SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 1998
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-17816 77-0148208
- ------------------ --------------- -----------
(State of or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
47265 Fremont Boulevard, Fremont, California 94538
- -------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 623-9001
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS.
On May 8, 1998, the Board of Directors of Sunrise Technologies
International, Inc. (the "Company") agreed to provide amended and restated
change of control rights to each of the Company's executive officers, as
set forth in the Change of Control Agreements attached hereto as
Exhibits 10.1 and 10.2.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) Exhibits.
10.1 Form of Amended and Restated Change of Control
Agreement by and between Sunrise Technologies International, Inc. and its
President and Chief Executive Officer.
10.2 Form of Amended and Restated Change of Control
Agreement by and between Sunrise Technologies International, Inc. and its
Executive Officers (other than the President and Chief Executive Officer).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
(Registrant)
DATE: May 19, 1998 By: /s/ Timothy A. Marcotte
-----------------------------------
Name: Timothy A. Marcotte
Title: Vice President, Finance and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Item
- ----------- ----
10.1 Form of Amended and Restated Change of
Control Agreement by and between Sunrise Technologies International, Inc.
and its President and Chief Executive Officer.
10.2 Form of Amended and Restated Change of
Control Agreement by and between Sunrise Technologies International, Inc.
and its Executive Officers (other than the President and Chief Executive
Officer).
EXHIBIT 10.1
- ------------
AMENDED AND RESTATED
CHANGE OF CONTROL AGREEMENT
---------------------------
AGREEMENT made on May 8, 1998, by and between Sunrise Technologies
International, Inc., (the "Company") and C. Russell Trenary, III (the
"Executive").
RECITALS
--------
A. The Executive is currently employed by the Company as President
and Chief Executive Officer and is currently a Director of the Company.
B. The Executive and the Company entered into a Change of Control
Agreement on November 7, 1997.
C. The Executive and the Company desire to amend and restate said
Change of Control Agreement as provided herein.
In consideration of the mutual agreements herein set forth and for
good and valuable consideration, receipt of which is hereby acknowledged
the parties agree as follows:
1. TERM OF AGREEMENT. Subject to the provisions of paragraphs 2
and 3 of this Agreement, the term of this Agreement (the "Three-Year Term")
shall be for the period which commences on the date hereof and which
terminates on May 8, 2001.
2. DEFINITIONS. For purposes of this Agreement, the following
definitions apply:
(a) "Cause" shall mean: (i) an act or acts of personal
dishonesty by Executive which results in personal enrichment of Executive
at the expense of the Company; (ii) violation by Executive of Executive's
obligations under paragraphs 6 or 7 of this Agreement which are willful on
the Executive's part and which are not remedied to the reasonable
satisfaction of the Company in a reasonable period of time after receipt of
written notice from the Company; or (iii) the conviction of the Executive
of a felony. Any termination of this Agreement for Cause shall be
communicated by the Company to the Executive in a notice of termination
which shall set forth in reasonable detail the facts and circumstances, if
any, claimed to provide a basis for termination of this Agreement.
(b) "Change of Control" shall mean the occurrence of any of
the following events:
(i) The "Beneficial Ownership" of securities
representing more than thirty-three percent (33%) of the combined voting
power of the Company is acquired by any "person" as defined in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (other
than the Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company, or any corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company); or
<PAGE>
(ii) The stockholders of the Company approve a
definitive agreement to merge or consolidate the Company with or into
another corporation or to sell or otherwise dispose of all or substantially
all of its assets, or adopt a plan of liquidation; or
(iii) During any period of three consecutive years,
individuals who at the beginning of such period were members of the Board
cease for any reason to constitute at least a majority thereof (unless the
election, or the nomination for election by the Company's stockholders, of
each new director was approved by a vote of at least a majority of the
directors then still in office who were directors at the beginning of such
period or whose election or nomination was previously so approved).
(c) A resignation for "Good Reason" shall mean the
resignation of the Executive from employment by the Company after: (i) a
material reduction or adverse alteration in the nature of the Executive's
position, responsibilities or authorities; (ii) the Executive becoming the
holder of a lesser office or title than that held by him immediately prior
to such change; (iii) any material reduction of the Executive's
compensation or benefits; (iv) the relocation of the Executive's job more
than fifty miles from his present location; or (v) any other material
adverse change to the terms and conditions of the Executive's employment or
benefits, provided that, if the Executive shall consent in writing to any
event described in clauses (i) through (v) of this sentence, the
Executive's subsequent resignation shall not be treated as a resignation
for Good Reason, unless a subsequent event described in such clauses to
which Executive did not consent occurs.
