EXHIBIT 10.10
SEVERANCE COMPENSATION AGREEMENT
Dated as of January 30, 2002
Between
PACER TECHNOLOGY
And
RICHARD S. KAY
The Board of Directors of Pacer Technology, a California corporation
(the "Company") has determined that it is appropriate and in the best interests
of the Company and its shareholders to reinforce and encourage the continued
attention and dedication of members of the Company's senior management,
including Richard S. Kay, the Company's Chairman of the Board, Chief Executive
Officer and President (the "Executive"), to his assigned duties without
distraction in potentially disturbing circumstances arising from the possibility
of a change in control of the Company.
This Agreement is intended to accomplish that objective by providing
Executive with the assurance that he will receive severance compensation if the
Executive's employment with the Company terminates under one of the
circumstances described herein following a Change in Control of the Company (as
defined in Section 2).
NOW, THEREFORE, it is agreed as follows by the Company and Executive:
1. Term. The term of this Agreement shall commence on the date hereof
and, subject to earlier termination due to a termination of Executive's
employment pursuant to Section 3.1, 3.2 or 3.3 hereof, shall end two (2) years
following the date on which notice of non-renewal or termination of this
Agreement is given by either the Company or Executive to the other. Thus, this
Agreement shall be renewable automatically on a daily basis so that the
outstanding term is always two (2) years following any effective notice of
non-renewal or of termination given by the Company or Executive, other than in
the event of a termination pursuant to Section 3.1, 3.2 or 3.3 hereof.
2. Certain Definitions. For purposes of this Agreement, the following
terms shall have the respective meanings given to them below:
2.1 Cause. The term "Cause" shall have the meaning given to such
term in Exhibit A hereto, which by this reference is incorporated herein and
made an integral part of this Agreement as if fully set forth below in this
Section 2.1.
2.2 Change in Control. A "Change in Control" of the Company shall
be deemed to have occurred upon the consummation or occurrence of any of the
following:
(a) any merger or consolidation of the Company with
another corporation or business entity (hereinafter a "Merger"), unless
immediately after the consummation of such Merger, the Persons who were
the holders of the outstanding voting securities of the Company
immediately prior to the Merger own, in substantially the same
proportions as they had then held the Company's voting securities,
fifty-one percent (51%) or more of the outstanding voting securities of
(i) the surviving party in such Merger (whether that surviving party is
the Company or the another party to such Merger), or (ii) if the
surviving party has a Parent, then of that Parent; or
(b) any Sale of Assets Transaction (as hereinafter
defined) by the Company to a Purchasing Party (as hereinafter defined),
unless, immediately after consummation of the Sale of Assets
Transaction, the Persons who were the holders of the outstanding voting
securities of the Company immediately prior to the Sale of Assets
Transaction own, in substantially the same proportions as they had then
held the Company's voting securities, fifty-one percent (51%) or more of
the outstanding voting securities (i) of the Purchasing Party in such
Sale of Assets Transaction, or (ii) if the Purchasing Party has a
Parent, then of such Parent; or
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(c) any Person or group (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of twenty percent (20%) or
more of the outstanding shares of the Company's Common Stock, other than
any such Person or group whose beneficial ownership of the outstanding
shares of Common Stock of the Company has increased above 20% by reason
of such Person or group's purchase of shares of Company Common Stock, or
securities that are convertible or exercisable into shares of Company
Common Stock, in a firmly underwritten public offering by the Company of
such Common Stock or other securities; or
(d) during any period of two consecutive years during the
term of this Agreement, individuals who at the beginning of the two year
period constituted the entire Board of Directors of the Company cease
for any reason to constitute a majority of the members of the Board of
Directors, unless the election, or the nomination for election by the
Company's shareholders, of each new director was approved by a vote of
at least two-thirds of the directors then still in office who were
directors at the beginning of that two year period; or
(e) the shareholders of the Company approve any plan or
proposal for the liquidation or dissolution of the Company.
2.3 Disability. The term "Disability" of "disabled" shall mean
Executive's incapacity due to physical or mental illness that causes the
Executive to be absent from his duties with the Company on a full-time basis for
five (5) months. In the event that there is a dispute over whether the Executive
is disabled, then, such dispute shall be resolved by a practicing physician,
licensed as such and in good standing, in California that is selected by mutual
agreement of the Company and the Executive or his counsel, to conduct a physical
or, in the case of an alleged mental disability a psychiatrist to conduct a
psychological, examination of the Executive and Executive agrees that he will
submit to such examination in the event of such a dispute. The determination of
such physician or psychiatrist (as the case may be) shall be binding on the
parties.
