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Exhibit 99.03
EMPLOYMENT AGREEMENT
This Agreement ("Agreement") is made and effective as of October 5,
1989 by and between VACUUM GENERAL, INC. ("VGI"), a California corporation, with
its executive offices in San Diego, California and DAVID J. FERRAN
("Executive"), an individual residing in the State of California, with reference
to the following facts.
A. Executive has been employed by VGI since its creation and
Executive's background, expertise and efforts have contributed to the success of
VGI.
B. The Board of Directors ("Board") of VGI, without the vote of
Executive, has determined that the best interests of VGI would be served by
Executive's continued employment by VGI in the capacity of President and Chief
Executive Officer and such mutually acceptable additional capacities as the
Board may delegate to him from time-to-time during the term of this Agreement.
C. VGI wishes to assure itself of the continued benefit of Executive's
services provided in this Agreement, and Executive is willing to serve in the
employ of VGI solely within the terms hereof for said period.
D. VGI and Executive desire to define their respective rights and
obligations as provided herein.
NOW THEREFORE, in consideration of the premises and mutual promises
contained herein, and for other good and valuable consideration, receipt of
which is hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT
VGI agrees to continue Executive in its employ and Executive
agrees to remain in the employ of VGI for the period stated in Section 3 hereof
and upon the terms and conditions herein provided.
2. POSITION AND RESPONSIBILITIES
(A) DUTIES. VGI shall employ Executive in the capacity of
President and Chief Executive Officer and such other mutually acceptable
executive positions as the Board may determine to be in the best interest of
VGI, and Executive shall serve as such for the term and under other conditions
hereinafter set forth. Executive shall devote his full business time and
attention to the performance of services of the nature and scope and in the
manner currently rendered by him for VGI, and to such other services as may be
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necessarily requested by the Board that are consistent with those required of a
President and Chief Executive Officer of a company. In this capacity as
President and Chief Executive Officer, Executive shall perform such duties and
have such powers and authority as are customary for the President and Chief
Executive Officer of a company. In the event that, without his consent,
Executive is assigned to a position involving a different title or materially
lesser authority and responsibility, then Executive shall have the option,
exercisable for 30 days following notice to Executive of such assignment or new
title, to consider that this Agreement has been terminated without cause in
which case Executive shall be entitled to the benefits set forth in Section 8(c)
herein.
(B) COMPETITIVE ACTIVITY. Except upon the prior written
consent of the Compensation Committee of the Board of Directors of VGI (the
"Committee"), Executive, during the term of his employment hereunder, will not
accept any other employment of any nature and will not engage, directly or
indirectly, in any other business activity (whether or not pursued for pecuniary
advantage) that is or may be competitive with, or that might place him in a
competing position to that of VGI or any other corporation or entity that
directly or indirectly controls, is controlled by or is under common control
with VGI.
3. TERM OF EMPLOYMENT
The effective date of this Agreement shall be October 5, 1989
and shall remain in effect until terminated pursuant to Section 7.
4. WORKING FACILITIES
Executive shall be furnished with a private office,
secretarial and other necessary clerical and stenographical assistance, and such
other facilities, amenities and services as may at the time be generally
furnished to executive officers of VGI and as are appropriate for Executive's
position and adequate for the performance of his duties.
5. PLACE OF PERFORMANCE
In connection with this Agreement, Executive shall maintain an
office at VGI's current principal executive offices in San Diego, California.
6. SALARY, BONUS, EXPENSES AND BENEFITS
(a) SALARY. VGI shall pay Executive an initial monthly salary
of $11,666.66. Executive's salary shall be reviewed and revised (if appropriate)
at least
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annually by the Committee and shall be adjusted based upon Executive's job
performance, VGI's financial condition and performance and the salary and
compensation levels of executives in similar companies with similar
responsibilities. Any increases in Executive's salary pursuant to this Section
6(a), shall require approval by the Committee, without the vote of the Executive
(if Executive is a member of such Committee).