(d) "Permanent Disability" shall mean any physical or mental
disability which shall have rendered Executive unable to perform his duties
hereunder for 120 consecutive days, or which, in the opinion of a licensed
physician reasonably satisfactory to the company, is likely to render
Executive unable to perform his duties hereunder for such period.
(e) "Retirement" shall mean a termination of the Executive's
employment other than for Cause on or after the Executive's attainment of
age 65.
3. SEVERANCE BENEFIT
If, during the term of this Agreement, (a) a Change of Control
occurs, and (b) within a two-year period from the date of such Change of
Control, either: (i) the Executive's employment with the Company and its
subsidiaries is terminated by the Company other than for Cause or on
account of the Executive's death, Permanent Disability or Retirement; or
(ii) the Executive resigns for Good Reason, then the Company shall pay to
the Executive a Severance Payment in an amount, (net of excise taxes, if
any) equal to: (I) one and one-half (1-1/2) times the total of the
Executive's annual salary, inclusive of any elective deferrals made by the
Executive to the Company's 401(k) Plan, plus the target bonus, if any, for
the year in which termination occurs; and (II) an amount equal to any
employer matching contributions the Company would have otherwise made on
the Executive's behalf to the Company's 401(k) Plan during the 12 months
following the Executive's date of termination, had the Executive's
employment and/or the amounts contributed thereto by the Company on the
Executive's behalf not been reduced or terminated, and assuming Executive
made elective deferrals to the maximum extent permitted by Section 402(g)
of the Internal Revenue Code of 1986, as amended (the "Code") PLUS an
amount equal to any non-vested matching contributions under the Company's
401(k) Plan which are otherwise forfeited by the Executive. The Severance
Payment shall be payable in a single lump sum which shall be paid within 30
days of the termination of employment or resignation.
<PAGE>
In addition to the Severance Payment, the Company shall provide
health, disability and life insurance in accordance with the plans
maintained by the Company for executives for a period of one and one-half
(1-1/2) years from the date of termination of the Executive's employment,
provided that health, disability and life insurance benefits shall cease if
Executive becomes employed during such period and receives similar benefits
in connection with such employment.
4. ACCELERATION OF STOCK OPTIONS. If a Change of Control of the
Company shall occur, then, without any action by the Board, all outstanding
stock options, which the Executive then holds to acquire securities from
the Company, shall accelerate and become immediately exercisable in full
and shall remain exercisable during the remaining term thereof, regardless
of whether or not the Executive remains in the employ or service of the
Company.
5. NO REDUCTIONS OR MITIGATION. The amounts payable pursuant to
paragraph 3 of this Agreement shall be paid without reduction, other than
as provided in said paragraph, regardless of any amounts of salary,
compensation or other amounts which may be paid or payable to the Executive
from any source or which the Executive could have obtained upon seeking
other employment; provided that the Company shall be permitted to make all
such payments net of any legally required tax withholdings.
6. NON-COMPETITION. The Executive agrees that during his
employment and for a period of one year after the termination of his
employment for any reason, he shall not enter into or engage in or be
connected with, or engage to work for an individual, firm or corporation
which is engaged in or connected with, any business which is then in
substantial competition with the Company in the United States. The
provisions of the last preceding sentence shall not apply to the ownership
of less than 5% of the shares of any corporation listed on any recognized
exchange or traded over-the-counter. The provisions of this paragraph
shall survive a termination of this Agreement.
7. NON-DISCLOSURE. The Executive agrees not to disclose either
during the period of his employment or at any time thereafter to any
person, firm or corporation any information concerning the business or
affairs of the Company which he may have acquired in the course of, or as
incident to, his employment with the Company for his own benefit or to the
detriment or intended detriment of the Company. The provisions of this
paragraph shall survive a termination of this Agreement.
8. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and the
Executive's heirs and legal representatives and the Company's successors
and assigns. This Agreement is assignable by the Company to any corporate
or other entity which acquires, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or substantially all of the
assets of the Company. Upon any such assignment, and the assumption by the
assignee of all obligations hereunder, the Company shall be released from
all liability hereunder. This Agreement shall not be assignable by the
Executive.