2.4 Parent. The term "Parent" shall mean any corporation,
business entity or other Person that holds, either directly or indirectly,
shares or ownership interests of another corporation or business entity
possessing at least a majority of the voting power of that other corporation or
business entity.
2.5 Person. The term "Person" shall mean any natural person,
corporation, limited liability company, partnership (general or limited), trust,
estate or other business entity or unincorporated association.
2.6 Purchasing Party. The term "Purchasing Party" shall mean any
Person that acquires ownership of substantially all of the assets of the Company
in a Sale of Assets Transaction.
2.7 Retirement. The term "Retirement" or "Retirement Age" shall
mean termination by the Company or the Executive of the Executive's employment
or of this Agreement based on the Executive having reached age seventy (70) or
such other age as shall have been fixed in any arrangement established with the
Executive's consent with respect to the Executive.
2.8 Sale of Assets Transaction. The term "Sale of Assets
Transaction" shall mean any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company.
3. Termination Following Change in Control.
3.1 Executive shall become entitled to receive the severance
compensation provided for in Section 4 hereof if, and only if, a Change in
Control of the Company shall have occurred while the Executive is still a full
time employee of the Company, and there subsequently occurs a termination of the
Executive's employment by:
(a) the Executive for Good Reason (as defined in Section
3.5 below); or
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(b) the Company for any reason other than (i) Executive's
death or Disability, (ii) Executive's reaching Retirement Age, or (iii)
Cause (any such termination to be referred to hereinafter as a "Company
Termination without Cause or Reason").
Upon any such termination of employment, whether by Executive for Good Reason or
by the Company without Cause or Reason, this Agreement shall terminate, provided
that such termination shall not affect the rights of Executive under Section 4
which shall survive any termination of this Agreement pursuant to this Section
3.1.
3.2 Executive's Disability or Death.
(a) Termination due to Disability. Executive's employment
and this Agreement may be terminated by the Company for Disability if
Executive becomes disabled (as defined in Section 2.3 above), which
termination shall become effective thirty (30) days after the receipt by
Executive of a written notice of termination from that Company if
Executive has not returned to the full-time performance of his duties by
the end of such 30-day notice period.
(b) Termination on Death. Executive's employment and this
Agreement also shall terminate immediately in the event of the death of
the Executive occurring at any time during the term hereof.
The Company shall have no obligation to pay, and Executive shall have no right
to receive, any compensation under Section 4 of this Agreement if his employment
with the Company terminates due to his disability or his death, even if such
termination of employment for such reason occurs within 12 months after the
occurrence of a Change in Control.
3.3 Retirement or Voluntary Resignation. This Agreement shall
terminate automatically on Retirement (as defined above) of Executive or due to
the resignation or termination by Executive of his employment for any reason
other than Good Reason (as hereinafter defined). The Company shall have no
obligation to pay and Executive shall have no right to receive any compensation
under this Agreement on or due to such Retirement or the Executive's resignation
or termination of employment other than for Good Reason, even if such
termination occurs within 12 months after the occurrence of a Change in Control.
3.4 Cause. The Company may terminate Executive's Employment
and/or this Agreement for Cause and the Company shall have no obligation to pay
and the Executive shall have no right to receive any compensation under or
pursuant to this Agreement by reason of any such termination, even if such
termination for Cause occurs within 12 months following the occurrence of a
Change in Control. Notwithstanding the foregoing, no termination of Executive's
employment for Cause shall be effective for purposes of this Agreement, unless
and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Company's Board of Directors at a meeting of the
Board called and held for that purpose (after reasonable notice to the Executive
and an opportunity for the Executive, together with the Executive's counsel, to
be heard before the Board), finding that in the good faith opinion of the Board
the Executive engaged in conduct that constitutes grounds for a termination of
his employment for Cause and specifying the particulars thereof in reasonable
detail.