(b) BONUS. VGI shall pay Executive an annual bonus up to
twenty-five percent (25%) of Executive's annual salary for the immediately
preceding year. The Committee, without the vote of the Executive (if Executive
is a member of such Committee), shall determine in good faith the amount of such
bonus giving consideration to VGI's overall achievement of the goals set forth
on VGI's annual plan for the applicable fiscal year and Executive's performance
during the year. VGI shall pay such bonus no later than 45 days after the end of
each fiscal year of VGI.
(c) PARTICIPATION IN WELFARE AND BENEFIT PLANS. Executive
shall be entitled to participate in, personally and/or for the benefit of his
family or other beneficiaries, any welfare, insurance, pension, or other
employee benefit plans as are at the time made generally available to other
executives of VGI. Executive shall be eligible to receive during the term hereof
all benefits for which executives are eligible under every such plan or program
to the extent permissible under the general terms and provisions of such plans
or programs and in accordance with the provisions thereof.
(d) VACATION. Executive shall be entitled to 4 weeks' paid
vacation time each year, during which such time his compensation hereunder shall
be paid in full. Unless otherwise directed by the Committee, Executive shall
have the discretion to take vacation time on the dates as he determines to be
appropriate and not detrimental to VGI.
(e) HOLIDAYS, LEAVE DAYS, ETC. Executive shall be entitled to
such holidays, sick leave, leaves of absence and other absences as are at the
time made generally available to other executives of VGI of comparable tenure
and positions.
(f) AUTOMOBILE. During the term of this Agreement, VGI shall
make an automobile available to Executive under such terms and conditions as are
presently applied or as may be later applied to other executives of VGI of
comparable tenure and position. In connection therewith, VGI shall bear all
expenses relating to such automobile, including insurance, maintenance and
repair, gas and oil. Upon termination of this Agreement, VGI shall offer
Executive the right to purchase the automobile then being operated by Executive
at the depreciated value of such automobile or to assume VGI's lease of such
automobile and shall execute and deliver to Executive all documentation
necessary to establish Executive's ownership or leasing of such automobile.
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(g) LIFE INSURANCE. VGI shall pay for and provide life
insurance for each year of this Agreement for the benefit of Executive under
VGI's group life insurance plan.
(h) HEALTH INSURANCE. VGI shall provide health insurance for
Executive under VGI's health insurance plan.
(i) DISABILITY INSURANCE. VGI shall provide disability
insurance for Executive pursuant to VGI's directors' and officers' disability
policy according to VGI's policy established by the Committee.
(j) REIMBURSEMENT OF EXPENSES. VGI shall pay or reimburse
Executive, on a monthly basis, for reasonable travel, entertainment, promotional
and other expenses incurred by Executive in the performance of his obligations
under this Agreement. Executive must submit timely detailed expense reports for
appropriate review prior to reimbursement.
(k) TAX, LEGAL AND FINANCIAL ADVICE. VGI shall pay for the
fees and expenses of legal, tax and financial advisory, and income tax
preparation services for Executive in an aggregate amount not to exceed $1,500
for each year of this Agreement; provided that no payment of any fees shall be
made by VGI for legal services obtained by Executive in connection with any
dispute with VGI regarding this Agreement.
(l) OTHER FRINGE BENEFITS. Executive shall be entitled to any
and all other fringe benefits according to VGI's policy as set by the Committee.
7. TERMINATION
Executive's employment under this Agreement may be terminated
by VGI or Executive as herein provided, without further obligation or liability
except as expressly provided herein:
(a) RESIGNATION, DEATH OR DISABILITY. Executive's employment
hereunder shall be terminated at any time by Executive's resignation (other than
a resignation for good reason as provided in Section 7(d)), or by Executive's
death or disability. In the event Executive wishes to resign, he shall give the
Board of Directors of VGI not less than 30 days prior notice of such
resignation, which notice shall indicate the proposed resignation date.