9. NONALIENATION OF BENEFITS. Benefits payable under this
Agreement shall not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, charge, garnishment,
execution or levy of any kind, either voluntary or involuntary, prior to
actually being received by the Executive; and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber, charge, garnish,
execute on, levy or otherwise dispose of any right to benefits payable
hereunder, shall be void.
<PAGE>
10. INTERNAL REVENUE CODE LIMITS AND OTHER LIMITS.
(a) Notwithstanding anything in this Agreement to the contrary, in
the event that the Company's auditors or any other independent auditor
substituted for the Company's auditors pursuant to an agreement in writing
by and between the Company and the Executive (the "Auditor') determines
that any payment by the Company to or for the benefit of the Executive,
whether paid or payable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be an "excess parachute payment" within the
meaning of Section 280G of the Code, then the Company shall pay an
additional amount of money to the Executive that will equal (based on the
Executive's good faith representations of the Executive's income tax
position for the year of payment hereunder) the sum of (i) all excise tax
imposed on the Executive by Section 4999 of the Code and (ii) all
additional state and federal income taxes attributable to the additional
payments to the Executive pursuant to this Section 10(a), including all
state and federal income taxes on the additional income tax payments
hereunder ("Additional Payment").
(b) If the Auditor determines that any Payment would be such an
"excess parachute payment" because of Section 280G of the Code, then the
Company shall promptly give the Executive notice to that effect and a copy
of the detailed calculation thereof and the Executive shall provide in
writing within ten (10) days of the Executive's receipt of such notice, a
good faith representation of the Executive's income tax position so that
such Additional Payment may be calculated. All determinations made by the
Auditor under this Section 10 shall be binding upon the Company and the
Executive and shall be made within 60 calendar days of the Executive's
termination of employment. Following such determination and the notices
hereunder and subject to the other conditions set forth in this Section 10,
the Company shall pay to or distribute to, or for the benefit of, the
Executive such amounts as are then due to the Executive under this
Agreement in the manner identified in Section 3 and this Section 10 of this
Agreement, and shall promptly pay to or distribute for the benefit of the
Executive in the future such amounts as become due to the Executive under
this Agreement.
(c) As a result of the uncertainty in the application of Section
280G of the Code at the time of the initial determination by the Auditor
hereunder, it is possible that an Additional Payment will have been made by
the Company which should not have been made (an "Overpayment"), or that an
increase in the Additional Payment which will not have been made by the
Company could have been made (an "Underpayment"), consistent in each case
with the calculation of such excess parachute payment hereunder. In the
event that the Auditor, based upon the assertion of a deficiency by the
Internal Revenue Service against the Company or the Executive which the
Auditor believes has a high probability of success, determines that an
Overpayment has been made, such Overpayment shall be treated for all
purposes as a loan to the Executive which the Executive shall repay to the
Company, together with interest at the applicable federal rate provided for
in Section 7872(f)(2)(A) of the Code. In the event that the Auditor, based
upon controlling precedent, determines that an Underpayment has occurred,
such Underpayment shall promptly be paid by the Company to or for the
benefit of the Executive, together with interest at the applicable federal
rate provided for in Section 7872(f)(2)(A) of the Code.
11. SEVERABILITY. If all or any part of this Agreement is declared
by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any portion of
this Agreement not declared to be unlawful or invalid. Any paragraph or
part of a paragraph so declared to be unlawful or invalid shall, if
possible, be construed in a manner which will give effect to the terms of
such paragraph or part of a paragraph to the fullest extent possible while
remaining lawful and valid.
<PAGE>
12. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement represents
the entire agreement between the parties hereto with respect to the subject
matter hereof, and supersedes all prior or contemporaneous oral or written
negotiations, understandings and agreements between the parties hereto.
This Agreement shall not be altered, amended or modified except by written
instrument executed by the Company and Executive. A waiver of any term,
covenant, agreement or condition contained in this Agreement shall not be
deemed a waiver of any other term, covenant, agreement or condition, and
any waiver of any default in any such term, covenant, agreement or
condition shall not be deemed a waiver of any later default thereof or of
any other term, covenant, agreement or condition.