3.5 Good Reason. If, prior to the termination of this Agreement
for any other reason or due to any other event, there occurs: (i) first, a
Change in Control of the Company, and (ii) second, within the succeeding twelve
(12) months any of the events or circumstances described below in this Section
3.5 occurs, and (iii) third, a termination by Executive of his employment
effectuated in the manner and within the applicable time period set forth
hereinafter, then, Executive shall become entitled to receive the severance
compensation set forth in Section 4 of this Agreement. Any such termination
shall constitute a termination for "Good Reason." For purposes of this Agreement
"Good Reason" shall mean any of the following (without the Executive's express
written consent) that occurs either as a result of, or after the occurrence of,
any Change in Control:
(a) The Company has materially changed the Executive's
position, duties, responsibilities, status, or offices as in effect
immediately prior to a Change in Control of the Company or has removed
the Executive from or failed to reelect the Executive to any of such
positions, except in
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connection with the termination of his employment for Disability, or
Cause or as a result of the Executive's death or Retirement;
(b) A reduction by the Company in the Executive's base
salary as in effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement, or the Company's
failure to increase (within 12 months of the Executive's last increase
in base salary) the Executive's base salary after a Change in Control of
the Company in an amount which at least equals, on a percentage basis,
the average percentage increase in base salary for all officers of the
Company effectuated in the preceding 12 months;
(c) Any failure by the Company to continue in effect any
benefit plan or arrangement (including, without limitation, the
Company's life insurance, accident, disability and health insurance
plans, 401(k) and bonus or incentive compensation, stock option, and all
other similar plans which are from time to time made generally available
to senior executives of the Company and in which the Executive is
participating at the time of a Change in Control of the Company
(hereinafter referred to as "Benefit Plans"), unless replaced by any
other Benefit Plan or Plans providing the Executive with substantially
similar benefits, or the taking of any action by the Company which would
adversely affect the Executive's participation in or materially reduce
the Executive's benefits under any such Benefit Plan or deprive the
Executive of any material fringe benefit enjoyed by the Executive at the
time of a Change in Control of the Company which adversely affects
Executive in a manner materially different from other executives of the
Company;
(d) A relocation of the Company's principal executive
offices, from where those offices were located immediately prior to the
consummation of the Change in Control that has the effect of making the
usual and ordinary commuting time by automobile of Executive immediately
prior to the consummation of the Change in Control from Executive's then
principal residence to the Company's principal executive offices, or
from those offices to such residence, more than total of 100 minutes
each way, except for required travel by Executive on Company business to
an extent substantially consistent with the Executive's business travel
obligations during the 12 months immediately preceding a Change in
Control of the Company;
(e) Any failure by the Company to provide the Executive
with the number of paid vacation days to which the Executive is entitled
at the time of a Change in Control of the Company;
(f) Any material breach by the Company of any provision of
this Agreement which it fails to cure within 15 days of written notice
thereof from the Executive;
(g) An attempt by the Company to terminate Executive's
employment on grounds that he is disabled, if Executive disputes the
Company's assertion that he is disabled and the physician or
psychiatrist (as the case may be) that is selected to determine whether
or not Executive is, in fact, disabled, determines that he is not
disabled and that the Company had no reasonable basis for its assertion
to the contrary; or
(h) Any failure by the Company to obtain the assumption of
this Agreement by any Purchasing Party in a Sale of Assets Transaction
that constitutes a Change in Control of the Company.
To constitute a Termination for Good Reason, the Executive must
give written notice of his termination of employment to the Company within 30
days of the occurrence of the event constituting Good Reason, which notice must
describe such event in reasonable detail. If the Company fails to cure such
event within 10 days of such notice, such termination shall be effective at the
end of such 10-day period and Executive shall thereupon become entitled to
receive the compensation and benefits set forth in Section 4 hereof.
3.6 Notice of Termination. Any termination by the Company, other
than pursuant to Section 3.2, due to Executive's Death, shall be communicated by
a Notice of Termination. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which shall indicate those specific
termination provisions in this Agreement relied upon and which set forth in
reasonable detail the facts and circumstances claimed to provide a
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basis for termination of the Executive's employment under the provisions so
indicated. For purposes of this Agreement, no such purported termination by the
Company (other than due to Executive's death) shall be effective without such a
Notice of Termination.
4. Severance Compensation upon Termination of Employment. Subject to
Section 4.3 below, if the Company shall terminate Executive's employment without
Cause or Reason or the Executive shall terminate his employment for Good Reason,
and any such termination occurs within twelve (12) months following a Change in
Control, then:
4.1 Severance Payment. On or before the fifth (5th) day following
the date of such termination of employment (the "Termination Date"), the Company
shall make a lump sum payment, in cash, to the Executive in an amount equal to
2.99 multiplied by the sum of (i) the Executive's highest annual base salary in
effect during the 12-month period immediately preceding the Termination Date,
and (ii) the amount of the bonus or incentive compensation that Executive would
have earned for the year during which such termination occurred had he remained
in the Company's employ for the balance of that year and he or the Company (as
the case may be) had achieved any goals established as a condition to the
payment of the maximum amount of bonus or incentive compensation that he could
have earned for such year. All payments hereunder shall be made net of
withholdings required by applicable federal, state or local laws.