Following receipt of such notice, VGI, through an action by its Board of
Directors, shall have the right to accelerate the date of Executive's
resignation and to cause his resignation to become effective at any time prior
to the resignation date set forth in Executive's original notice; provided,
however, that such acceleration or changed effective date of resignation shall
not affect in any manner the
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delivery of any benefits or payments to which Executive may be entitled under
Section 8 of this Agreement. In the event Executive resigns, VGI shall have the
right to require Executive to provide consulting services to VGI as provided in
said Section 8(c). For purposes of this Agreement, disability shall be deemed to
have occurred only after the following procedure has been satisfied. If within
45 days after notice of proposed termination for disability is given to
Executive by VGI, Executive has not returned to the performance of substantially
all his duties, VGI may terminate Executive's employment by giving notice of
termination for disability. The notice of proposed termination may only be given
by VGI following Executive's substantial and material absence from Executive's
duties by reason of physical or mental disability for a period of 120 calendar
days.
(b) TERMINATION FOR CAUSE. Executive's employment hereunder
may be terminated by the Board for cause; provided, however, that Executive
shall be given notice of the Board's findings of conduct by Executive amounting
to cause for such termination. Cause for termination under this Agreement shall
be limited to (i) Executive's personal dishonesty or gross misconduct; (ii) a
material breach of any provision of this Agreement; (iii) Executive's refusal or
failure to act in accordance with any lawful, reasonable direction or order of
the Board and such refusal or failure results or is reasonably likely to result
in a materially adverse effect on VGI's business; (iv) conviction of any felony
involving moral turpitude (not including a conviction for operating a motor
vehicle under the influence of alcohol or any other motor vehicle violation if
no bodily injury to a third party is involved); (v) any chemical dependency or
substance abuse resulting in a continuous and material impairment of Executive's
ability to perform his duties under this Agreement; (vi) the willful and
continued failure by Executive to substantially perform Executive's duties with
VGI or its subsidiaries or affiliates (other than any failure resulting from
disability) after a written demand identifies the manner in which the Board
believes that Executive has not substantially performed his duties. Termination
of Executive's employment under this Agreement for cause as set forth in clauses
(i) or (iv) of the preceding sentence shall be deemed to be effective upon
delivery of notice thereof in accordance with the provisions of Section 9(i) of
this Agreement. Executive shall have 30 days from the date notice is given for
cause as set forth in clause (ii), (iii), (v) or (vi) of the second sentence of
this Section 7(b) to cure such conduct.
(c) TERMINATION WITHOUT CAUSE. VGI shall have the right,
exercisable at any time during the term of this Agreement on a written notice to
Executive, to terminate Executive's employment without cause upon 30 days prior
notice. If Executive is terminated without cause, he shall be entitled to
receive the severance benefits pursuant to Section 8(c) hereof subject to his
full compliance with said Section 8(c).
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(d) RESIGNATION FOR GOOD REASON. During the term hereof,
Executive may regard Executive's employment as being constructively terminated
and may, therefore, resign within 30 days of Executive's discovery of the
occurrence of one or more of the following events, any of which will constitute
"good reason" for such resignation:
(i) Without Executive's express written consent, the
assignment to Executive of any duties materially inconsistent with Executive's
position, duties, responsibilities and status with VGI;
(ii) Without Executive's express written consent, the
termination and/or material reduction in Executive's facilities (including
office space and general location) and staff reporting available to Executive
unless such reduction occurs as part of a company-wide action authorized by the
Board of Directors (including the vote of Executive) to reduce VGI's expenses;
(iii) A material reduction by VGI of Executive's base salary
or of any bonus compensation formula applicable to him unless in connection with
a company-wide salary expense reduction necessitated by poor financial
performance of the Company as determined by the Committee in its reasonable
discretion;
(iv) A failure by VGI to maintain any of the employee benefits
to which Executive is entitled at a level substantially equal to or greater than
the value of those employee benefits currently in effect through the
continuation of the same or substantially similar plans, programs and policies;
or the taking of any action by VGI or its affiliate(s) which would materially
affect Executive's participation in or reduce Executive's benefits under any
such plans, programs or policies, or deprive Executive of any material fringe
benefits enjoyed by Executive unless such failure or reduction occurs as part of
a company-wide action authorized by the Board of Directors (including the vote
of Executive) to reduce VGI's expenses;
(v) The failure by VGI to permit Executive to take
substantially the same number of paid vacation days and leave to which Executive
is entitled;
(vi) VGI or any affiliate(s) requiring Executive to be based
anywhere other than within 25 miles of San Diego, California, except for
required travel on VGI's or an affiliate's business to an extent substantially
consistent with Executive's present business travel obligations;
(vii) Any termination of Executive's employment by VGI which
is not effected pursuant to the requirements of this Section 7 with respect to
death, disability or termination for cause;
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(viii) The failure of VGI to obtain the assumption of this
Agreement by any successor as contemplated in Section 10(e) hereof;