13. NOTICES. All notices required by this Agreement shall be in
writing and delivered by hand or by first class registered or certified
mail, postage prepaid.
14. LEGAL FEES AND EXPENSES. The Company is aware that upon the
occurrence of a Change in Control, the Board or a shareholder of the
Company may then cause or attempt to cause the Company to refuse to comply
with its obligations under this Agreement, or may cause or attempt to cause
the Company to institute, or may institute, litigation seeking to have this
Agreement declared unenforceable, or may take or attempt to take other
action to deny the Executive the benefits intended under this Agreement.
In these circumstances, the purpose of this Agreement could be frustrated.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of the Executive's rights
under this Agreement by litigation or other legal action, nor that the
Executive be bound to negotiate any settlement of the Executive's rights
hereunder, because the cost and expense of such legal action or settlement
would substantially detract from the benefits intended to be extended to
the Executive hereunder. Accordingly, if following a Change in Control it
should appear to the Executive that the Company has failed to comply with
any of its obligations under this Agreement or in the event that the
Company or any other person (including the Internal Revenue Service) takes
any action to declare this Agreement void or unenforceable, or institutes
any litigation or other legal action designed to deny, diminish or to
recover from the Executive the benefits entitled to be provided to the
Executive hereunder, and the Executive has complied with all of his
obligations under this Agreement, the Company irrevocably authorizes the
Executive from time to time to retain counsel of the Executive's choice, at
the expense of the Company as provided in this paragraph 14, to represent
the Executive in connection with the initiation or defense of any
litigation or other legal action, whether such action is by or against the
Company or any director, officer, shareholder, or other person affiliated
with the Company, in any jurisdiction. Notwithstanding any existing or
prior attorney-client relationship between the Company and such counsel,
the Company irrevocably consents to the Executive entering into an
attorney-client relationship with such counsel, and in that connection the
Company and the Executive agree that a confidential relationship shall
exist between the Executive and such counsel. The reasonable fees and
expenses of counsel selected from time to time by the Executive as herein
above provided shall be paid or reimbursed to the Executive by the Company
on a regular, periodic basis upon presentation by the Executive of a
statement or statements prepared by such counsel in accordance with its
customary practices. Any legal expenses incurred by the Company by reason
of any dispute between the parties as to enforceability of or the terms
contained in this Agreement, notwithstanding the outcome of any such
dispute, shall be the sole responsibility of the Company, and the Company
shall not take any action to seek reimbursement from the Executive for such
expenses.
15. APPLICABLE LAW. The provisions of this Agreement shall be
interpreted and construed in accordance with the laws of the State of
California, without regard to its choice of law principles.
16. EXTENSION. This Agreement shall be automatically extended for
additional Three-Year Terms if the Company does not give Executive written
notice of termination of this Agreement on or before 120 days prior to the
expiration of the Three Year Term then in effect.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
Sunrise Technologies International, Inc.
By:
Its:
EXECUTIVE:
EXHIBIT 10.2
- -------------
AMENDED AND RESTATED
CHANGE OF CONTROL AGREEMENT
---------------------------
AGREEMENT made on May 8, 1998, by and between Sunrise Technologies
International, Inc., (the "Company") and ________________ (the
"Executive").
RECITALS
--------
A. The Executive is currently employed by the Company as
__________________________________________________.
B. The Executive and the Company entered into a Change of Control
Agreement on November 7, 1997.
C. The Executive and the Company desire to amend and restate said
Change of Control Agreement as provided herein.
In consideration of the mutual agreements herein set forth and for
good and valuable consideration, receipt of which is hereby acknowledged
the parties agree as follows:
1. TERM OF AGREEMENT. Subject to the provisions of paragraphs 2
and 3 of this Agreement, the term of this Agreement (the "Three-Year Term")
shall be for the period which commences on the date hereof and which
terminates on May 8, 2001.
2. DEFINITIONS. For purposes of this Agreement, the following
definitions apply:
(a) "Cause" shall mean: (i) an act or acts of personal
dishonesty by Executive which results in personal enrichment of Executive
at the expense of the Company; (ii) violation by Executive of Executive's
obligations under paragraphs 6 or 7 of this Agreement which are willful on
the Executive's part and which are not remedied to the reasonable
satisfaction of the Company in a reasonable period of time after receipt of
written notice from the Company; or (iii) the conviction of the Executive
of a felony. Any termination of this Agreement for Cause shall be
communicated by the Company to the Executive in a notice of termination
which shall set forth in reasonable detail the facts and circumstances, if
any, claimed to provide a basis for termination of this Agreement.