4.2 Continuation of Benefits. The Company shall continue to
provide, for a period of 2.99 years' from the Termination Date, the following
benefits to the Executive (and his dependents) if and to the extent he or they
(as the case may be) were receiving such or similar benefits on the day
immediately preceding the Change in Control:
(a) Participation in the Company's medical, dental and
vision plans;
(b) Life Insurance.
Provided however, that any benefits payable under this subsection 4.2 shall
terminate at such time as the Executive (and his dependents in the case of any
benefits that they were receiving) becomes eligible for similar benefits from
any subsequent employer of Executive.
4.3 Limitation on Amount of Severance Compensation. To the extent
that any or all of the payments and benefits provided for in this Agreement
constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code (the "Code") and, but for this Section 4.3, would be
subject to the excise tax imposed by Section 4999 of the Code, the aggregate
amount of such payments and benefits shall be reduced such that the present
value thereof (as determined under the Code and applicable regulations) is equal
to 2.99 times the Executive's "base amount" (as defined in the Code). The
determination of the amount of any reduction of any payment or benefits under
this Section 4 pursuant to the foregoing provision shall be made by a nationally
recognized public accounting firm chosen by the Company in good faith, and such
determination shall be conclusive and binding on the Company and the Executive.
If it is determined by that accounting firm that the present value of the
severance compensation and benefits provided for in Sections 4.1 and 4.2 above
exceeds the product of 2.99 times the Executive's base amount, the determination
whether the reduction required by this Section 4.3 shall be accomplished by
reducing the compensation called for by Section 4.1 or the benefits provided for
in Section 4.2 and which benefits are to be reduced, if any, shall be made by
the Executive.
4.4 No Duty to Mitigate. The Executive shall not be required to
mitigate the amount of any payment provided for under this Section 4 by seeking
other employment or otherwise, nor, except as otherwise set forth in Section 4.2
above, shall the amount of any payment provided for under this Section 4 be
reduced by any compensation earned by the Executive as the result of employment
by another employer after the date of the termination of Executive's employment,
provided, that, such other employer is not a competitor of the Company. The
provisions of this Agreement, and any payment provided for hereunder, shall not
reduce any amounts otherwise payable, or in any way diminish the Executive's
existing rights, or rights which would accrue to the date of the termination of
Executive's employment, solely as a result of the passage of time, under any
Benefit Plan or Incentive Plan, or other written contract, plan or arrangement
to which the Company is a party.
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5. Termination without Cause in the Absence of a Change in Control.
5.1 In the event that, during the term of this Agreement, there
occurs a termination of Executive's employment by the Company without Cause or
Reason and there has not been a Change in Control within the 12 months
immediately preceding such termination of employment, then, upon such a
termination (which shall be referred to hereinafter as a "Section 5
Termination"), Executive shall be entitled to receive the following
compensation:
(a) The Company shall pay to the Executive as severance
pay, by the fifth (5th) day following the effective date of such Section
5 Termination, a lump sum cash payment in an amount equal to 2.99 years'
of the Executive's highest annual base salary in effect during the
12-month period immediately preceding the date of such Section 5
Termination , and (ii) the amount of any bonus that was earned by
Executive and was no longer subject to any contingencies prior to, but
had not been fully paid as of, the date of such Section 5 Termination.
All payments hereunder shall be made net of withholdings required by
applicable federal, state or local laws.
(b) The Company shall, for a period of 2.99 years from the
date of such Section 5 Termination, continue to provide the following
benefits to the Executive if and to the extent he was receiving such
benefits on the day immediately preceding the date of such Termination:
(i) participation in the Company's medical, dental and vision plans and
(ii) life insurance, to the extent that Executive was participating in
such plans or programs on the day preceding the date of the Section 5
Termination; provided, however, that any benefits payable under this
paragraph 5.1(b) shall terminate at such time as the Executive becomes
eligible for similar benefits from any subsequent employer.