(ix) A material breach of any provision of this Agreement by
VGI; and
(x) A material breach by VGI of any provision of the Option
Agreement that has been entered into between Executive and VGI pursuant to VGI's
1989 Non-qualified Stock Option Plan.
In the event of the occurrence of any of the above listed events and in
the event Executive wishes to resign on the basis of occurrence of such event,
Executive shall give VGI notice of his proposed resignation, and VGI shall have
a period of 30 days following its receipt of such notice to remedy the breach or
occurrence giving rise to such proposed resignation. In the event VGI fails to
so remedy said breach or occurrence by expiration of said 30-day period,
Executive shall be deemed to have resigned from his employment with VGI for good
reason pursuant to this Section 7(d).
(e) TERMINATION OBLIGATIONS. Executive here acknowledges and
agrees that all personal property of VGI, including, without limitation, all
books, manuals, records, reports, notes, contracts, lists, and other documents,
proprietary information, copies of any of the foregoing, and equipment furnished
to or prepared by Executive in the course of or incident to his employment,
belong to VGI and shall be promptly returned to VGI upon termination of his
employment for any reason. Executive shall retain the rights to remove all of
his personal property from the premises of VGI and any personal property of VGI
as may be mutually agreed upon between VGI and Executive.
8. PAYMENTS TO EXECUTIVE UPON TERMINATION.
(a) DEATH OR DISABILITY. In the event of Executive's death or
disability, all benefits generally available to VGI's executives as of the date
of such an event as determined by the Committee shall be payable to Executive or
Executive's estate, without reduction, in accordance with the terms of any plan,
contract, understanding or arrangement forming the basis for such payment,
including but not limited to, payments under the plans identified in Section
6(c). Executive shall be entitled to such other payments as might arise from any
plan, contract, understanding or arrangement between Executive and VGI at the
time of any such event pursuant to Section 6(c) or 6(i) hereof.
(b) TERMINATION FOR CAUSE OR RESIGNATION WITHOUT GOOD REASON.
In the event Executive is terminated by VGI for cause as provided in Section
7(b) or Executive resigns for other than good reasons as defined in Section
7(d), neither VGI nor an affiliate shall have any further obligation or
liability of any nature to Executive under
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this Agreement or otherwise, except to the extent provided in any plan
identified in Section 6(c) or as may be expressly required by law, provided,
however, that VGI shall, at its option, have the right to require Executive to
provide consulting services to VGI on the terms of Section 8(c) below.
In such event, VGI shall have the right, exercisable not later than ten
(10) days following the effective date of such resignation or termination, to
require Executive to provide consulting services upon the terms provided in
Section 8(c) below, provided however, that in such event VGI shall not be
obligated to pay the bonus amount described in Section 8(c)(2)(iv).
(c) TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON.
Upon the occurrence of termination without cause, or resignation for good
reason, as defined in Section 7(d), Executive may elect to require VGI to enter
into a consulting contract with Executive under these terms:
(i) During the one year period subsequent to
termination, Executive shall provide consulting services to VGI in the areas of
his expertise for up to 45 hours per quarter. During this one year period, in
recognition of his exposure to confidential information of VGI, such services
will be exclusive to VGI in the area of mass flow and vacuum control and
measurement, and Executive will not provide his services in any manner, directly
or indirectly, to any other person or entity engaged in such business. In the
event Executive shall fail for any reason to comply with the restrictions set
forth in the foregoing sentence, VGI's obligations pursuant to Section
8(c)(2)(i) and (ii) below shall terminate.