(b) "Change of Control" shall mean the occurrence of any of
the following events:
(i) The "Beneficial Ownership" of securities
representing more than thirty-three percent (33%) of the combined voting
power of the Company is acquired by any "person" as defined in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (other
than the Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company, or any corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company); or
(ii) The stockholders of the Company approve a
definitive agreement to merge or consolidate the Company with or into
another corporation or to sell or otherwise dispose of all or substantially
all of its assets, or adopt a plan of liquidation; or
<PAGE>
(iii) During any period of three consecutive years,
individuals who at the beginning of such period were members of the Board
cease for any reason to constitute at least a majority thereof (unless the
election, or the nomination for election by the Company's stockholders, of
each new director was approved by a vote of at least a majority of the
directors then still in office who were directors at the beginning of such
period or whose election or nomination was previously so approved).
(c) A resignation for "Good Reason" shall mean the
resignation of the Executive from employment by the Company after: (i) a
material reduction or adverse alteration in the nature of the Executive's
position, responsibilities or authorities; (ii) the Executive becoming the
holder of a lesser office or title than that held by him immediately prior
to such change; (iii) any material reduction of the Executive's
compensation or benefits; (iv) the relocation of the Executive's job more
than 50 miles from his present location; or (v) any other material adverse
change to the terms and conditions of the Executive's employment or
benefits, provided that, if the Executive shall consent in writing to any
event described in clauses (i) through (v) of this sentence, the
Executive's subsequent resignation shall not be treated as a resignation
for Good Reason, unless a subsequent event described in such clauses to
which Executive did not consent occurs.
(d) "Permanent Disability" shall mean any physical or mental
disability which shall have rendered Executive unable to perform his duties
hereunder for 120 consecutive days, or which, in the opinion of a licensed
physician reasonably satisfactory to the company, is likely to render
Executive unable to perform his duties hereunder for such period.
(e) "Retirement" shall mean a termination of the Executive's
employment other than for Cause on or after the Executive's attainment of
age 65.
3. SEVERANCE BENEFIT
If, during the term of this Agreement, (a) a Change of Control
occurs, and (b) within a two-year period from the date of such Change of
Control, either: (i) the Executive's employment with the Company and its
subsidiaries is terminated by the Company other than for Cause or on
account of the Executive's death, Permanent Disability or Retirement; or
(ii) the Executive resigns for Good Reason, then the Company shall pay to
the Executive a Severance Payment in an amount, (net of excise taxes, if
any) equal to: (I) the total of the Executive's annual salary, inclusive of
any elective deferrals made by the Executive to the Company's 401(k) Plan,
plus the target bonus, if any, for the year in which termination occurs;
and (II) an amount equal to any employer matching contributions the Company
would have otherwise made on the Executive's behalf to the Company's 401(k)
Plan during the 12 months following the Executive's date of termination,
had the Executive's employment and/or the amounts contributed thereto by
the Company on the Executive's behalf not been reduced or terminated, and
assuming Executive made elective deferrals to the maximum extent permitted
by Section 402(g) of the Internal Revenue Code of 1986, as amended (the
"Code") PLUS an amount equal to any non-vested matching contributions under
the Company's 401(k) Plan which are otherwise forfeited by the Executive.
The Severance Payment shall be payable in a single lump sum which shall be
paid within 30 days of the termination of employment or resignation.
In addition to the Severance Payment, the Company shall provide
health, disability and life insurance in accordance with the plans
maintained by the Company for executives for a period of one year from the
date of termination of the Executive's employment, provided that health,
disability and life insurance benefits shall cease if Executive becomes
employed during such period and receives similar benefits in connection
with such employment.
<PAGE>
4. ACCELERATION OF STOCK OPTIONS. If a Change of Control of the
Company shall occur, then, without any action by the Board, all outstanding
stock options, which the Executive then holds to acquire securities from
the Company, shall accelerate and become immediately exercisable in full
and shall remain exercisable during the remaining term thereof, regardless
of whether or not the Executive remains in the employ or service of the
Company.