5.2 In the event of any Section 5 Termination, this Agreement
shall thereupon terminate automatically, without any action or notice required
to be given by the Company to Executive, but without affecting his rights under
this Section 5 which shall continue in effect until Executive has received the
compensation and benefits set forth in Section 5.1 hereof, and Executive shall
not be entitled to receive any compensation provided for in Section 4 hereof;
provided, however, that, notwithstanding the foregoing, if within 180 days
following such a termination of employment the Company enters into a definitive
agreement that provides for the consummation of a transaction or series of
related transactions that would constitute a Change in Control of the Company
(as defined above in this Agreement), and such Change in Control is consummated
within six (6) months thereafter, such Section 5 Termination shall constitute a
termination of Executive's employment pursuant to Paragraph 3.1(b) as a
Termination by the Company without Cause or Reason and Executive shall be
entitled to receive the severance payment and continuation of benefits provided
for in Section 4 of this Agreement. In that event however, any compensation
theretofore paid or benefits theretofore provided to Executive pursuant to this
Section 5 shall be credited toward and to that extent shall reduce the severance
payment to be paid and the benefits to be provided pursuant to Section 4, to the
same extent as if that Termination by the Company without Cause or Reason had
occurred on the date of the Section 5 Termination.
6. Successor to the Company.
(a) The Company will require any successor or assignee to all or
substantially all of the business and/or assets of the Company (whether that is
the result of the consummation of a Sale of Assets Transaction or a Merger in
which the Company is not the surviving corporation or entity, or otherwise), by
agreement in form and substance reasonably satisfactory to the Executive,
expressly, absolutely and unconditionally to 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 or assignment had taken place. Any
failure of the Company to obtain such agreement prior to the effectiveness of
any such succession or assignment shall be a material breach of this Agreement
and shall entitle the Executive to terminate the Executive's employment for Good
Reason. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor or assignee to its business and/or assets
as aforesaid which executes and delivers the agreement provided for in this
Section 6 or which otherwise becomes bound by all of the terms and provisions of
this Agreement by operation of law or any agreement.
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(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts are still 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.
7. Release of Claims. The obligations of the Company under Section 4 of
this Agreement shall constitute the only obligations and liability of the
Company arising from a termination of Executive's employment under the
circumstances set forth in Section 3.1 hereof following a Change in Control of
the Company or under the circumstances set forth in the proviso to Subsection
5.2 hereof and the obligations and liability of the Company under Section 5 of
this Agreement shall constitute the only obligations of the Company arising from
a termination of Executive's employment under the circumstances set forth in
Section 5 hereof. Upon the Company's tender of payment hereunder pursuant to
Section 4, or completion of the installment payments under Section 5, as the
case may be, the Company shall have no obligation to Executive by reason of his
employment or the termination thereof other than those set forth herein, and the
Executive agrees that receipt of such payment or payments (as the case may be)
shall constitute a full and final settlement and complete and absolute release
of all claims or rights, whether fixed or contingent, absolute or uncertain or
known or unknown, that Executive has or may have against the Company whether
under this Agreement or any other employment contract or agreement to which the
Company is a party or under applicable laws or regulations to which the Company
may be subject, and Executive shall execute all appropriate agreements
reflecting such settlement and release. In addition, the Company may condition
the making of any payment or payments due under this Agreement on the execution
and delivery by Executive of such a settlement and release agreement, provided
that such settlement and release agreement expressly provides that such
agreement will terminate and shall not be binding or enforceable against the
Executive in the event that the Company breaches its obligations to Executive
under whichever of Section 4 or Section 5 of this Agreement is applicable.
8. Notice. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return-receipt requested, postage-prepaid, as follows:
If to the Company: If to Executive:
President Richard S. Kay
Pacer Technology
9420 Santa Anita Avenue
Rancho Cucamonga, CA 91730
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
9. Amendments and Waivers. No provisions of this Agreement may be
amended, modified, waived or discharged unless such amendment, modification,
waiver or discharge is set forth in a writing signed by the Executive and the
Company. No waiver by either party hereto at any time of any breach by the other
party of, or of the compliance with, any term, condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar terms, provisions or conditions at the same or at any
prior or subsequent time.
