within this amendment.
You acknowledge that all other elements of your agreement in their original
form remain in force.
Please sign below your acceptance of this amendment.
Sincerely,
/s/ Robert G. Allison
Director
Accepted by:
/s/ James W. Ward Date Accepted: 2-11-97