5. NO REDUCTIONS OR MITIGATION. The amounts payable pursuant to
paragraph 3 of this Agreement shall be paid without reduction, other than
as provided in said paragraph, regardless of any amounts of salary,
compensation or other amounts which may be paid or payable to the Executive
from any source or which the Executive could have obtained upon seeking
other employment; provided that the Company shall be permitted to make all
such payments net of any legally required tax withholdings.
6. NON-COMPETITION. The Executive agrees that during his
employment and for a period of one year after the termination of his
employment for any reason, he shall not enter into or engage in or be
connected with, or engage to work for an individual, firm or corporation
which is engaged in or connected with, any business which is then in
substantial competition with the Company in the United States. The
provisions of the last preceding sentence shall not apply to the ownership
of less than 5% of the shares of any corporation listed on any recognized
exchange or traded over-the-counter. The provisions of this paragraph
shall survive a termination of this Agreement.
7. NON-DISCLOSURE. The Executive agrees not to disclose either
during the period of his employment or at any time thereafter to any
person, firm or corporation any information concerning the business or
affairs of the Company which he may have acquired in the course of, or as
incident to, his employment with the Company for his own benefit or to the
detriment or intended detriment of the Company. The provisions of this
paragraph shall survive a termination of this Agreement.
8. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and the
Executive's heirs and legal representatives and the Company's successors
and assigns. This Agreement is assignable by the Company to any corporate
or other entity which acquires, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or substantially all of the
assets of the Company. Upon any such assignment, and the assumption by the
assignee of all obligations hereunder, the Company shall be released from
all liability hereunder. This Agreement shall not be assignable by the
Executive.
9. NONALIENATION OF BENEFITS. Benefits payable under this
Agreement shall not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, charge, garnishment,
execution or levy of any kind, either voluntary or involuntary, prior to
actually being received by the Executive; and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber, charge, garnish,
execute on, levy or otherwise dispose of any right to benefits payable
hereunder, shall be void.
10. INTERNAL REVENUE CODE LIMITS AND OTHER LIMITS.
(a) Notwithstanding anything in this Agreement to the contrary, in
the event that the Company's auditors or any other independent auditor
substituted for the Company's auditors pursuant to an agreement in writing
by and between the Company and the Executive (the "Auditor') determines
that any payment by the Company to or for the benefit of the Executive,
whether paid or payable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be an "excess parachute payment" within the
<PAGE>
meaning of Section 280G of the Code, then the Company shall pay an
additional amount of money to the Executive that will equal (based on the
Executive's good faith representations of the Executive's income tax
position for the year of payment hereunder) the sum of (i) all excise tax
imposed on the Executive by Section 4999 of the Code and (ii) all
additional state and federal income taxes attributable to the additional
payments to the Executive pursuant to this Section 10(a), including all
state and federal income taxes on the additional income tax payments
hereunder ("Additional Payment").
(b) If the Auditor determines that any Payment would be such an
"excess parachute payment" because of Section 280G of the Code, then the
Company shall promptly give the Executive notice to that effect and a copy
of the detailed calculation thereof and the Executive shall provide in
writing within ten (10) days of the Executive's receipt of such notice, a
good faith representation of the Executive's income tax position so that
such Additional Payment may be calculated. All determinations made by the
Auditor under this Section 10 shall be binding upon the Company and the
Executive and shall be made within 60 calendar days of the Executive's
termination of employment. Following such determination and the notices
hereunder and subject to the other conditions set forth in this Section 10,
the Company shall pay to or distribute to, or for the benefit of, the
Executive such amounts as are then due to the Executive under this
Agreement in the manner identified in Section 3 and this Section 10 of this
Agreement, and shall promptly pay to or distribute for the benefit of the
Executive in the future such amounts as become due to the Executive under
this Agreement.
(c) As a result of the uncertainty in the application of Section
280G of the Code at the time of the initial determination by the Auditor
hereunder, it is possible that an Additional Payment will have been made by
the Company which should not have been made (an "Overpayment"), or that an
increase in the Additional Payment which will not have been made by the
Company could have been made (an "Underpayment"), consistent in each case
with the calculation of such excess parachute payment hereunder. In the
event that the Auditor, based upon the assertion of a deficiency by the
Internal Revenue Service against the Company or the Executive which the
Auditor believes has a high probability of success, determines that an
Overpayment has been made, such Overpayment shall be treated for all
purposes as a loan to the Executive which the Executive shall repay to the
Company, together with interest at the applicable federal rate provided for
in Section 7872(f)(2)(A) of the Code. In the event that the Auditor, based
upon controlling precedent, determines that an Underpayment has occurred,
such Underpayment shall promptly be paid by the Company to or for the
benefit of the Executive, together with interest at the applicable federal
rate provided for in Section 7872(f)(2)(A) of the Code.