10. Severability. Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be determined to be
invalid or unenforceable under applicable law, such provision shall be
ineffective to the extent of such invalidity or unenforceability only, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
11. Governing Law; Legal Proceedings, Fees and Expenses; Waiver of Jury
Trial. This Agreement shall be governed by and construed in accordance with the
laws of the State of California. In the event any controversy, claim or dispute
arises between the parties hereto relating to this Agreement, the California
Superior
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Court for the County of San Bernardino shall have exclusive jurisdiction over
such controversy claim or dispute, and each party further agrees (i) to accept
and not challenge the subject matter or the personal jurisdiction or the venue
of such court, (ii) that it shall not assert the defense of forum nonconviens,
and (iii) that it shall accept service of process in any such proceeding by
registered or certified mail. TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH PARTY
EXPRESSLY AND IRREVOCABLY WAIVES ANY RIGHT IT OR HE MAY HAVE TO A TRIAL BY JURY
WITH RESPECT TO ANY SUCH CONTROVERSY, CLAIM OR DISPUTE AND EXPRESSLY AND
IRREVOCABLY AGREES THAT THE JUDGE SHALL BE THE SOLE TRIER OF FACT IN ANY SUCH
PROCEEDING. EACH PARTY IS AWARE THAT THE RIGHT TO A TRIAL BY JURY IS A
CONSTITUTIONAL RIGHT AND EACH PARTY REPRESENTS THAT THE FOREGOING WAIVER IS
BEING GIVEN VOLUNTARILY AND WITH AN UNDERSTANDING OF THE CONSEQUENCES THEREOF.
The Company shall pay all legal fees and expenses which the Executive may incur
as a result of the Company's contesting the validity, enforceability or the
Executive's interpretation of, or determinations under, this Agreement unless
the Company prevails in such contest.
12. Confidentiality. The Executive shall retain in confidence any and
all confidential information known to the Executive concerning the Company and
its business so long as such information is not otherwise publicly disclosed.
13. Entire Agreement. This Agreement contains all of the terms agreed
upon between the Executive and the Company with respect to the subject matter
hereof and replaces and supersedes any and all prior severance agreements or
understandings (whether written or oral) between the Executive and the Company.
14. Headings and Interpretation. This Agreement is the result of
arms'-length negotiations between the parties hereto and no provision of this
Agreement, because of any ambiguity found to be contained herein, shall be
construed against a party by reason of the fact that such party or its legal
counsel was the draftsman of that provision. Unless otherwise indicated
elsewhere in this Agreement, (a) the term "or" shall not be exclusive, (b) the
term "including" shall mean "including, but not limited to," and (c) the terms
"herein," "hereof," "hereto," "hereunder" and other terms similar to such terms
shall refer to this Agreement as a whole and not merely to the specific section,
subsection, paragraph or clause where such terms may appear. The Section and
paragraph headings in this Agreement are included for convenience of reference
and shall not be considered in interpreting, construing or giving effect to any
of the provisions of this Agreement.
15. 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.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURES OF PARTIES FOLLOW ON NEXT PAGE)
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written.
"COMPANY" "EXECUTIVE"
PACER TECHNOLOGY
By: /s/ Larry K. Reynolds By: /s/ Richard S. Kay
------------------------- -----------------------------
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EXHIBIT A
TO
SEVERANCE COMPENSATION AGREEMENT
BETWEEN
PACER TECHNOLOGY AND RICHARD S. KAY
DATED JANUARY 30, 2002
DEFINITION OF CAUSE
As used in this Severance Compensation Agreement, the occurrence of any
of the following shall constitute "Cause":
(1) The failure of Executive to perform, in all material
respects, the duties assigned to him by the Board of Directors of the Company
or, if the Executive reports to the Chief Executive Officer of the Company, any
duties assigned to him by the Chief Executive Officer, if that failure continues
unremedied for a period of 30 days following the receipt by Executive of a
written notice of such failure;
(2) The commission by the Executive of a felony, or of a
misdemeanor involving moral turpitude;
(3) The breach of any duties of Executive under any
non-competition, confidentiality or trade secret or invention transfer or
similar agreement entered into by the Executive with the Company;
(4) The commission of an action or an omission to act on the part
of the Executive which results in the incurrence by the Company of any criminal
liability or any material civil liability, unless the act or omission to act was
at the specific direction of the Board of Directors or any executive officer of
the Company to which the Executive reports;
(5) Any violation of any material written policies established by
the Company that is not remedied within a period of 15 days following the
receipt by Executive of a notice of such violation.
This Exhibit A is incorporated into and is an integral part of the
above-referenced Severance Compensation Agreement dated January 30, 2002 between
Pacer Technology and Richard S. Kay.
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