(ii) As consideration for such consulting services:
(1) VGI shall pay monthly to Executive (or in
the event of Executive's subsequent death, to Executive's surviving spouse, or
if none, to Executive's estate) for a period of one (1) year, a sum equal to the
monthly rate of salary paid to Executive immediately prior to such termination.
(2) VGI shall continue to provide to Executive
during the one year period subsequent to Executive's termination or resignation,
at VGI's expense, those benefits to which Executive is entitled to immediately
prior to the termination pursuant to Section 6(h) above as if Executive
continued to remain in the employ of VGI. In the event of Executive's death
during such one year period, such benefits shall be made available to
Executive's dependents to the extent such benefits would otherwise be available
to dependents of a deceased VGI executive.
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(3) Any options to purchase the capital stock of
VGI held by Executive which would vest in the eighteen (18) months following
Executive's termination to vest immediately as of the date of such termination.
(4) VGI shall pay Executive any amount equal to
the maximum potential bonus Executive would have been entitled to receive
pursuant to Section 6(b) hereof through the date of Executive's termination. VGI
shall pay such amount no later than 45 days after the end of VGI fiscal year in
which such termination occurred.
(5) In the event Executive does not elect to
enter into the consulting relationship in accordance wit this Section 8(c) upon
termination without good cause or a resignation for good reason, VGI shall have
no further obligation or liability to Executive with respect to his employment
or hereunder following such termination or resignation, and Executive shall be
deemed to have released any and all claims, rights or causes of action against
VGI relating thereto. If Executive does elect to enter into the consulting
relationship, such consulting relationship shall be accepted by Executive in
full satisfaction of all claims, rights or causes of action with respect to his
employment or hereunder, and VGI shall have no further liability or obligation
relating thereto.
9. GENERAL PROVISIONS
(a) ENTIRE AGREEMENT. The terms and provisions of this
Agreement shall constitute the entire understanding between Executive and VGI
with respect to the subject matter hereof, and shall supersede any and all prior
agreements or understandings between Executive and VGI, whether written or oral.
(b) AMENDMENTS. This Agreement may be amended or modified only
by a written instrument executed by Executive and VGI.
(c) GOVERNING LAW. This Agreement shall be governed by,
interpreted and enforced in accordance with California law as such laws are
applied to agreements between California residents entered into and to be
performed in California.
(d) SEVERABILITY. In the event that any terms or provisions of
this Agreement shall be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remaining terms and provisions hereof.
(e) ASSUMPTION. VGI shall require any successor-in-interest
(whether director or indirect or as a result of purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of VGI
to expressly assume and agree to
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perform the obligations under this Agreement in the same manner and to the same
extent that VGI would be required to perform it if no such succession had taken
place.
(f) ASSIGNABILITY. The rights or obligations contained in this
Agreement shall not be assigned, transferred, or divided in any manner by
Executive or VGI, without the prior written consent of the other; provided,
however, that nothing in this Section 10(f) shall preclude Executive from
designating a beneficiary to receive any benefits hereunder upon his death, or
the executors, administrators or other legal representatives of Executive or his
estate from assigning any rights hereunder to the person(s) entitled hereto.
Notwithstanding the foregoing, this Agreement shall be assignable by VGI without
Executive's consent and be binding on any entity which by purchase of assets,
mergers, or otherwise, becomes a successor to the business of VGI.
(g) WAIVER OF BREACH. Any waiver of any breach of employment
terms set forth herein shall not be construed to be a continuing waiver of
consent to any subsequent breach on the part of either Executive or VGI.
(h) HEADINGS. The headings of paragraphs herein are included
solely for convenience of reference and shall not control themeaning or
interpretation and performance of any of the provisions of this Agreement.
(i) NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or if mailed by United States certified or
registered mail, prepaid, to the parties or their permitted assignees at the
following addresses (or at such other address as shall be given in writing by
either party to the other):
To: Vacuum General
9577 Chesapeake Drive
San Diego, California 92123
To: David J. Ferran
1141 Gorsline Drive
El Cajon, California 92021
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day and year first written above.
VACUUM GENERAL, INC. DAVID J. FERRAN
By: /s/ [signature illegible] /s/ David J. Ferran
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Its: Chief Operating Officer
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