11. SEVERABILITY. If all or any part of this Agreement is declared
by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any portion of
this Agreement not declared to be unlawful or invalid. Any paragraph or
part of a paragraph so declared to be unlawful or invalid shall, if
possible, be construed in a manner which will give effect to the terms of
such paragraph or part of a paragraph to the fullest extent possible while
remaining lawful and valid.
12. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement represents
the entire agreement between the parties hereto with respect to the subject
matter hereof, and supersedes all prior or contemporaneous oral or written
negotiations, understandings and agreements between the parties hereto.
This Agreement shall not be altered, amended or modified except by written
instrument executed by the Company and Executive. A waiver of any term,
covenant, agreement or condition contained in this Agreement shall not be
deemed a waiver of any other term, covenant, agreement or condition, and
any waiver of any default in any such term, covenant, agreement or
condition shall not be deemed a waiver of any later default thereof or of
any other term, covenant, agreement or condition.
<PAGE>
13. NOTICES. All notices required by this Agreement shall be in
writing and delivered by hand or by first class registered or certified
mail, postage prepaid.
14. LEGAL FEES AND EXPENSES. The Company is aware that upon the
occurrence of a Change in Control, the Board or a shareholder of the
Company may then cause or attempt to cause the Company to refuse to comply
with its obligations under this Agreement, or may cause or attempt to cause
the Company to institute, or may institute, litigation seeking to have this
Agreement declared unenforceable, or may take or attempt to take other
action to deny the Executive the benefits intended under this Agreement.
In these circumstances, the purpose of this Agreement could be frustrated.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of the Executive's rights
under this Agreement by litigation or other legal action, nor that the
Executive be bound to negotiate any settlement of the Executive's rights
hereunder, because the cost and expense of such legal action or settlement
would substantially detract from the benefits intended to be extended to
the Executive hereunder. Accordingly, if following a Change in Control it
should appear to the Executive that the Company has failed to comply with
any of its obligations under this Agreement or in the event that the
Company or any other person (including the Internal Revenue Service) takes
any action to declare this Agreement void or unenforceable, or institutes
any litigation or other legal action designed to deny, diminish or to
recover from the Executive the benefits entitled to be provided to the
Executive hereunder, and the Executive has complied with all of his
obligations under this Agreement, the Company irrevocably authorizes the
Executive from time to time to retain counsel of the Executive's choice, at
the expense of the Company as provided in this paragraph 14, to represent
the Executive in connection with the initiation or defense of any
litigation or other legal action, whether such action is by or against the
Company or any director, officer, shareholder, or other person affiliated
with the Company, in any jurisdiction. Notwithstanding any existing or
prior attorney-client relationship between the Company and such counsel,
the Company irrevocably consents to the Executive entering into an
attorney-client relationship with such counsel, and in that connection the
Company and the Executive agree that a confidential relationship shall
exist between the Executive and such counsel. The reasonable fees and
expenses of counsel selected from time to time by the Executive as herein
above provided shall be paid or reimbursed to the Executive by the Company
on a regular, periodic basis upon presentation by the Executive of a
statement or statements prepared by such counsel in accordance with its
customary practices. Any legal expenses incurred by the Company by reason
of any dispute between the parties as to enforceability of or the terms
contained in this Agreement, notwithstanding the outcome of any such
dispute, shall be the sole responsibility of the Company, and the Company
shall not take any action to seek reimbursement from the Executive for such
expenses.
15. APPLICABLE LAW. The provisions of this Agreement shall be
interpreted and construed in accordance with the laws of the State of
California, without regard to its choice of law principles.
16. EXTENSION. This Agreement shall be automatically extended for
additional Three-Year Terms if the Company does not give Executive written
notice of termination of this Agreement on or before 120 days prior to the
expiration of the Three Year Term then in effect.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
Sunrise Technologies International, Inc.
By:
Title: President
EXECUTIVE:
